Use of trade marks on the internet in the Ukraine

It is normal practice to tell customers what kind of products you sell through your website. However this is not so straightforward in the light of registered trade mark protection.

It is common ground that lawfully purchased goods may be sold in the Ukraine under the principle of exhaustion of trade mark rights (part 6 of article 16 of the Trade Mark Law of Ukraine) without the consent of the trade mark owner. The rule is the following:

"...the exclusive right of the trade mark the owner shall not be applicable in the following cases: … use of the trade mark for goods being put on the market by the owner or with its consent provided the trade mark owner has no reasonable basis to forbid such use of the trade mark in connection with subsequent sale of goods including but not limited to change or deterioration of the state of the goods after the goods have been put on the market".

In 2015 the Supreme Commercial Court of Ukraine upheld the exhaustion of TM rights on the Internet for subsequent sale of goods in its ruling dated 20.10.2015 in case No.904/2029/15.

That case is about the use of the "Kaeser" trade mark by a Ukrainian entity Koprig on its website where it offered customers Kaeser compressors. The German company Kaeser Kompressoren SE claimed that Kaeser did not put its goods on the Ukrainian market; therefore, Koprig had no right to use the TM "KAESER".

The Supreme Commercial Court analysed the principle of exhaustion of TM rights in much detail, namely the international, regional and national approaches. It came to the conclusion that part 6 of Article 16 of the Trademarks Law of Ukraine does not require goods to be put on the market of Ukraine (national approach) and the German company has no right to prevent the use of its trade mark in the territory of Ukraine.

The ruling has come into force and other courts refer to it in similar cases.

However, Austrian company Julius Blum GmbH did not give up and filed a claim against a private entrepreneur for use of the trade mark BLUM on the defendant's website.

The defendant chose the same strategy and referred to the above-mentioned ruling of the Supreme Commercial Court. The Austrian company had different arguments. It claimed that the defendant was using the trade mark not the for the sale of goods but for marketing purposes, which are not connected to the subsequent sale of goods, namely the defendant's use of graphical images of protected trade marks and of marketing materials.

Moreover, the claimant insisted that the defendant failed to conduct business in good faith and did not enter into an agreement with the claimant's official representative in Ukraine the Limited Liability Company "Blum Ukraine", thus proving the defendant's intent of using the trade marks without respective consent.

The Court of Appeal agreed with the arguments of the Austrian company and confirmed that one should distinguish use of a trade mark when it is applied to goods (1-34 classes under Nice classification) from the use of trade mark in relation to services (35-45 classes of Nice classification).

The court noted that "the right to use the trade mark on the Internet with the purpose of advertising, which is also registered in class 35 of the Nice classification is not connected with the purchase of goods" and was not related to putting the goods on the market.

The defendant appealed to the Supreme Court of Ukraine which returned the case to the Court of First Instance for a new hearing of the case but did not give any decision in respect of the principle of exhaustion of trade mark rights under the Ukrainian trade mark law.

The new ruling of the first instance court supported the conclusions of the Court of Appeal – the defendant used the trade mark BLUM (as well as ANTARO, LEGRABOX, TANDEM and TANDEMBOX) not only for the sale of goods but for marketing purposes as well, and, therefore, such use constitutes a violation of the exclusive intellectual property rights of the trade mark owner.

In this case the defendant was using more than just the name of the product but also named himself as partner of the BLUM company and used official catalogues of BLUM products in PDF format.

Unfortunately, there is no clear definition of what shall be deemed use "with subsequent sale of goods" and not as marketing. We look forward to the new Intellectual Property Rights Court considering this as well as new decisions clarifying the use of trade marks on the Internet.

The beneficial side of this case is that the decision relates not to all uses of the trade mark in question but is limited only to the webpages and materials as services in Class 35.

Trade mark owners may now seek protection of their business reputation not only through the lengthy and unreliable procedure with the Antimonopoly Committee but also by utilizing their IP rights to the fullest extent.