MISTER NUT finds way around 'trademark use' definition

Russian Federation

The Commercial Court has reversed a decision of the Chamber for Patent-Related Disputes that cancelled the mark MISTER NUT for non-use. The court held that the Italian owner had used the mark within the strict meaning of the law (ie, use on the goods for which it is registered by the mark owner or its licensee), even though it had neither distributed the goods directly in Russia nor obtained a valid licensing agreement with its Russian distributor (Case 19/940389167/50, March 18 2004).

New Factor owns a trademark registration in Russia for MISTER NUT in relation to nuts, among other things. In 2001 a Russian company filed a petition in the Russian Patent Office (PO) seeking to cancel the registration for MISTER NUT on the grounds that the mark had not been used within the meaning of the law since (i) New Factor had sold the goods bearing the mark to a distributor, and (ii) the licensing agreement with that distributor had not been recorded, making it null and void under Russian law.

In a ruling issued in March 2002, the PO rejected the cancellation action. It accepted the claim that New Factor was the owner of the products distributed in Russia under the MISTER NUT mark pursuant to the Russian Civil Code provisions on commission contracts. Under these provisions, the seller of a product remains its owner until the product is sold to the end user. In other words, New Factor was considered the owner of the products distributed in Russia until its distributor sold the products to consumers. Thus, the mark MISTER NUT was considered to have been used within the meaning of the law.

Another Russian company filed a new cancellation action against MISTER NUT in 2003. This time, the Chamber for Patent-Related Disputes (created in 2002 to hear, among other things, cancellation actions at first instance) upheld the action on procedural grounds. New Factor filed an appeal with the Commercial Court, which reversed the chamber's decision.

These two cases show that, although the 'commission contract' defence may work in some circumstances against attempts (in particular the abusive types common in Russia) to cancel trademark registrations, it may not apply in all cases. Mark owners that do not directly distribute their goods in Russia are therefore advised to sign a licence agreement and have it recorded, especially as the recording costs are far below those of any administrative or judicial proceedings.

Vladimir Biriulin, Gorodissky & Partners, Moscow

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