FAS proposes to extend scope of unfair competition law to know-how and trademarks

The Federal Antimonopoly Service (FAS) has issued a proposal to extend the scope of the unfair competition law to know-how and trademarks.

The current Law on the Protection of Competition includes Article 14, which deals with intellectual property as an object of unfair competition. However, such coverage is not complete. The FAS thus seeks to prosecute activities whereby a competitor sells goods that use another party's know-how unlawfully. While this initiative is not objectionable per se, difficulties in connection with the collection of evidence can be foreseen. The situation may be complicated by the fact that many owners of know-how do not follow the precautionary measures provided by the law so that sensitive information can be qualified as know-how. These measures include limiting the number of people able to access sensitive information, using special storage for such information and rubberstamping.

The FAS also proposes an interesting innovation concerning trademarks. Currently, the commonly accepted point of view is that two identical trademarks may be registered in the name of two different parties if the registrations cover different classes of goods. The rationale behind this point of view is that different goods are aimed at different categories of consumers which do not intersect. However, one cannot deny that buyers of watches, for example, can be familiar with other categories of goods, such as clothes.

In a recent case, a company had registered VACHERON CONSTANTIN for clothes and opened a shop under that name. Although not all consumers may afford a Vacheron Constantin watch, most will know that name a symbol of success. Inevitably, the aura of the watch manufacturer will reach other goods, such as clothes. It is thus obvious that the shop used the status of Vacheron Constantin to attract consumers.

Vacheron Constantin initiated a cancellation action at the Patent Office, which was unsuccessful. It then initiated a court action against the owner of the clothes shop, but was also unsuccessful in the courts of first, second and cassation instance. All courts confirmed the decision of the Patent Office, which had refused to cancel the registration of VACHERON CONSTANTIN for clothes and confirmed that the law had not been infringed. The judgment was appealed to the Supreme Court, which reversed the previous judgments and directed the Patent Office to cancel the trademark.

However, the decision of the Supreme Court could not serve as precedent, which is why the proposal of the FAS is of such importance. The implementation of the proposal would help to combat registrations that constitute unfair competition.

Another reason behind the proposal is that the unfair practice of registering another manufacturer’s designation in one’s own name continues. The law does not oblige the owner of a designation to register it as a trademark; sometimes, the manufacturer wishes to test the market and launch a product without registering a trademark, or sometimes it simply does not attach a lot of importance to trademark registration. Unscrupulous competitors seize this opportunity to steal the trademark and register it in their own name. Although it is possible to cancel such pirated trademarks, there is no law that can be applied directly to such situations. The FAS thus seeks to include an appropriate provision in the Law on Protection of Competition in order to make the resolution of such cases more streamlined.

Vladimir Biriulin, Gorodissky & Partners, Moscow