Lawyers of Legal Alliance Company –Participants of Round-Table Meeting On Debts And Intellectual Property In Crimea

As of March, 21, 2014, the business affairs between Crimea and the continental part of Ukraine have legally collapsed. Needless to say, all businesses have been practically paralyzed because today neither companies nor financial structures of Ukraine are allowed to work in the territory of Crimea within a fair legal framework. Meanwhile, loss of the communication between the companies in Crimea and the companies in the continental part of Ukraine, the impossibility to perform counterpayments between the companies tend to generate more and more problems. The simplest transactions would be impossible to perform and the difficulties by their performance would arise.

Taking into account the concern of clients and readers due to the current touch and go situation, ‘YURIST & ZAKON’ (‘LAWYER & LAW’) edition jointly with ‘CompassGroup’ audit company conducted a round-table meeting 'Debts and Intellectual Property in Crimea: How to Return Them or Just Flat Forget Them?' for the experts to share their experience and best practices on these issues and assist companies find an exit out of the current situation.
At present Crimea goes through a formative stage of the Russian Federal Executive Service. The executive documents that were ‘inherited’ from the State Executive Service of Ukraine are being prepared. However, at the current stage such rulings are being performed in an extremely low manner. The local bodies expect clarifications and instructions from the central authorized body of the Russian Federation.

The issue regarding performance of the court rulings that were made in the continental part of Ukraine has reached its acute urgency. Therefore, for civil cases the Ukrainian creditor shall follow the Minsk Convention on Legal Assistance, for business cases they will be guided by the Arbitral Procedure Code of the Russian Federation that envisages the procedure for legalization of rulings of foreign courts (the present procedure shall foresee standalone court proceedings and looks rather lengthy).

In terms of debts, the law practice has gone the following ways. 'Fair' Crimean debtors have been open to the dialogue with their creditors and by way of agreements they take a joint action to restructure or reformalize such commitments. For instance, it involves replacement of creditors or debtors, off-set of counter demands, delay in performance of commitments.

As regards to ‘unfair' debtors, unfortunately, the law-abiding Ukrainian creditors will have to appeal to the courts of Kyiv or Kyiv oblast (according to the provisions of the Law on Occupied Territories) being later the subject to the procedure for recognition of the rulings issued by the Ukrainian courts under the legislation of the Russian Federation.

At the round-table meeting a number of practical recommendations as regards to regulation of problematic issues were delivered.
Alexandr Maznov, Senior Lawyer, admitted: ‘The normative base as regards to Crimea is being in Ukraine continuously developed as well as in the Russian Federation. Therefore, the lawyers will have ‘to keep their finger on the pulse’ and track the dynamics of changes since there remains an array of underregulated issues that need to be resolved. With time those in power and business will obviously develop adequate practical mechanisms and in the future the situation will be more positive. The participants of the round-table meeting stressed the necessity to hold regulatory events across Crimea since the experience in sharing the best practices is of immeasurable service to business by resolution of the concerns that emerge due to occupation of Crimea’.

At the round-table meeting additionally to the nuances of business transactions the participants also discussed the potential problems that await the Crimean owners of the trademark certificates in Ukraine. Since the certificates above do not protect the brands in the territory of Russia (the Russian legislation is de–facto effective in Crimea), the owners of the Crimean trademarks that did not yet receive there any legal protection risk to face the impossibility to protect their own brands only if they do not fail to register them as trademarks but already in Russia. The participants of the round-table meeting summarized that the Crimean owners of trademarks will not escape the requirement above even with the view to Article 12 Federal Code of Ukraine-6 of 21.03.2014 (Annexation of Crimea by the Russian Federation was performed in line with the above) that guarantees in the territory of Crimea an automatic effect of the documents issued by the state bodies of Ukraine.

The thing is that the effect of the trademark certificates of Ukraine without any confirmation on the part of Russia creates unfavorable conditions, for the Russian applicants inclusive, that will eventually lead to debates. To prevent the talks Rospatent has already published the notification of May, 6, 2014, that the Crimean entities are allowed to file the application on recognition of their trademark in Russia. The legal status of the present notification is not yet clear and, according to the participants of the round-table meeting, there is no confidence today that registration ‘from zero’ of the ‘Crimean’ trademark in Russia will be more interesting for the owners. At the meeting the participants agreed on the summary regarding current ineffectiveness or weakness of such methods as recognition of a trademark as a widely known brand in Russia (the present instrument of legal protection requires a customized approach) as well as that of the declaration of the ‘right of prior use’.

In any case, none of the instruments of legal protection might be a panacea if in Russia the trademark has been already rightfully registered in case if it is identical to the ‘Crimean trademark’ or the one that is similar to them up to extent of actual confusion. In this case the Crimean entrepreneurs will have to enter the process of negotiations with the Russian owners of trademarks.

Vitaliy Savchuk, the lawyer, comments: ‘It is absolutely clear that as a result of annexation of Crimea by the Russian Federation the trademarks were not incorporated into the list of the most acute issues. Therefore, the corresponding legislation of Russia shall not foresee any solution to the problem that could be either logical or convenient for all or nearly for everyone. But analysis of the Crimean status, the interest of all the parties involved as well as the current system for regulation of intellectual property brings about the conclusion that no ultimate solution is likely to be found. Hereat, the potential problems that we have discussed might impact many business processes: usage of trademarks, their devaluation, reallocation of royalties and etc. Today the most effective solution is initiation of independent urgent action by entities in Crimea– search of corresponding trademarks in the Russian registry and, based on the search results, either registration of their own trademark, or the negotiations with the entities that already own the present trademark'.