Serbia recently reworked its Law on Trademarks, coming into force on 1 February 2020. What has changed? In local parlance: “Everything and nothing”. The changes are not extensive, but concern key features of the local trademark rules.
The new law introduced an opposition system, as an auxiliary system to the existing framework. Per previous regular procedure, the Intellectual Property Office performed an official examination of both the absolute and relative grounds for refusal of trademark applications. The rule regulating this part of the procedure has remained unchanged. However, an additional step was introduced. After the examiner reviews all the refusal grounds, trademark applications are published, and oppositions can be filed within a three-month period. This approach exists in similar forms in countries like Portugal and Sweden.
2. Parallel Imports
With the new law, Serbia again changed its national trademark exhaustion system back to a worldwide trademark exhaustion system, which was in place several years ago until changes were made in 2013. A national trademark exhaustion system means that a trademark does not entitle its holder to prohibit others to use it in connection with goods marked already placed in circulation in the national territory. This means that trademark holders would be entitled to prohibit legal product imports and sales in Serbia in connection with goods already marketed abroad, i.e. they would be authorised to prevent parallel imports. In contrast, a worldwide system means that the trademark holder cannot prohibit others from reselling the products legally put into circulation anywhere in the world.
There has been somewhat of a clash between various institutions in Serbia vis-à-vis the framework for parallel imports: the Intellectual Property Office tended to encourage preventions of parallel imports and was supported by the courts on the basis of trademark rules. However, restrictions to parallel imports prevent intra-brand competition, generally leading to higher prices for consumers. Therefore, the Serbian Competition Commission had several times come out forcefully against the system, advocating for liberalisation of parallel imports and against perceived abuses and protectionism by exclusive importers. The legal changes represent a significant victory for the Competition Commission and the parallel importers and imply a significant compliance risk of antitrust investigations facing any Serbian distributors looking to hinder parallel imports. However, bearing in mind the trademark’s territorial nature, there is a significant downside, as well, in the reduction of incentives for distributors to invest in product and market development, which may very well lead to a lower quality of service across the board. Having in mind the expansion of e-commerce in particular, including cross-border sales, time will tell what the ultimate effects of these legal changes will have on the Serbian consumers.
Other smaller amendments related to the Trademark Law concern a narrower interpretation of the goods and services covered by trademark registrations and specifying the appeal process in revocation proceedings, but should not have as large of an impact as the previously-described changes. The Serbian trademark rules ran in a well-defined system for a number of years, but a nominally small change has the potential of significantly upsetting the apple cart.
The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.
By Veljko Smiljanic and Nikola Kliska, Senior Associates, in cooperation with Karanovic & Partners