It happens again and again with disturbing regularity. Russian companies are eager to collaborate with foreign partners and, usually, the collaboration is mutually beneficial. Sometimes, however, foreign companies are naïve with all their experience in business.  

Intellectual property should be protected before a company goes to the Russian market. It is a truth universally acknowledged. Negligence to do that may be fraught with unpleasant consequences. 

Lianyungang Forward Heavy Machinery Co. Ltd. is a well-known manufacturer of underground drill rigs and, as any company, wanted to expand its business activities elsewhere. Russia is a country where drill rigs are in high demand. There are a number of Russian companies operating in this field. One of them is TechService GNB Ltd. The history is silent about when and how the Russian company made acquaintance with the Chinese company, but their collaboration became very tight. So much so that the Russian company was not simply buying the products from the Chinese manufacturer and selling them in Russia but also was taking part in planning the manufacture of the goods under the Chinese trademark. Even a joint venture was organized, which was later sold to the Chinese company in 2019. 

A couple of years later, the Russian company filed a trademark application in 2021 and obtained registration No. 907180 for  in Class 07 reproducing the word “FORWARD”, which is included in the trademarks owned by the Chinese company for more than 10 years and which is part of the name of the Chinese company.  

The Chinese company sells its equipment in Russia not only to TechService GNB but to other buyers too. 

In the meantime, the Russian trademark owner, after obtaining his unlawful registration began sending out warning letters and sued other businesses on the market who were buying the rigs from the Chinese manufacturer labeled with the designation “FORWARD”. The lawful buyers experienced difficulties when they cleared the goods at customs and when they were selling the rigs on the market. 

The trademark confused consumers with regard to the manufacturer of the products, so the Chinese manufacturer appealed against the registration. Information on the Chinese manufacturer of the drill rigs was accessible on the internet before the date of priority of the disputed trademark as well as currently. 

The Chinese manufacturer sells his products to many countries to different buyers. Accordingly, those products may come to Russia from different countries and Russian consumers may buy the rigs from any Russian intermediaries being sure of the quality ensured by the Chinese manufacturer. Registration of the trademark in the name of the Russian company which is not the manufacturer misleads the consumers and brings chaos to the market, so much so that consumers aware that the owner of the disputed trademark was active in promoting the trademark on the market believed, indeed, that he was the real owner. 

During the examination of the appeal, the Chinese company stated that the trademark owner did not have manufacturing facilities and did not manufacture the equipment in Russia but was only selling the drill rigs imported from China. At the same time, the owner of the trademark was in the process of establishing contacts with another manufacturing facility for the purpose of manufacturing the equipment under the same trademark, which once again confirmed his unfair behavior.  

To support its position the Chinese company submitted documents galore and asked the Chamber of Patent Disputes to cancel disputed trademark No. 907180 in full. 

The Chamber of Patent Disputes carefully examined arguments put forward by both parties. It emphasized that the law (Article 1483 of the Civil Code) does not allow registration of designations being false or capable of misleading consumers with regard to the goods or their manufacturer. False or misleading designations are such that engender impression in the minds of the consumers of the quality of the product and of its manufacturer. 

The Chamber recalled the Paris Convention, according to which (Article 6-septies) if the agent or representative of the person who is the proprietor of the mark … applies without such proprietor’s authorization, for the registration of the mark in his own name … the proprietor shall be entitled to … demand its cancellation …   Also, according to the same Article, the owner of the trademark may prevent the use of the trademark if he did not approve that use. The Russian Civil Code has a corresponding provision in its Article 1512(2). 

The appeal against the registration may be filed by an interested person. The term “interested person” is not defined in the law but in view of the circumstances described above it is clear that the Chinese company was more than interested. By the time of the priority of the disputed trademark the Chinese company had registrations and in China in the same Class 07, and the collaborating Russian company had full knowledge about those trademarks all the more that the rigs bought by it carried that designation. 

The owner of the trademark went out of his way to prove that he was the lawful owner of the trademark, the details are omitted for the brevity of exposition. Notwithstanding, the Chamber of Patent Disputes canceled the registration in full by its decision of October 25, 2024. 

The takeaway point of this case is that before taking any action aimed at collaboration with a person or company one should take stock of his intellectual property and protect it in the country with which the business is going to be developed. The rule is simple but, unfortunately, is not followed sometimes.