Driving Jurisdictional Consistency

Article by Ignacio Lazaro, PETOŠEVIĆ COO, published in The World Trademark Review, June/July 2013

What the draft agreement on a unitary trademark in Belarus, Kazakhstan and the Russia Customs Union may mean for brand owners

The Eurasian Economic Commission – a supranational body that supervises the integration process between Kazakhstan, Russia and Belarus within the Customs Union and the Single Economic Space (SES) – has published a draft Agreement on Trademarks, Service Marks and Appellations of Origin in the Territory of the Single Economic Space between the Customs Union members. The draft agreement, dated December 20 2012, has been issued following the enactment of the Agreement on Unified Principles of Regulation in the Sphere of IP Rights Protection, which entered into force on January 1 2012. This stipulates that the Customs Union members must adopt a “single mechanism for the
registration of trademarks and appellations of origin (geographical indications) through a separate agreement”.

The objective of the draft agreement is to create an SES trademark, which would co-exist with national rights – similar to the way in which Community trademarks co-exist with national rights within the European Union. However, the SES trademark will be different from the
Community trademark, as it will more closely reflect international registrations.

The agreement will govern the registration and protection of trademarks, service marks and appellations of origin. It will be possible to register collective trademarks. However, certification and guarantee marks are excluded from the agreement. In terms of the types of sign that are entitled to protection, the only statutory condition laid down in the draft is that signs be capable of being represented graphically.

Under Article 12 of the draft agreement, SES trademarks are to be registered in a single trademark register, although there are no plans as yet to establish a dedicated SES trademark office or IP court. According to Article 4, applications may be filed before any one of the three national IP offices and each may set a different filing fee, which could cause malfunctions in the system.

Applications may be filed in any officially recognised local language, but a Russian translation must always be submitted and will prevail in case of any discrepancies between versions.

The office which receives the application will be in charge of the formal examination. If the application complies with the statutory formalities, it will be published electronically. Interested third parties will have three months to submit any observations based on absolute or relative grounds. The applicant will then have to pay the examination fee.

A separate substantive examination is to be conducted in each Customs Union member state. The receiving office will issue a decision based on the examination reports provided by each national IP office.

If the application encounters objections, the applicant may opt to convert the SES trademark application into a national registration application. The term of protection for an SES trademark will be 10 years from the application date, subsequently renewable for 10-year periods.

The trademark register will comprise registered SES trademarks from the offices of all three member states. National IP offices will be responsible for the accuracy and completeness of SES records, which will be made available through the commission’s website. As envisioned by the draft agreement, the enforcement of SES trademarks will rely on national regulations. Article 3.3 establishes that, as provided by national legislation, rights holders have the exclusive right to use an SES trademark and prevent other parties from using it.

Article 3.4 envisions that the national courts will resolve any dispute concerning the infringement of SES trademarks in accordance with their national legislation. To mitigate the existing divergence in national enforcement systems, the draft agreement introduces a principle of equal
treatment (Article 3.5), under which member states must ensure the same liability for infringement of SES rights as for that of national rights.

The draft agreement maintains the principle of regional exhaustion of rights introduced by Article 13 of the Agreement on Unified Principles of Regulation in the Sphere of IP Rights Protection. However, the Russian and Belarusian governments have already expressed the view, through their respective anti-monopoly committees, that international exhaustion should be adopted in the region, and that parallel imports should be treated as a mere act of unfair competition.

The agreement will enter into force once it has been ratified by all Customs Union members. The system will be further developed by an implementing regulation, a draft of which has been published by the commission. Currently, the draft agreement is under discussion at the three national IP offices. Commission officials are confident that the final text of the draft agreement will be available by May 2013. However, the Kazakh authorities recently revealed that Kazakhstanis are increasingly discontented with the Customs Union, which they blame for the sharp rise in prices in the country.

The draft agreement represents a welcome development towards the integration of the three Customs Union jurisdictions. However, it fails to initiate a system that would deal with problems that may arise as a result of territoriality. It fails to create a unitary right; the scope of protection granted to an SES trademark will depend on national regulations and practice. In its current form, the SES trademark is a blank page onto which the relevant national legislation will project different legal effects.

The advantages that a single registration system could offer to trademark owners are diminished by the complex interaction between the member state IP offices. In terms of costs, the draft agreement allows each member state to set its own official fees for the various steps in the registration
procedure, which may not reduce the overall cost of registration.

The law and practice in the three jurisdictions diverge to a considerable extent. The harmonisation process is only at an inceptive stage and the above-mentioned agreement on unified principles of regulation is hardly more than a declaration of good intentions. Approximation of national laws, as well as respecting member states’ legal traditions and established structures, is a high priority for the commission. However, this will require significant determination, political will and consensus within the region.