Recent Developments

The procedure of state registration of franchising agreements (as commercial concession agreements) will come into effect in Ukraine from 21 April 2015.

Franchising arrangements fall under the definition of commercial concession agreements for the purposes of Ukrainian law and such agreements are subject to state registration. If a commercial concession agreement is not registered then its parties cannot refer to such agreement vis-a-vis third parties in Ukraine.

The Ministry of Justice of Ukraine introduced the registration rules when it adopted Order No. 1601/5 on Approval of the Procedure for State Registration of Commercial Concession (Sub-concession) Agreements (the “Order”) on 29 September 2014. The Order was published on 21 October 2014, and is scheduled to come into force in 6 months after its publication, which date falls on 21 April 2015.

Implications for right holders and the market

Until recently there were no specific regulations governing the registration of commercial concession agreements in Ukraine. This meant that the status of franchising agreements, which fall under the definition of commercial concession agreements, was unclear.

When the Order comes into force on 21 April 2015, commercial concession agreements will have a clearer status and the rights holders and users of rights under commercial concession agreements will be able to fully comply with the law and register such agreements in Ukraine.

What the Order says

According to the Order, the state registration of commercial concession (sub-concession) agreements will be performed by the state registrar by entering the relevant information into the Unified State Register of Legal Entities and Individual Entrepreneurs (the "Unified State Register"). An application for the state registration of a commercial concession (sub-concession) agreement can be filed by a right holder (for state registration of a commercial concession agreement), by a user of the rights (for state registration of a commercial sub-concession agreement), or an authorized representative.

The state registration of a commercial concession agreement will be performed after the state registration of the right holder or user under the said agreement. In other words, if the rights holder under the commercial concession agreement is a foreign entity it will need to prove its legal status to the state registrar by submitting an apostilled extract from the company register, and if the user is a Ukrainian entity it will need to be registered in the Unified State Register, before the commercial concession agreement can be registered.

The state registration of a commercial sub-concession agreement can be performed only after state registration of the initial commercial concession agreement.

It should be noted that copies of title documents for the relevant intellectual property rights should be submitted for registration along with the commercial concession agreement. That is, copies of trademark certificates of all trademarks, and copies of all patents, utility models, or industrial designs, mentioned in the commercial concession agreement in relation to granted rights, will have to be submitted to the state registrar along with the commercial concession agreement.

If changes are made to the commercial concession (sub-concession) agreement, such changes would also require state registration. For the purposes of state registration a commercial concession (sub-concession) agreement must be supplemented with a Ukrainian translation certified by a Ukrainian notary.

Conclusion Practice will show which documents are required to confirm the right holder's title to the intellectual property rights under commercial concession agreements submitted for state registration. This question is also relevant for intellectual property rights that are not subject to obligatory registration (e.g. trade names or copyright). A literal reading of the Order suggests that failure to submit copies of title documents may serve as formal grounds for denying the state registration of the commercial concession agreement.  This and other working details of the state registration process have yet to be tested.