Natalia Vadimivna Lemeshchuk, lawyer, patent attorney of Ukraine
Published: “Bulletin of the Odessa Bar Association”, 2008, No. 3
With the entry into force of the Civil and Economic Codes of Ukraine, a new object appeared in intellectual property law – “commercial name”. It replaced the “brand name” mentioned in Article 27 of the Civil Code of the Ukrainian SSR, which on this issue had a deferential nature to the legislation of the USSR. As you know, the legislation that would regulate the legal protection of brand names was never developed (obviously, due to the needlessness of this object in the era of advanced socialism), therefore the Regulation on the firm, approved by the Resolution of the CEC and Radnarkom of June 22, 1927, continued to apply . This provision existed until recently and became invalid only on January 1, 2004 in connection with the adoption of the CCU and GCU.
The authors of the new codes replaced the term “brand name” with the term “commercial name” for reasons of principle. They assumed that the subject of the right to a firm can only be a legal entity, while the subjects of the right to a commercial name can be both legal entities and natural persons-entrepreneurs. However, as time shows, three articles of the Civil Code (Articles 489-491 of the Civil Code), one article of the Economic Code (Article 159 of the Civil Code) and accompanying references in some other laws and international treaties (Article 6 of the Law of Ukraine “On Protection rights to signs for goods and services”, Article 4 of the Law of Ukraine “On Protection from Unfair Competition”, Article 8 of the Paris Convention on the Protection of Industrial Property) is categorically not enough for this necessary and interesting object of intellectual property to begin to to really “work”. It is not enough for legal entities, nor for individual entrepreneurs, nor for legal scholars – theoreticians and practitioners.
This article brings to the attention of colleagues the coverage of problematic issues of the use of the right to a commercial name in Ukraine, a comparative analysis of the legal protection of commercial (brand) names in some countries of the near and far abroad, aspects of the international legal protection of brand names, as well as the prospects for the development of national legislation on this matter question.
The first and main problem of using a commercial name in Ukraine is related to the fact that neither the national legislation nor the Paris Convention for the Protection of Industrial Property of 1883, which entered into force for our country on December 25, 1991 (hereinafter – the “Paris Convention “), the definition of “commercial (brand) name” is not given. As a result, scientists and practitioners have been debating for more than a year: whether a commercial name is the official name of a legal entity or whether a commercial name is a pseudonym for entrepreneurial activity.
Proponents of the first of these positions claim that the commercial name must completely coincide with the full name of the legal entity. In turn, in the structure of the commercial name, they distinguish the so-called “corpus”, which indicates the type of enterprise, its organizational and legal form, and an auxiliary part, which indicates the proper name of the legal entity. Upon careful examination, it turns out that this point of view is borrowed from Russian scientists, who are starting from the principles of the company name, laid down in the Regulations on the company: truthfulness, novelty, distinctiveness, stability of the company (see, for example, Sergeev A.P. The right of intellectual property in the Russian Federation. – Moscow: Prospect, 2003. – P. 574).
Their opponents consider the commercial name as a peculiar pseudonym of a business entity. In their opinion, the commercial name serves not to individualize the enterprise, but to individualize the business, which is carried out in a certain place, using a certain integral property complex and which is characterized by a certain quality of goods/services, a culture of production/service, qualified hired personnel, etc. At the same time, a “pseudonym”, unlike the name of a legal entity, can be alienated during the sale of a complete property complex, which is used for conducting this activity. It is this possibility of alienation of the commercial name, its transfer to another business entity, that constitutes, in their opinion, the fundamental difference between the name of a legal entity and a commercial name.
The second problematic issue of this object is directly related to the first and consists in the fact that the law does not define what commercial name an individual entrepreneur can have: should it be only his own surname and first name or can the entrepreneur use it as a commercial name names, other designations, so-called “fictitious names”, for example, “Jeanette Recruitment Agency”, “La Rose Beauty Salon”, “Scat Vulcanization”, etc. The norm of Art. 159 of the Economic Code of Ukraine, which establishes that a citizen-entrepreneur has the right to declare his surname or first name as a commercial name, unfortunately, does not allow us to draw an unequivocal conclusion on this matter. Also, as well as the norm of Art. 4 of the Law of Ukraine “On Protection from Unfair Competition”, which provides for the addition of some distinctive element to one’s own name.
The following problem: the legislation on the names of legal entities (the Law of Ukraine “On State Registration of Legal Entities and Individual Entrepreneurs”, Requirements for writing the name of a legal entity or its separate subdivision, approved by the Order of the State Committee of Enterprise of Ukraine dated 09.06.2004 No. 65) is not aligned with the legislation about commercial names. Based on Article 27 of the Law of Ukraine “On State Registration of Legal Entities…”, there cannot be two enterprises or organizations with the same name in Ukraine, while Art. 489 of the CCU defines that persons may have the same commercial names, if this does not mislead consumers regarding the goods they produce and sell and the services they provide.
The list of problematic issues can be continued. Yes, the issue of maintaining a register of commercial names, the existence of which is provided for by Art. 159 of the Civil Code and Art. 489 of the CCU; it is not defined whether one person can have several commercial names, or whether this object can be provided as a commercial concession. The lack of clear definitions does not allow even to think about the possibility of inheriting the commercial name of an individual entrepreneur. Also, as a result of weak legislative regulation, cases of conflict of rights arise between owners of commercial names and owners of identical or similar word trademarks, between owners of commercial names and owners of identical or similar domain names.
So, there are a lot of debatable and practical issues that need to be resolved at the legislative level. But as can be seen from the above, in order to solve them, it is necessary to develop a principled position and, first of all, to decide on the essence of the commercial name: is it synonymous with the official name of the business entity or is the commercial name a business pseudonym? In this context, it seems logical to analyze the experience of regulating the rights to commercial (brand) names in other countries, as well as to familiarize yourself with the provisions of international norms. In recent years, specialists of the State Department of Intellectual Property, the Ukrainian Institute of Industrial Property, employees and graduate students of the Institute of State and Law have been studying these issues. Koretsky, other experts.
Here are some conclusions that can be drawn based on the results of studying this issue:
1. There are countries where the theory and practice of brand names adhere to the principle of “brand truth”. Legal entities are prohibited from acting in commercial relations under a name different from the registered name of the company (in particular, the Russian Federation, Germany, Austria).
For some other countries, the principle of “freedom of the firm” is characteristic: along with the official name of companies, the use of one or more fictitious names is allowed: “trade name” – in the USA, “business name” – in Great Britain, “nom commercial” – in France. Almost any word designation can be chosen as a brand name. Under such a condition, a business disclosure requirement may be imposed if the trade is carried out under a fictitious name. Thus, according to the UK Business Names Act 1985 (Business Names Act), every person using a business name must indicate, according to its legal status, the name of the corporation or each of the partners, or the individual name of the person ( entrepreneur), as well as the address for sending correspondence: in places where business is conducted and there are contacts with buyers and suppliers; in business correspondence; in invoices for the supply of goods or services; in invoices or receipts; in written demands for payment of monetary obligations.
2. Registration of brand names has legal significance only in China. In all other countries that are members of the Paris Convention, the right to a brand name arises from its use, as provided for in the Paris Convention. At the same time, in 63 of the 72 studied countries, along with trade registers of companies, registers of brand names are kept. These functions are entrusted to the bodies that carry out the registration of companies or to patent offices.
3. Unlike a company name, which is considered an object of intellectual property, the right to name companies is considered either as a personal non-property right (in the countries of the Romano-Germanic legal system) or as a company ownership right (in the countries of the Anglo-American legal system). The right to name the company arises upon signing the founding documents and registering the company. A company with a corresponding name is entitled to protection against the use of an identical or similar name by a third party. This is possible provided that the name is used in commercial activities.
4. In all countries, an individual engaged in business is the subject of the right to a corporate name (the controversy on this topic is being conducted only in Russia). Moreover, in some countries (even those that adhere to the principle of the truth of the firm, such as Germany), an individual entrepreneur may have several business names if he conducts business through several enterprises owned by him.
5. In the Model Law for Developing Countries on Trademarks, Trade Names and Acts of Unfair Competition, adopted in 1967 by the United International Bureau for the Protection of Intellectual Property (later reorganized into the World Intellectual Property Organization), a trade name is defined as name or designation that identifies the enterprise of a legal entity or an individual. The commentary to the Model Law states that the name of the owner, his pseudonym, some fictitious name, a description of the enterprise or any other designation may be part of the corporate name. This law allows an entrepreneur to use more than one business name, for example, the full name and its abbreviation, or a special name for a part of the enterprise.
All names in the event of their independent use must be protected by law to an equal extent. The comment also states that businesses can have identical names provided that this will not mislead the public, for example, in the case of sufficient distance from each other, when they are located in different parts of the country and each of them is known locally.
6. According to the Cartagena Agreement of 1993, an international regional agreement between the countries of Latin America (Bolivia, Colombia, Ecuador, Peru and Venezuela), a business name is any designation that identifies an economic activity, an enterprise or a commercial establishment. The business name may consist of the corporate designation of the enterprise (establishment), its business name, or another designation entered in the register of merchants or trading enterprises. It is determined that an enterprise (establishment) can have more than one brand name. The exclusive right to a brand name is acquired from the moment of first use and ends when such use ceases or when the activity of the enterprise (institution) ceases. In accordance with the internal legislation of the countries participating in the agreement, the owner of the brand name can register (deposit) it in the patent office. Such registration (deposit) is declaratory in nature.
The given comparative analysis once again confirms the fact that the legislation of Ukraine regarding the protection of brand names is regulated very weakly and needs fundamental changes. At the same time, you can go in two ways: 1) determine that the commercial name = the name of the legal entity, that is, choose the path followed by the countries of continental Europe, which adhere to the principle of “the truth of the firm”; 2) determine that the name of a legal entity is a personal non-property right, and a commercial name is the name under which entrepreneurial activity is carried out, that is, the property right of intellectual property; countries that adhere to the principle of “freedom of the firm” followed this path. In a similar way, the requirements for the commercial name of an individual entrepreneur should be defined – to establish the entrepreneur’s obligation to use only his first and last name or to provide for the possibility of choosing other verbal designations as commercial names.
Of course, the second way seems more complicated, but, in the deep conviction of the author of this article, it will fully correspond to reality and protect the rights of business entities as much as possible. “Hotel “Continental”, “Restaurant “Esterlita”, “Recruiting company “Department of Resources”, “Web design studio “Domino”, “Travel agency “Viter Mandriv” – these and thousands of other bright and interesting names do not coincide with the official name of a registered legal entity or generally carry out their activities through individual entrepreneurs. However, they are known on the market, have an established clientele and business reputation, that is, it is these names, and not the surnames of entrepreneurs at all, that are the objects of intellectual property rights. In addition, one should not forget that even within one administrative-territorial unit there are many namesakes, not to mention the whole country, therefore the commercial name “SPD Ivanov” not only does not individualize the entrepreneur, but also violates the requirement of the law on the inadmissibility of deception consumers
Implementation of the model based on the principle of “freedom of the firm”, according to the author of the article, is impossible without maintaining a register of commercial names, which, in order to avoid violation of Art. 8 of the Paris Convention, should not have a binding, law-making character. Such registration can be conventionally compared to the registration of rights to copyright objects: the author’s right to the work arises as a result of its creation, the performance of any special formalities is not required, however, to confirm authorship, state registration can be carried out at any time. This is convenient, because a document (certificate) appears that simplifies the procedure for disposing of the author’s property rights, registration of inheritance and eases the burden of proving authorship rights in the event of a legal dispute.
The maintenance of the register of commercial names can be entrusted to the bodies that carry out state registration of business entities, but it seems more logical that the patent office should deal with it. To indicate the subject of activity, you can use the existing classifiers – KVED or the International Classification of Goods and Services, which is used in the registration of trademarks. The fee for entry into the register should depend on the requirements of the business entity and the type of its activity: the use of a commercial name within one region (local use) should cost less than the use of a commercial name throughout Ukraine.
Despite all the initial complexity, such a register will have a large number of positive points:
a) will avoid the appearance in the same administrative territory of business entities with the same commercial names, capable of misleading consumers;
b) will facilitate the choice of names and commercial names for new business entities (by the way, more than 60 countries have registries of business names in online mode with paid access);
c) will help to check the novelty of trademarks applied for registration, which, in accordance with Art. 6 of the Law of Ukraine “On Marks for Goods and Services”, must not be identical or similar to already existing commercial names of other persons for related goods and services;
d) will make it easier to prove the fact of using a commercial name for individual entrepreneurs, if this name does not coincide with their own name, and for legal entities whose commercial name does not coincide with the officially registered name;
e) will make it easier to prove priority in the use of a commercial name;
e) will allow the inheritance of this object in the event of the death of a natural person-entrepreneur (if the legislator decides that the brand name of the product can also be a fictitious name) and record the fact of the alienation of the commercial name or its provision in a commercial concession (if the legislator allows this object in a commercial concession, which is possible only in the concept of “freedom of the firm”).
Thus, maintaining a register will fill this rather weak object with life and allow it to take a worthy place alongside another means of individualizing business – a trademark. This is very important, taking into account the course of Ukraine’s accession to the European Union: in European countries, brand names are given no less attention than trademarks, and in Scandinavian countries (Denmark, Finland, Norway, Sweden) brand names have even stronger protection than trademarks .
And while there is no register, and only three articles of the Central Committee and one article of the Civil Code are in force, it is possible to offer legal entities to indicate their commercial name (full/abbreviated) in the statute, immediately after indicating the full and abbreviated official name, and natural persons-entrepreneurs – necessarily indicate the name of your object in the registration card of the object of trade and the sphere of services, which is filled out in the executive bodies of local self-government in order to obtain permission for their placement, and also try to convince the employees of the tax inspectorate to add the commercial name (restaurant, shop, agency, salon, Internet cafe, etc.) in the income and expenditure accounting book, in the certificate of payment of the single tax, in the trade patent – so that there are official documents that confirm the use of the commercial name. Or register a commercial name as a trademark, in which the author of the article will be happy to help.