RENALGAN Case requires reconsideration

The Higher Economic Court of Ukraine has upheld in part an appeal against earlier decisions by the Economic Court of Kiev and Kiev Economic Court of Appeal, which had accepted a claim by joint-stock company Lekchim that closed joint-stock companies Velmed and Red Star had infringed its rights in the trademark RENALGAN (in Cyrillic characters) (Case 39/161, January 18 2005).

Lekchim began developing a medicinal preparation called Renalgan in 1994. In 2000 it obtained a trademark registration for RENALGAN. It started to use the mark from the date of publication in the official bulletin. On October 20 1995 Lekchim and Red Star concluded an agreement to cooperate in the production, sale and promotion of Renalgan. In 2002 this agreement was terminated on the grounds that Red Star had not fulfilled its obligations.

However, Red Star continued to (i) produce and sell the product under the RENALGAN mark, and (ii) use the name on the Internet without Lekchim's permission. The other company involved, Velmed, also offered for sale RENALGAN-marked products.

Lekchim brought a claim before the Economic Court of Kiev, alleging that Red Star and Velmed had infringed its rights in RENALGAN. Red Star filed a counterclaim, arguing that the registration was invalid on the grounds of non-use.

The Economic Court upheld Lekchim's claim and dismissed the counterclaim. It reasoned that, pursuant to Articles 16 and 20 of Law of Ukraine On Protection of Rights in Trademarks and Service Marks, Lekchim owned the trademark. It alone had the right to use the mark or give its consent for another party to use it. It also stated that Lekchim had proved that it had used the mark.

Red Star appealed to the Kiev Economic Court of Appeal, arguing that it started to use RENALGAN before the trademark application was filed by Lekchim. According to Article 500 of the Civil Code of Ukraine, a person who is using a trademark in good faith can continue such use, even if another person files an application or obtains registration for the same trademark. However, the court did not take these arguments into consideration as the relevant provision of the Civil Code came into force only in 2004 (ie, after Red Star had started using the mark). Red Star appealed again.

The Higher Economic Court of Ukraine upheld the appeal in part. It concluded that the court of first instance and the appeal court had failed to examine fully all the circumstances of the case. In particular, they had not properly determined whether:

• Red Star's claims of prior use were valid;
  
  
• Red Star had failed to fulfil its obligations under the agreement with Lekchim; and
  
  
• Red Star's use of RENALGAN after termination of the agreement was unfair.

Thus, it remanded the case to the court of first instance for reconsideration.

Nataliya Yeryomina, Konnov & Sozanovsky, Kiev