Abuses in registering industrial property rights

Some multinationals have tripped up when trying to register their industrial property rights. Mihai Radulescu of Schoenherr si Asociatii explains the traps

     As in other countries which have a longer specialised practice, Romania’s business environment suffers a proliferation of methods and an increase in the case law of abusive protection of industrial property rights.
     In addition to people abusively registering trademarks or Internet domain names, we are lately witnessing a rising number of abusive protection cases in the field of industrial models, designs and even inventions.
     In a recent case, top managers of a large number of renowned multinational companies using terrace umbrellas in their marketing activity were investigated by criminal authorities as ‘delinquents’ (invinuiti) following submission of a complaint grounded on the protection of the umbrella as industrial model and design.
     Some of these managers had recently taken over the position in the respective multinational or had managing responsibilities in fields other than the marketing business.
     The registration of the umbrella as industrial model and design with the National Patent Authority (OSIM) was done in murky circumstances in the early 1990s. The same company who lodged the complaint is the holder of the ale-bench and ale-table which are also protected as industrial model and design.

TRICKS OF THE TRADE

     But abusively registered property rights experience is often highly efficient for those registering these names and designs.
     Large corporate groups often prefer ‘compromise settlements’ for the redemption of registered industrial property rights.
     This avoids the following: the fact that corporates need to make significant efforts to take part in the necessary proceedings for the cancellation of abusively protected rights, the long durations that ensue and the uncertain outcome caused by the so far poor case law experience of the courts.
     In a “typical” case of abusive protection of industrial property rights, a person records with the local authority (of a transition economy) intellectual property rights identical or similar to those representing large corporate groups.
     Once the large corporate decides to enter the transition economy, it finds itself impeded from registering its rights. The users of this method - in Romania mostly put in practice at the beginning of the 1990s - only had to anticipate the market entrance of an international enterprise and to wait before the enterprise’s representatives contacted them suggesting the conclusion of a settlement.

DIRECT ACTION

     A more serious form of abuse is given if the user of such methods directly approaches the rightful owners of industrial property rights.
     The existing laws are applicable for both the material and criminal liability for the infringement of industrial property rights.
     The criminal liability does not apply if the parties reach a settlement.
By merely reporting a criminal offence, the person who has abusively registered an industrial property right may turn the criminal authorities into a very efficient tool to exert pressure on a corporate enterprise.
     The common way to structure a defence in the criminal file is to initiate civil proceedings displaying the deficiencies that were made at the registration of the respective abusively protected rights.
     However such a strategy may prove to be inefficient, whereas civil proceedings are slow-going as compared to criminal investigations.
     The range of actions set out in the law which may account as counterfeit criminal offences is very broad (eg imitation (…), manufacturing, offering, sale, import, use or deposit (…) for industrial models and designs).
     Considering that the criminal liability of legal entities does not yet apply in Romania, the question arises: which person from a multinational enterprise will be subject of the criminal investigation, which the authorities have to conduct following receipt of a criminal offence complaint?
     To make it simple, criminal authorities are tempted to orient their investigations directly against the managers (administratori) of the enterprise, as in the above example with the umbrellas.
     Following this line of thought, even if the manager does not directly imitate, manufacture, offer, sell, import or deposit pre-protected rights, he shall be held responsible.

Mihai Radulescu
Lawyer, Schoenherr si Asociatii
Piata Romana no. 8, Bucharest,
tel: 021/ 319 67 90; fax: 021/ 319 67 91
www.schoenherr.ro