№2(13)(2013)

On the size of the regular price of remuneration to the owner of property rights to the trademark, which differs from the trademark in the customs register only by certain elements and is similar to it to such extent that they may be confused

(practical advice of a forensic expert to determine the amount of payments)

From September 1, 2012 Resolution of the Cabinet of Ministers of Ukraine "On approval of the list of grounds for suspension of customs clearance of goods for which the copyright holder has not provided an application for the protection of their property rights to the object of intellectual property rights, on the initiative of the customs authority» № 432 from 21.05. 2012 came into force.

It is worth noting that the State Intellectual Property Service of Ukraine since 1992 discloses official statistics on the number of registered documents on intellectual property rights (with the exception of copyright or related intellectual property rights).

As of 1 August 2012 (since 1992) there were registered:

• 104117 patents for inventions, including registered inventor's certificates and 20-year after short;

• 71972 patents on utility models;

• 23498 patents for industrial designs;

• 159444 Certificate to marks for goods and services, including divisional applications;

• 12 certificates on IC topography;

• 19 certificates on qualified indication of origin of goods;

• 21 certificate for the right to use the registered qualified indication of origin.

Thus, tens of thousands of intellectual property rights may provide a basis or reasons for the suspension of customs clearance in accordance with:

• application of a person who according to law has proprietary rights to the intellectual property not included in the customs registry of intellectual property rights, or a person acting on their behalf within granted powers;

• information officially received by the customs authorities of the violation of intellectual property rights by: law enforcement and regulatory agencies; customs authorities of Ukraine and other countries, international organizations, whose competence including questions of intellectual property rights.

In addition, the basis for the suspension of customs clearance of goods is the fact of declaring of a trademark, which is different from brand available to the customs registry only by certain elements and is similar to it so that they can be confused.

In accordance with paragraph 2 of Art. 5 of the Law of Ukraine "On Protection of Rights to Trademarks for Goods and Services» № 3689 of 15.12.1993 (hereinafter - Law № 3689), the object of the mark (trademark) can be any marking or any combination of markings, in particular words, including personal names, letters, numerals, figurative elements, colors and combinations of colors as well as any combination of such marking.

Multilateral "Agreement on Trade-Related Aspects of Intellectual Property Rights" dated 15.04.1994 (hereinafter - Agreement on TRIPS) and Decree of the European Parliament and the Council "On convergence of legislation of Member States in respect of trademarks and service marks" of 22.10.2008 (hereinafter - EU Directive on Trademarks) proceed from the fact that the owner of the mark may require discontinuation of any distinctive marking, the use of which may violate their rights.

Thus, p. 16.1 of TRIPS Agreement obliges the states parties to ensure the owner of the trademark the right to prohibit all third parties to use without their consent in the process of trading identical or similar marking for goods or services.

 It should be noted that the term "marking" is generalizing and applies not only to trademarks.

All designations are prohibited for use by third parties according to the EU Directive on Trademarks and Agreement TRIPS, considering the level of certainty of risk of mixing the trademark and illegally used designation are divided into two groups.

 The first group includes the marking identical with a registered mark intended for labeling homogeneous products (ie, identical marks for identical goods). In these circumstances, the risk of confusion in the minds of consumers is an obvious fact that needs no proof. Therefore, the probability confused some marking of the registered mark is presumed that allows the owner to prevent its illegal use, relying only on the fact of the identity to its own trademark.

The second group includes marking whose use may be prohibited by the owner only if they should prove the risk of mixing it with his trademark. The above condition is related to the lack of complete identity between the disputed designations and labelled goods or services.

 Thus, the following are included in the second group:

• similar by trademark designations which are intended for labeling of identical goods;

• similar to the trademark designations used for similar goods;

• identical with the trademark designations that apply to similar goods.

According to Art. 5.3 of the EU Directive, it is prohibited to put someone else's marking on a product or its packaging, offer the product or introduce into trade channels under a false designation or save for the specified goals, and offer or provide services under this sign, make imports or exports under an assumed designation , use alien designations in business documentation and advertising.

Standards of IPR protection during the movement of goods across the customs border of Ukraine are contained in Chapter XIV of the Customs Code of Ukraine.

 So, if the customs authorities on the basis of customs registry of intellectual property rights which are protected by law, notice signs of violation of intellectual property rights regarding the goods presented for customs control and customs clearance, customs clearance suspended and the goods are to be stored at this authority's warehouse. The decision to suspend customs clearance for up to 10 business days and, if necessary, to extend this period for not more than 10 days is made by the head of the customs authority or a person who performs his duties. On the day of the decision to suspend customs clearance the Customs office by fax and / or electronic communication informs the right holder about the fact of bringing these goods to customs clearance, and the declarant - about the causes of the suspension of customs clearance, and also it informs the declarant about the name and address of the owner. The notification to the holder includes: customs clearance of which specific goods has been suspended, their number, cause and time of the suspension, the name and address of the owner of the goods, as well as other necessary information.

If within the first 10 working days of receiving notification of suspension of customs clearance the right holder informs the customs authority of appeal to the courts to protect intellectual property rights or turns to such customs agency with a written reasoned request for extension of the suspension of customs clearance, the suspension of customs clearance of these products may be extended by the customs authority, but not for more than 10 business days or for the period set by the court in its ruling.

In the absence of compelling reasons to consider the products suspended by customs authorities for customs clearance as counterfeits, the right holder may apply to the customs authority with a written statement on providing the consent to reinstate customs clearance of such goods. In this case the right holder has the right to order the destruction of such goods from the owner.

According to p. 17, p. 46, Art. 4 Customs Code of Ukraine, counterfeit goods are goods containing objects of intellectual property rights (copyright and related rights, inventions, utility models, industrial designs, trademarks, geographical indications (Appellations of Origin) and plant varieties) whose importation into the customs territory of Ukraine or export from this territory is a violation of intellectual property rights.

Procedures for suspension of customs clearance are also regulated by the Decree of the Ministry of Finance of Ukraine "On approval of the registration of the customs registry of intellectual property rights which are protected under the law» № 648 of 30.05.2012 and "On approval of the interaction of customs in the exercise customs control and customs clearance of goods containing objects of intellectual property »№ 647 of 30.05.2012.

Given the above, this article is relevant both for holders of property rights to IPR objects and declarants, and for forensic experts (given the lack of certified by the Ministry of Justice of Ukraine separate methodology to conduct forensic examinations on economic research in the field of intellectual property).

Since "compelling reason not to consider the goods, suspended by customs authorities for customs clearance counterfeit" may be a license or sub-license agreement between entities that provides for payment of compensation, readers are offered the stages of forensic research of questions regarding the size of the regular price of remuneration to the owner of property rights to the trademark, which differs from the trademark in the customs registry only by certain elements and is similar to it so that they could be confused at the date of customs clearance.

Conducting forensic investigation on the above question is based on the condition that the declarant (whose goods are suspended by the customs authority for customs clearance) and the owner of the property rights of trademark (available in the customs registry) are residents of Ukraine.

Thus, at the first stage of expert research comparing details of documents and the terms "identification code", "location", "Name of Entity", "kinds of activity", "classes of the Nice Classification", "priority" is held.

Thus, details "location" and "Name of Entity", specified in the certificate of state registration of the legal entity that owns the property rights to the trademark, which is different from the trademark, available in the Customs Register, only by certain elements and is similar to it so that they can be confused should coincide with the details "location "and" the name of a legal entity, "referred to in the Certificate of Ukraine of the owner of the mark for goods and services in the certificate of effect within Ukraine of international registration of the trademark for goods and services.

Comparison of details of documents should also be based on the publication of information on the issue of certificates of Ukraine trademarks and service marks, starting with № 1 of Official Bulletin "Industrial Property" State Enterprise "Ukrpatent" (hereinafter - Official newsletter) for 1993. Publication of data on granting certificates of Ukraine to marks for goods and services on the basis of Art. 12 of the Law № 3689, starting with number 5 of the Official Bulletin for 1994 (section "Publication on the issuance of certificates of Ukraine to marks for goods and services"). The date of information for granting the certificate to sign for goods and services is the publication date of the newsletter that is stated on its front page.

 Ownership of the sign (trademark) is confirmed by the certificate. Validity of the certificate is 10 years following the filing date to the State Enterprise "Ukrpatent" and is extended by the state enterprise "Ukrpatent" upon the request of the owner of the certificate each time for 10 years, subject to the fee.

 Publications about issuing certificates of Ukraine to marks for goods and services may include the following information (The INID codes):

(100) – USSR certificate number;

(111) – registration number of the mark which is the number of the certificate;

(151) – date of registration of the mark;

(181) – expected certificate date expiration;

(200) – number and date of submission to the State Department of the application previously filed to the Patent Office of the USSR;

(210) – application number;

(220) – filing date;

(230) – data on exhibition priority;

(300) – data on priority under the Paris Convention;

(310) – number of the earlier application under the Paris Convention;

(320) – filing date of an earlier application under the Paris Convention;

(511) – indices of the ICGS and the list of goods and services;

(526) – removal of individual elements of the mark;

(540) – representation of the mark;

(551) – indication that the mark is collective;

(554) – indication that the mark is three-dimensional;

(556) – indication that the mark is a sound;

(591) – indication of the color or combination of colors that are protected;

(641) – number and date of submission of other proposals related related;

(646) – numbers and dates of other registrations of the mark legally;

(732) – name or the full name and address of the owner (s) of the certificate.

When publishing information about marks for goods and services each item in accordance with WIPO Standard ST.60, is accompanied by INID codes that were double (two positions) before December 1993, triple afterwards. In Ukraine triple INID codes are used, beginning with the official bulletin № 3 for 1996.

Information on the code INID (591) require payment of the fee for color, if these colors are other than black and white image. If there is no INID code (591), trademark for goods and services is protected and may be used in any color or any combination of colors other than black and white.

Starting from № 7 2003 (Book 2), the official newsletter contains section "Information about the Marks registered under the Madrid Agreement Concerning the International Registration of Marks and / or the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks, which are protected in Ukraine", which publishes signal information under INID codes: (111) (116) - the number of extended international registration (151), (450) - the date of publication of information on the International Registration and issue of the WIPO journal (511) (540) (580) - date of submission of information to the International registry.

Also, beginning with number 4 (book 2) of the Official Bulletin for 2007, according to the norms of the Order of State Department of Intellectual Property № 148 of 28.12.2006, amendments to the data on the international registration of marks that have been granted protection in Ukraine are published in the "Notification" section.

Besides, official bulletin № 7 2005 first featured "Information on well-known marks in Ukraine".

Thus, pursuant to the results of the recognition of Appeals of the State Department of Intellectual Property of the mark for goods and services as a well-known trademark protected without registration under international treaties, publication of information was initiated concerning:

• effective dates of the decision, declaring that the mark has become well known in Ukraine;

• date upon which the mark has become well known in Ukraine;

• name or the full name of the owner;

• representation of the mark;

• list of goods and / or services for which the mark is known in Ukraine.

The owner of though unregistered on the territory of a certain country but a well-known mark in another country that has joined the Paris Convention for the Protection of Industrial Property(hereinafter - the Paris Convention), has the right to prohibit the use of symbols. Thus it is enough to prove the publicity of the latter (Article 6 bis of the Paris Convention and Art. 16.2 of the TRIPS) and existence of the risk of confusion between the owned mark and the conflicting designation.

At the same time the owner of the usual mark may exercise the right to ban the registered designation solely within the territory specified in the application for registration of a trademark for goods and services.

The comparison of documents and details " CTEA activities" should consider the following.

According to Order № 457 of 11.10.2010 of the State Committee of Ukraine for Technical Regulation and Consumer Policy, beginning 1 January 2012 the National Classifier DK 009:2010 "Classification of Economic Activities" entered into force to replace DK 009:2005, which is to be reversed from 31 December 2012.

Thus, according to CTEA-2010 a new class of economic activities 77.40 "Leasing of intellectual property and similar products, except for works copyrighted" appeared. This class includes the provision of rights to use intellectual property products and similar products, for which royalty or license fee shall be paid to the owner of the product (ie the owner of the property). Leasing of such products can take various forms, such as permission to reproduce, use in the following processes and products, business management under the brand name on a franchise etc. Owners of intellectual property products may act as their developers or not. Class 77.40 includes:

• Leasing of intellectual property with the exception of copyrighted works (such as books or software);

• receiving royalties or license fees for the use of:

√ patented products;

√ trade and service marks;

√ brand names;

√ exploration and evaluation of mineral resources;

√ franchise agreements;

√ activities to transfer the non-exclusive right to use the trademark for goods and services to legal entities;

√ activities to transfer rights to use the technical specification of the product manufacturing to legal entities and individuals.

Class 77.40 does not include:

• acquisition of rights and publishing rights;

• production, reproduction and distribution of works protected by copyright (books, software, films).

In carrying out comparison of details of documents the forensic expert should take into account that under CTEA-2005 there was a subclass 74.87.0, which included:

• leasing of nonfinancial intangible assets;

• activities to transfer the non-exclusive right to use the trademark for goods and services to legal entities, transfer of rights to use technical terms of product manufacturing to legal entities and individuals.

                Court expert in the research part of the opinion should draw attention of the court to the results of comparison and the copyright holder's lack of registration of intellectual property rights (included in the custom registry) for class 77.40 CTEA-2010 and / or class 74.87.0 CTEA -2005.

Satisfaction of the claim of the right holder of intellectual property rights (included in the custom registry), which does not have registration by class 77.40 CTEA and / or class 74.87.0 CTEA-2005, is left to the discretion of the court.

The comparison of documents and details of "classes of the Nice Classification" should consider the following.

Nice Classification is based on the classification composed in 1935 by the Joint International Bureau of Intellectual Property, WIPO's predecessor. This classification, which includes the list of 34 classes and the alphabetical list of products that have been approved by the Nice Agreement and later it was supplemented by the list of eight classes of services and an alphabetical list of these services. The first edition of the Nice Classification was published in 1963, the second - in 1971, the third - in 1981, the fourth - in 1983, the fifth - in 1987, the sixth - in 1992, the seventh - 1996, the eighth - in 2001, the ninth - in June 2006, the tenth - in June 2011.

Names and full contents of 45 classes of the tenth edition of the Nice Classification can be seen at the site of the SE "Ukrpatent".

Compulsion of the procedure of comparing the content of classes due to changes in versions for each sign is associated with the following.

In connection with the control procedures of the customs register forensic expert in the research of the conclusion should draw attention of the court to the presence or absence of registration of the mark in the class whose content provides for the service "licensing of Intellectual Property" and / or "services for supervision of intellectual property".

For example, a certificate on mark for goods and services of Ukraine № 777999333 was issued during the eighth edition of the Classification and protected the mark in providing services of "licensing of Intellectual Property" and / or "services for supervision of intellectual property". The ninth edition of the Nice Classification changed the meaning of class 42:

In this the certificate on sign for the goods and services of Ukraine № 777999333 did not protect property owners' rights in 45 class:

If forensic investigation is related to the information about the mark registered under the Madrid Agreement on the International Registration of Marks and / or the Protocol of the Madrid Agreement Concerning the International Registration of Marks, which are provided protection in Ukraine, the procedure of comparing the content of classes may be held on the basis of International Classification of the Figurative elements of Marks (Vienna Agreement).

Vienna Agreement entered into force on 9 August 1985. Countries Parties to this Agreement (as at 1 January 2007) include Austria, Bulgaria, Armenia, Guinea, Kyrgyzstan, Cuba, Luxembourg, Mexico, Netherlands, Poland, Republic of Moldova, Romania, Saint Lucia, Slovenia, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Uruguay, France, Croatia, Sweden, Jamaica.

The first edition of the Vienna Classification was published in 1973, the second - in 1988, the third - in 1993, the fourth - in 1997, the fifth - in 2002, the sixth - in June 2007 (became effective from 01.01. 2008) Sixth Edition changed the previous ones, and its content can be viewed on the website of the SE "Ukrpatent".

According to the norms of paragraph 4.3.14. Instructions for examination of objects technology for patent cleanness (hereinafter - Instructions for examination), if a protected trademark is registered for a different product category (another class), it is necessary to evaluate the possibility of recognition of "a similar good" the product being examined. This assessment presents serious difficulties, as there is no uniformity in the approach to the issue of the courts of different states. In some countries, courts do not provide the classification of decisive importance, in others (Italy, France) courts usually largely rely on the classification of the Patent Office.

Therefore, satisfaction of the right holder’s claim intellectual property rights (included in the custom registry), which has no registration for the class, the content of which provides for the services of "licensing of intellectual property" and / or "services for the supervision of intellectual property" of the Nice Classification or equivalent registration in the category under the Vienna classification is at the discretion of the court.

Comparison of documents and details of "priority" should take into account information on the filing date (220), data on the exhibition priority (230), data on priority under the Paris Convention (300), the filing date of an earlier application under the Paris Convention (320).

In addition, the forensic expert must submit a petition to the court regarding answers on presence or absence in the Unified State Register of judgments relating to the right of priority and actions of the right holder of intellectual property rights to the trademark (included in the customs register).

Petition of the forensic expert should be based on the analogy of law.

For example, according to the Resolution of the Supreme Economic Court of Ukraine on the case of 16.12.2008 № 32/110-07 the right of prior user to the trademark was recognized as a result of its continued use through the implementation in Ukraine of relevant products before the date of filing an application for the trademark.

At the second stage of expert research attention is paid to presence or absence of comparison of details of the documents and the terms "identification code", "location", "Name of Entity", "kinds of activity", "classes of the Nice Classification", "priority" in the report on patent research and / or patent card, that must be presented to the court by the right holder of intellectual property rights to the trademark introduced to the customs registry under the rules of the Instruction for Examination.

Thus, norms of paragraph 4.3.5. of the Instruction for Examination provide that all industrial products marked with trademarks and other types of markings or notations, which are contained both on the product itself and the packaging, are subject to review for patent cleanness of trademarks, regardless of whether these products have been tested for the patent cleanness with respect to other types of industrial property. In addition, service technical documentation, advertising and other materials (such as business papers) are subject to review if the trademark is marked on them.

In case of absence in the case file of a patent research report and a patent card of the trademark, available in the Customs Register, a forensic expert, guided by the memorandum of the Supreme Economic Court of Ukraine from 10.07.2006 № 01-8/1516, must submit an a petition to the court on the answers to questions:

1. Is there probability of confusing the marking on the declarant’s product, halted for customs control, with the trademark, entered into a custom registry, if they are used for similar goods?

2. Are the comparable designations on the product of the declarant, halted for customs control, and trademark entered to the customs registry, identical or similar to the extent that they can be confused?

3. Does the trademark entered to the customs registry consist exclusively of designations which have no distinctive character (stating the kind, quality, quantity, properties, value of the goods, the place and time of production or sale, etc.)?

4. Does the trademark entered to the customs registry contain elements that are not protected?

5. Does verbal designation on the product of the declarant, halted for customs control as part of a trademark, introduced into the customs registry have distinctiveness for the goods of the class or classes of NICE specified in the publication of the issue of certificates of Ukraine for Marks for Goods and services or in the information on signs registered under the Madrid Agreement on the International Registration of Marks and / or the Protocol of the Madrid agreement concerning the International registration of marks, which are guaranteed protection in Ukraine?

6. Do figurative designations on the product of the declarant, halted for customs control as part of a trademark, introduced into the customs registry have distinctiveness for the goods of NICE class or classes specified in the publication of the issue of certificates of Ukraine for marks for goods and services or in the information on marks registered under the Madrid Agreement on the International Registration of Marks and / or the Protocol of the Madrid agreement concerning the International registration of marks, which are guaranteed protection in Ukraine?

7. Does commercial (brand) name on the product of the declarant, halted for customs control, include signs similar to the trademark, entered into a custom registry to such extent that this designation and sign may be confused or mislead regarding who produces goods or provides services?

8. Is designation for the product of the declarant, halted for customs control, commonly used as designation of goods or services of a certain type?

9. Does designation for the product of the declarant, halted for customs control, have attributes which characterize it as a qualified indication of origin of goods?

10. Does verbal designation on the product of the declarant, halted for customs control, coincide with a brand name that is known in Ukraine?

11. Is verbal designation on the product of the declarant, halted for customs control, the dominant element of the trademark entered to the customs registry?

12. Does the trademark entered to the customs registry due to its use on the product of the declarant, halted for customs control, have distinctiveness to refer to the products produced enterprise that owns the property rights to the trademark introduced to the customs registry?

13. Has the trademark entered to the customs registry turned during use into the designation that became commonly used as a designation of goods and services?

14. Is figurative and / or verbal portion of the trademark entered to the customs registry commonly used to refer to the certain kind of goods?

15. Is the trademark entered to the customs registry capable to mislead the consumer regarding who produces the product or provides a service with respect to goods of the class or classes of NICE mentioned in the publication about granting of certificates of Ukraine of marks for goods and services or in the information on marks, registered according to the Madrid agreement concerning the International registration of Marks and / or the Protocol of the Madrid agreement concerning the International registration of marks, which are guaranteed protection in Ukraine ?

16. Is the use of designation on the declarant’s product, halted for customs, and / or on the packaging of the declarant’s goods and documents, considered to be the use of trademark, introduced into the customs registry?

17. Is the designation on the declarant’s product, halted for customs control, similar to the trademark, entered into a custom registry to such extent that they could be confused or mislead regarding the person/entity that provides services or produces goods using this designation?

Forensic expert has to state the necessity of researching the above issues and passing a separate court ruling for them in the petition to the court in the case when a report on patent research and patent form, prepared with regard to the trademark, available in custom registry, does not contain any such research and conclusions.

Answers (conclusions) on the above issues should be prepared by a certified forensic expert with specialty 13.6 "Research related to commercial (trade) names, trademarks (signs for goods and services), geographical indications".

In the research part of the report a forensic expert, certified with specialty 13.9 "Economic research in the field of intellectual property" may only draw attention of the court to provisions of paragraph 4.3.13. of the Instruction for Examination.

Thus, comparing the labeling with trademark under protection is carried out both for the mark as a whole and by its individual elements. Moreover, the main criterion is not an exact match of the mark being checked (or other element of the labeling) with the protected one, but their overall similarity, which can give an ordinary buyer the impression of identity of comparable signs and, therefore, mislead them regarding the manufacturer of the product. In the case of arbitration claim for breach of trademark rights a violation is usually considered adding new elements to the protected sign, translating a verbal sign (or verbal element of the combined sign) into another language, minor changes to elements of the sign (including words) and introduction of other differences, if they exclude the common impression of protected and counterfeit marks.

However, if categorical opinions of a forensic expert (with specialty 13.6) regarding all raised aforementioned issues are not in favor of the owner of intellectual property rights to the trademark introduced to the customs registry and a respective court order, a forensic expert (with specialty 13.9) shall prepare a notification of inability to express an opinion.

In case of the probability of opinions of a forensic expert (with specialty 13.6) in respect of all or part of raised aforementioned issues in favor of the owner of intellectual property rights to the trademark introduced to the customs registry, and absence of a respective court order, a forensic expert (with specialty 13.9) should continue research and give an opinion.

At the third stage of expert research a comparison is conducted of norms and indices of balances of the owner of intellectual property rights to the trademark entered to the customs registry, prepared at the last annual date and last reporting date preceding the date of suspension of the declarant’s product.

Given the requirements of Articles 144, 155 and 490 of the Civil Code of Ukraine and the information from the balance sheet of the owner of proprietary rights to the trademark introduced to the customs registry, compiled on the last annual date, the expert must conduct comparison of figures in "Statutory capital" (line 300) and "Equity" (line 380).

Comparison of aforementioned indices should be carried out considering the norms of paragraph 30 resolution of the Supreme Court of Ukraine "On the practice courts' corporate disputes» № 13 dated 24.10.2008, norms of the Memorandum of the State Committee of Ukraine for Regulatory Policy and Entrepreneurship № 6610 from 09.08.2005 regarding "net assets"and norms of Memorandum of the Ministry of Justice of Ukraine on recognition of agreements void № 1022-0-1-08-19 from 30.10.2008.

To conduct the procedure of comparison of indicators of balances of the owner of property rights of trademark, entered to the customs registry, previously a forensic expert has to apply to the court with a petition provide him for research:

• provisions of the accounting policies, developed by the owner of proprietary rights to the trademark (included in the the customs registry) in accordance with paragraph 5 of Art. 8 of the Law of Ukraine "On Accounting and Financial Reporting in Ukraine" and acting at the last annual date and the last reporting date preceding the date of suspension of the declarant’s product;

• balance sheets and statements of financial position of the owner of property rights on the trademark introduced to the customs registry, prepared as of last annual date and the last reporting date preceding the date of suspension of the declarant’s product;

• data of inventory results and acts of control inventory of the owner of intellectual property rights to the the trademark introduced to the customs registry, prepared to state the value of intangible assets at the latest annual date preceding the date of suspension of the declarant’s product according to the norms of the Ministry of Finance of Ukraine "On the instructions for inventory of fixed assets, intangible assets, inventories, cash and documents and calculations” № 69 of 11.08.1994, registered by the Ministry of Justice of Ukraine № 202/412 from 26.08.1994;

• form NA-1 "Act of putting into economic circulation of the intellectual property rights object within intangible assets" form NA-2 "inventory card of accounting intellectual property rights object in intangible assets" form NA-3 "Act of disposal (liquidation) of intellectual property rights object within intangible assets ", prepared with regard to the trademark added to the customs registry over the period from adopting the decision to issue a Certificate of Ukraine for the trademark introduced to the customs registry, or adopting the decision on the sign, which is guaranteed protection in Ukraine and is registered under the Madrid Agreement on the International Registration of Marks and / or the Protocol of the Madrid agreement concerning the International registration of marks;

• form NA-4 'stock taking of intellectual property rights within intangible assets ", compiled as of the latest annual date preceding the date of suspension of the declarant’s product.

In carrying out comparison of standards and indicators of balance sheets of the owner of intellectual property rights to the trademark introduced to the customs registry, prepared on the last annual date and the last reporting date preceding the date of termination of the declarant's product, a forensic expert should take into account that:

 • purchased or received intangible asset is shown in the balance sheet if it is probable to obtain future economic benefits associated with its use, and its cost can be reliably measured;

• accounting of intangible assets (including rights to trademarks (for goods and services) is carried out by groups on each object, except those whose acquisition costs are recognized as royalty;

• acquired (created) intangible assets are credited to the balance sheet at cost;

• initial cost of an intangible asset acquired in exchange for a similar item is equal to the residual value of the transferred intangible asset; if the residual value of the transferred object exceeds its fair value, the cost of intangible assets derived in exchange for such an object is its fair value with the inclusion of the difference in financial results (costs) of the accounting period;

• historical cost of an intangible asset acquired in exchange (or partial exchange) for a dissimilar asset, equals the fair value of a non-monetary asset transferred, increased (decreased) by the amount of cash or cash equivalents, transferred (received) during the exchange;

• historical cost of obtained free of charge intangible assets is their fair value at the date of receipt with the account of financial costs that are not included in the original cost of intangible assets acquired (created) fully or in part through borrowings (excluding financial expenses, which are included in the cost of qualifying assets according to NAS 31 "Financial expenses");

• historical cost of intangible assets, included in the authorized capital of the company is recognized agreed by the founders (participants) of the company their fair value with the account of financial costs that are not included in the original cost of intangible assets acquired (created) fully or in part through borrowings (excluding financial expenses, which are included in the cost of qualifying assets according to NAS 31 "Financial expenses");

• company may conduct revaluation at fair value at the balance sheet date of intangible assets for which there is an active market. In case of revaluation of an individual objects of intangible assets it is necessary to revalue all other assets of the group, to which the intangible asset belongs (other than those for which there is no active market);

• revaluation of intangible assets of the group, whose objects have undergone revaluation henceforth should be made with such regularity that their residual value at the balance sheet date did not significantly differ from the fair value.

So, summing up the results of comparison of indicators of balance sheets of the owner of intellectual property rights to the trademark introduced to the customs registry, in the research part of the report a forensic expert has the right to draw attention of the court to the following:

• incapacity of owner of intellectual property rights to the trademark, introduced into the customs register, if at the beginning of the period and at period end balance sheet figures in "Statutory capital" (line 300) exceeds "Equity" (line 380) at the last annual date preceding the date of suspension of the declarant's product;

• incapacity of owner of intellectual property rights to the trademark, introduced into the customs register, if at the beginning of the period and end of period balance sheet indicator "Equity" (line 380) is negative at the last annual date preceding the date of suspension of the declarant’s goods;

• the fact that balance sheets of the owner of property rights to the trademark, introduced into the customs register, compiled at the last annual date and the last reporting date preceding the date of suspension of the declarant's product, property rights to the trademark introduced to the customs registry are recorded at cost and not at fair value;

• absence of revaluation at fair value of property rights to the trademark, introduced into the customs register, which is the fact of acknowledgment by the owner of property rights, the absence of an active market in connection with the use of rights to this trademark.

At the fourth stage standards for definition of "regular compensation price" are investigated.

Thus, with regard to cases of application of regular prices, a forensic expert should take into account standards of Methodological guidelines on algorithm for determination of the regular price of products (goods) in foreign trade operations, namely:

• when checking tax reporting periods before 1 April 2011 paragraph 7.4 Art. 7 of the Law of Ukraine "On Corporate Income Tax» № 283/97-VR from the 22.05.1997 applies, under which income derived by the taxpayer from the external economic operations is determined in accordance with the contract price, but not less than the usual price for the goods acting on the date of such sale;

• when checking tax reporting periods after 1 April 2011 paragraph 153.2 Art. 153 Section III of the Code applies, under which income derived by the taxpayer from the external economic operations is determined in accordance with the contract price, but not less than the normal price of the goods acting on the date of such sale, if the contract price for such goods differs by more than 20 percent of the regular price of such goods;

• factors determining comparability relate to physical features of the property (tangible assets);

• to determine the normal selling price of products (goods) on the world commodity markets, one can use information of the results of an independent valuation of the property and property rights, which is performed in accordance with the Law of Ukraine "On valuation of property, property rights and professional activities in Ukraine".

In addition to the above on application of regular prices, the court expert should take into account standards of Section 4 Regulation of the National Bank № 597 dated 30.12.2003 "On the transfer of funds in national and foreign currency to non-residents on certain transactions", namely that the basis for operations to pay for works, services, intellectual property rights and / or offsetting debts under such payment in the case of homogeneous offset of counter claims that the total value of intellectual property rights under the contract exceeds 100 thousand euros or the equivalent in another currency at the official exchange rate against foreign exchange established by the National Bank of Ukraine on the day the contract is the act of price examination of National information and Analysis center of monitoring International Commodity Markets, which certifies the conformity of contract prices on rights of intellectual property that are the subject of the contract.

To obtain the act of price examination of National information and Analysis center of monitoring International Commodity Markets, residents must file a written application to the center. The application is supplemented with certified by the resident copy of the contract with appendices, including specifications and detailed calculation of costs. It is also necessary to add to the application materials that will help experts in determining prices for services that are the subject of the contract (price lists, pricing and promotional catalogs, etc.). This will speed up the publication of the act. The Act is issued on payment basis, on average this procedure takes seven working days.

As for the application of regular prices, forensic experts should also take into account provisions of the Resolution of the Cabinet of Ministers of Ukraine "On approval of the prolongation of the terms of settlements on Foreign Economic Activity» № 1409 dated 29.12.2007

 At the same time, in order to justify valuation procedures, an expert should take into account the requirements of Art. 632 of the Civil Code of Ukraine, namely:

«1. The price in the contract is set by the agreement of the parties.

In cases prescribed by the law, the prices (tariffs, rates, etc.) apply, which are set or controlled by the authorized state bodies or local authorities.

2. Changes in the price after the conclusion of the contract are allowed only in cases and under conditions established by the contract or law.

3. Price change in the contract following its execution is not permitted.

4. If the price of the contract is not established and can not be determined based on its terms, it is determined based on regular prices that prevailed for similar goods, works or services at the time of conclusion of the contract. "

Therefore, given the lack of research materials provided the expert must submit to the court a petition on obtaining from:

• National Information and Analysis center of monitoring external commodity markets the act or acts of price expertise regarding establishing the regular price of compensation for the use of property rights to the trademark (included in the the customs registry), compiled in the period from the date of the decision to issue the Certificate of Ukraine for the trademark introduced to the customs registry, or adopting the decision on the sign, which is guaranteed protection in Ukraine and is registered under the Madrid Agreement on the International Registration of Marks and / or the Protocol of the Madrid agreement concerning the International registration of marks, before the date of suspension of the declarant’s product;

• owner of intellectual property rights to the trademark introduced to the customs registry, information of the results of an independent valuation of the property and property rights, which is performed in accordance with the Law of Ukraine "On valuation of property, property rights and professional activities in Ukraine" regarding the setting of the regular price of compensation for the use of property rights to the trademark, introduced into the customs register, compiled within the period from the date of the decision to issue the Certificate of Ukraine for the trademark introduced to the customs registry, or the decision on the sign, which is guaranteed protection in Ukraine and is registered under the Madrid Agreement on the International Registration marks and / or the Protocol of the Madrid agreement concerning the International registration of marks, before the date of suspension of the declarant’s product.

Based on the method of regulation comparison and analysis in the process of further research the expert needs to take into account that a lack of the act of price examination of the National information-analytical center of monitoring external commodity markets; the results of an independent valuation of the property and property rights, held in accordance with the Law of Ukraine "On valuation of property, property rights and professional activities in Ukraine "regarding the setting of the regular price of compensation for the use property rights on the trademark introduced to the customs registry; revaluation at fair value of property rights on the trademark introduced to the customs registry, witness recognition by the owner of property rights of absense of active markets associated with the use of rights to this trademark.

In this case, forensic expert, taking into account the "Regulations on accounting policies", developed by the owner of property rights on the trademark introduced to the customs registry, in accordance with paragraph 5 of Art. 8 of the Law of Ukraine "On Accounting and Financial Reporting in Ukraine" has the right to conclude that the regular price of compensation for the use of property rights to the trademark entered to the the customs registry, is the historical cost of an intangible asset, stated in the balance sheet of the owner of property rights to the trademark introduced to the customs registry, at the last reporting date.

When the following is submitted for expert examination: the act of price examination of the National Information and Analysis Center of monitoring of external commodity markets; details of the results of an independent assessment of the property and property rights, which is performed according to the Law of Ukraine "On valuation of property, property rights and professional activities in Ukraine "regarding the setting of the regular price of compensation for the use property rights to the trademark introduced to the customs registry; information and documents about the revaluation at fair value of property rights to the trademark introduced to the customs registry, a forensic expert carries out further research.

Subsequently, at the fifth stage the expert investigates basis and rate of royalty for:

• contract offered to the declarant of the goods (halted by customs officers) by the owner of the trademark, introduced into the customs registry;

• determination of the amount of compensation to the owner of the trademark, introduced into the customs registry.

At the sixth stage a forensic expert on the basis of the above stages of assessment procedures:

• carries out arithmetic calculations for each period of paying a remuneration within the dates of the contract offered to the declarant of the goods (halted by customs officers) by the owner of the trademark, introduced into the customs registry;

• provides the conclusions in categorical or probable form.