The Limits of Discretion in Intellectual Property Disputes

Limits of Choice

Discretion arises only where the law leaves an authority with room for assessment and the choice between several lawful options. In the field of intellectual property, this may include situations where the Ukrainian National Office for Intellectual Property and Innovations (UANIPIO) assesses the distinctiveness of a sign, its descriptiveness or generic character, the compliance of an industrial design with the criteria for protection, or the necessity of requesting additional materials from an applicant.

Where the law expressly requires an authority to adopt a specific decision or take a particular action, discretion is absent. This applies where legislation establishes a mandatory course of action, sets clear criteria without alternatives, or where a decision results from a formal examination of whether an application meets prescribed requirements. In such cases, the authority does not choose between different courses of conduct but merely verifies the existence of the conditions established by law.

Judicial review of acts and actions of public authorities in the exercise of discretionary powers is limited (separate opinion of Justice Oleksandr Banasko of the Grand Chamber of the Supreme Court dated 25 February 2025 in case No. 990/190/23). However, this does not mean that such decisions are immune from judicial scrutiny. The court must determine whether the authority’s conclusions are arbitrary or irrational, whether they are supported by evidence, and whether they are based on an erroneous assessment of the facts. To this end, the court examines whether the authority’s powers were discretionary in nature, whether the exercise of such powers is subject to judicial review, whether the authority acted within the scope of its powers in a transparent and consistent manner, whether procedural safeguards were observed, and whether the decision was adequately reasoned. The court also assesses whether the decision is arbitrary, biased, or manifestly unfair.

When the Court Orders

In case No. 910/8295/21, the Commercial Court of Kyiv declared invalid and annulled the refusal of the State Enterprise “Ukrainian Intellectual Property Institute” to grant supplementary protection for an invention patent. The refusal had been issued in the form of a letter.

In addition to annulling the refusal, the court ordered the Ukrainian National Office for Intellectual Property and Innovations (UANIPIO) to register the supplementary protection of the patent, enter the relevant information into the State Register of Inventions of Ukraine, publish the information in the official electronic bulletin of UANIPIO, and issue a supplementary protection certificate.

UANIPIO challenged this decision, arguing, inter alia, that the court had interfered with its discretionary powers. However, both the appellate and cassation courts dismissed the appeals.

In its ruling of 14 December 2023, the Commercial Cassation Court held that the court of first instance had taken into account the recommendations of the Committee of Ministers of the Council of Europe, the Venice Commission, the case law of the Supreme Court, and the jurisprudence of the European Court of Human Rights. The court further noted that discretionary powers of an authority must comply with the principle of the rule of law, in particular legal certainty and the prohibition of arbitrariness. The judgment was duly executed.

When the Court Does Not Substitute the Authority

A different approach was taken by the court in case No. 910/8419/22. The claimant sought to annul the decision of the State Enterprise “Ukrainian Intellectual Property Institute” regarding an application and to refuse registration of a trademark under that application.

The Commercial Court of Kyiv dismissed the claim. One of the key reasons was that the registration of intellectual property objects, including trademarks, falls within the discretionary powers of the Ukrainian National Office for Intellectual Property and Innovations (UANIPIO), which independently decides on the registration and issuance of trademark certificates.

Accordingly, the claimant’s request to refuse registration of the trademark was considered by the court as an interference with the defendant’s discretionary powers. The appeal was dismissed, and the first-instance court’s decision was upheld without changes.

When the Court Remands for Reconsideration

In case No. 910/12047/19, the Commercial Cassation Court declared unlawful and annulled the decision of the Ministry of Economic Development and Trade refusing registration of a trademark for goods and services.

The court also annulled the decision of the Appeals Chamber rejecting the opposition, as well as the ministerial order approving that decision. At the same time, the court did not directly order the registration of the trademark. Instead, it instructed the Ukrainian National Office for Intellectual Property and Innovations (UANIPIO) to reconsider the application in light of the findings set out in the court’s judgment.

In granting the claim, the court emphasized that discretionary powers must not be exercised arbitrarily, and that judicial review must ensure effective control over decisions adopted under such powers. The court referred, inter alia, to the case law of the European Court of Human Rights (Hasan and Chaush v. Bulgaria, No. 30985/96) and Recommendation No. R (80)2 of the Committee of Ministers of the Council of Europe.

The appeals filed by the defendants were dismissed, and the first-instance judgment remained unchanged.

What a Lawyer Should Consider

Accordingly, the case law suggests several possible scenarios. A court may:

• uphold a mandatory claim and, in practice, limit the authority’s discretion;
• dismiss the claim if the request is viewed as an interference with the powers of the Ukrainian National Office for Intellectual Property and Innovations (UANIPIO);
• order the authority to reconsider the matter, taking into account the conclusions set out in the court’s decision.

During the reconsideration of documents, state authorities generally take into account the court’s findings and adopt decisions in favour of applicants. At the same time, in some cases, the processing of applications does not continue even after decisions or findings are annulled and a new examination or reconsideration is ordered. In certain matters, further enforcement of court decisions cannot be tracked, as not all documents and information are publicly available.

Therefore, a legal position in such disputes should be built not on challenging discretion as such, but on demonstrating that the authority acted beyond the scope of its powers. This requires analysing the reasoning part of the decision, assessing procedural violations, and formulating claims with due regard to whether the authority had discretionary space.

Depending on the circumstances, this may involve a claim to declare the decision unlawful and to order a qualification examination to be carried out in light of the court’s findings. In another situation, it may involve a claim to invalidate the decision, amend the register, and publish the relevant information in the official electronic bulletin.

Published in ZіB (Law & Business)

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