In recent years, the practical landscape of trademark protection in Russia has been facing unique challenges. Since 2022, geopolitical changes have affected the presence of foreign enterprises in the Russian market, with many international companies reducing or suspending their operations in Russia.

These developments have stimulated certain market participants to attempt to exploit this situation. Many entities have attempted to acquire the rights to well-known international brands and profit from their reputation.

These entities possessing bad faith submit trademark applications that copy or highly imitate existing brands. Such applications rarely achieve success during the examination stage, because they are usually rejected on the grounds of prior rights. However, instead of abandoning their efforts, applicants initiate non-use cancellation actions against the prior trademarks to clear obstacles, and then register identical or similar trademarks under their own names.

It needs to be pointed out that the grace period for trademark non-use stipulated by Russian law is three years. Since 2022, with many foreign companies suspending their business activities, a large number of trademarks are currently formally facing the risk of "encountering cancellation due to non-use." This has led to a wave of litigation, a considerable portion of which appears to be initiated by trademark squatters and bad-faith former local distributors.

Russia's General Approach to the Issue of Non-Use

Article 1486 of the Civil Code stipulates the legal mechanism for the early termination of trademark protection due to non-use. Any interested party who believes that a trademark has not been used for three consecutive years may initiate a cancellation action.

The plaintiff must prove its legitimate interest in the cancellation action, otherwise the claims will be dismissed.

Proving interest usually requires demonstrating an intention to use a similar trademark, supplemented by corresponding preparatory steps.

At the same time, the rules applicable to the defendant are stricter. The defendant must prove genuine (rather than token) use for each of the specific categories of goods/services in which the plaintiff has demonstrated an interest: the principle of "homogeneity" generally does not apply.

The sole exception explicitly pointed out by the Supreme Court of the Russian Federation involves well-known trademarks: if a trademark is proven to be "widely known" in specific classes, and the defendant proves use in those classes, the protection for the trademark shall also extend to homogeneous goods. This principle has been firmly established in judicial practice and is frequently applied in cases involving well-known brands.

Traditionally, this framework was applied in a relatively formalistic manner. However, recent cases show that this practice is evolving.

The Concept of "Malicious Interest"

The practice of "canceling a trademark due to non-use" is increasingly being used as a tool to seize well-known brands, a reality that challenges the original formalistic approach. Although bad-faith entities are often able to formally prove their interest by submitting documents certifying preparations to enter the market, a deeper scrutiny may reveal that these preparatory activities are actually intended to misappropriate the reputation of the existing brand.

Under this context, the Intellectual Property Court of the Russian Federation has begun to apply the concept of "malicious interest," which is also referred to as "sham" interest or "abstract" interest. Although the law does not explicitly define this concept, it originates from the general prohibition against the abuse of rights and reflects a shift from a purely formalistic assessment of interest toward a more substantive evaluation of the nature and purpose of the interest.

The core of the concept of malicious interest lies in recognizing that if the primary motivation for a cancellation action is to exploit the reputation of a well-known trademark, the interest may not be deemed legitimate. In such scenarios, the court may comprehensively consider the overall conduct of the plaintiff, the choice of the specific sign, and the commercial logic behind it.

A case embodying this approach involved a company named Multigoods Production Limited, which sought to cancel the registered trademarks of "VICTORIA'S SECRET" for several classes of goods and services (Case No.: SIP-803/2024). The company applied for a sign highly similar to the well-known brand covering a variety of products, and provided evidence of preparation for use. Multigoods asserted that although the original trademark was widely known in the class of women's lingerie, it was not used on goods and services in other classes. The defendant proved that the trademark enjoyed extensive reputation across a wide range of goods and services classes (including clothing, cosmetics, accessories, and retail services), and pointed out that the plaintiff's conduct showed signs of abuse of rights, asserting that the purpose of the lawsuit filed by the plaintiff was to exploit the reputation of the brand.

The court followed the traditional approach regarding the determination of trademark reputation: for goods and services where the trademark had been proven to be widely known, as well as similar goods thereof, the court maintained trademark protection; whereas for non-similar goods, protection was canceled. However, the court further pointed out that although the plaintiff's evidence formally proved its interest in the action, with respect to those goods where protection was maintained, the interest was malicious and aimed at deriving commercial benefit from the reputation of the well-known brand. Although the court mentioned the defendant's arguments regarding the abuse of rights, it arrived at the conclusion primarily based on the defect in the plaintiff's interest itself.

With the increasing number of cancellation actions targeting well-known brands, the perspective of the courts appears to be shifting, and they have conducted stricter scrutiny over the claims of trademark squatters.

Recent cases involving the HUGO BOSS and ZANUSSI trademarks (Case Nos.: SIP-1315/2024 and SIP-423/2024) embody this shift. The HUGO BOSS case was likewise initiated by Multigoods, which applied for the registration of a sign. The litigation against the ZANUSSI trademark was filed by a local company, Stroyresurs, LLC, which had previously attempted to cancel other well-known brands such as CANON and AEG.

In these disputes, the Intellectual Property Court provided a broader interpretation of the concept of wide recognition, and directly addressed the issues of bad faith and abuse of rights, while considering the well-known nature of these trademarks and the plaintiff's lack of a compelling independent motivation for use.

The court pointed out that if a trademark is widely known among consumers, the concept of malicious interest can extend not only to similar goods, but also to goods where consumers might associate their source with the trademark owner. The higher the reputation of the trademark, the wider the scope of goods to which this association may extend. The court stated that for trademarks that have long enjoyed a reputation globally (including in Russia), such a transfer of association may occur even on non-similar goods. For example, although ZANUSSI is widely known for household appliances such as kitchen stoves and ovens, consumers may still associate other technically complex products (such as electronic door locks) with the original brand.

In addition, the court directly determined bad faith and the abuse of rights in the plaintiff's conduct, the purpose of which was to profit from the reputation of the well-known brand and mislead consumers, constituting unfair competition. The court also pointed out that companies are free to choose their trademarks, but if their good faith is questioned, they must explain to the court why a specific sign was chosen. Under this context, it appears unreasonable for a Russian company to seek registration of a trademark containing the Italian surname "Zanussi" when there is no obvious connection with it. Since the company failed to provide any explanation, its claims were dismissed.

Conclusion

For right holders of well-known brands, these new dynamics highlight the importance of the following practices: not only retaining evidence of genuine use as much as possible, but also proving the reputation of their trademarks and the opposing party's lack of legitimate interest. While specific strategies may vary from case to case, defense arguments regarding bad faith and the likelihood of consumer confusion can serve as effective supplementary defenses for well-known trademarks.