Legal actions available to enforce trademark rights


Mohammad Badamchi
Hami Legal Services, Tehran

The Trademark Office is a subsidiary of the judiciary in Iran and examines trademark applications and grants a registration if an application meets the necessary requirements and formalities.

The trademark registration certificate is prima facie evidence of ownership and a trademark owner holds exclusive rights to use the trademark. A trademark registrant can take anti-counterfeiting measures against infringers only through the courts and not with the Trademark Office. The Trademark Office is not the authority through which to enforce intellectual property rights.

However, it is possible to take action against infringing trademark applications. A trademark owner may oppose an application with the Trademark Office if it discovers that an application is identical or misleadingly similar to its own trademark. The opposition must be filed with the Trademark Office within 30 days of publication of the mark.

The opposition will be notified to the applicant. It may either submit to the opposition or continue with its application. If the applicant submits to the opposition, then its application will be cancelled automatically. If the applicant does not submit, then the opposing party must bring a cancellation action against the application at a court.

A very important point in opposing a trademark application is that, if the opposing party is not fully satisfied that the new trademark application is violating its rights but nevertheless is serious about cancelling the registration, it is advisable not to oppose the trademark application. This is because the post-registration opposition period is three years from the registration date provided that the opposing party was aware of the registration of the conflicting mark. By opposing a trademark, the opposing party makes clear that it is aware of the registration of the conflicting mark and the post-registration opposition period begins. In contrast, after the post-registration opposition period it may file a lawsuit to cancel the conflicting trademark claiming that it had no information about the registration of the conflicting trademark.

If a trademark registrant can prove that the party opposing the registration became aware of this registration within three years of the registration date, but nevertheless failed to file an opposition within this period, then any subsequent opposition will be rejected.

The Trademark Office may not refer the matter to the criminal prosecutor and only the trademark registrant has the authority to file its complaint with the Prosecutor's Office against counterfeiters.

When the exclusive rights to a registered trademark are being infringed, the proprietor may bring an anti-counterfeiting action against the infringement with the court. It is possible to take civil or criminal action to prosecute the infringers.

Criminal complaint

A criminal complaint is a very effective and speedy action against infringers. If a trademark owner finds that its trademark is being forged and counterfeited in a way that means consumers do not realise that they are purchasing a fake product, or if the trademark similarity is very misleading, the trademark owner may initiate a criminal action. Where a trademark is being copied and/or is very similar or is being misleadingly used, it is possible to take criminal action. It is also possible, but not advisable, to take a criminal action in cases where the similarity is arguable.

Articles 529 and 530 of the penal code are the key articles for prosecuting counterfeiters in a criminal action. Anyone who commits forgery or uses a forged trademark shall, in addition to being liable for compensation for incurred damages, be sentenced to imprisonment of between three months and two years.

Meanwhile, anyone coming into possession of any trademark, in any manner contrary to the regulations, and using it in such a way as to prejudice the rights and interests pertaining thereto shall, in addition to being liable for compensation for the damages incurred, be sentenced to imprisonment of between two months to two years.

If the criminal court is satisfied that a forgery has occurred and that the infringer has committed the forgery in bad faith, the infringer will be obliged to compensate the trademark owner with the damages incurred by the forgery. If the criminal court does not find the infringing action to be a forgery, then it may not rule for the payment of damages. To satisfy the court, the forgery should not just be an imitation that misleads consumers – it must be composed of the same design and form as the genuine trademark so that the consumer cannot see that the product is a forged one.

The criminal court structure in Iran

The Prosecutor’s Office for Medical, Pharmaceutical and Hygiene Issues hears trademark infringement complaints. The Office is of particular interest to trademark owners as it deals with, among other things, the prosecution of counterfeiting of pharmaceuticals and trademarks.

The office has given trademark owners a greater opportunity to enforce their rights against counterfeiting and forgery in Iran. Indeed, feedback so far has been very positive. When requested, the Office has been able to collect and secure evidence relating to a seizure of counterfeit goods within a few days.

If the Prosecutor's Office is satisfied that the case involves counterfeiting and forgery, it will send the case and all the investigations to the first instance court. The first instance court will hear the merits of the case and issue its decision. This decision can be appealed to the appellate court. The decision of the appellate court is final.

An anti-counterfeiting strategy must first be aimed at identifying and targeting the main infringement sources and then raiding the counterfeiters.

It is very hard to give an exact timeframe for settlement of a criminal action. However, a criminal action is much faster than a civil action. All of our criminal actions, so far, have been settled in the Prosecutor's Office stage in two to three months.

A complete criminal proceeding (ie, Prosecutor's Office, first court and appellate court) may take about one to one-and-a-half years.

Raid on the infringer's premises and seizure of counterfeited goods

Upon filing a complaint, the Prosecutor's Office, if satisfied with the documents and evidence, orders the police to collect evidence, conduct a raid on the infringer's premises and seize counterfeited goods. The Office also orders the police to investigate the manufacturers, distributors and retailers of the counterfeited goods. The manufacturers, distributors and retailers of counterfeited goods will be summoned to court for further investigations.

A criminal proceeding is very effective if the trademark owner intends to prevent the counterfeiters from manufacturing and selling the counterfeited products promptly and as the first priority. A criminal action is so strong and threatening that most infringers will try to settle the case amicably. In this case, the infringer will undertake to stop further violations and future infringements will be met with high penalties. If the parties agree to settle the case amicably, it can be argued that the infringer should cover the incurred legal and investigation fees.

One of the most important roles of the criminal action is to make noise and inform the market that the trademark owner is monitoring the market and is very serious about prosecuting counterfeiters. This will deter potential infringers from engaging in counterfeiting actions against the trademark owner.

Criminal or civil action?

It is very difficult to say which of the criminal or civil case would be more efficient, in general. Each case requires a definite anti-counterfeiting policy and must be handled and treated according to its specific situation.

A criminal action is very prompt and efficient, but not all are successful. If the criminal case is dismissed, the trademark owner may prosecute the infringers in a civil action. The civil court does not examine whether the trademark has been forged or counterfeited. Instead, a misleading or confusingly similar imitation will be sufficient to allow for a claim of damages and to stop the infringer from committing further violations.

Civil action

A civil action is rather lengthy and may not be very efficient in some counterfeiting cases as to promptness. It is strongly advisable to collect and secure evidence of infringement before bringing a civil action. The collected evidence will be a reliable proof of the infringement in the civil action.

The evidence of infringement will be secured by the court agent and will take about two weeks to collect.

After collecting the evidence, the trademark owner should file a civil petition to stop the infringer from further violations and should claim damages. The petition will be based on the collected evidence that the counterfeiter is involved in an unfair competition.

A trademark owner may ask the court, before or upon filing the petition, for a prompt injunction for seizure of counterfeit or imitatation goods and products, or an order for the temporary restraint of the manufacture, sale or import of the counterfeit or imitation goods. Court injunctions are subject to the deposit of an adequate bond to recover any possible damages incurred by the other party if the trademark owner loses the case. The amount of the bond is not predictable and depends on the case and the judge.

If the trademark owner has requested an injunction, it must take civil or penal action within 10 days from the date of issuance of the injunction; otherwise the decree will be lifted and the trademark owner will be liable for any possible claimed damages.

Unfair competition rules of the Paris Convention are in force and referred to by the courts in decisions for anti-counterfeiting, infringement and unfair competition cases.

Damages claimed in a civil case may include incurred losses and also loss of earnings or profits. The incurred losses include monetary and intellectual damages.

A trademark registrant may ask the court, before or upon filing the petition, for seizure and destruction of counterfeit goods and the court will order the seizure of goods before the hearing session. After the court judgment and finding that the goods are counterfeit, the court will order the destruction of the goods.

However, since a civil action is rather lengthy, the infringer will have sufficient time to hide the fake goods.

The difference between civil or criminal action

Although some cases can be handled through both civil and criminal actions, there are some differences between the two. These include:

•  Criminal penalties are severe in cases where infringement is proved, while civil actions are more lenient.

•  Criminal actions are very prompt while civil actions are rather lengthy.

•  Criminal actions do not give infringers the opportunity to hide the counterfeit goods because the raid on the infringers will be without any prior warning. The seizure of infringing goods in a civil case will be with a prior warning from the court.

•  Seizure of counterfeit goods in a criminal action requires no bond to be deposited with the court, while in a civil action seizure is subject to deposit a bond to cover any possible damages claimed by the defendant if the plaintiff loses the case.

•  A criminal remedy followed by a raid on the market will make it clear that trademark infringement is very risky, while a civil remedy prosecutes the infringer silently.

Customs

Currently, it is not possible to record a trademark with customs officials in Iran as the Iranian customs do not provide trademark owners with this service.

Nevertheless, another anti-counterfeiting measure can be based at ports and border controls through customs. If a trademark owner gets information about imported goods in the customs, it is possible to take action to seize the counterfeit goods in the customs by getting a court order. This prevents the goods from being released and entering the country.

The customs law provides for port and border measures to ban importation of counterfeit goods and products bearing misleading trademarks. Goods bearing trademarks, manufacturers’ details or other particulars that confuse and mislead consumers as to the source of goods may not be released. Nevertheless, customs do not practically check the authenticity of the trademarks on imported goods.

The courts may order customs officials to seize and destroy infringing goods. The customs officials may not seize and destroy the counterfeit goods on their own initiative. A court order is always required to seize or destroy counterfeit goods. A trademark owner may not directly ask customs officials to prevent the release of counterfeit products.

A trademark owner may obtain a court order that allows it to prepare a detailed list of goods that are subject to trademark violation charges. This will serve as legal evidence to prove the infringing actions of the counterfeiters and importers.

If a trademark owner has been made aware of containers arriving in the ports or of goods being transported across borders, it may get an order from the court or Prosecutor's Office and seize the goods very promptly. The Office will order  customs to seize the goods.

If a company is suspected of importing infringing goods, it is officially not possible to blacklist it so that all its imports be checked.

Cease and desist letter

A cease and desist letter is a very useful and cost-effective tool to inform a counterfeiter that the trademark owner is monitoring the market and is serious about protecting its rights in the local market.

Cease and desist letters are mostly effective against innocent infringements and amateur counterfeiters and retailers to some degree. Any successful anti-counterfeiting strategy will involve the use of cease and desist letters to some extent.

Collecting and securing infringement evidence through court and sending cease and desist notices are useful indications to prove the infringing actions of the counterfeiters in prospective anti-counterfeiting court actions.

Most infringements in Iran are due to the lack of public awareness of the existence of anti-counterfeiting rules and regulations. These counterfeiters, unlike committed ones, are therefore usually easily deterred from further violations.

It is not recommended to send cease and desist letters to professional and committed counterfeiters, as such a notice will inform them that their actions are being monitored and they will continue their activities with more prudence. In these cases, it is better to collect evidence and seek legal relief as quickly as possible.