New Part IV of Civil Code raises trademark issues

The new Part IV of the Russian Civil Code (2006/230-FL) has come into force, replacing all Russian laws covering intellectual property. This represents a positive step towards a better protection of IP rights. However, some provisions will change substantially, which is causing concern to IP rights owners, and to trademark owners in particular.

The replacement of the Law on Trademarks (1992/3520-1) by Part IV of the Civil Code introduces two substantial changes.

First, Part IV provides that the existence of a domain name identical to a trademark is a ground for refusing to register the mark and for revoking a registered trademark if the domain name has an earlier priority (Paragraph 10, Article 1483). This provision has attracted criticism, including the following:

• Russian law does not define 'domain name' and the meaning of 'identical' is unclear. For example, can the owner of the domain name 'abcd.xyz.ru' prevent the registration as a trademark of both ABCD and XYZ, or only of ABCD.XYZ or ABCD.XYZ.RU? If the owner can oppose the registration of ABCD and XYZ, this will encourage trademark hijackers, contrary to the message given by Hennes & Mauritz's recent success in the courts against the owner of the H&M trademark in Russia (Federal Arbitrazh Court of Moscow District, July 18 2007).
  
  
• It does not matter which goods or services, if any, the domain name has been used for. This feature makes it easier for trademark hijackers.
  
  
• It is unclear what date is used to establish the priority of rights - for example, if a domain name has lapsed due to non-payment of renewal fees but is later restored, is the relevant date that of the first registration or that of restoration?

Second, Part IV provides that a trademark licensee's goods or services must be of at least an equivalent quality to the licensor's goods or services (but it is no longer a requirement to provide for this in the licence) and the licensor has the right to check that this requirement is met.

The important change is that the licensee and licensor will be jointly and severally liable to consumers if the quality is lower. The provision clearly aims to increase consumer protection, but it appears to impose a potentially unfair and excessive liability on trademark owners.

It remains to be seen how these provisions, as well as other changes to IP law, will be interpreted in practice and what effect they will have. It is hoped that the current climate of better enforcement of IP rights in Russia will influence the state authorities and the courts in their interpretation of the new provisions and will help to protect the interests of both IP rights owners and the public.

Natalia Gulyaeva and Tatiana Mrdulyash, Lovells LLP, Moscow