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Government’s War against “Patent Trolls”


Mariia Koval, attorney at Ilyashev & Partners Law Firm
Source: Ekonomichna Pravda

A unique business thrives in Ukraine: individuals patent standard items and demand money from entrepreneurs. The Ministry of Economic Development decided to suppress these tricky acts.

On January 18, 2017, the Government supported the Draft Law “On the Amendments to Certain Laws of Ukraine Concerning the Improvement of the Legal Protection of Intellectual (Industrial) Property” developed by the Ministry of Economic Development and Trade (MEDT).

On January 23, 2017, this Draft Law was registered at Verkhovna Rada with the reference number 5699.

Let us make it clear what does the improvement of intellectual property legal protection involve.

The Draft Law aims at filling the gaps in the legislation concerning the fight against the so called patent trolling. It is no secret that this phenomenon is thriving causing great problems to the manufacturers and the distributors.

The main type of “patent trolling” is the registration of industry designs of common forms of different articles (hangers, corks, light bulbs) and the registration of such objects within the Customs Register with further extorting the unreasonable royalty payments from business entities.

Based on the abovementioned, the Draft Law suggests the amendments in particular to the Civil Code, the Laws of Ukraine “On the Protection of Rights to Industrial Designs” and “On the Protection of Rights to Trademarks”.

The only requirement to the industrial design patentability is the novelty. The MEDT’s Draft Law adds one more requirement to protectability (not patentability) — “individual character”.

According to the proposed definition the industrial design shall be considered to have an individual character if the overall impression it produces on an informed user differs from the overall impression produced on such user by any industrial design, which has been made available to the public.

This definition is quite ample and not very understandable. What does “an informed used” mean? What is “the overall impression”, and how it will be proved in practice?

One of the most important innovations proposed by the Draft Law is the opportunity for the Appellate Chamber to declare the industrial design rights void. Obviously, this would greatly simplify, accelerate and cheapen the invalidation procedure for the “industrial design’ certificates”, which are registered by “patent trolls”.

The Draft Law entitles “any person” with the right to file a claim for the revocation of industrial designs rights.

The document also reduces the validity term of industrial design’ certificates from 10 years to 5 years from the date of filing an application, with the possible extension for another one or more five-years periods, but no longer than for 25 years instead of currently existing 15 years.

This provision complies with the requirements of the Association between Ukraine and the EU, but the agreement specifies the term for industrial design protection “at least five years upon the registration”.

The “patent trolling” in Ukraine is also popular in relation to the trademarks. It manifests itself in unfair registration by the individual entity of the trademark being well-known and used in other countries not having a legal protection in Ukraine with further offer to the owner for purchasing the registration.

As for the counteraction with the “patent trolling” in the sphere of trademarks the Draft Law offers to adjust the article 6 of the Law “On the Protection of Trademarks” with the following reasons for the refusal of trademark registration:

1. When a filed mark is identical or similar with the sign that has been recognized as well-known even in relation to miscellaneous articles. This provision shall finally formalize the theoretical aspect of the unacceptability of weakening the well-known mark.
2. If the filed mark is identical or similar with the mark used by another entity in foreign country, if the proprietor filed an unfair application, in particular if the agent or representative of the proprietor applies for the registration of the mark in his own name without such proprietor’s authorization, but with the proprietor’s objections. This provision duplicates Art. 6 of Paris Convention for the Protection of Industrial Property.

In order to decrease the claims and lawsuits of “patent trolls” the Draft Law introduces a wide number of cases when the trademark proprietors are not allowed to prohibit the use of their trademarks without their consent.

In particular — when using the mark in trade of signs related to the form, quality, purpose, value of goods and services, as well as using the trademark in comparative advertizing in order to identify the goods and services aimed at objective highlighting of their advantages.

These provisions should make it easier for the business entities operating in sales, resale, repair works. They also should make many of patent lawsuits unprofitable and senseless.

The Draft Law envisages that it is possible to declare the trademark void during the 5 years period from the date of certificate issuance publishing, except for the issuance of certificate as a result of application filed with the infringement of other persons’ rights.

In such a way, should the Draft Law be adopted, it will be possible to nullify the certificate due to the mark’s incompliance with the requirements of legal protection only within the term of 5 years.

This provision obviously shall not facilitate the counteraction with “patent trolls”, as in Ukraine the situations occur very often when the business entities become aware of any trademarks long after the expiration of litigation period (three years).

It turns out that if the trademark has been registered with the incompliance of requirements to legal protection, it will be impossible to cancel it after 5 years. In my opinion, it is too early to designate such 5 years period for Ukraine.

The Draft Law sets forth for the court to apply the single-use penalty from UAH 32 thousand to UAH 160 million with regard to industrial designs and trademarks instead of the recovery of damages caused by their illegal use, as well as in cases when the court declares the certificates for industrial designs or trademarks void, and determines that the application was filed in the breach of other persons’ rights.

This provision is certainly a development for the fair proprietors of industrial designs and trademarks, rather than for “patent trolls”, as it allows the proprietors to receive at least a pecuniary compensation for the infringement of their rights.

On the whole, the proposed Draft Law shall hopefully decrease the activities of “patent trolls” by making it unprofitable to register and seize the well-known and alien industrial designs and trademarks.

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