Trademarks are Subject to Enforced Execution in Bosnia and Herzegovina
By Ognjen Bogdanic, Law Firm Sajic
Trademarks are protected by intellectual property rights and therefore have an important position in the global market economy, as well as in the daily turnover of goods and services. The financial value of trademarks in the modern business world is immeasurable.
Sometimes the value might even reach tens of billions of dollars, and it is therefore necessary to provide their quality and timely legal protection. Due to their significance and value, certain trademarks are highly desirable acquisitions for many business entities.
One of the modalities leading to acquisition of a trademark and its undisturbed use is a court procedure, i.e. enforcing court decisions through execution against a trademark and consequently a court-executed public sale of the trademark. There are situations when business entities face financial problems and diffculties and are unable to settle their debts, and it might happen that their trademark is the property of the highest value. For example, the value of some of the world’s most famous trademarks exceeds the total asset value of the rest of the company.
The Trademark Act of Bosnia and Herzegovina, which entered into force in 2010, regulates the legal framework of the trademark protection in Bosnia and Herzegovina and forms a part of a whole set of legislative solutions in the field of intellectual property rights. This was a consequence of the need for the harmonisation of domestic legislation with the existing legislation of the European Union. Accordingly, and pursuant to the provisions of the Trademark Act, a trademark is a right that protects a recognisable mark, label or symbol, which in economic transactions serves to differentiate the goods or services belonging to an individual or a legal entity from the same or similar goods or services of another individual or legal entity. However, the provisions of the Trademark Act of Bosnia and Herzegovina do not regulate the possibility of execution against a trademark. In this way, the legislators left a legal vacuum, and the possibility of a different interpretation of the dilemma concerning the question of whether it is possible in Bosnia and Herzegovina to execute against a trademark in order to settle debts.
However, such a dilemma is eliminated with the relevant provisions of the Act on an execution procedure of both entities, where the same regulates the very process of forcible execution against any debtor’s property in order to settle debts. Thus, among other things, the Act stipulates that a writ of execution can relate to a patent, technical improvement or pledge, and a similar right where the same will be exercised by seizure of that right and consequently its liquidation in accordance with the provisions on the sale of movable property. Therefore, these provisions precisely establish the possibility of execution against a trademark because under the term “other similar rights of the debtor”, we can also undoubtedly consider the right of the trademark.
As far as the method of execution is concerned, the same would apply to the procedural rules applicable to enforced execution on movable property. This means that the acting court should primarily issue the writ on execution against a trademark and submit the same to the Intellectual Property Institute of Bosnia and Herzegovina, as the body competent for acquiring, maintaining, trading and terminating industrial property rights, all for the purpose of recording the execution. The next step would be the evaluation of the trademark conducted by an authorised evaluator, i.e. expert witness. Finally, after determining the economic value of the trademark, the court would schedule the first public sale of the subject trademark in accordance with the bidding rules, where all interested parties would have the right to purchase the same. The lowest price for which the trademark can be sold at that first-sale session is half of the previously determined value of the trademark. In the event of failure of the first sale, due to the absence of interested buyers, the court will, at the proposal of the opposing party, schedule another public sale of the subject trademark, and then the trademark cannot be sold below one-third of the estimated value. In the end, irrespective of whether the trademark was sold in the course of the first or the second sale session, the court will award the right of ownership, and accordingly designate as a new trademark right holder, the buyer who offered the highest purchase price and paid in due time. In addition, the court will, at the same time, order the Institute for Intellectual Property of Bosnia and Herzegovina to register the change of the holder. From the moment of registration, the procedure will be considered as completed.
According to the available data, since its establishment, the Institute for Intellectual Property of Bosnia and Herzegovina has never been ordered by the court to register a change of trademark right based on a court decision on the sale of the trademark. This can be attributed to the fact that the Trademark Act does not contain suffcient specific provisions in this respect, as well as the fact that awareness of the significance and value of the trademarks in Bosnia and Herzegovina is not yet suffciently developed and that, in this respect, Bosnia and Herzegovina is largely behind developed countries of the European Union. One of the solutions for improving this situation is constant education of the population and the leading people who manage domestic companies and this is something that in the future needs to be given special attention by the relevant institutions and bodies in Bosnia and Herzegovina.
Ognjen BogdanicLaw Firm Sajic, Banja Luka, Bosnia and Herzegovina
T: + 387 51 227 620
Published: GGI Insider, No. 101, May 2019 l Photo: r_andrei - stock.adobe.com