Court Rules Distributor’s Trademark Registration as Unfair Competition

The Intellectual Property Court recognized that a distributor’s seizure of a foreign trademark constituted unfair competition. The case involved the company KyungDong Navien Co., Ltd, a South Korean manufacturer of heating equipment that registered the trademark “GOM Ace” in South Korea in 2005. To enter the Russian market, it signed a distribution agreement with Mr. Igor Filatov in 2008.

Unbeknownst to the Korean company, Filatov registered the “Ace” trademark No. 491279 with the same design under a controlled company and later liquidated the company, transferring the trademark rights to himself. Meanwhile, a couple of years later KyungDong Navien Co., Ltd established a subsidiary company Navien Rus in Russia and registered its own “NAVIEN ACE” trademarks No. 600685 and No. 826147.

Navien Rus actively used the trademarks on the market for some time, raising their popularity among consumers, but then Filatov demanded that the company KyungDong Navien Co., Ltd purchase the earlier “Ace” trademark from him. When the company declined, he successfully challenged both “NAVIEN ACE” trademarks before Rospatent and even filed lawsuits that resulted in several hundred million rubles compensation claims against the company KyungDong Navien Co., Ltd and its partners, blocked shipments of genuine products, and attempted to revoke Navien Rus’s equipment certifications.

KyungDong Navien Co., Ltd contested his actions in court as unfair competition and in the process unveiled numerous fraudulent actions on Filatov’s part, including forging the signature on the trademark transfer agreement from his controlled company to himself, as confirmed by expert handwriting examination.

Based on the evidence, and despite Filatov’s attempts to claim that the “Ace” mark had been created by Russian designers even earlier than the Korean company started using it, the court ruled that his actions were part of a deliberate strategy to force the company KyungDong Navien Co., Ltd out of the Russian market, constituting unfair competition under Russian law.