8 Jan
2021

Serbia

Popović, Popović & Partners

Relevant legislative framework

The relevant legislation for trademark litigation is primarily the Law on Trademarks (6/2020), as it lists possible actions and other procedural particularities, such as available injunction measures and the securing of evidence. Other national laws that apply directly to trademark litigation include:

  • the Law on Civil Procedure;
  • the Law on Mediation;
  • the Law on Enforcement and Security Interest (in particular, Chapter 5 regarding injunction measures);
  • the Law on Arbitration;
  • the Law on Trade (in particular, articles regarding unlawful competition); and
  • the Law on the Organisation and Competences of the Courts.

Depending on the nature of the case (eg, pharmaceutical trademarks), other legislation may also be applicable.

In regard to the most significant sources of applicable international legislation, Serbia is a signatory to the following:

  • the Paris Convention for the Protection of Industrial Property (20 March 1883);
  • the Madrid Agreement Concerning the International Registration of Marks (14 April 1891);
  • the Madrid Protocol (27 June 1989);
  • the Trademark Law Treaty (1994);
  • the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks (15 June 1957);
  • the Vienna Agreement Establishing an International Classification of the Figurative Elements of Marks (12 June 1973); and
  • the Singapore Treaty on the Law of Trademarks (27 March 2006).

Causes of action according to the Law on Trademarks

The Law on Trademarks stipulates that in case of trademark infringement any of the following may file for action:

  • the owner of the trademark, trademark application or licence holder;
  • any user of the collective trademark, with the consent of the collective trademark owner; and
  • any user of the warranty trademark, with the consent of the warranty trademark holder.

The trademarks in question may be nationally registered marks or international marks under the Madrid Protocol that are designated for Serbia. Although Serbia is geographically in Europe, it is not part of the European Union, meaning that EU marks are not valid in Serbia. Besides trademarks, a company’s name also has a certain amount of protection; however, it is always advisable for companies to also register their name as a trademark.

Alternative dispute resolution

Both arbitration and mediation are possible and available to parties. Parties may opt to mediate or arbitrate their dispute at any given time. Mediation, in accordance with its nature, is better suited to being initiated ahead of court proceedings, although it can be used throughout the court proceedings. Moreover, the courts always inform the parties of the possibility of mediation in preliminary hearings for all types of IP litigation, including trademark litigation. In recent years, there have been attempts by both the legislature and the courts to encourage parties to accede to alternative dispute resolution methods, in particular mediation. The reasons are based on practicality (ie, to decrease the courts’ backlog, particularly pertinent during the covid-19 pandemic) and on welfare and cost efficiency for the parties that mediation has to offer.

According to the Law on Arbitration, the arbitration agreement must be in written form (Article 12) and be conducted and organised by the responsible body (Article 6). The Serbian Chamber of Commerce has a permanent arbitration department and the Belgrade Arbitration Centre is also an option for interested parties. Similar to mediation, arbitration can also be initiated during the dispute.

In both mediation and arbitration, if the parties have already initiated court proceedings but wish to attempt to resolve the dispute via a different method, the competent court will stop the proceedings. If the case is successfully mediated, the court process will end; if an arbitration clause has been signed, the parties then proceed to arbitration and the court will consider the lawsuit to be withdrawn.

In terms of costs, in Serbia, for the majority of foreign firms, litigation may still be the most affordable option. Court fees are relatively low for trademark litigation, especially when compared with the high arbitration rewards. However, arbitration is much more efficient, and compared to the lengthy court process (a first-instance decision is usually brought within two years from the filing date of the claim; and a second-instance decision with revision can take up to a further three or four years), the time-effectiveness of arbitration is significant. On the other hand, domestic arbitration decisions can be the subject of an invalidity procedure, which could potentially negatively affect the efficiency of arbitration. There are many factors, and each should be considered on a case-by-case basis.

Litigation venue and formats

In case of trademark litigation cases, the only competent courts are based in Belgrade. If a trademark dispute exists between two parties that are companies, or between a company and a natural person but the dispute is commercial in its nature, the competent court authority is the Commercial Court in Belgrade. The Commercial Appellation Court, also located in Belgrade, decides in the second instance (ie, the appeal) in these cases. In other trademark disputes (eg, between natural persons or organisations of some type) the competent court is the Higher Court. In these cases, the Court of Appellation issues the second-instance decision. The third instance exists in trademark cases because revision as an extraordinary legal remedy is always available – in both cases, this is the Supreme Court of Cassation. The entire procedure is conducted in Serbian, and foreign persons must be represented by a local attorney.

Jurisdiction is most commonly established when the infringement activity takes place in Serbia, has an effect in Serbia or the defendant’s domicile, or if the trademark is a Serbian trademark.

In terms of forum shopping, there are few options in Serbia, although this does not include arbitration and mediation since these can be conducted wherever it is most convenient for both parties.

In terms of trademark litigation in Serbia, there is no option for a case to be disputed in front of a jury, as it is a professional judge that decides in the first instance (Article 34 of the Law on Civil Procedure) – this is true for both the Higher Court and the Commercial Court. In the second instance (ie, the Court of Appellation), a panel of three professional judges issues the decision (Article 37). The jury system was abandoned some time ago, and was never a traditional jury in the sense recognised in Anglo-American law. There were only two jurors on a panel with a professional judge, and they would usually just accept the ruling.

None of the aforementioned courts has a specialised IP department. Some judges (particularly those for the higher instances) are known to have expertise in intellectual property and IP cases are assigned to them; however, in general, uncertainty regarding the judges’ understanding of a matter may remain.

It is the opinion of the majority of trademark practitioners and experts that it would beneficial to have a proper specialised trademark litigation court or at least specialised IP departments within the present court structure.

Damages and remedies

Civil

In case of infringement, the plaintiff may request the following:

  • determination of infringement;
  • termination of the infringement, as well as a ban on the repetition of such or similar actions;
  • compensation;
  • publication of the judgment at the defendant’s expense;
  • confiscation (ie, permanent exclusion from the market, or destruction or alteration, without compensation) of infringing objects; and
  • prohibition of alienation, confiscation or destruction, without compensation, of materials and objects used in the production of objects.

When considering the amount of damages, the court will consider the particulars of each case, especially any negative economic consequences that the rights holder has suffered, including lost profits and gains by the infringer.

The court will consider the proportion between the seriousness of the violation of the right and the claim, as well as the interests of third parties. An infringement action can also be filed against a person whose services were used during the violation of rights (intermediary). The plaintiff is entitled to compensation for material and non-material damage. In determining the amount of damages, the court will consider all the circumstances of the case, particularly the negative economic consequences suffered by the plaintiff, including lost profits and profits made by the defendant as a result of the violation.

The court may, where circumstances justify it, award the plaintiff compensation for damages, which cannot be lower than the compensation that they would have received for the particular form of use of the object of protection if that use had been lawful. This scenario with a hypothetical licence fee depends on various elements, such as the extent of the trademark infringement, profits gained by the defendant and losses suffered by the trademark owner, among other things.

If the rights violation was not committed intentionally or through gross negligence, the court may award the plaintiff compensation just for the profit that the defendant made by violating the right.

Injunctive measures may be requested in the following forms, among others:

  • the seizure of infringing products;
  • the seizure or removal from channels of commerce any materials or items that were used exclusively or majorly in the production of infringing products, or are intended for the production of said products; and
  • the prohibition of infringing actions or of actions that represent a serious threat that the right will be infringed (ie, preparation actions).

In addition, the plaintiff may propose:

  • that its right has been infringed, or is about to be infringed; and
  • that the existence of certain circumstances would hinder or significantly aggravate the compensation of damages, such as:
    • seizure of the movable and immovable property of the person against whom the adjudicating of injunctive measure is proposed; and
    • prohibition of payments from the bank account of the person against whom the adjudicating of the measure is proposed.

Further, the court may request from the defendant additional information regarding bank statements, financial and business documents in order to determine the likelihood of the inability to pay damages.

A similar procedure is available for the securing of evidence, which can be requested both during and before the initiation of the procedure.

Criminal

Unlawful use of others’ trademarks or protected intellectual property could result in being held liable, resulting in a fine or imprisonment for up to three years. There is also criminal liability for infringing others’ trademarks. The maximum penalty is around €25,000 for legal entities and around €500 for natural persons.

In both criminal and civil procedure, certain legal fees are recoverable in Serbia. The losing party is generally ordered to pay procedural costs to the other party, including official court fees, translation costs (when applicable) and attorneys’ fees (to some extent). However, the sums awarded never fully compensate the costs of the client.

Evidencing the case

One of the first steps when building a case would be to acquire evidence of infringement. Evidence may be numerous and come in many forms, as no formal prerequisites need be met. Usually this consists of buying one or several infringing items, photographing the location (eg, if the name of a shop is infringing) and preserving copies and printouts of webpages containing infringing content.

The usual second step would be writing a cease and desist letter to the infringer, in order to have potential proof of defending activity, as well as of potential bad faith by the infringer, should the activity persist even after receipt of the letter. Notwithstanding, it is always advisable (particularly for trademark owners whose goods are often and widely infringed) to have customs protection, so that Customs can confiscate infringing goods before they enter the market.

A general rule of civil procedural law stipulates that all evidence must be presented by each party at the preliminary court hearing.

This is also important for the judge, since it is the judge who determines a timeframe for the whole procedure. However, if the party obtains new evidence that was unavailable during the proceedings, this can be added up to the point when the court is ready to bring forth the substantive decision. Also, the plaintiff may always request that the judge order the defendant to provide additional information or evidence that is in their possession, if this fact has been made likely by the other party.

In general, the matter of likelihood of confusion and similarity can be determined by the judge or sometimes an expert witness. However, expert witnesses in trademark cases are more often used for issues such as determining the amount of damages. Since there are no formally specialised courts or judges, some prefer to have the opinion of expert witnesses regarding the similarity of two marks.

Available defences

In some cases the defendant has legal authorisation to use a registered trademark of another person (limitation of right, Article 54 of the Trademark Law):

  • if the mark in question is the defendant’s business name or a name that was used in good faith before the priority date of the trademark; and
  • if, also in good faith, it is allowed to use in the market:
    • its own name or address; and
    • the notification of type, quality, amount, purpose, value, geographical origin, production date or other elements of nature of the goods or services.

During the court procedure, the defendant may initiate several other procedures or counterclaims, either in front of a court or in front of the Serbian Intellectual Property Office (IPO) that would become a prior matter, in which case the court must wait for the relevant authority to bring the final decision, before proceeding with the first trademark case. Defendants may initiate:

  • trademark invalidity procedure (in front of the IPO);
  • trademark revocation procedure due to non-use (in front of the IPO);
  • trademark revocation procedure where the mark’s name has become generic and usual through use:
    • if the mark is used in such a way that it may cause confusion regarding geographical origin, type, quality or other elements of nature of the goods or services; and
    • if the mark has become contrary to public order or the accepted moral principles (in front of the IPO); and
  • legal action for the challenge of a trademark, if the trademark (application) was granted or filed contrary to the principle of good faith and honesty, or on the basis of an application being a breach of a legal or contractual obligation (in front of the competent court).

Other arguments that are usual in practice for the defendant include that:

  • there is no likelihood of confusion;
  • the defendant has other prior rights; or
  • the infringement has been ongoing for more than five years and is subject to the statute of limitation.

In addition, in cases of trademark invalidity procedure the five-year period is significant, because if the owner of the older mark knew and tolerated the existence of the younger mark for five years then they cannot initiate this procedure. This exception does not apply where the registration of the later trademark was applied for in bad faith.

Appeals process

Depending which court decided in the first instance, the appeal is either submitted to the Commercial Courts of Appeal (if the first instance was decided by the Commercial Court) or to the Court of Appeal (if the first instance was decided by the Higher Court).

As a rule, the parties have 15 days from the receipt of a judgment. This type of deadline cannot be extended. The opposite party has a right to file a response to the appeal also within 15 days of notification of the appeal. As a rule, second-instance courts base their decisions on the facts that were already established by the first-instance court. Presenting new facts as evidence is not possible (ie, it can be done in a very limited scope). Therefore, it is recommendable to have the request for establishing all relevant factual evidence presented at the preliminary court hearing in the first instance. The appeal courts, as a rule, do not schedule hearings and decide in closed sessions.

Appeal has a suspensive effect and the first-instance ruling is not enforceable; however, preliminary injunctions are always enforceable from the moment that they are granted and delivered to the other party.

In all trademark litigation cases, revision, as an extraordinary legal remedy, is allowed. The revision must be filed in the 30-day period from receiving the second-instance decision. In the revision procedure, the previous decisions may be enforced since it has no suspensive effect.

Popović, Popović & Partners

Takovska 19

Belgrade 11120

Serbia

Tel +381 11 3239 442

Fax +381 11 3242 646

Web http://www.ppsp.rs/

Natalija Popović Maksimović

Associate

[email protected]

Natalija Popović has been a junior attorney at Popović Popović & Partners since 2016. She obtained an LLB from the University of Belgrade Faculty of Law and an LLM in international IP law from the Technical University of Dresden, in cooperation with the University of Exeter. Ms Popović deals with trademark prosecution, customs measures, litigation and commercial practice. Her particular areas of expertise are trademarks, unfair competition, copyright contract and tort law. She is fluent in English and German.

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