BUSINESS

Trademark Amendment Protects Owners’ Rights

By Yekaterina Dranitsyna

Staff Writer

New legislation is set to prevent the unauthorized use of registered trademarks on the internet. Although designed to protect property rights, experts said the reforms would lead to a number of contradictions.

If amendments to the fourth part of the Civil Code are approved, a domain will become a legally protected item.

Since 2002, according to the Law on Trademarks, Service Marks and Indication of Product Origin, the unauthorized use of trademarks on the internet is regarded as a legal infringement, and Russian courts have investigated over 40 such cases, said Victor Naumov, Head of Intellectual Property and Information Technology Protection Group at DLA Piper in St. Petersburg.

“If a trademark was used on the internet in connection with similar goods and services, it was regarded as abuse of property rights. If this fact was not proven, the owners of trademarks usually lost their cases,” Naumov said.

The new draft of the Civil Code, to be approved by the State Duma within the next few months, directly forbids the unauthorized use of trademarks as domain names, but contradicts to a separate new amendment.

“Another amendment concerning domain names stipulates the predominance of trademarks over domain name, something currently absent from existing law. But the article on trademarks stipulates the opposite norm, prohibiting the registration of trademarks identical to existing domain names,” Naumov said.

“Trademarks demand more time and money to be registered, and the mass registration of domain names could decrease the status and importance of trademarks,” he said.

According to Ru Center, the largest domain register in Russia, 446,730 web sites were registered in the .ru zone by the end of 2005.

Ru Center’s annual report indicates trends potentially dangerous to trademark owners.

“An annual growth rate in registrations of 46 percent is one of the highest in the world. The number of companies owning domains continued to fall in 2005. By the end of the year they accounted for 44 percent of all owners, though about three years ago they accounted for 60 percent,” the report said.

Obviously, for individuals the reselling of domains to interested companies could prove a rather profitable venture, since the registration of a domain in the .ru zone costs only $20 with annual extensions costing $15.

A lawyer from the Linia Prava law firm, Vitaly Tokarchuk, was optimistic about trademark protection. Both the Law on Trademarks, Service Marks and Indication of Product Origin and amendments to the Civil Code give more rights to the owners of trademarks, he said.

“Domains are not an exception. Owners could prohibit others from using their trademark at any moment by filing an appeal to the court to cancel domain registration,” Tokarchuk said.

However it is a complicated and time-consuming exercise. In January 2001 the Istman Kodak Company appealed to the Arbitration Court to prohibit a Moscow-based entrepreneur from using the Kodak trademark in a domain name. The district court, Court of Appeal and Court of Cassation rejected the demand. Only the Supreme Arbitration Tribunal decided in favor of Istman Kodak, Tokarchuk said.

Sergei Spasennov, head of corporate and real estate practice at Pepeliaev, Goltsblat & Partners in St. Petersburg, said that sometimes unauthorized persons use famous trademarks just to increase the number of site hits, but in most cases they offer trademark owners the chance of buying up the domain.

“They often threaten to post information on the site that is potentially damaging to the respective company,” Spasennov said.

If approved, article 1482 of the Civil Code would establish the exclusive right of trademark owners to use their property, including domain names, on the internet.

“This norm should be approved as soon as possible. In the rare cases where a domain has become very popular, we can only advise the owner to register it as a trademark, which would protect it from unauthorized use and might result in license payments in the future,” Spasennov said.

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