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Jurisdiction Issues of Disputes with Antimonopoly Bodies.

March 29, 2018

The number of cases on the recognition of actions associated with the acquisition and use of the exclusive right to the means of individualization of a legal entity, the means of individualization of goods, works or services (hereinafter referred to as the means of individualization) as an unfair competition is increasing every year.

Such cases are considered by the antimonopoly body, whose decisions are challenged in court. And here the question arises as to which court to apply.

The answer to this question is quite obvious: the decisions of the antimonopoly body are challenged at the location of this body. Accordingly, the decisions of the territorial antimonopoly authority must be challenged in the arbitration court of the entity, and the decisions of the federal antimonopoly body must be challenged in the Arbitration Court for the City of Moscow.

Perhaps, the article should be completed, since the issue of determining the jurisdiction of this category of disputes is self-explanatory. However, the system analysis of the current legislation allows us to come to the conclusion that cases on the grounds set forth in Article 14.4 of Federal Law “On Protection of Competition” No. 135-FZ of July 26, 2006 (hereinafter referred to as “the Law on Protection of Competition”) are subject to the jurisdiction of the Intellectual Property Court. This position was confirmed in judicial acts.

Federal Law No. 275-FZ of 05.10.2015 amended the Law on Protection of Competition, in accordance with Paragraph 1 of Article 14.4 of which The unfair competition associated with the acquisition and use of the exclusive right to the means of individualization of a legal entity, the means of individualization of goods, works or services (hereinafter referred to as the means of individualization) shall not be allowed.

The basis for applying to the antimonopoly body is the registration to the name of a competitor of the means of individualization, in combination with its subsequent use, made in violation of the antimonopoly law.

In the market there is such a situation, when one economic entity has been using some designation for the individualization of its goods during several years, in doing so it does not register it as a trademark. Meanwhile, another economic entity engaged in the similar activities registers this trademark to its own name, and notably, it does so not for the purposes of its further use, but with a purpose of prohibiting its use by its competitor. In such a situation, the antimonopoly body, according to the statement of case of the first economic entity, shall consider the case on violation of the antimonopoly legislation, and may adopt a decision to recognize the competitor's actions for the registration and use of the trademark as an unfair competition act.

Paragraph 63 of Joint Resolution of the Plenum of the Supreme Court of the Russian Federation and the Plenum of the Supreme Arbitration Court of the Russian Federation No. 5/29 of March 26, 2009 “On certain issues arisen in connection with the enforcement of Part four of the Civil Code of the Russian Federation” stated that the unfair competition, associated with the acquisition and use of the exclusive right to the means of individualization of a legal entity, the means of individualization of goods, works or services is only a complex of actions for the acquisition and use of the exclusive rights to the means of individualization, but not one of them.

Paragraph 4-6 of the Information on the issues of unfair actions, including the competition, on the acquisition and use of the means of individualization of legal entities, goods, works, services and an enterprise (approved by Resolution of the Presidium of the Intellectual Property Court No. SP-21/2 of March 21, 2014) (hereinafter referred to as “the Information”) provides a complex of circumstances that are subject to be taken into account and to be evaluated at the qualification of the economic entity actions as an unfair competition act in the context of Article 14.4 of the Law on Protection of Competition, which are considered and evaluated collectively exclusively in the totality and mutual connection.

As it follows from the Information, Article 14.4. of the Law on Protection of Competition is applied by the antimonopoly body, if the person who has acquired the trademark knew about the existence of third-party competitors at the moment of the registration of the trademark, who were using that registered designation at that moment or prior to it (Paragraph 4-5); currently it actively restricts the competitors’ rights to use this designation (Paragraph 6); the designation has gained popularity among the consumers at the expense of other persons, but not the one who has registered the trademark (Paragraph 4-5); - the applicant – the competitor (the person who has applied to the supervisory body) has existed prior to the registration of the trademark.

In accordance with Paragraph 15 of Article 4 of the Law on Protection of Competition, the antimonopoly body means the federal antimonopoly body and its territorial bodies.

In accordance with Paragraph 1 of Article 39 of the Law on Protection of Competition, the Antimonopoly Body, within the frames of its authorities, initiates and considers the cases of violation of the antimonopoly legislation, adopts decisions on the results of their consideration and issues directions.

Thus, the decision adopted by the antimonopoly body within the frames of its authorities in its legal nature is a non-regulatory legal act characterized by the fact that it contains the rules of conduct obligatory for a certain person, in particular, a direction to stop the violation. The non-regulatory legal act can be challenged not only by the person to whom it is addressed, but also by the person whose rights are violated by the adoption of this act. The non-regulatory legal act may illegally impose any obligations or create obstacles to the implementation of entrepreneurial and other economic activities.

In accordance with Part 1 of Article 198 of the Arbitration Procedural Code of the Russian Federation (hereinafter referred to as “the APC RF”) Citizens, organizations and other persons have the right to apply to the arbitration court with a statement of case on invalidating the non-regulatory legal acts, illegal decisions and actions (inaction) of the bodies exercising public authorities, officials, if they believe that the challenged non-regulatory legal act, decision and action (inaction) do not comply with the law or other regulatory legal act and violate their rights and legal interests in the sphere of entrepreneurial and other economic activities, impose on them any obligations illegally, create other obstacles for entrepreneurial and other economic activities.

In accordance with Paragraph 1 of Article 52 of the Law on Protection of Competition The decision and/or direction of the antimonopoly body can be appealed to the arbitration court within three months from the date of the adoption of the decision or the issuance of the direction. The cases on appealing against the decision and (or) the direction of the antimonopoly body are subordinated to the arbitration court. The decision and (or) the direction of the territorial antimonopoly body may also be appealed to the collegial body of the federal antimonopoly authority.”

According to Part 4 of Article 34 of the APC RF, the Intellectual Property Court as the first-instance court considers, among other things, the cases on challenging the decisions of the federal antimonopoly body on the recognition of the actions associated with the acquisition of an exclusive right to the individualization of a legal entity, goods, services and enterprises as an unfair competition.

Taking into account the abovementioned rules of law, it can be stated that challenging the decision of any antimonopoly body on the recognition of the actions associated with the acquisition of an exclusive right to the means of individualization as an unfair competition is subject to the jurisdiction by the Intellectual Property Court.

This position was reflected in the judicial practice (the ruling of the Intellectual Property Court on the refusal to transfer cases No. CIP-587/2017, No. CIP-588/2017 based on the jurisdiction.)

The Intellectual Property Court considered the statements of case of the territorial antimonopoly body for the transfer of these cases based on the jurisdiction to the Arbitration Court of the Stavropol Territory.

In the opinion of the antimonopoly body, the cases on challenging the decisions of only the federal antimonopoly authority are subject to the jurisdiction of the Intellectual Property Court as the first-instance court, in accordance with the Resolution of the Presidium of the Intellectual Property Court of December 24, 2015, No. C01-1201/2015, in case No. CIP-564/2015.

The statement of case for challenging the decision of the territorial antimonopoly body must be filed with the arbitration court of the subject of the Russian Federation at the location of the territorial antimonopoly body that has adopted the decision to be challenged, since the Arbitration Procedural Code of the Russian Federation does not provide an exception from the general rule on the jurisdiction of cases to arbitration courts for this category of cases.

In view of the fact that the Office of the Federal Antimonopoly Service in Stavropol Territory is a territorial body of the Federal Antimonopoly Service of the Russian Federation and the challenged acts have been adopted by the territorial body, which is located on the territory of the Stavropol Territory, the case on challenging the decisions of this body on violation of the antimonopoly legislation shall be subject to the jurisdiction of the arbitral court of the Stavropol territory.

Having considered the petition filed for transferring the case on the jurisdiction, the Intellectual Property Court concluded that there was no reason to satisfy it, as the relevant cases were subject to the jurisdiction of the Intellectual Property Court as the first-instance court.

Taking into account the provisions of Sub-Paragraph 3 of Item 2 of Part 4 of Article 34 of the APC RF, Item 15 of Article 4 and Article 14.4 of the Law on Protection of Competition, the Intellectual Property Court also considers the cases on challenging the decisions of territorial antimonopoly bodies on the recognition of the actions associated with the acquisition of an exclusive right to the means of individualization as an unfair competition.

“By virtue of Part 8 of Article 44 and Article 48 of the Law on Protection of Competition, the cases on challenging the decisions of antimonopoly bodies to refuse to initiate and to dismiss the case on violation of the antimonopoly legislation are subject to the jurisdiction of the same court.

In addition, the cases on disputes on the recognition by court of the rights holder's activities associated with the grant of the legal protection to a trademark as an unfair competition are also subject to the jurisdiction of the Intellectual Property Court as the first-instance court on the basis of Item 2 of Part 4 of Article 34 of the Arbitration Procedural Code of the Russian Federation, as the decision of the court in this case is the basis for the invalidation of the grant of the legal protection to a trademark, by virtue of Subparagraph 7 of Paragraph 2 of Article 1512 of the Civil Code of the Russian Federation (hereinafter referred to as the CC RF).

Taking into account the foregoing, the court comes to the conclusion that the present case is subject to be considered by the Intellectual Property Court as the first-instance court, and therefore the petition of the antimonopoly body on transferring the case to the consideration of another arbitration court shall be dismissed.” (From the ruling of the Intellectual Property Rights on the refusal to transfer cases No. SIP-587/2017, No. SIP-588/2017 based on the jurisdiction.)

In view of the foregoing, I believe that the practice of considering the cases on invalidating the decisions of antimonopoly bodies on the grounds set forth in Article 14.4 of the Law on Protection of Competition will be formed by the Intellectual Property Court.

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Author of article

Aleksandra Pelikh

Aleksandra Pelikh

Head of Department / Senior Lawyer