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Trademarks Registry Might Not Reveal Real Trademark Owner

25.10.2008

Companies planning to acquire a trademark registered in the trademarks registry before 1 May 2004 have reason to be careful since the registry might not reveal the real owner of the mark.

The effective Trademarks Act lays down rules for situations where a company wishes to acquire a trademark belonging to another person. In order to become the new owner of a trademark, one has to go through two major stages. Firs, one has to sign a trademark transfer agreement, whose format is not explicitly provided by law. As a second mandatory condition for transferring a trademark's ownership to a new owner, the law prescribes that the change of ownership of a trademark must be entered in the trademarks registry. Therefore, the transfer of a trademark is deemed to have been formally effected only once the new owner has been registered with the registry instead of the old one. It means that, according to the law currently in effect, the person who is entered in the registry as the holder of a trademark is deemed to be its actual owner.

Regarding the above, it is important to note that the respective provisions entered into force only from 1 May 2004 when the current Trademarks Act took effect. The earlier version of the Act did not include the requirement that the new trademark owner should be entered in the registry for the transfer of a trademark to be effective. Hence, in order to change the owner of a trademark it was sufficient for the old and new owner of the trademark to sign a transfer agreement, whereby the transfer of the trademark from the old owner to the new owner was deemed to be completed. Registration of the new owner was not necessary for the transfer of ownership.

The foregoing was affirmed by the Supreme Court in its judgment No. 3-2-1-73-08 of 23 September 2008. The two companies involved in this dispute had entered into a trademark transfer agreement in 1998, whereunder one company transferred a trademark owned by it to the other company; however, no entry was made in the trademarks registry on the change of ownership. In 2006, the former owner of the trademark prohibited the company that had become the owner of the trademark under the transfer agreement from using the trademark, claiming that as it was registered in the trademarks registry as the owner of the trademark, he was still the legitimate owner of the mark and the new owner had no legal right to use it. In this case, the court found for the company that had become the new owner of the trademark under the transfer agreement. The court noted that a failure to register the change of ownership with the trademarks registry did not mean that the trademark was not transferred, and the transferee of the trademark was the trademark's legitimate owner regardless of the fact that, according to the registry, the holder of the mark was still the transferor. The court stressed that under the Trademarks Act effective before 1 May 2004 an entry regarding the owner was purely informative and did not have the legal effect it does under the current version of the Act.

Consequently, companies seeking to obtain a trademark registered before 1 May 2004 should always conduct a proper search to make sure who is the actual owner of the mark. The potential new owner should keep in mind that the entry on the owner in the trademarks registry is not 100% reliable but an attempt should be made to check additional sources. By doing that the company reduces the risk of later disputes.

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