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Practical issues on dissolved company’s trademark

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To continue the topic on trademarks after dissolution of a company in Latvia, it is proposed to consider the practical case concerning the Latvian trademark No. M 45 949 Latgales alus.

The trademark was registered on 20 May 2000.[1]

On 20 August 2013 the trademark assignment from its owner, a New Zealand company Mirtex Global Corporation Limited (hereinafter - Mirtex), to Alexander D., a natural person from Daugavpils (LV) was registered.[2] The ground for the trademark assignment registration was a Deed of Assignment dated 9 July 2013.

Then, on 20 June 2016 the trademark was assigned to Rēzeknes speciālā ekonomiskā zona “DFD”, SIA (LV)[3] (hereinafter - DFD), thereafter the trademark assignment to Rēzeknes Bryuvers, SIA (LV)[4] (later changed its name to Sol Invest, SIA)[5] was registered on 12 October 2018.

If in 2015 Alexander D., the owner of the trademark at that moment, did not file an objection against registration of a later trademark, perhaps, this sequence of changes of ownership would still have been considered legitimate and reasonable.

However, resulting the trademark conflict, it was revealed that the Deed of Assignment between Mirtex and Alexander D. was signed after the New Zealand company had been removed from the New Zealand Companies Register, which was recorded on 25 February 2011,[6] that is, at the moment when Mirtex had no right to sign any documents since the company did not exist.

As a result, firstly, from 25 February 2011 to 20 August 2013 the trademark was registered in the name of a non-existing company, and secondly, on 6 November 2017 the transaction on the trademark assignment and Deed of Assignment between Mirtex and Alexander D. was recognized invalid by the court (the judgment after the unsuccessful cassation[7] entered into force on 21 March 2019).

If the dissolved company were Latvian, part 5 of Article 19 of the Law on the Entry into Force of the Commercial Law of Latvia (later this provision was duplicated in the Commercial Law, Article 317, part 3) in conjunction with Article 417 of the Civil Law could be applied to the trademark. Following these rules, a trademark left after the removal of a company from the companies register should be considered as equivalent to property without heirs and escheat to the Latvian state.

However, Mirtex Global Corporation Limited was a New Zealand company. Accordingly, the property that remains after company dissolution vests in the Crown,[8] provided that the company has not been restored or the court has not decided to vest the escheated property in the entitled person. Further, the state may dispose of the property at its discretion at the request of the interested person[9].

Thus, on 9 July 2013, the person acting on behalf of the non-existing company Mirtex signed the Deed of Assignment to transfer the trademark to Alexander D., while only the state of New Zealand had the right to dispose of the trademark. Obviously, the New Zealand Treasury, which manages the property vested in the Crown, had no idea about the Latvian trademark.

In this regard, there are several issues.

Firstly, it is not entirely clear what actions the Patent Office of Latvia should take in connection with the court’s judgement on the invalidity of the Deed of Assignment and transaction on the trademark assignment, since it was the Patent Office that registered the trademark assignment on the basis of the invalid document. It should be noted that the competence of the Patent Office does not include the substantive examination of the Deed of Assignment, including the verification of signatories’ entitlement. Compliance with the formal requirements of the document is sufficient for trademark assignment registration, although recently the Patent Office started to check at least whether the Latvian company existed at the time of signing the assignment document.

If the Deed of assignment being the basis for the trademark assignment registration is invalid, the assignment registration must be canceled. The Patent Office carries out the trademark assignment registration by issuing an administrative act. It remains an open question whether it is possible to challenge this administrative act, to cancel it or to issue a new one, whether the Patent Office is obliged to take some action in this regard, what consequences this may lead to, and, finally, whether this should be done taking into account the court judgement and the subsequent changes of trademark owners.

Secondly, it should be weighted how the invalidity of Deed of Assignment and transaction on trademark assignment can affect the subsequent two trademark assignments to DFD and then to Rezeknes Bryuvers, SIA. In such situations the Civil Law of the Republic of Latvia, Article 2380, does not provide for the return of a trademark, but for the return of a fee received for the transfer of a trademark, provided that the assignee has acted in good faith.[10] After the dissolution of the New Zealand company Mirtex the trademark has vested in the Crown, however, Alexander D. became presumptively bona fide assignee of the trademark. Consequently, the New Zealand Treasury may request the return of the fee received by Alexander D. for the transfer of trademark to DFD.

Consequently, the status of the trademark will apparently remain the same, since it is difficult to imagine that the persons involved will take any action. The New Zealand Treasury is probably not aware that a certain Latvian trademark was transferred without their awareness, and the question of the fee the Treasury could receive from Alexander D. can hardly be taken seriously (was there any payment?). The competence of the Patent Office of Latvia in this situation is very limited; therefore, in absence of a request of an interested person or supervisory authority, registration of the chain of trademark assignments is unlikely to be revised. With regard to the interested parties, it can be assumed that the current or one of the previous trademark owners is logically not interested in revising the trademark rights, while the person involved in a trademark dispute has achieved its goal - the objection against his trademark was rejected. Thus, the trademark currently registered in the name Sol Invest, SIA will be valid at least until 23 October 2028, unless the trademark owner or other interested party requests termination of the trademark registration.

* All materials used in this article are obtained from public sources.

 

 

[1] http://databases.lrpv.gov.lv/databases/lv/trademark/details/m-98-2433

[2] The Official Gazette of the Patent Office of the Republic of Latvia - "Patenti un preču zīmes" No. 8/2013, 20.08.2013, p. 1152

[3] The Official Gazette of the Patent Office of the Republic of Latvia - "Izgudrojumi, Preču Zīmes un Dizainparaugi" No. 6/2016, 20.06.2016, p. 998

[4] The Official Gazette of the Patent Office of the Republic of Latvia - "Izgudrojumi, Preču Zīmes un Dizainparaugi" No. 10/2018, 20.10.2018, p. 2096

[5] Latvijas Vēstnesis Nr. 249 (6335), 19.12.2018.

[6] Judgement of Riga Regional Court of 6 November 2017 in the case No. C30489015

[7] Decision of High Court of 21 March 2019 in the case No. C30489015, SKC-193/2019

[8] https://treasury.govt.nz/information-and-services/other-services/bona-vacantia-ownerless-property/how-deal-property-company-removed-companies-register

[9] I would be thankful for any clarifications and comments by New Zealand lawyers and professionals, e.g., regarding the statute of limitations for restoration of companies, filing applications for the vest of the trademark with court and filing applications of the interested party with the Treasury etc.

[10] The Civil Law of the Republic of Latvia. Valdības Vēstnesis No. 41, 20.02.1937.

 

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