The problems with joint ownership of trademarks24 September 2018
The problem of joint ownership of trademarks rarely surfaces on the Russian IP landscape. One of these cases elicits remembrance of a famous story “The Roads we Take” by O’Henry.
As a rule, a trademark application is filed and registered in the name of one legal person or one individual entrepreneur. In an article in the Civil Code, (Article 1478) a chapter is dedicated to trademarks which states that “a trademark may belong to a legal person or to an individual entrepreneur”. In addition, there is also a chapter in the Civil Code which concerns intellectual property in general, (viz. Article 1229). This article sets forth that “Exclusive right for the result of intellectual activity or a means of individualization (except for the company name) may belong to one person or jointly to several persons.” As shown there is some contradiction between these provisions leaving space for interpretation. This contradiction played part in triggering a lengthy and complicated court case which lasted four years ending in 2018 with involvement of all court instances, patent office and trademark owners.
The case under review started as a routine trademark non-use case. A company, Les Publications Conde Nast S.A. (plaintiff 1) and its Russian offspring Conde Nast CJSC (plaintiff 2) sued an open joint stock company ‘Sinergia Capital’ for non-use of trademarks (Nos 295229, 304346 and 433377). The case was examined by the IP court in its capacity in the first instance. The patent office was involved in the case as a third person without its own claims. The IP court satisfied the claims in part. Both, the plaintiffs and the respondent appealed the judgment to the Presidium of IP court. The hearings were postponed four times on request of plaintiffs and the respondent. The reason for this was that the parties wanted to conclude an amicable agreement and needed time to discuss it. On the fifth scheduled time the parties appeared at the hearing and asked the court to approve their amicable agreement and discontinue consideration of their cassation appeals.
Provisions of the amicable agreement:
The respondent agreed with the judgment of the IP court concerning the early termination of protection of his trademark VOGUE according to registration No 295229, trademark VOUGE (sic!) according to registration No 304346 and trademark VOGUE according to registration No 433377. The respondent also owns a trademark VOGUE according to IR No 929433.
Plaintiff 1 owns numerous trademarks in Russia where the word VOGUE is part of the trademarks, such as VOGUE EUROPE (IR 430952). All above trademarks cover Classes 32 and 33 of ICGS.
The respondent recognises the right for VOGUE in the name of the plaintiff. The parties agree on joint co-ownership in shares 50/50 and use of the trademarks as provided in Article 1229(2) of the Civil Code. Article 1229(2) sets forth that “Exclusive right for the result of intellectual activity or a means of individualization (except for the company name) may belong to one person or jointly to several persons”. The parties also made some provisions regarding their financial relations that were acceptable for both parties.
IP Court Vs Patent Office
The IP court approved the agreement which was submitted to the patent office for registration. The patent office however refused to register it. The patent office argued that joint ownership of trademarks is not possible proceeding from the combined analysis of the provisions of the law and judicial practice. It further opined that if both parties wanted to have a trademark they could convert it into a collective trademark.
The parties did not agree with the decision of the patent office and sued the patent office in the Moscow Commercial Court asking the court to recognize the decision as invalid. They argued that the decision of the patent office contravenes Article 5(3) of Paris Convention, Article 11 of the Singapore Treaty on Trademark Laws and Article 1229 of the Civil Code mentioned above. They complained that they would not be able to jointly conclude a license agreement with the producer of a sparkling wine under the VOGUE trademark.
The parties argued against the patent office’s statement that there is a collective trademark option which could have been used by the parties. In fact, the concept of a collective trademark supposes that there are a number of manufacturers producing goods with similar characteristics however the collective trademark belongs to the association of manufacturers (one legal entity) but not jointly to the manufacturers.
The court delved into the provisions of the Civil Code and concluded that the law draws distinction between the rights for things and the rights for the means of individualization ((Article 128 CC). Further, the court explained that according to Article 1227(2) CC provisions concerning real property (Section II CC) should not be applied to intellectual property. Hence, provisions concerning joint shared property (50% and 50%) cannot be applied to intellectual property in principle. As a result, proceeding from the fact that a trademark is a designation serving to individualize the goods (Article 1477) assignment of a trademark to more than one person contradicts the essence of the trademark which should individualize, i.e. distinguish the goods of one person from those of another.
Being not satisfied with the judgment of the Moscow Commercial Court the parties appealed the judgement before the 9th commercial court of appeal which confirmed the judgement of the Moscow Commercial court without additional arguments.
The parties appealed the judgement to the IP court as cassation instance. This became a second entry to the IP court though for a different reason. They delivered a staunch approach in support of their original claim, i.e. they again referred to Article 1229 which admits of no double interpretation. Besides, the lower courts ignored the provisions of international agreements which allow joint ownership of trademarks. They also referred to the International Bureau of WIPO which had established joint ownership of International Registration No 430952 and this trademark enjoys protection in Russia in the absence of objections from the patent office.
The IP court confirmed its earlier position stating that in contravention of conclusions of the courts of first and appeal instances the law does not contain provisions forbidding joint ownership of trademarks but conversely, it directly provides for joint ownership in its Article 1229 CC. The lower courts did not take into account that the concept of exclusive right does not consist in that it should belong to one person but in that it is assigned to a person or persons defined in the law while all other persons are deprived of the right to use the trademark. The IP court also pointed out that international agreements allow joint ownership of trademarks and Russia is a member of those agreements. In the end, the IP court cancelled the judgments of the lower courts and obliged the patent office to resume examination of the parties’ request to register partial assignment of the trademark.
Backlash from Patent Office
This time the patent office backlashed. It applied to the Supreme Court with a cassation appeal against the judgment of the IP court. The Supreme Court went through the arguments ofthe courts and the complainants and concluded that Article 1229 on which the trademark owners relied, appears in the chapter of the Civil Code which regulates general aspects of intellectual property while the issues specific to the trademarks are explained in other articles of the Civil Code. Those articles provide that only one person may own a trademark. The Supreme Court also justified the approach of the first instance court and of the court of appeal in what concerns international treaties discussed by IP court during the hearing. Article 5C(3) of Paris Convention sets forth that simultaneous use of a trademark by industrial or trade companies being co-owners according to the law of the country where the trademark is used does not limit protection in any country… The key words here are coowners according to the law of the country. It is implied by this that the Russian law does not allow joint ownership.
Provisions of Article 11 of the Singapore Treaty do not prescribe that a member country should grant protection to a trademark in the name of several persons simultaneously. As a result, the Supreme Court upheld the decision of the patent office refusing registration of VOGUE in the name of joint owners. Not withstanding the decision of the Supreme Court, doubts still remain. Article 1229 CC cited many times by the trademark owners and by the courts is absolutely unequivocal, in that it allows joint ownership of the trademark. Interpretation of that provision with reliance on other provisions is not convincing.
This is confirmed by the fact that the mentioned article even though it sets forth general conditions nevertheless includes a very specific limitation indicating that a company name cannot be owned jointly. That means that despite being general it is also quite specific, otherwise it should not mention the company names leaving interpretation to other specific provisions regulating company names in the section concerning the means of individualization. If the law does not want to allow joint ownership Article 1229 should be excluded from the Civil Code.
To conclude, the situation is as it is and trademark owners should be aware that attempts at joint trademark ownership are doomed to failure, at least for now.