Can a trademark be "confiscated" abroad? Let's look at an example.
In early November 2023, the media reported that the national law enforcement authorities of Finland "confiscated" (seized) more than 40 intellectual property objects, including trademarks, belonging to residents of Belarus and Russia, which are included in the blocking sanctions of the European Union (EU).
Subsequently, the Finnish Patent and Registration Office (PRH) informed Rospatent that the trademarks were seized strictly within the framework of and in accordance with the adopted EU restrictive measures legislation. Let's dissect what is crucial to understand in this context.
Do sanctions indeed allow you to "seize" a trademark abroad?
In simplified terms, EU sanctions are divided into two types:
- "Blocking sanctions", which means "freezing" all assets of both individuals and entities on such blocking sanctions lists, as well as a complete ban on directly or indirectly providing them with "economic resources". In other words, EU companies and individuals are prohibited from engaging in property transactions with persons on EU blocking sanctions lists;
- "Sectoral sanctions", which affect certain areas of the economy, have a negative impact on particular companies whose activities are related to these sectors.
Based on the core nature of blocking sanctions, the assets of persons included in such sanctions are subject to a "freeze". Therefore, if a trademark is an "economic resource" within the meaning of the EU sanctions regulation, it can also be "frozen".
In its clarifications, the European Commission confirmed that "freezing" the economic resources of a person under blocking sanctions means that any asset of that person, whether material or non-material, cannot be used directly or indirectly to obtain other funds or assets. Concerning the scope of the sanctions, the European Commission has indicated that EU sanctions also apply to intellectual property rights (e.g. trade trademarks, industrial models, patents for inventions and utility models, plant variety rights).
As intellectual property (IP) objects can be considered as "economic resources", they can also be "frozen". State IP authorities should not make it easier for a sub-sanctioned person to utilize IP objects belonging to him or her. For example, they should not register the transfer of ownership of such objects, which means that it is impossible to carry out transactions with such IP objects, to make payments for their use (for example, license fees for the use of IP objects paid by an EU person to a sub-sanctioned person).
What does it mean to "freeze" a trademark?
"Freezing" a trademark means that those subject to be blocked with sanctions are prevented from selling, licensing, or otherwise transferring their rights in those IP objects. It is important to note that these restrictions do not entail the suspension of intellectual rights or prevent the use of IP objects, for example, to designate the goods and services for which the trademark was registered. Thus, the exclusive right is not cancelled or terminated but remains with the right holder. It should also be noted that the extension of the term of validity of the exclusive right is not subject to the established restrictions.
In other words, in the Finnish trademark freeze example, the frozen trademark continues to be valid in Finland and the EU as a whole and remains the property of the right holder, but the latter cannot dispose of this right, e.g. sell it under an assignment agreement or assign the right to use it under a license agreement.
What other IP activities are sub-sanctioned individuals allowed to do?
Concerning other trademark actions in the context of existing sanctions, the European Commission specified that the European Union Intellectual Property Office (EUIPO) and the national intellectual property authorities of EU Member States:
- may prolong the registration of existing IP owned by persons on the blocking list, provided that the IP remains "frozen";
- applications for registration of new IP filed by individuals on the blocking list cannot be approved, even if the application was filed before the applicant was included in the EU blocking sanctions. This means that any existing procedures for processing applications for registration of new IP where the applicant is a sub-sanctioned person must be stopped;
- cannot register the transfer of ownership of IP objects owned by sub-sanctioned individuals;
- do not undertake invalidation or trademark opposition procedures initiated by sub-sanctioned persons, unless these procedures are necessary to preserve an established right. The suspension of these procedures shall not affect the registration of a new IP from persons on the EU blocking sanctions list.
Conclusion
The decision of the Finnish authorities to freeze trademarks is based on additional clarifications by the European Commission, which considered that trademarks belong to "economic resources" that can be "frozen". However, even the additional clarifications of the European Commission do not prevent unsanctioned entities from appealing in court against the actions of the authorities to freeze assets, including trademarks and patents.
It should be emphasized that these actions do not mean that trademarks belonging to the sub-sanctioned individuals are no longer valid in the EU. Their owners still have the right to protect their exclusive rights against infringement and to use their trademarks to mark the goods they produce or the services they provide. The restrictions affected the possibilities of disposal and commercialisation of trademarks owned by these entities.