Cross-border unfair competition dispute questions Belarus trademark registration

• The claimants, the creators of the hookah chain HOOKAH PLACE, filed unfair competition claims against the defendant with the EEC
• The EEC found that the defendant had violated the competition rules of the EAEU cross-border market
• The defendant, by registering the mark HOOKAHPLACE in Belarus, sought to take advantage of the reputation of the claimants’ HOOKAH PLACE brand

The dispute involved two companies registered in the Eurasian Economic Union (EAEU) (‘the claimants’) and a Belarusian company (‘the defendant’), with the bone of contention being hookah bars operating under the brand HOOKAH PLACE.

The case is significant as it underlines the following key aspects:

1. the benefits enjoyed by trademark owners;

2. the potential difficulties faced by third parties, including original brand creators, in ‘first to file’ countries; and

3. the possibility to consider cross-border unfair competition disputes at the Eurasian Economic Commission (EEC), the supranational regulatory body of the EAEU.

Background

In July 2021 the claimants, the creators and organisers of the famous hookah chain HOOKAH PLACE, filed unfair competition claims with the EEC against the defendant, which operated the hookah bar HOOKAHPLACE in Belarus. The claimants considered that the Belarusian hookah bar HOOKAHPLACE created the appearance of a connection with their well-known brand, which misled consumers.

EEC decision

After an investigation lasting more than two years, in late November 2023 the EEC found that the defendant had violated the competition rules of the EAEU cross-border market: namely, it had committed actions aimed at misleading consumers in relation to the provider of the services at issue. The EEC ~ned the defendant and its director.

The following conclusions of the EEC are noteworthy.

Why should the EEC consider the dispute?

The EEC is competent to consider unfair competition disputes in a cross-border market. The following market was applicable in this matter: the services for granting IP rights to third parties, as well as the services of organising entertainment (hookah bars) using a trademark (‘the services’).

A market is considered to be cross-border if its geographical boundaries cover the territories of two or more EAEU member states. The EEC established that a potential consumer may purchase the services, or have an opportunity to purchase the services, within the geographical boundaries of two EAEU member states (including Belarus).

How was the brand HOOKAH PLACE created?

The claimants have been providing the services since 2013, using a logo including the word mark HOOKAH PLACE:

They have also registered and used domain names and accounts on social networks.

The logo was created by a third party under an agreement with one of the claimants. Elements of this logo were used by the claimants when registering a series of trademarks that shared the common verbal elements HOOKAH PLACE. These trademarks did not cover Belarus.

The services were provided by both claimants on their own and their partners under separate agreements concluded in relation to hookah bars. The network of hookah bars using the verbal designation HOOKAH PLACE included more than 200 bars in 20 countries.

Which actions constituted unfair competition?

The defendant’s shareholder received information from the claimants about the business model for hookah bars (eg, prices, materials and functioning). Having received this information, the defendant’s shareholder stopped communicating with the claimants.

The defendant opened two hookah bars in Belarus. In its advertising, it positioned its hookah bars as being part of the international network of hookah bars owned by the claimants.

In 2018 the defendant registered the trademark HOOKAHPLACE in Belarus. Subsequently, it tried to attack the claimants’ partners with cease and desist letters and/or tried to persuade them to conclude agreement with the defendant, rather than the claimants. The defendant also registered a website to promote its activities on the Internet.

What benefits did the defendant receive?

The EEC established that the defendant, by registering the trademark HOOKAHPLACE in Belarus, sought to take advantage of the reputation of the brand HOOKAH PLACE, which was obtained through the ~ financial and production efforts of the claimants. The defendant also sought to gain advantages by carrying out its activities in Belarus and to push the claimants and their partners out of the Belarus market. Such actions might lead to losses and/or damage to the claimants’ business reputation.

This article first appeared on WTR Daily, part of World Trademark Review, in January. For further information, please go to www.worldtrademarkreview.com.