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Bringing to administrative responsibility for the illegal use of means of individualization on the basis of Article 14.10 of the Code of the Russian Federation on Administrative Offences

May 23, 2019

In my previous article, I have considered the methods of identifying counterfeit products and the fight against them, and I have raised indirectly the issue regarding responsibility, which the offender, who introduces the counterfeit products into the civil circulation, can be brought to.

Thus, one of the measures of responsibility for the illegal use of the means of individualization of the products (works, services), which the offender can be brought to, is administrative responsibility established by Article 14.10 of the Code of the Russian Federation on Administrative Offences (hereinafter referred to as the CoAO RF, the Code).

Part one of Article 14.10 of the CoAO RF states that the illegal use of someone’s trade mark, service mark, appellation of origin of the product or the designations similar to them for the homogeneous products, except for the cases stipulated by Part 2 of this Article, shall entail imposing an administrative fine:

  • on citizens – from 5,000 to 10,000 roubles;
  • on officials – from 10,000 to 50,000 roubles;
  • on legal entities – from 50,000 to 200,000 roubles.

 

Part two of the Article under consideration narrows the concept “use” by determining it as a manufacture for the purposes of sale or realization of the product containing an illegal reproduction of someone else's trademark, service mark, appellation of origin of the product or the designations similar to them for the homogeneous products, if these actions do not contain a criminal offense. The sanction under Part 2 of Article 14.10 of the CoAO RF stipulates imposing an administrative fine:

  • on citizens – in double the amount of the value of the product, which has become a subject of the administrative offense, but not less than 10,000 roubles;
  • on officials – in triple the amount of the value of the product, which has become a subject of the administrative offense, but not less than 50,000 roubles;
  • on legal entities – in fivefold the amount of the value of the product, which has become a subject of the administrative offense, but not less than 100,000 roubles.

 

In this case, both parts of the commented Article stipulate responsibility in the form of confiscation of the items containing an illegal reproduction of the trademark, service mark, appellation of origin of the product, as well as the materials and equipment used for their manufacture, and other tools of committing the administrative offense.

In my opinion, currently, the issues related to the peculiarities of the application of Article 14.10 of the CoAO RF are considered in the most detailed way
in Paragraphs 8-15 of Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation No. 11 of February 17, 2011 “On Some Issues of the Application of the Special Part of the Code of the Russian Federation on Administrative Offences” (hereinafter referred to as Resolution No. 11 of February 17, 2011).

I would like to dwell separately on the most interesting, in my opinion, aspects considered in the said Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation.

Thus, in Unnumbered Paragraph 4 of Resolution No. 11 of February 17, 2011, it is noted that Article 14.10 of the CoAO RF covers, among others, such offences as the introduction of the product, which (as well as of the labels, packaging, documentation) contain an illegal reproduction of the means of individualization into the civil circulation on the territory of the Russian Federation, as well as the importation into the territory of the Russian Federation of such product with a purpose of the introduction of it into the civil circulation on the territory of the Russian Federation.

In this Paragraph of the Resolution, the reference to Articles 1474, 1484, 1519, 1539 of the Civil Code of the Russian Federation, which determine the methods of exercising the exclusive right to the means of individualization, is obviously traced.

It should be noted that this Resolution states separately that any person may be brought to administrative responsibility stipulated by Article 14.10 of the CoAO RF for the offence consisting in the realization of the products containing an illegal reproduction of the trademark, if he is engaged in such realization, and not only the first seller of the correspondent product.

At the same time, as the numerous practices related to the consideration of the cases of bringing to administrative responsibility under Article 14.10 of the CoAO RF demonstrate, in the majority of cases, the importers, who submit to the Customs the goods declarations with a purpose to place the products under the Customs procedure of “release for domestic consumption,” and the Customs authority, in the course of exercising control, discovers that the designations that are confusingly similar to the trademarks are placed on the products indicated in the declarations, while the importer can not provide evidence that he has the right holder’s permission, are brought to responsibility on the basis of the applications from the Customs authorities.

However, the facts of bringing subsequent sellers as well to responsibility are not rare. As a rule, in such cases, the police, the prosecutor's office and Rospotrebnadzor, who identify offenders in the course of conducting inspections of the sales outlets’ activities act as the applicants in the court on behalf of the state authority.

By the way, an interesting fact is that only Unnumbered Paragraph 4 of Paragraph 17 of the same Resolution No. 11 of February 17, 2011 indicates that only the person, who has first introduced into circulation the product with the illegal use of the results of intellectual activity and equated to them means of individualization of a legal entity, means of individualization of products, works, services, can be a subject of administrative responsibility for the administrative offenses stipulated by Part 2 of Article 14.33 of the CoAO RF (Unfair competition that has been expressed in the introduction into circulation of the product with the illegal use of the results of intellectual activity and equated to them means of individualization of a legal entity, means of individualization of products, works, services), but subsequent sellers can not be brought to responsibility under this Article.

I believe that a separate scientific article can be devoted to the subtleties and peculiarities according to which the legislator divided thus way the persons, who may be brought to responsibility on the basis of the above Articles of the Code, and we shall not rest on this issue within the framework of this article.

I believe that further it is worth noting what role, when considering the issue on bringing to administrative responsibility on the basis of Article 14.10 of the CoAO RF, the right holder' opinion on whether the subject of the administrative offense contains an illegal reproduction of the trademark, service mark, appellation of origin of the product or the designations similar to them plays.

It follows from Paragraph 13 of Resolution No. 11 of February 17, 2011 that, when solving the issue on whether the subject of the administrative offense contains an illegal reproduction of the trademark, service mark, appellation of origin of the product or the designations similar to them, the courts should take into account the fact that the right holder’s opinion regarding this issue is not an expert’s opinion in the sense of Article 86 of the Arbitration Procedural Code of the Russian Federation or Article 26.4of the CoAO RF. However, such opinion shall be evidence that shall be assessed by the court along with other evidence.

It follows from the above that the letters (opinions) of the representatives of the right holders are admissible evidence in the case and, along with other evidence, are subject to be assessed by the court. The similar legal position was reflected in Resolution of the Intellectual Property Court of July 17, 2018 in case
No. 32-30023/2017.

It is impossible not to draw attention to Paragraph 15 of Resolution No. 11 of February 17, 2011, which states that the actions to import products into the territory of the Russian Federation shall be considered completed from the moment of moving the disputed products across the Customs border of the Russian Federation and submitting the Customs declaration to the Customs authority and (or) the documents required for placing these products under the Customs procedure, the conditions of which imply a possibility of the introduction of these products into circulation on the territory of the Russian Federation (for example, “release for domestic consumption”).

Now I would like to consider the main differences and peculiarities of bringing to administrative responsibility from bringing to more habitual civil law responsibility, which consist in the following:

  • the availability of the application of the right holder of the trademark is not a necessary condition for initiating a case of an administrative offense stipulated by Part 1 of Article 14.10 of the CoAO RF;
  • the fact that the first-instance court has not involved the right holder to the participation in the case shall not be a basis for cancelling the decision of the Arbitration Court (Paragraph 11 of Judicial Practice Review “On Some Issues Arising at the Consideration by the Arbitration Courts of the Cases of Administrative Offences Stipulated by Chapter 14 of the Code of the Russian Federation on Administrative Offences” approved by the Presidium of the Supreme Court of the Russian Federation of December 6, 2017);
  • the Customs officials (along with the officials of the law enforcement authorities and the authorities carrying out the functions for control and supervision in the field of defence of the consumer rights and the consumer market) collect evidence of the illegal use of the trademarks independently;
  • evidence collected within the framework of the case of the administrative offense and/or the circumstances established by the court regarding this case may be used in the future by the right holder, if he files a statement of claim for defence of his rights to the trademark, including the claim for recovery of compensation.

 

It may seem at first glance from the above peculiarities that the tool to protect one's right to a means of individualization in the form of bringing the offender to administrative responsibility on the basis of Article 14.10 of the CoAO RF is very convenient for the right holder and it does not have disadvantages. However, if you have a closer look, it is not quite so, and that is why:

  • within the framework of the consideration of the case of bringing to administrative responsibility, the fine imposed by the court is subject to be recovered in favor of the federal budget, and not in favor of the right holder;
  • as a rule, the Customs authorities, the law enforcement authorities and the authorities carrying out the functions for control and supervision in the field of defence of the consumer rights and the consumer market do not initiate conducting inspections independently, within the framework of which the facts of the illegal use of the means of individualization can be identified, and the right holder’s application is often a necessary tool to start this process.

In addition, one should not forget about the cases of parallel imports, when the products are imported into the territory of the Russian Federation without the right holder’s consent, on which the trademark is placed by the right holder himself or with his consent.

In this case, the legal mechanisms shall be applied, which were developed within the framework of the consideration of case No. A40-9281/08-145-128, and which were reflected in Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation No. 10458/08 of February 3, 2009, according to which the offender can not be brought to administrative responsibility.

In that Resolution, the Highest Court concluded that the application for administrative responsibility under Article 14.10 of the CoAO RF for importing the products marked with the trademark without the permission of the right holder into the territory of the Russian Federation should be dismissed, as the car that is a subject of the offense, has been released by the right holder of the trademarks with the same names and, therefore, it does not contain the features of an illegal reproduction of the trademarks.

In addition, it should be borne in mind that, according to the legal position set forth in Unnumbered Paragraph six of Paragraph 8 of Resolution No. 11 of February 17, 2011, it is indicated that, taking into account Article 1484 of the Civil Code of the Russian Federation, the purchase of the product containing an illegal reproduction of the trademark, as well as storing or transporting such product without a purpose of the introduction into the civil circulation on the territory of the Russian Federation, shall not constitute an administrative offense under Article 14.10 of the CoAO RF.

At the same time, establishing the purpose for which the disputed product has been stored is essential for determining, whether there is an administrative offense, the responsibility for which is stipulated by Article 14.10 of the CoAO RF, in the actions of the person.

Thus, storing is recognized as an independent offence of the exclusive right to the trademark only in the case, if such storing is carried out for the purposes of the introduction of the product into circulation.

The similar legal position was reflected in Resolution of the Intellectual Property Court of August 1, 2018 in case No. А40-198194/2017.

I think this conclusion of the Highest Court is quite interesting, but it seems to me that it will be quite difficult for the person, against whom the inspection is being conducted, to prove that the product is being stored not for the purposes of the introduction of the product into circulation.

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Author of article

Roman Larshin

Roman Larshin

Lawyer