Avoiding Brand Theft

Michael Malloy
Counsel, Head of Intellectual Property & Technology Practice Group
DLA Piper

For many people, brand theft rather than piracy is the biggest intellectual property risk. Brand theft occurs where one party establishes a brand but another party acquires rights to the brand (in bad faith). Not all trademark disputes are brand theft — many involve disputes between parties all acting in good faith, but cases of brand theft are those where people abuse trademark laws. Brand theft can make a legitimate brand owner essentially an infringer in using its own brand and is all the more dangerous because it is done through perfectly legal means. The costs of fighting brand theft are high, so the best defense is to reduce the risk of it happening.

Russian law grants legal protection only to trademarks registered in Russia (there are some limited exceptions to this rule). This rule applies no matter whether the trademark is registered or used in other countries or whether it has been used in Russia without registration.

Trademark registration is usually granted to the first party to file (a trademark lawyer can explain the details). Because of this first-to-file rule, a brand is at particular risk when used without registration or where the brand owner has publicized plans to use the brand in Russia. In these cases, there is little to stop another person from filing a trademark before you do and this can result in the most simple form of brand theft.

This type of brand theft is easily avoided by undertaking registration yourself before you publicize the brand. Registration can be done either through the Federal Service for Intellectual Property (Rospatent) or through an international process — a trademark lawyer can explain how this works. Registration is neither difficult nor expensive and should be done in almost every case.

Trademark rights are granted in association with the classes of goods and services for which the trademark is registered (a trademark lawyer can explain the limited exceptions to this rule). The key risk here is where you leave out relevant classes, allowing another party to register a similar trademark for those classes and blocking you from using the trademark as you wish.

Russian law allows third parties to apply to cancel a trademark registration in whole or in part if the trademark owner fails to use the trademark. Because a nonuse cancellation is almost always done to make way for another trademark application in place of yours, it is often part of an attempt at brand theft. Because the trademark owner bears the burden of proving use, it is important not only to use the trademark in all relevant classes but to be able to prove such use. Presenting this proof can be complicated, so check with your lawyer to assess your risk for a nonuse cancellation.

Brand theft can be done entirely within the law, meaning that prevention is the best defense, but there are some things you can do if the problem arises.

Where another party has applied for a trademark similar to yours, you can oppose the registration of this mark. You will need a trademark lawyer, but it is easier to prevent the registration of the trademark than to get the registration canceled.

If you have not already filed your own trademark, you should consider doing so immediately. By filing an application, you essentially establish yourself “next in line” for registration in case your opposition succeeds.

If your rival has already registered a trademark you should consider how you might attack this registration, perhaps through a nonuse cancellation, as bad faith trademark owners often don’t actually use the trademarks. You should check the classes in the registration to see whether it covers all of the classes you wanted and then file your own trademark application, at least for those classes if not for all relevant classes, because this will establish you as “next in line” for registration in case the attack is successful.

If you cannot block or cancel the registration of the new trademarks, you will probably have to either surrender the brand or negotiate a deal. The best way to avoid this is to take preventative measures to minimize your risk of brand theft.