On July 6, 2018 amendments to the Law of the Republic of Kazakhstan On Trademarks, Service Marks and Appellations of Origin (the “Law”) entered into force in Kazakhstan.
The amendments affect a wide range of issues, including powers of the Ministry of Justice of the Republic of Kazakhstan as an authorized body for the protection of intellectual property rights, powers of the National Intellectual Property Institute as an expert organization, the procedure for registration of trademarks, service marks and appellations of origin, the procedure for recognition of trademarks as well known, the procedure for the transfer of trademark rights, the procedure for challenging trademark registrations, the scope of protection of trademark rights, and the status of patent attorneys.
Specifically, the most significant changes are as follows.
(i) Timing of Procedures
- Time limits for the formal (the so-called ‘preliminary’) examination and substantive (the so-called ‘complete’) examination of applications for registration of designations claimed to be trademarks have been reduced. Previously, in the case of the formal examination, such time limit was one month, and in the case of the substantive examination, nine months, from the date of filing of an application. Now, the time limits are: ten business days - for formal examination, and seven months - for the substantive examination, respectively. A trademark registration will be carried out by an expert organization, and not by the authorized agency.
- The maximum time limit for examination of appeals by the Board of Appeals is reduced. Previously, the Board of Appeals had the right to consider objections within 12 months (with taking into account a six-month extension). Now, the maximum time limit is 9 months.
(ii) Registration Procedure
- The new rules envisage mandatory publication of applications after their preliminary examination. Previously, such applications were not subject to publication. Now, applications must be published in a bulletin of the expert organization within five days of the completion of the preliminary examination.
- Representatives of authorized entrepreneurial organizations will now participate in the Board of Appeals. Thus, the previous practice where only representatives of the authorized agency and representatives of the expert organization decisions of which were disputed were members of the Board of Appeals has been changed.
- Procedure for a registration of license agreements is simplified. Specifically, while the Law is not entirely clear on this matter, it is anticipated that in accordance with new requirements the registration process will not include the examination of a license agreement itself.
(iii) Appeal Procedure
- Additional grounds for challenging trademark registrations are introduced (for instance, registration in the name of a representative without the consent of the trademark owner).
- Consideration of appeals against trademark registrations on the grounds of their non-use is excluded from the competence of the Board of Appeals, which considers appeals against decisions of the expert organization. Now, appeals based on this ground can be filed directly with the court.
- Now, disputes relating to trademark registrations on the grounds of their non-use, violation of rights to trademarks and appellations of origin, and conclusion and performance of trademark license agreements can be resolved, by agreement of the parties, through mediation or arbitration.
(iv) New Definitions
- The term ‘exhaustion’ of exclusive trademark rights is expressly introduced to the Law. Previously, despite the existence of the rule, the absence of the term used to create disputes regarding the legitimacy of the use of trademarks in relation to goods imported from the territory of the member states of the Eurasian Economic Union. Now the law-making agencies have eliminated this gap.
- The concept of ‘counterfeit goods’, which was previously absent from the legislation, is expressly introduced to the Law. Specifically, goods are recognized to be counterfeit if trademarks, appellations of origin or confusingly similar designations are placed to such goods and their packaging without owner's consent.
(v) Counterfeit and Grey Import
- The new version of the Law provides that only counterfeit goods are now subject to removal from the market and destruction. This means that original goods that were introduced into the market with breach of trademark owner’s rights (parallel import) are not subject to seizure or destruction. Absence of such measures may result in increase of sales of such goods.
- Under the new rules, counterfeit goods and their packaging are not subject to destruction and can be introduced into the market if this is in public interest and does not breach Kazakhstan consumer protection legislation. Thus, the Republic of Kazakhstan has become the first member state of the Eurasian Economic Union which legalized sales of counterfeit goods.
(vi) Compensation instead Damages
- Another novelty is granting to trademark owners the right to claim from infringers a so-called "compensation" instead of damages (the so-called ‘alternative liability’). The amount of such compensation will be determined by the court based on the nature of the breach, the market value of the homogeneous/original goods to which a trademark, appellation of name origin or confusingly similar designation is placed with the owner’s consent.
In general, despite the fact that a number of novelties should somewhat simplify the trademark registration procedures, we believe that, after the entry into force of these amendments, the level of protection of trademarks and appellations of origin will decrease. Furthermore, a number of adopted rules contradict to international treaties on protection of intellectual property rights to which the Republic of Kazakhstan is a party. In that regard, we anticipate a large number of legal disputes relating to violations of trademark rights, especially with regard to parallel imports.