Unofficial Translation

REGARDING THE POSSIBILITY OF RUSSIAN TRADEMARKS “NATIONALIZATION”

Statement by
Dr. Alexander Korchagin
General Director, Rospatent  (the Russian Federation Federal Patents and Trademark Agency)

Most recently a number of publications have appeared in the press regarding allegedly pending “nationalization” of the Russian trademarks registered back in the Soviet Union.  These publications have referred to an interview with Rospatent General Director.  Because the substance of the pending amendments to the Russian Federation Law “On Trademarks, Service Marks and Appellations of Origin of Goods” is being misinterpreted, I believe it is appropriate to provide precise characteristics of the proposed amendments.  I would like to underscore that the matter in question is only one of many other proposed provisions in the draft Law. 

Let us, however, in the first place, review the question: whether “nationalization” of trademarks is at all possible, from a legal perspective.

As it is known, trademark, in the most general sense, is a designation, which individualizes products of a given producer and helps distinguish these products from similar products of its competitor.  Legal protection of a trademark in the Russian Federation is provided on the basis of its state registration in accordance with the procedures established by the Russian Federation Law “On Trademarks, Service Marks and Appellations of Origin of Goods.”  A trademark may be registered in the name of a legal entity, and/or a physical person involved in entrepreneurship activity.  The law also specifies procedures for assigning a trademark (i.e. the procedures of changing the owner of a trademark).

Now let’s turn to one of the most general definitions of the notion of nationalization.  In essence, nationalization is transition of enterprises and branches of the economy from private ownership into the state ownership.  And finally, let us refer to Article 35 of the current Constitution of the Russian Federation.  In accordance with this article, the right of private ownership is protected by law.  Nobody can be deprived of his/her property, except by court decision.  Forced alienation of property for the state needs (i.e. nationalization – author’s note) may be carried out only on condition of preceding and equitable compensation.

According to Article 128 of the Civil Code of the Russian Federation, property and results of intellectual activity, including exclusive rights to these results (intellectual property), represents different types of civil right objects. 

Therefore, analysis of the above norms leads to the only possible conclusion: intellectual property (including trademarks) cannot be alienated in favor of the state (“nationalized”), except as a part of other property (assets) of an enterprise in case the latter is transferred under state ownership in accordance with the procedures established by the law.

It is particularly important to emphasize that, as it is shown above, all kinds of allegations regarding pending “nationalization” of trademarks have absolutely no legal basis, either now or in the future.  The reasons for speculations nevertheless exist.  What are these reasons?  The major reason is that a serious mistake was made during the mass privatization of state enterprises in 1992.

In the course of privatization, nobody appraised or factored intellectual property that was once created at the expense of the state.  Thus, in the course of privatization, intellectual property gratuitously passed on to private enterprises as part of the assets complex.  But it is impossible to correct this mistake today, as privatization was conducted in accordance with the legislation that existed at that time.  As the saying goes:  “The law is hard, but it’s the law.”

Was it possible to do it in a different way?  Perhaps, it was.  Let’s recall the contrary process, which took place after the 1917 Revolution.  It’s a known fact that the Revolution abolished private property.  What happened to trademarks?  In 1919 the Supreme Council of National Economy decreed that all enterprises of Soviet Russia must stop manufacturing products under the trademarks registered in tsarist Russia, because those enterprises became state-owned.  The decree permitted to finish using the old stock of trademark labels, after which new trademarks were developed and registered.

The lawmaker could have done the same in 1992.  Somewhat similar measures were taken two years ago in Ukraine.  The law was adopted, in accordance with which all trademarks, which had been in use in Ukraine prior to January 1, 1992, were not considered as trademarks proper.  But this way is in many respects unacceptable for Russia. 

So what specifically does Rospatent suggest?

In fact we are facing a situation related to the use of designations of specific goods produced prior to January 1, 1992 by many state enterprises in accordance with the then effective standards.  We would like to underscore that we are talking about the designations, which were not registered as trademarks in the USSR, but were registered after 1992 in the name of one of many enterprises which produced similar goods.  Such developments have naturally led to many conflicts associated with the demands put forth by the “newly-fledged” owners of such trademarks to conclude commercial license agreements with the enterprises that have long been producing the respective goods.

Unfortunately, there are only isolated cases of the adoption of collective trademarks in such situations.  The number of conflicts is constantly going up.

One of the solutions for such conflicts is disputing trademark registration through the courts and administrative procedures on the grounds of extinction of their distinctive capability, and consumer’s factual perception of such trademarks as names of types of goods.  Provided that relevant evidence is in place, registration of such trademarks is canceled.

In order not to “lose” such trademarks, we suggest providing their owners with an opportunity to apply to the State Committee for Standardization and Metrology of Russia with a request to transform such a trademark into a compliance mark, should the above mentioned conflicts arise and a clear threat of cancellation of registration appear.  If the State Standardization Committee of Russia issues a decision to transform the trademark into a compliance mark, the Patent Office cancels the registration of the trademark which de facto continues to exist, but in a new legal status.

We believe that such a proposition cannot with all the best will in the world be referred to as “nationalization” of trademarks. 

Let me cite a draft norm proposed as one of the provisions of the law on trademarks:

“trademark registration shall be invalidated:

by the Patent Office decision, which has entered into legal force, on pre-term cessation of its validity in connection with the transformation of the trademark, upon the request of its owner, into the compliance mark by the federal executive agency responsible for inter-branch coordination and operational regulation in the sphere of standardization, metrology and certification following the procedures established by the Government of the Russian Federation.  A trademark may be transformed into a compliance mark if prior to January 1, 1992 a designation, identical or confusingly similar to this trademark, was used by several state enterprises on the goods that were produced in accordance with the state standards and are similar to the goods in relation to which this trademark has obtained legal protection after January 1, 1992.”

Dr. Alexander D. Korchagin
General Director
Russian Agency on Patents and Trademarks