Legal Line

Daniel Klein’s Legal Line

Passport’s legal columnist Daniel Klein fields legal questions posed by our readers. Do you have a Russia-related corporate legal question you’d like Daniel to address? Then tell him about it at dklein@passportmagazine.ru.

Dear Daniel:

I am based in the Netherlands and we are developing a business soft ware product that we will start selling in Russia once the soft ware has been finalized in about six months. We set up a Dutch holding company and are in the process of setting up a subsidiary in Russia. I recently found out that there is a potential local Russian competitor who within several months will market a similar product using the same name that we have chosen. I have been advised that in Russia it doesn’t matter who uses a trademark first but who files the trademark application first. Do you have any trademark filing-tips for Russia?

Dear Soft ware Brander:

First off, in Russia, as in most countries, foreign companies and individuals have the right to file for a trademark, and the applicant does not have to have a locally established company before doing so. Depending on the corporate structure that you use, it might be advisable to keep the intellectual property (IP) in the name of the foreign entity and then establish trademark licenses with the Russian entity or other entities in other markets that you may enter, but that would depend on the particularities of your business model.

Second, you are allowed to fi le for a trademark prior to selling your product here in Russia. According to Russian trademark law, you have three years from the registration date to start using the trademark commercially. But before you go through the process of applying for a trademark, it is advisable to find out if the trademark you want to use is available in Russia, and, for that matter, any other country where you envisage using the trademark in the next several years. It may turn out that your potential competitor has already filed or others have registrations that are the same or similar to the trademark you want to use.

When you file for a Russian trademark, the trademark office will indicate availability, but it could take months to receive this information from them. So conventional wisdom holds that it is worth spending some money up front to conduct an independent trademark search, which can usually produce results within a few weeks. This way you play it safe by making sure ahead of time that you can use the mark rather than learning about other, more senior trademark claimants later on the hard way.

Many entrepreneurs adopt a trademark without verifying its availability and without filing for trademark protection, only to find out a few years after commencing use that there are others out there with senior conflicting rights. This is true not only in Russia but everywhere in the world. These unlucky entrepreneurs often find themselves supporting costly, business-distracting litigations and, even worse, may even be forced to abandon their original trademark. This can be a nightmare for an entrepreneur who has made significant investments in his or her brand. Re-branding is neither fun nor cheap.

One other important point about trademarks in Russia is that if the words used have meaning in a foreign language and are not, say, names of individuals, it may be necessary to obtain a trademark in Russia if you intend to use the words in advertisements.