Conflicts Between Means of Individualisation: Problems Arising from the Clash of Rights to Trademarks and Trade Names in the Republic of Belarus

In modern commercial practice, means of individualisation of participants in civil circulation, goods, works and services play a key role in identifying a company and its products on the market. Two principal instruments of such identification are the trade name and the trademark (service mark). However, the current legislation of the Republic of Belarus and law-enforcement practice often face situations in which exclusive rights to these intellectual property objects come into conflict with one another. This conflict creates serious risks for business, misleads consumers, and requires complex legal mechanisms for its resolution.

1. Legal nature and scope of legal protection

To understand the essence of the conflict, it is necessary to distinguish between the nature of these two objects.

A trade name serves to individualise the commercial entity itself, that is, the legal person. The right to a trade name arises from the moment of state registration of the legal person and the entry made in the Unified State Register of Legal Entities and Individual Entrepreneurs (the “USR”), maintained by the Ministry of Justice of the Republic of Belarus.

Pursuant to Article 1014 of the Civil Code of the Republic of Belarus, a legal person has the exclusive right to use its trade name. As a rule, the full official name is protected, although an abbreviated name is also used in commercial practice.

In addition, the trade name of a commercial organisation may be used in a trademark and/or service mark belonging to it.

A trademark serves to individualise goods, works or services. The right to a trademark arises only after its state registration with the National Centre of Intellectual Property of the Republic of Belarus (NCIP) and the issuance of the relevant certificate. Protection extends throughout the country in respect of specific classes of goods and services in accordance with the International Classification of Goods and Services (the Nice Classification).

At the same time, it is important to note that these means of individualisation are registered by different authorities and, more importantly, at the registration stage no cross-check is carried out for the existence of similar trademarks and trade names, and vice versa, having an earlier priority date. In other words, when examining an application for a trademark, the NCIP does not check the USR for similar trade names registered earlier; similarly, when registering a trade name, the Ministry of Justice does not check trademark registers for similar registered trademarks with earlier priority.

2. Main causes and types of conflicts

A conflict arises when different business entities begin using identical or confusingly similar signs. The following typical situations may be distinguished:

A. Priority of the trade name over the trademark (“name piracy”)

Situation: A hypothetical company, “Alfa”, has been operating on the market for 10 years and has built up a good reputation, but has not registered its trade name (or part of it) as a trademark. Another company (or entrepreneur) files an application with the NCIP to register the trademark “ALFA” for homogeneous goods (for example, building materials).

Problem: Formally, trademark legislation (the Law of the Republic of Belarus “On Trademarks and Service Marks”) allows for the examination of applied-for signs as regards identity or similarity to third parties’ trade names protected in Belarus, where the relevant rights arose earlier than the priority date of the trademark. However, in practice, signs similar to existing trade names may still pass examination. Moreover, even if the USR is checked for the principal activity of the legal person, the actual business activity does not always coincide with the activity in fact carried on. As a result, the owner of the earlier trade name may find itself in a situation where it cannot register its own name as a trademark, while the “newcomer” obtains a monopoly over it in relation to certain goods and services.

Admittedly, where such a situation arises, the owner of the earlier trade name has the possibility of challenging the registration of the trademark by filing an opposition with the NCIP Appeal Board; however, this requires substantial financial and time expenditure. Even a successful outcome of such opposition proceedings does not entail automatic transfer of the trademark to the owner of the trade name; it merely gives that person an opportunity to file an application and register the mark in its own name.

B. Priority of the trademark over the trade name (“aggressive brands”)

Situation: There exists a hypothetical well-known trademark “Beta”, registered in the name of LLC “Gamma”. At a later date, a new legal entity is registered under the trade name LLC “Beta”.

Problem: When incorporating a new company, the registration authorities (the Ministry of Justice and its territorial bodies) verify the uniqueness of the name only within the USR. They do not check for registered trademarks. This leads to the appearance in the register of companies whose names literally reproduce well-known brands. Although Article 10bis of the Paris Convention for the Protection of Industrial Property and the Belarusian anti-monopoly legislation (the Law of the Republic of Belarus “On Counteracting Monopolistic Activity and Promoting Competition”) prohibit unfair competition, the registration of such a trade name nevertheless takes place. The trademark owner is then forced to initiate court proceedings, proving that the defendant (the owner of the trade name) uses the name in order to mislead consumers and free-ride on the brand’s reputation. The process is lengthy, costly, and requires proof of the fact of infringement specifically in the course of the defendant’s business activities.

C. Conflict between confusingly similar signs

This is the most complex category of disputes, where the issue is not identity (“Alfa” and “Alfa”) but similarity (“Alfa” and “Альфа”, “AlfaStroy” and “Alfa-StroyGroup”) to the point of confusion. In such cases, questions arise of subjective expert assessment: is one sign confusingly similar to another from the consumer’s perspective? The assessment may at times require even a forensic expert examination and consideration of the actual circumstances of the market.

3. Consequences of such conflicts

The clash of rights leads to a number of adverse consequences:

1. Destabilisation of civil circulation: the consumer is unable to identify the producer, and confusion arises in the market.
2. Litigation: the parties are forced to apply either to the Judicial Board for Intellectual Property Cases of the Supreme Court of the Republic of Belarus or to the NCIP Appeal Board (depending on the type of dispute). Claims may include invalidation of a trademark registration, prohibition on the use of a trade name, as well as claims for compensation or damages.
3. Invalidation of registration: both the registration of a trademark and the registration of a legal person (insofar as the trade name is concerned) may be challenged and declared invalid if it is proven that they infringe third-party rights. This entails rebranding, re-registration of documents, and loss of market recognition.
4. Export blockage: if a Belarusian company plans to export, but its trade name coincides with a trademark registered in the destination country by another person, exports may be blocked.

4. Solutions and legal mechanisms of protection

The legislation provides the following instruments for resolving disputes:

Administrative procedure (challenging a trademark): filing oppositions with the NCIP Appeal Board against the registration of a trademark if it infringes rights to an earlier trade name (Article 5 of the Trademark Law).

Judicial procedure:

• a claim for cessation of infringement of exclusive rights to a trade name or trademark (prohibition of use);
• a claim compelling a legal person to change its trade name;
• a claim seeking recognition of the acts as an act of unfair competition (considered by the Ministry of Antimonopoly Regulation and Trade (MART) and by the courts).

Prevention: the most effective way of avoiding conflicts is comprehensive protection of means of individualisation, as well as prior clearance searches before registration.

Companies are advised to:

1. before registering a new legal entity, conduct searches not only in the USR but also in the NCIP trademark register;
2. обязательно register their key trade name (its distinctive element) as a trademark as early as possible;
3. when registering a trademark, include in the list of goods and services those activities actually carried on by the company, so as to have lawful grounds for restraining competitors’ actions.

Conclusion

The conflict between trademarks and trade names is a consequence of the imperfect interaction between two independent registration systems (the register of legal entities and the trademark register). The current legislation provides mechanisms for the protection of infringed rights, but these mechanisms are, as a rule, subsequent in nature, that is, restorative rather than preventive. The burden of proof and of initiating the dispute lies with the right holder.

The only reliable way to minimise risks for business remains a proactive intellectual property policy combining legal protection with prior clearance at the stage of planning commercial activities.

Author: Pavel Klementsov, Aliaksei Fedarovich.