[Guest Post] Red Stripes for Ex-President

One of the great privileges I have enjoyed while studying intellectual property law at Chicago-Kent College of Law is the opportunity to discuss IP issues from around the world with the variety of JD and LLM students that come to Chicago to study law. Before Covid-19 pushed all of our classes online, I have had the pleasure of working closely with one classmate from Ukraine, Roman Kostyrko.

Roman is an LLM student at Chicago-Kent studying intellectual property law; he graduated from Ivan Franko National University of Lviv with an LLB in 2018, prior to beginning his studies at Chicago-Kent. Here's his take on a current Ukrainian trademark issue that is wrapped up in a constitutional, judicial crisis.

Former Ukrainian President,
Petro Poroshenko

Red Stripes for Ex-President

By Roman Kostyrko

Intellectual property is currently not on the front line of Ukrainian’s problems. To be fair, the nation has faced many crises in years that have occupied the news. The state itself was recently attacked by its eastern neighbor, and even now Russian forces remain within Ukrainian territory. 

Further, new internal political issues recently arose and now, the nation - along with the rest of the world - faces Covid-19. However, this field of Ukrainian law remains active, with a judicial crisis and five new criminal charges as a backdrop, as Ukraine’s “Chocolate King’ seeks trademark protection for a red stripe.

Background

This case reveals the tremendous efforts taken by former President, Petro Poroshenko toward his own absolute success. Perhaps above all traits he displayed in leading the nation, he will be most remembered for his business acumen outside of political office. Not to discount the work that he did for Ukraine as president, but when an issue pertinent to his business was at stake, he proved capable of achieving something that even Adidas could not pull off. 

On May 13, 2017, Mr. Poroshenko’s company decided to file an application for trademark protection for a red stripe while he was in office. Not only did a court rule that he was entitled to such protection, but the protection was granted contrary to the firm position of the specialized trademark body.

In fairness, the mark is not merely a red stripe, but red stripe designated for pastry and other confectionery. Mr. Poroshenko - also known as a “Chocolate King” – is not only a former president and successful politician, but also one of the richest oligarchs in Ukraine with business in the sweet sphere. Once, his brand Roshen was even named 27th in top 100 of confectionery businesses in the world. With such a background of success, this trademark victory doesn’t seem so unbelievable (especially as he was president at the time). 

The local court issued a judgement in favor of Poroshenko. However, it is not merely the decision of affording protection for a red stripe that makes this case interesting – although it is a departure fundamental trademark doctrines - but it is the evidence and the reasoning of the court behind this decision that may drive further interest in the case.

Main Story of the Case

The issue started with the competition between two companies: Poroshenko’s corporation Roshen and another confectionary company based in Kiev, “KYIVKHLIB”. The way of competition by gaining trademark protection is more than conventional in the confectionery industry, and it is what Roshen decided to undertake.

As an initial matter, Mr. Poroshenko’s company applied for registration of this trademark, a red stripe for confectionary products. Ukrpatent, the institution tasked with reviewing trademark applications, rejected it at first, and the case went to the appellate body under the Ministry for Development of Economy, Trade, and Agriculture of Ukraine. 

Chocolate Kats

Based upon Ukrpatent’s examination, which ruled that the red stripe didn’t satisfy the requirement of acquired distinctiveness to be protected under trademark law, the bench of the appellate body rejected the registration of the mark again. Both Ukrpatent and the appellate body based their rejections on a lack of distinctiveness, ruling that Roshen failed to prove that the red stripe had acquired distinctiveness.

Consequently, after failure in both hearing, Roshen took the case to local court. Although the decision not to allow protection was based upon solid ground and the Applicant failed to provide any specific evidence of the mark’s distinctiveness, the Commercial Court of Kyiv City ruled in favor of the former President’s company which came armed with only one survey.

Here the issue appeared; after a recent decision of constitutional court of Ukraine, it seems that the future of the case is unclear. Any appeals in this case hang in the balance, as the nation addresses the judicial crisis caused by the formation of two coexistent high courts in Ukraine. 

Speaking about that reasoning it is also worthwhile to show the difference between Ukraine and Europe in addressing such an issue with the similar subject matter. As I mentioned Adidas earlier, its attempts to protect the three-stripe mark are particularly valuable in this case.

Adidas three-stripe logo

Cases with Stripes

Indeed, brands seeking registration for stripes is nothing new. Adidas has tried dozens of time and in different jurisdictions to protect its famous logo. There has been a great deal of litigation involving this big company in connection with its three black stripes. To be fair, comparison of judicial reasoning with Adidas and Roshen is nothing new, as Mr. Illarion Tomarov - prominent Ukrainian IP lawyer - did in his blog here a comparison of the texts of the relevant decisions. Considering both his post and the two cases will reveal how the Adidas case of 19 June 2019 and case of our “Chocolate King” differ in terms of reasoning.

We currently have two decisions from Urkpatent and one from the local court in Poroshenko’s case on one side and a decision of the General Court in Adidas’ case on the other. The biggest difference Mr. Tomarov identified is the approach toward evaluation of evidence - and I must admit that he is quite right. While 62% of the text of the Adidas case decision consists of evaluation of the evidence, such evaluation in Roshen’s case (both the institutional decisions and local court’s decision) consist of far less than 50% of the text. In fact, the local court used 12% of the text of the decision to address the admissibility of an expert’s opinion.

This limited analysis by the court can fairly be attributed to the evidence on the record – there was hardly anything to analyze. The case itself solidly base upon two primary pieces of evidence: that expert’s opinion and a single survey. Apart from this expert opinion, which gives little support to applicant’s argument of distinctiveness anyway, the approach in reviewing survey evidence is quite different from that of the General Court. Adidas offered a broad variety of surveys starting from 1983 until 2011. The General Court found that only 18 of these were relevant, but even these were insufficient for court to rule in favor of Adidas. 

By contrast, Roshen proposed only the one survey. Moreover, this survey was not exactly

The ROSHEN mark shown in surveys
Despite this as survey presentation, the mark as issue was a simple red stripe

 about the claimed trademark; while the company sought protection of the red stripe as a mark, the survey asked consumers about specific red stripes with golden edges and word “ROSHEN” on its surface. Consumers noted that they recognized the mark as depicted in the survey, not discussing the mark for which protection was sought. Although the local court’s decision may be misguided, the “Chocolate King” has won his golden ticket (with a red stripe) for now.

Conclusion

What are the consequences of this decision? So far, there are no cases in which Roshen has invoked these the protections of this trademark. Yet, it is not even a year that passed from the decision, but truth remains to be that former president Poroshenko owns an exclusive right for red stripe for confectionary. In addition to the existent judicial crisis of Ukraine’s proper Supreme Court and its legitimacy, this case will likely have lasting effects on Ukrainian trademark law. 

Now, the nation must determine the validity of the appointment of the Supreme Court’s judges, which prompted the current judicial crisis that looms over this case and the nation as a whole. What remains for Ukraine? To keep our sweets far from Ukraine (at least those which are wrapped with red stripe) as the monopoly for this perhaps-indistinct mark could last for several years.