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Publications - What constitutes an advertisement in Ukraine?

What constitutes an advertisement in Ukraine?

Journal "The In-House Lawyer", #165, November 2008

IIN UKRAINE, LEGAL RELATIONSHIPS THAT arise between companies in the sphere of intellectual property are regulated. The problematic questions for companies with respect to the application of the law may be settled by receiving an official explanation from the governmental authorities or by applying to the court. However, governmental authorities only understand problems superficially and treat issues unilaterally.

This article contains a short analysis of letter no 2287 (dated 30 March 2007) of the State Committee of Ukraine for Regulatory Policy and Entrepreneurship, addressing the question of whether a trade mark placed on an awning is considered to be an advertisement.

In accordance with Article 492 of the Civil Code of Ukraine, a trade mark means any sign or any combination of signs applied to distinguish the goods or services produced/rendered by one person from the goods or services produced/rendered by others.

According to the Article it)f the Ukrainian law 'On Advertisement', 'advertisement' means any information about a person or the goods they distribute designed either to form or support the knowledge of advertising users and their interest in such persons or goods.

This law also includes provisions defining advertising on transport. Advertising on transport means advertising by public transport enterprises on the underground, on internal and external surfaces of vehicles and on buildings belonging to public transport enterprises. Simply put, 'advertising on transport' means advertising on public transport. Such differences between the definition of advertisement on public and private transport are unusual - normally advertising on private transport would also be considered to be 'advertising on transport'.

It is necessary to differentiate between the legal status of 'advertising' and that of 'application of trade mark':

- Legal obligations regarding advertising trade marks arise if a company plans to inform users in any way of the existence of a trade mark and/or to support or generate their interested in such a brand. This is defined as an intention of the company to sell goods or services related to the trade mark.

- Legal obligations regarding the application of a trade mark exist if a company applied the trade mark to differentiate its goods and/or services from those of other companies.

The nature of companies' legal obligations differs, depending on whether they are advertising or using the trade mark. This also affects the taxation of such actions.

Thus placement by a company of a trade mark within its own premises or form of transport (a car, house front, trade stand or trade area) should be considered as a use of the trade mark, not an advertisement. In this case, the company has an objective both to identify and differentiate its goods and/or services from those rendered by other firms. In particular, regarding cars, it is an intention to dsitinguish the car from other models. Further, Article 8 of the law on advertisement provides that the placement of information concerning the goods and/or the producer of the goods, in places where they are sold to the customer, is not considered to be advertising. Such an approach is confirmed by an explanation of the State Committee of Ukraine for Regulatory Policy and Entrepreneurship in letter no 4186 (dated 31 May 2005). This explanation referred to the possibility for the company to place a signboard with its name on the house front where it is situated. To avoid 'advertising', when a company uses the trade mark in this way it should avoid slogans which invite the purchase of goods and/or services. Any slogans must be of an informative, neutral character.

The situation is different if the trade mark is placed on a form of transport that a company does not own. If the trade mark is on the house front and/or the trade stand, things are simple. However, if the trade mark is placed on a car beneficially owned by a third party and not leased to the company, it is considered an advertisement. The use of the trade mark is, in this situation, not of an identifying character, and the company intends to inform the consumer of existence of the trade mark or to extend such information.
Therefore, we may conclude the following:

- if a company places the trade mark on their own property, ie a car, without inviting the purchase of goods and/or services, the said placement will not be considered as advertising and will not be subject to advertising taxation;

- if a company places the trade mark on a car or a car awning without the right of ownership, such an activity will be considered as advertising. This will oblige the company to pay advertising tax (the advertising taxation rate depends on whether the advert is long-term or a one-off).

Taking into account the information above, the State Committee for Regulatory Policy and Entrepreneurship's interpretation of whether a trade mark placed on a car awning is an advertisement is not a final position, as additional comments by appropriate state bodies may change the situation.

By Taras Rozputenko, associate,
Volkov Koziakov & Partners

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