NORR STIEFENHOFER LUTZ
RECHTSANWÄLTE  STEUERBERATER  WIRTSCHAFTSPRÜFER

The First Annual CIPR Conference
"Building Partnerships to Protect and Enforce Intellectual Property Rights"

Moscow
26 – 28 June, 2000

Trademark Piracy and Domain Grabbing

Jan Strzebniok
Attorney at Law
Head of the Moscow Office of NSL
Ul. Malaya Nikitskaya, 27
121069 Moscow
Tel.: (+ 7 095) 2902438
Fax.: (+ 7 095) 2003246
E-mail:

PART ONE: Trademark Piracy

Art. 1 Trademark Law RF (TLRF): “A trademark and a service mark are signs capable of distinguishing goods and services respectively, of a certain person or legal entity from similar services and goods of other natural persons or legal entities.”

Trademarks distinguish goods and services of one enterprise from those of others.

Trademarks are a focus for goodwill.

Trademarks are the links between the goods and the enterprise. By virtue of the trademark a Consumer associatesa name with a certain product and a certain quality.

Trademarks encourage and oblige an enterprise to maintain or improve quality of its goods and/or services in order to maintain or improve goodwill.

Protection in general only through registration. Art. 2 TLRF: “A trademark shall be legally protected in the Russian Federation on the basis of its State registration effected through the procedure set forth by this law or by virtue of international treaties to which the Russian Federation is a party.”

Two possibilities: 1) National registration; 2) International Registration

Trademarks have to be registered with the State Patent Office of the Russian Federation (ROSPATENT). Registration for 10 years with possibility of renewal (Art. 36 para 1 TLRF). If the trademark owner is a foreigner, registration only through Patent attorneys who are registered with ROSPATENT. Full scale of protection only if trademark is effectively used, if trademark is not used within 5 years of registration any interested person can apply for deregistration of  trademark.

Madrid Agreement: Central registration of trademarks in Geneva, Applicant has to specify the countries in which he wants his trademark to be protected, the resulting Protection is not regulated by the Agreement but by the applicable national laws (but member states have to adhere to some common principles). An applicant for international registration must have already obtained registration of the mark in the country of origin.

Exception: Protection without registration for “well known trademarks” such as e.g. Coca-Cola, Rolex, Mercedes. In Russia protection so far only through international treaties (Paris Convention) and through new regulation (effective as of May 2000. Protection of well known trademarks not regulated by TLRF. Therefore still hard to define “well known trademark” in Russia. New regulations on “well known trademarks” provide for protection only when “well known trademarks” are registered as such with Higher Patent Chamber. The TRLF does not foresee any protection for trademarks which are not registered. This is probably about to be changed soon, as new draft of TRLF provides for such protection.

Special case: If trademark is the same as the firm name, protection also by regulations in the Civil Code, the Law on Joint Stock Societies, the Law on Limited Liability Societies and by the Ordinance of 1927 “On the firm”.

Two aspects:

Any use, intentionally or not, of protected (registered) trademarks or similar signs, so that goods legally bearing the trademark have disadvantages in the market through confusion (example: shoes using the trademark “Hugo Boss” without having been manufactured by Hugo Boss or shoes using the trademark “Hugo Buss”, software sold under the trademark “Mycrosoft” or sold under the trademark “Microsoft” without having been licensed by Microsoft), loss of sales quota; dilution of goodwill and loss of confidence through lower quality.

Generally, the principle of first come, first serve applies to registration, even if it is obvious that the person who files for registration will not use trademark in proper way and/or that registration is for the sole purpose of selling registered trademark to its rightful holder. Now planned amendments to amend TLRF in such way that registration is prohibited whenapplicant will obviously not use trademark and/or when registration is clearly only for the purpose of selling the trademark.

If a trademark is properly registered (nationally or internationally) and rights are infringed, what means do exist to protect your rights ?

Principle: “Unauthorised manufacture, use, importation, offer for sale, sale, other commercial introduction into marketing, storage, for any of these purposes, of a trademark or goods bearing this trademark or a confusingly similar sign in respect of similar goods shall be regarded as infringement of rights of the trademark owner.” (Art. 4 para 2 TLRF). “Any use of a trademark ... in contravention of Art. 4 para 2 ... of this law shall entail civil and/or criminal responsibility under the laws of the Russian Federation.” (Art. 46 para 1 TLRF)

There are 1) civil, 2) criminal and 3) administrative sanctions:

(Not mentioned below but also important and helpful when fighting Trademark Piracy are the law “On the protection of consumer rights”, the law “On advertisement”) and the Customs Code.

1. Civil

Damages

Art. 1064 para 1 Civil Code: Harm caused to a person or property of a citizen, and also harm caused to the property of a juridical person, shall be subject to compensation in full by the person who caused the harm.”

Other

Art. 46 para 2 TLRF: “Civil Rights may also be protected from illegal use of a trademark, apart from the request of injunction to stop the infringement or damages through:

- publication of a court order with the aim of restoring goodwill of the injured party;

- removal from the goods or their packages of the illegally used trademark or a sign confusingly similar to it, or destruction of images of the trademark or a sign confusingly similar to it.”

Art. 54 para 4 Civil Code and Ordinance “On the firm name” of 1927: Regulate the exclusive rights of the owner of a (registered) firm name to make use of his/her firm name, to ask others to terminate their unlawful use of the firm name and to ask for compensation for losses.

2. Criminal

Art. 180 para 1 Criminal Code: “The illegal use of a trademark, ..., or a sign which is similar to it and which concerns similar goods, is, if the use has been made repeatedly or if the damage incurred is serious, punished by a fine which is equal to in between 200 times and 400 times the monthly minimal salary ...or the profits from the last two to four months or by forced labour of 180 to 240 days or by correctional labour of up to two years.”

Comment: It is obvious that the punishments as provided by this article will not deter anyone from illegally using trademarks. We have received some positive signals from the Government that much harder penalties will be imposed soon.

3. Administrative

Art. 10 of the law “On Competition and Restriction of Anti-monopolistic Activities in the Commodity Markets”: “Unfair competition shall not be permitted, including: dissemination of false, inaccurate or distorted information capable of causing losses to another economic entity or damaging its business reputation, ......., sale of goods with illegal use of intellectual property, including means of individualisation of legal persons, products, works and services, ...... .”

Comment: The unlawful use (in whatever way) of a trademark is to be considered as the “dissemination of false, inaccurate or distorted information” as consumers are made to believe that the trademark is used (e.g. by affixing it to a good or by using it in advertisement) by its rightful holder. If low quality products are sold by using the trademark of a well known company, the reputation of the company will suffer.

Art. 12 of the law “On Competition and Restriction ....”: “The federal antimonopoly authority shall have the right:

to give economic binding prescriptions concerning the cessation of violations of anti-monopoly legislation and (or) elimination of their consequences, ...

to take decisions concerning the imposition of fines on commercial and non-profit organisations, and of administrative penalties on their managers, as well as on citizens, ... for the violation of the antimonopoly legislation, ...

to lodge with the civil or economic court the petitions concerning the violations of antimonopoly legislation, ..., as well as to participate in civil or economic court hearings ...

It should also be noted that the Customs Code (Art. 278, 279) provides for the possibility to confiscate goods which have not been properly declared (as usually is the case with pirated goods).

Conclusion: In theory, with the exception of the Criminal Code, Russian legislation provides the necessary means to fight Trademark Piracy. But unfortunately, as so often in Russia, the problem lies less in the laws than in the implementation and enforcement of them. It should be noted though, that during the last rounds of talks with the current Russian government we got the impression, that the government is genuinely interested in changing the existing laws for the better and to do something about enforcement. The government seems to understand, that it has to improve its record on the protection of Intellectual Property Rights if it wants more investment and if it wants Russia to become a member of the WTO (sufficient protection of IPR is one of the preconditions for membership).

PART TWO: Domain Grabbing

What is a “Domain” ?

Every Server which is connected to the World Wide Web (WWW) has an address, which clearly identifies the Server. This address is called the Domain name. Example: “www.deutsche-bank-24.de”

There are several kinds of Domains:

Nearly all Russian servers in the WWW are related under the Domain “.ru”, which is a “country code Top Level Domain” (ccTLD) (the top level domain for Germany for example is “.de”). The ccTLD for Russia is still administered by RusNIIROS but will probably be administered either by the Ministry for Communication or the Ministry of Justice soon.

Generic Top Level Domains (gTLDs), such as “.com”, “.net” or “.org” are administered by a few Registrars world-wide.

Within the top level domain there are numerous so-called “Second Level Domains”. These domains relate to the Server which belong to a person, an enterprise or another entity. On these Servers the information is stored, which the person, enterprise wants to provide through the WWW. In order to find these computers in the WWW you have to know their name, their “Domain name”.

Where/How do I register my Domain name in the “.ru” zone ?

Registration with RusNIIROS for the top level domain “.ru” of for example the name “www.volkswagen.ru”.

RusNIIROS does not control whether the Domain name it registers is a trademark or a similar sign which belongs to another person. Domain names are assigned on a first come, first served basis. RusNIIROS does not control, whether the registered domain is used by the applicant. Significant (positive) changes introduced by new regulations (effective as of 1 June 2000) on registration. The new regulations provide that it should not be allowed to apply for the registration of a Domain name if the applicant knows that this registration restricts or infringes the rights of a third party. RusNIIROS has the right to decline the application for registration if the registration violates Russian laws. As these regulations have only been enacted at the beginning of this month it remains to be seen whether they really improve the situation.

For the moment the situation still is as follows:

Everybody can register well known trademarks as their Domain name, if they are only first to register and if they pretend that they know nothing about protected rights of a third party which may be infringed by the registration;

The rightful holder of the name (trademark) cannot register his name as a Domain name as the Domain is already blocked by someone else.

What is Domain Grabbing (Cybersquatting) ?

Registration of names (trademarks or similar signs) as Domain names in order to profit from the goodwill connected to them (for example selling cars and offering repair services under the Domain “www.volkswagen.ru” ) or registration with the sole purpose of selling the Domain to its rightful holder.

Why is Domain Grabbing a special problem ?

The problem sounds familiar if compared with Part One, so why is Domain Grabbing a special problem ?

The whole subject boils down to one question: Is a Domain name only an address or is it also a name (an identifier) ?

If a Domain is only an address, the protection offered to trademarks as described in Part One does not apply. If a Domain is also a name, all the means of protection as described in Part One should also apply to Domain names.

Two aspects:

a) Producer/Seller

Domain names were intended to provide addresses for servers that are easy to remember and to identify. Precisely because they are easy to remember and to identify Domain names have come to acquire a supplementary existence as business or personal identifiers. As commercial activities have increased on the Internet, Domain names have become part of the standard communication apparatus used by businesses to identify themselves, their products and their activities. For example advertisement in the media now routinely includes a Domain name.

b) Consumer (Internet user)

Domain names are also used as a means of identifying goods and services with the producer or seller of those goods and services. Internet users will often start to look for a particular product by typing the trademark in the location toolbar of their Internet browser and adding either “.ru” or “.com”.

Result: As commercial activities on the Internet have increased, Domain names have acquired a further significance as business identifiers (as opposed to being merely addresses). This is now acknowledged in most countries (German, French and Belgian courts have ruled that Domain names have to be treated as names and trademarks) and by the WIPO. As the Kodak case shows, Russia seems to be one of the few remaining exceptions. But this is also about to be changed soon.

As there will be a special presentation on the Kodak case, only the main arguments which were/are used by the two sides will be pointed out .

The Russian company which registered the Domain name www.kodak.ru without registration argues (and the courts so far have agreed with those arguments) that

• the Domain name is only used as an address (and not for advertisement purposes),

• the Domain name is not affixed to goods, as trademarks are, and therefore cannot be regarded as something similar to a trademark,

• the Domain name is not a trademark and cannot be treated as something similar to a trademark as long as there is no special legislation on Domain names and that

• the Domain name is not a firm name, as, according to Russian legislation firm names always have to consist of the designation of the legal form of the company and the name of the company and Domain names lack the first part.

As has been proved above, Domain names are not only addresses but also names and should be therefore protected by the legislation regulating the protection of intellectual property rights (see Part One). We also believe that legislation concerning firm names has been violated and that the interpretation of the defendant and the courts on what constitutes the firm name is too narrow. It cannot (and in other countries with similar laws it does not) make a difference, whether the name OOO “Volkswagen” or “Volkswagen” is used without authorisation. In both cases has the right of Volkswagen on their firm name been violated.

Recently there have been some positive signs that Russian Courts are now willing to accept the arguments of trademark holders. The first to win a legal battle in Court against a Cybersquatter was the Russian company “Mosfilm”. More important, the Deputy of the Higher Arbitration Court of the Russian Federation lodged an appeal at the beginning of May against the latest Judgement against Kodak. In his appeal the Deputy points out, that Domain names are not merely addresses but identifiers and should therefore be protected accordingly.

Means to fight Domain Grabbing/ Sanctions ?

No specific Russian legislation yet with regard to Domain names – questionable whether new legislation necessary. Our view is that if applied properly by acknowledging that Domain names are a means of individualisation, judges should apply all the regulations concerning trademarks and firm names to Domain names as well. Therefore all the regulations mentioned in Part One also apply to Domain Grabbing.

It should also be noted that the new regulations on the registration of Domain names provide for an out of court settlement of Domain related issues which was drafted in accordance with the “Uniform Name Dispute Resolution Policy” as recommended by WIPO. According to the regulations should be declared invalid any registration which was made for the sole purpose of selling the Domain to its rightful holder or of simply blocking the Domain or which was made in order to profit from the goodwill connected to it (for example selling cars and offering repair services under the Domain “www.volkswagen.ru” ).

Conclusion

There are means in the Russian legislation to fight Domain Grabbing. As in other countries it would be advisable to employ these means first before enacting new laws (at the moment there are rumours about a new Ordinance or a new Law to be enacted soon which will only deal with matters connected to the Internet and its use) which will only be the answers to specific questions and problems but will not be able to tackle the whole issue of Cybersquatting, E-commerce etc. Only when enough information and experienced has been gathered over the next few months or even years, should a law with a broader view of the problem be enacted. In the meantime the Legal Committee will continue to take part in the talks with the government and the competent authorities on how to change and improve IPR legislation in Russia.