The Russia-Ukraine conflict has resulted in the EU and US intellectual property (IP) offices shutting down co-operation with Rospatent, the IP office of Russia. In response, Russia has used the current attitude against it to reform its IP policy stance. To date Russia has released Decree 299, allowing for compulsory licensing of third parties’ patents without compensation, misappropriated trademark proprietors rights and changed its stance on “grey” goods, allowing for parallel imports.
In our firm’s trademark practice the value behind trademark registrations is abundantly clear. The protection of reputation and its linked appreciable value is unparallelled, especially when a mark is well known. Registering a trademark provides the proprietor with clear and reliable rights to the benefits of protection and commercialisation. So, any action by a country’s trademark authority that may recant on a proprietor’s rights and thereby affect a proprietor’s trust in a country’s trademark system, will without doubt spell disaster for both trademark proprietors and the country’s economy.
Although there has not been a similar decree to Russia’s Decree 299 in terms of copyright and trademark law, the precedent has been established. Certain news agencies have gone so far as to hint at the future removal of restrictions on the use of IP contained in goods whose supply to Russia has been restricted — which could include copyright and trademarks.
In addition, Russia has suggested nationalising deserted businesses. This could mean moving Russian residents into deserted McDonald’s restaurants and allowing them to continue these businesses without the consent of the owner. It seems this suggestion has led to a barrage of trademark applications by Russian nationals at Rospatent, related to already existing well-known marks.
In terms of article 16 of the Trade-Related Aspects of Intellectual Property Rights Agreement, providing for the minimum standards relating to IP to be implemented by its member states, as well as article 6bis of the Paris Convention (1967), well-known trademarks are protected in member states even if they are not registered in that territory. But even for registered trademarks Rospatent has received several applications for both similar and confusingly-similar established and well-known trademarks, indicating an influx of trademark squatting on the horizon.
Some of these include Idea (as a composite trademark with elements strikingly similar to the Ikea logo); Uncle Vanya (as a composite trademark incorporating the golden arches of McDonald’s, and which is colloquially used in Russia to describe McDonald’s); McDonald’s as a word mark; and Starbucks as a word mark.
In terms of recent case law the Russian judiciary ruled on March 3 in favour of a Russian entrepreneur’s infringing use of the Peppa Pig trademark held by Entertainment One UK Limited, raising the restrictive political and economic sanctions levied against Russia as a reason for dismissing the claim of trademark infringement. There is further concern regarding the actual damages claimable by trademark and copyright proprietors, seeing as the Russian ruble has seen a significant dip. Other than a claim for an interdict (which may not be worth the paper it is written on), the costs of instituting an infringement suit may greatly outweigh the damages award securable, raising the question of whether approaching the courts is even worth it.
Further damage stemming from trademark squatting and the nationalisation of deserted businesses is not only dangerous to trademark proprietors but for Russian consumers too. The main function of a trademark is to designate origin and protect consumers. This is maintained by guaranteeing that goods, services and their quality stem from the same source, and allows consumers to trust goods or services associated with a particular trademark.
Trademark squatting and nationalisation mislead consumers who had placed their trust in goods or services they believe have a certain origin, as it is then revealed that these come from a completely different source — resulting in them being “catfished”, for lack of a better word. This will have a major effect on consumers who rely on goods or services that require certain standards to be met or are known for their quality or consistency.
Think of the effect on someone relying on a brand of tyres or car parts renowned for reliability, unique material and compliance with prescribed standards and regulations; or a skincare product known for its particular composition to treat a specific condition. What will the effect be on the consumer if a copycat or nationalised business misappropriates a business’s branding but offers its own goods or services?
The reliance on a substandard car tyre with the branding of a well-known business can mean the difference between life and death — just as reliance on a substandard skincare product can mean the difference between curative benefits and an allergic reaction.
Based on these concerns it is also possible that goods produced in this manner can find their way into the global market through export. This will result in the reputation and goodwill of a trademark — the ability to draw customers through its trademark — being damaged. Furthermore, the provision of a cheaper knock-off option to the broader consumer community can cause damage or injury to unknowing consumers in other markets.
This disregard for trademark proprietors’ rights and nationalisation of businesses may seem to uplift the Russian community in the short term, but there is the additional risk of damaging the confidence of the international investment community. Investors will not only face backlash from their portfolio companies, partners and the general community, but would also be regarded as short-sighted by investing in a company that practises trademark squatting. If this position becomes the status quo for Russia or continues without regulation, investor confidence in the Russian market will continue to decrease.
Concern is raised by the above practices, which do not only extend to trademark proprietors but to consumers and the investment community. Trademark proprietors will have to turn their back on the Russian market and governments will start strict monitoring practices as it relates to the import and export of all goods to and from Russia, leaving the market abandoned on open waters.
• Stemmet is a senior associate at Dommisse Attorneys.