Defending rights to company names and commercial designations
Special designations are used to distinguish entities and their products. Currently, protection can be obtained for the following means of individualisation:
- a company name;
- a commercial designation;
- a trademark (service marks); and
- the name of a products’ place of origin.
The introduction of geographical indications to this list is also on the horizon.
These designations can be divided into two groups:
- designations that individualise an entity (company names and commercial designations); and
- designations that distinguish products, works or services.
In accordance with Article 1474 of the Russian Civil Code, a company name serves as a means of individualising a legal entity. Its main function is to distinguish the company from others and create a stable association between it and third parties. According to Article 1475, the rights to a company name are exclusive and start from the date that the entity is registered and end when it is removed from the Unified State Register of Legal Entities in connection with the termination of its activities or a change of name.
The rights to a company name are exclusive and allow the holder to use the designation as a means of individualisation in any way that does not contradict the law. An entity can include this name on signs, letterheads, bills and other documentation, products or the packages thereof, the Internet or in announcements and advertisements. Third parties are not entitled to use designations that are the same or are confusingly similar.
Article 1474(3) stipulates that the following conditions, when occurring simultaneously, are considered to be a violation of the exclusive rights to a company name:
- a third party’s company name coincides fully with that of the rights holder or is confusingly similar to it;
- the entity carries out similar activities; and
- the rights holder’s company name was entered in the Unified State Register of Legal Entities before the third party’s name.
If one or more of the above circumstances is absent, it does not count as a violation of the rights to a company name:
“...the mere fact that the company names coincide, when the plaintiffs and the defendant carry out the different kinds of the economic activities, cannot be a ground for a total prohibition of the use by the defendant of the combinations of words in the company name.” (Resolution of the IP Court of 28 October 2014 in Case A75-11531/2013)
If all of the factors are present, the rights holder can file a claim to prohibit the use of the company name for certain activities and/or recover damages. If filing for the former, the holder is required to prove the violation only (Resolution of the Ninth Arbitration Court of Appeal of 23March 2016 in Case A40-187312/2015). With regard to the latter, Article 15 defines ‘damage’ as that which is suffered by the rights holder as a result of the violation as well as any profits lost (ie, the income that the company would have received under normal conditions). To justify the claimed damages, it is necessary to prove the size of the violation, how it arose and a cause-and-effect relationship between the violator and the damages. The entity trying to recover lost profits must prove that it is in fact able to make a profit.
Unlike a company name, a commercial designation need not be registered and is a means of individualising one or more enterprises in a certain territory.
A commercial designation is characterised by the following combination of features:
- there is no requirement for mandatory registration;
- the designation must be known within the particular territory;
- the means of individualisation is used continuously by the right holder to distinguish the enterprise;
- the designation is used by one or more organisations; and
- the commercial designation does not confuse the consumer with regard to ownership of the company.
As per Article 1540(2), if the holder does not use the designation continuously within one year the rights could be terminated. This period of non-use can be calculated at any point during the effect of the exclusive right from the moment of establishing non-use.
With regard to the violation of the rights to a commercial designation, rights holders are entitled to claim for the full or partial termination of the use of a designation. In this case, partial prohibition prevents an entity from using the designation in a particular territory or with respect to the manufacture of certain products (rendering services). As follows from Article 1539(3), the rights holder is also entitled to claim damages. However, not every use of an identical or confusingly similar designation is considered a violation – illegal activity is considered to be the use of the designation for the individualisation of the enterprise, which carries out similar activities within the same territory.
The rights holder must prove its possession of the exclusive right to the commercial designation and the illegal use thereof. It must provide documents, which explicitly indicate how and in respect of which enterprise the designation is used. Thus, in order to defend rights to a commercial designation, it is necessary to present more material proof confirming these rights.
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