Sanctioned countries and trademark protection

What happens to trademark rights when trade sanctions or other restrictive measures are placed on countries by the United Nations Security Council, or by countries or territories, such as the US or EU? We outline the implications.

When economic or trade sanctions are placed on any country, there will be implications for IP owners both within and outside the sanctioned country. Depending on the objectives of the measures, the sanctions could prohibit financial transactions or add restrictions to imports and exports.

Therefore, a first impact for companies with trademark registrations in sanctioned countries will be that it becomes difficult, if not impossible, to sell their goods or offer their services in these countries. In other words, the fact that a country is facing economic and trade sanctions can also affect the business development, growth and turnover of foreign companies since the sanctioned country is not accessible as a sales market.

A second, less obvious impact has to do with the obligation of use of a trademark registration. In most countries, when a trademark has been registered for a certain period of time (often three or five years), the trademark must be used as registered. If not, the registration will be exposed to a non-use cancellation action by a third party or even an automatic cancellation by the trademark authorities. In addition, it is not possible to renew a trademark registration in some countries when no evidence of actual use can be provided. In this respect, when a foreign trademark owner is not able to sell its goods or offer its services under its trademark in a certain country because of economic and trade sanctions, its trademark registrations can be at risk.

Sanctioned countries and the obligation of use – some examples

It is important to check for obligation of use in sanctioned countries, therefore, as well as: (i) whether a cancellation following non-use will be imposed automatically by the trademark authorities or only following an action by a third party; (ii) whether actual use is required at the time of filing a trademark renewal; and (iii) whether economic and trade sanctions can be invoked as a force majeure argument against such requirements.

Here are some examples of sanctioned countries and the implications for trademark rights in each:

• Iran
  A trademark registration is vulnerable to a non-use cancellation action if it has not been in actual use for three consecutive years after registration. Such an action can only be initiated by a third party, however, as the IP Office does not ask for evidence of use at the time of renewal or any other moment. In case of a non-use cancellation action by a third party, the fact that Iran is a sanctioned country can be invoked as a force majeure argument, although there are no straightforward rules on this argument.
• Sudan
  A trademark registration is vulnerable to a non-use cancellation action if it has not been in actual use for five consecutive years from the registration date. Such an action can only be initiated by a third party, however, as the IP Office does not ask for evidence of use at the time of renewal or any other moment. In case of a non-use cancellation action by a third party (which is filed directly to a Court), the acceptance of the defensive argument that Sudan is a sanctioned country will depend on the discretion of the judge.
• Syria
  A trademark registration is vulnerable to a non-use cancellation action if it has not been in actual use for three consecutive years following registration. Such an action can only be initiated by a third party, however, as the IP Office does not ask for evidence of use at the time of renewal or any other moment. In case of a non-use cancellation action by a third party (filed directly to a Court), the Syrian Courts will not accept the defensive argument that Syria is a sanctioned country because the sanctions are not imposed by the UN, but rather by specific countries such as the US.

Whether you plan to start commercial activities in a sanctioned country, or already have a trademark registration in that territory, it’s important to consultant with your trademark attorney to ensure you secure and maintain the best protection possible in light of any barriers to trade.

If you have any questions about trademark registrations in sanctioned countries, please speak to your Novagraaf attorney or contact us below.