Constitutional Court summarises practice on IP disputes

Russia
Available languages: RU

In November 2020, the Russian Constitutional Court published its Review* of practices surrounding intellectual property disputes completed by July 2020.

The Review includes resolutions and rulings issued by the Constitutional Court between 2016 and 2020 and addresses the following issues:

  • compensation to owners of intellectual property objects;
  • liability for parallel imports;
  • timing when rights to a trademark are transferred during the reorganisation of a company;
  • well-known trademarks; and
  • problems of protection for complex audio-visual works.

The positions of the Constitutional Court indicated in the Review are already reflected in law enforcement practice, particularly, in the decisions of the Intellectual Property Court. The publication of the Review emphasises how important the Constitutional Court positions expressed in this document are for the formation of uniform practices in the field of intellectual property.

Reduction by the courts of the compensation below the limit established by law

The Constitutional Court confirmed that the amount of compensation for the violation of the right holder’s rights to an intellectual property object can exceed the amount of the actual losses incurred.

In certain circumstances, however, the award of this compensation may not meet the requirements of fairness and proportionality (e.g. if the offence is committed for the first time). In this type of situation, the courts should be able to reduce the amount of compensation awarded below the limit established by law. (See Constitutional Court Resolution No. 28-P/2016* of 13 December 2016).

Differences in the nature of liability in case of parallel imports and sales of counterfeit goods

The Constitutional Court noted that it does not approve of the actions of right holders who abuse the mechanism of national exhaustion of the right to a trademark. This is particularly the case when they restrict the import of certain goods into the country or excessively inflate prices on the domestic market in comparison with foreign ones, especially when, as a result of these actions, the access of Russian citizens to vital goods (e.g. medicines, life-support equipment) is limited.

Regarding compensation to the right holder of a trademark, the Court indicated that the amount should be established by the courts taking into account the fact that, in case of parallel imports, the losses incurred by the right holder, as a general rule, are not as great as when importing counterfeit goods marked with its trademark.

The Constitutional Court also called for the delimitation of liability in the case of parallel imports and sales of counterfeit goods. In the case of parallel imports, the seizure and destruction of these goods will be justified only in exceptional situations (e.g. if the goods are of inadequate quality). At the same time, when knowingly importing counterfeit goods, their destruction is a standard measure. (See Constitutional Court Resolution No. 8-P/2018* of 13 February 2018).

Transfer of rights to a trademark in case of company reorganisation

For a company reorganised in the form of a merger with universal succession, the Constitutional Court indicated that trademarks belonging to the company are transferred to its legal successor when a record is made in the Unified State Register of Legal Entities on the termination of the company’s activities.

At the same time, the new company will be able to perform any trademark-related actions in full only after the transfer of the exclusive right to it is registered with Rospatent.

If the new right holder does not apply for state registration of the transfer of rights to a trademark after the completion of the reorganisation, it will still be fully liable to third parties as a right holder. (See Constitutional Court Resolution No. 280-P/2018* of 3 July 2018).

Assessment of well-known nature of a trademark

The Constitutional Court indicated that a trademark cannot be recognised as well-known if – at the time of filing the corresponding registration application – it has lost wide recognition and other signs of being well-known as established by Art. 1508 of the Russian Civil Code. (See Constitutional Court Ruling No. 2145-О/2019* dated 19 September 2019).

Audio-visual work as a whole and independent works included as IP objects in an audio-visual work

If both a complex audio-visual work and the work of fine art included in it have an independent objective form, then both works are subject to legal protection.

When filing a claim for the recovery of compensation for violation of an exclusive right, the claimant must indicate the right to which the particular object was violated. (See Constitutional Court Ruling No. 1345-О/2020* dated 18 June 2020).

If you have any questions on this eAlert, do not hesitate to contact CMS Russia experts Anton Bankovskiy and Irina Shurmina or your regular contact at CMS Russia.

* In Russian