Top IP pitfalls and how to avoid them

Foreign companies would be well advised to prioritise their IP strategies before entering the Ukrainian market. While the same would doubtless be claimed by lawyers practising corporate or banking law, practice confirms that a long, hard look at IP rights should precede the launch of any business in Ukraine. This article discusses common pitfalls that foreign business can face with respect to IP infringement and gives some pointers on how to avoid them.

Foreign registration is not valid

Applying to register a trademark or having a valid registration in one’s country of origin or any other jurisdiction (eg, Russia or Commonwealth of Independent States countries) will not result in protection in Ukraine. In order to secure trademark protection in Ukraine, a rights holder must register its mark there or include Ukraine as a relevant state under the Madrid procedure.

Ukrainian IP laws are different

The concepts set out in Ukrainian IP law are based on those developed in the legal systems of other jurisdictions, with local laws being continually updated to harmonise them with international statutes. However, despite this, Ukrainian IP laws remain distinct, with their own specific and established practices which must always be taken into account.

Register the mark before entering the market

When starting to do business in Ukraine, it is not unusual for foreign companies to discover that a bad-faith owner has already registered or is in the process of registering their marks there. Foreign companies are advised to do their homework – in this case, conducting a preliminary search for any similar marks – before entering the Ukrainian market.

Your distributor may not be your best IP counsellor

Although a company may believe that its non-affiliated distributor is the only person it can trust locally and the best person to advise it on how to protect its intellectual property, past experience suggests that this is not the case. Registering trademarks and other IP rights in the name of such a distributor or even assigning IP rights to it is fraught with legal risk. Always ensure that the IP portfolio is yours and is in your name.

Only share information with a confidentiality agreement

When launching new products on the market, most companies involve third parties to promote them, which involves sharing sensitive data. Experience suggests that it is wise to have a confidentiality agreement in place first, in order to mitigate the risks of such disclosure – including the products being commercialised by third parties. This is especially pertinent given that Ukraine is a first to file rather than a first to use jurisdiction.

Assigning future IP rights

While foreign companies may be able to assign any future rights under the laws of their home jurisdiction, this is prohibited in Ukraine. Only existing IP rights may be assigned, with few exceptions.

Best international practice may be bad service in Ukraine

It is regrettable, yet not uncommon to see cases where it appears that best practice has been followed with regard to assignment or licensing, yet under Ukrainian law the rights in question have not been assigned or licensed at all. It is crucial that rights holders itemise all rights that are subject to an assignment or licence (eg, translations and adaptions); otherwise, these rights will not be deemed to have been assigned or licensed.

IP assignments must still consider the local environment

Ukraine is still a formalistic country where IP assignments are enforceable only once all of the correct documents are in place. In most cases an IP rights assignment agreement will be unenforceable unless all of the correct supporting paperwork (eg, delivery and acceptance certificates) is in place.

Record products with Customs

Companies often ignore the local instruments that are available to protect their intellectual property. Further, it appears that bad-faith trademark owners and patent trolls are getting wise to this and registering trademarks and trade designs with Customs, thus preventing genuine rights holders from importing their goods into the country. Simply recording your IP rights with Customs can result in a significant reduction in counterfeiting.

File in time

Ukraine operates on a first to file system for both trademarks and domain names. There are plenty of unfortunate examples where globally well-known brands have been a day late in claiming priority for Ukraine or have neglected to register all local domains in their name. Such situations can be avoided by prioritising IP rights protection right from the start.

Customise IP strategies

Boilerplate brand protection strategies often prove ineffective and result in large-scale parasitic copying and protracted battles with counterfeiters. Companies should develop customised strategies for each particular case in order to take effective action against infringement and counterfeiting.

Cybersquatting

Cybersquatting is unfortunately all too common in Ukraine, with few instruments available to combat it. Again, a customised strategy is required in each individual case to take successful action against cybersquatters.

Conclusion

Although this article focuses on the most common pitfalls that foreign businesses may face in Ukraine, the actual list is much longer and is constantly growing. However, it is our hope that even this brief overview will help foreign businesses to improve their IP protection and thus feel safer and more confident when doing business in Ukraine.