What happens to a trademark after a legal entity is liquidated?
Nothing lasts forever – a legal entity may close by choice or circumstance. It is often the case that during liquidation procedures and following settlements with creditors, rights holders are no longer able to manage their trademarks. This article addresses the fate of those trademarks. The liquidation of a legal entity does not automatically result in a transfer of rights and obligations. However, after settlements are made, it is common for the legal entity’s property to be transferred to the founder of that entity that has proprietary or corporate rights. Any transfer of exclusive rights must be recorded with the Russia Patent and Trademark Office (Rospatent).
Both a legal entity and an individual can be a founder. Further, a trademark owner in Russia may be a legal entity or an individual entrepreneur (eg, owner of a registered but unincorporated business). In this case, the transfer of a mark to a legal entity is permitted but transfer to an individual who is not registered as an entrepreneur can become problematic. What is more, Russian law does not provide special provisions to regulate the latter.
A trademark that is in the process of being transferred to an individual becomes vulnerable to cancellation. Further, the law allows an individual to assign rights or obtain status as an individual entrepreneur within one year in other situations (eg, inheritance).
The same provisions – namely a one-year period for the handling of formalities – should apply to an individual who receives a trademark after the liquidation of a legal entity of which they were a founder. However, this issue is not clearly stipulated in the law, which can cause problems and lead to unfavourable consequences during the liquidation process, up until the time that the right lapses. This issue has been raised by the legal community and it is to be hoped that upcoming changes to the law will include a special provision to address this.
When a legal entity collapses, trademarks become unassigned and remain on the trademark register as active marks. Rospatent is not obliged to monitor the legal status of trademark owners. Such so-called ‘dead wood’ trademarks may become obstacles to the registration of new trademarks. Fortunately, Russian law allows third parties to file requests with Rospatent for a finding that the mark has been abandoned due to the liquidation of a rights holder. The party interested in abandonment should adhere to formal requirements such as:
- submitting documents containing evidence of the liquidation of the legal entity; and
- enclosing documents and providing comments to prove that the liquidation document has been executed in accordance with the law of the liquidated entity’s country of origin.
These requirements may look straightforward, but Rospatent examines all submitted materials very carefully, bearing in mind that the abandonment of a mark is on the line. A party seeking the abandonment of a mark should therefore present an extract from the Companies Register or a decision from a court confirming the liquidation. This material should explain why these documents are correct, reflect all relevant information and be issued by the appropriate body with reference to the law from the country of origin of the liquidated party.
While the above processes appear simple, they may turn into a challenge when the legal system is unclear in the country of origin of the liquidated entity.
For example, information on Spanish companies is published in various official resources and can be accessed and downloaded, but only for information purposes set out in the regulations. If you wish to receive an official extract with detailed and verified information, you must deal with the Regional Register, which has knowledge of the specific province of Spain in which the liquidated entity is located. That may take time and require the notarisation or legalisation of documents.
Liquidated entities and their founders as well as interested market players must be very careful and plan their course of action in a timely manner in order to avoid adverse consequences when the fate of a trademark is on the line.
This is an Insight article, written by a selected partner as part of IAM's co-published content. Read more on Insight
Copyright © Law Business ResearchCompany Number: 03281866 VAT: GB 160 7529 10