In Ukraine, brands are usually fought over by liquor producers and retailers.
The tobacco growers have been quiet until recently.
However, during a crisis, they too tend to trip each other up.
Swiss cigarette manufacturer Philip Morris Brands Sarl has filed a lawsuit to ban its American competitor, British American Tobacco (Brands) Inc., from using the Pall Mall cigarette brand in Ukraine.
EP learned of this from a recent court ruling by the Kyiv Commercial Court.
Because of the line on the packaging
Philip Morris filed a lawsuit demanding that the State Intellectual Property Service annul its competitor's brand registration certificate.
To determine who was right, the court in March ordered a forensic examination to determine the similarity of the competitors' brands. It's worth noting that Philip Morris doesn't have its own Pall Mall brand, but it does have Parliament cigarettes.
In court, the defendant's representative stated that Pall Mall was well known to consumers and was associated with British American Tobacco.
However, a Philip Morris representative objected. He believes that Pall Mall cigarette consumers are not only being misled about the manufacturer but are also incorrectly associating the competitor's product with their own brand.
In court, Philip Morris cited its international trademark registration for one of the graphic elements on Parliament packaging. It calls it the "Slash Device"—a light, diagonal, elliptical line.
Philip Morris spotted this line on Pall Mall packaging and therefore deemed it necessary to ban the competitor's entire brand.
Representatives of both companies contacted by EP decided not to comment on the dispute, at least until the brand assessment is completed.
Other market participants and lawyers interviewed by the editorial team were surprised. Previously, international tobacco companies, of which there are four in the Ukrainian market—there are also Imperial Tobacco and Japan Tobacco—tended to avoid litigating brand use in local courts.
Element of war?
Lawyers suspect that Philip Morris is starting a small war.
"It looks like Philip Morris wants to trip up its competitor and force them to reformat their existing product packaging," says Artem Afian, managing partner of Juscutum Law Firm. He believes the company may have taken this step because of the crisis: the market is declining, and they need to survive.
In addition, he adds, the company may try to recover damages for the period when Pall Mall cigarettes were sold at retail.
"It's possible that Philip Morris has decided to monopolize a simple design element. It has consistently registered a series of trademarks that demonstrate its evolution," notes Illarion Tomarov, head of intellectual property at AstapovLawyers.
It's surprising that Phillip Morris is so interested in Pall Mall's fate in Ukraine. According to AC Nielsen, cigarettes under this brand are only among the top thirty most popular brands in the country.
Meanwhile, Parliament, which the company is trying to protect, rounds out the top 15 brands. Moreover, it's the most expensive of them, at around 24 UAH. Pall Mall, on the other hand, costs only 15-16 UAH.
Natalia Meshcheryakova, partner at IPExperts, an intellectual property expert bureau, has another theory.
"Considering that in such cases, courts quite often apply a measure to secure a claim in the form of a ban on the defendant transferring rights to a trademark, it can be assumed that the plaintiff's goal is to block such a transaction."
In other words, Phillip Morris, perhaps aware of the sale of a competitor's brand, is trying to drag out this process for as long as possible.
Chances are few
Lawyers believe that it will be difficult to win a case against a Swiss company.
"The controversial diagonal stripe that appears after the words 'Pall Mall' takes up less than 5% of the combined trademark's area on the packaging and clearly doesn't stand out as a distinct element," says Tomarov.
According to him, the trademarks Philip Morris cites have no verbal elements or original shapes. Only one of them is dark blue, while the others are black and white. "The forensic examination's response regarding similarity is easy to predict—it will be negative," he believes.
Meshcheryakova also believes the Swiss have little chance. Tomarov and Afian note that heavy smokers are reluctant to switch brands and are well aware of their cigarettes' appearance. They are unlikely to confuse them.
Loud controversy
In recent years, litigation regarding trademark similarities with well-known brands in various industries has become more frequent in Ukraine.
Intellectual property protection is starting to bring in a decent income for Russian lawyers. Claims are typically directed at local manufacturers who have decided to capitalize on their strong brand names.
EP has compiled a list of the most high-profile lawsuits over the past two years, in which major brands are attempting to eliminate their copies in Ukraine.
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