Agreement of Lawsuit in Cases Challenging Rospatent Decisions

This paper addresses the possibility of entering into an agreement of lawsuit as part of the court consideration of the case on invalidating decisions of the Russian Agency for Patents and Trademarks (Rospatent). In cases where it is possible to enter into such an agreement, we will consider who are the parties to that agreement and how it is approved by the court.

The disputes in question are those on accordance or closure of defense of a right to the results of creation of the mind and the equivalent visual identities of legal entities, goods, works, services and enterprises, except for the objects of copyright and related rights and integrated circuit topography. That includes cases on challenging non-regulatory acts and decisions and acts or omissions by the federal executive authority on intellectual property.  Only the inferior intellectual property courts are competent to try such cases (paragraph 2 of Part 4 of Article 34 of the Arbitration Procedure Code of the Russian Federation).

The order of proceedings on challenging non-regulatory acts, decisions, acts and omissions of state authorities in arbitration courts is defined by Chapter 24 of the Arbitration Procedure Code of the Russian Federation. These cases are governed by administrative procedure.

As it is known, in court proceedings on cases arising from administrative legal relations, the parties to the dispute are the claimants and interested persons. The term “interested person” refers to a body exercising public powers, decisions and acts or omissions disputed by the claimant. Rospatent acts as an interested party since within the framework of consideration of such cases, the court reviews the legality of a decision taken by Rospatent.

Paragraph 1 of the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation of 18.07.2014 № 50 "On reconciliation of the parties in the arbitration process" (hereinafter - the Resolution № 50) states the following.

“In accordance with the Arbitration Procedure Code of the Russian Federation, the legal proceedings in arbitration courts is a procedure to promote the establishment and development of partnership business relations, the formation of customs and ethics of business (paragraph 6 of Article 2 of the Code); the purpose of preparing a case for litigation is reconciliation of the parties (paragraph 1 of Article 133 of the Code). On this basis and on the basis of paragraph 1 of Article 138 of the Arbitration Procedure Code of the Russian Federation, the arbitration court, when considering a case, shall take measures to reconcile the parties, assist them in settling the dispute, guided by the interests of the parties and the objectives of court proceedings in arbitration courts”.

Therein, according to paragraph 7.1. of Rospatent's order No. 18 of February 4, 2014 On Approval of the Regulations of the Russian Agency for Patents and Trademarks (registered with the Ministry of Justice of Russia on April 29, 2014 No. 32154) states the following.

“The Head of the Agency may act as a representative of Rospatent in the court and shall be entitled to perform on behalf of Rospatent all procedural actions, including the right to file a lawsuit and sign the points of defense, sign an application for injunctive relief, a full or partial withdrawal of a claim and acknowledgement of a claim, change of the grounds or subject matter of a claims, enter into agreement of lawsuit, an agreement on state of affairs, as well as the right to sign a statement on revision of judicial acts due to newly discovered evidence, challenge the decision of the Ministry of Justice of the Russian Federation and receipt of adjudicated funds and other property”.

Taking into account that the Arbitration Procedure Code of the Russian Federation does not limit Rospatent in the agreement of lawsuit and the head of Rospatent is endowed with such right, it can be concluded that in disputes on the invalidation of Rospatent's decisions, the agreement of lawsuit can be concluded between the claimant and Rospatent, as they are the parties to the dispute considered by the arbitration court.  

In fact, everything is not as unambiguous as it seems at first sight, and here is why. First of all,  it raises concern as the analysis of judicial practice in such cases has not revealed any judicial acts in which Rospatent would be a party to the agreement of lawsuit, which, as it seems, is related to the position of the agency which is not ready to revise its conclusions set forth in the decision made by it and to recognize possible mistakes made when considering the opposition.

Secondly, it would appear that the conclusion of an agreement of lawsuit only between Rospatent and the claimant is unacceptable in itself, since a judicial act adopted in the course of consideration of such a case may affect the rights of third parties. Thus, in cases concerning the challenge of non-regulatory acts, decisions and acts or omissions of Rospatent, as a rule, as a third party, which does not claim under its own right in respect of the subject matter of the dispute, it is either the owner of the challenged patent , certificate or visual identity, which have been upheld by the challenged decision, or the person who filed an opposition to the grant of a patent or the granting of a defense of right to a visual identity, if this opposition has been sustained.

At the same time, in this category of disputes, third parties, mainly, protect and support the decision taken by Rospatent, since it is aimed at protecting their interests. Therefore, the conclusion of an agreement of lawsuit only between the claimant and Rospatent without taking into account the position of a third party is inappropriate.

However, in practice, there are situations when, for example, the person who filed an opposition to the defense of a right to the trademark, in the course of the dispute resolution, came to the conclusion that under certain conditions (for a fee or taking into account the delimitation of the commodity markets), where allowed by law, it is ready to give its consent to the registration of the disputed trademark notice. In this regard, there is no need to recognize the defense of a right to the visual identity invalid and the grounds that served as a basis for the adoption of the contested non-regulatory act.

After all, the decision of Rospatent to invalidate a patent or grant defense of a right to trademark or protected designation of origin entails the revocation of a patent, termination of defense of a right to trademark and termination of the relevant exclusive right from the date of filing an application to Rospatent for the grant of a patent, registration of a trademark, annulment of an entry in the State Register regarding all certificates of exclusive right to such a protected designation of origin (paragraph 139 of the Resolution of the Plenum of the Supreme Court of the Russian Federation of April 23, 2019 No. 10 On the application of Part Four of the Civil Code of the Russian Federation).

In this regard, the desire of the person who filed the opposition to actually withdraw from it to restore the defense of a right to the contested trademark on favorable terms is not enough, since the decision of Rospatent remains valid.

So, what can be done in a situation like this? Can an agreement of lawsuit be concluded between a third party and Rospatent or a trilateral agreement between a claimant, Rospatent and a third party? The answer to this question is contained in paragraph 33 of Resolution No. 50, which provides the following clarification:

“Subject to the principles of discretionary and voluntary mediation by the parties, in arbitration proceeding, conciliation may result in other agreements between individuals if such agreements effectively result in settlement of the dispute.

Thus, when considering cases on challenging the decisions of the federal executive authority on intellectual property to sustain the opposition against the defense of a right to trademark by the reasoning that the defense of right to trademark has been granted in violation of the requirements of civil legislation in connection with the lack of consent of the body or person whose consent is required in cases stipulated in paragraphs 2, 4, 6, subparagraphs 1 and 2 of paragraph 9 of Article 1483 of the Civil Code of the Russian Federation, the courts should take into account the following issues.

If the said consent of the respective person (including the person involved in the case as a third party without independent demand regarding the subject matter of the dispute) is obtained in the course of consideration of the dispute by the court, including by entering into an agreement between the party to the dispute and this person, such consent (agreement) cannot be qualified by the court as an agreement of law suit, since it was not concluded between the parties to the lawsuit.

At the same time, this consent (agreement) is a result of reconciliation of the party to the case and the person whose consent to provide defense of a right to trademark is necessary in accordance with the requirements of the civil legislation with regard to the provisions of Article 138 of the Arbitration Procedure Code of the Russian Federation”.

Interestingly, the approval of such an agreement does not result in a court ruling to terminate the proceedings, as we used to see in cases that ended in an agreement of lawsuit. The result is a court decision (ruling), by which the court cancels the decision of the federal executive authority on intellectual property and obliges it to consider again the opposition, which served as the basis for the decision of this authority contested in court, which follows from the explanations contained in sub-paragraph 5 of paragraph 33 of the Resolution No. 50.

It is worth saying that the same legal approach shall be applied in the cases on challenging the decision of the Russian Agency for Patents and Trademarks to grant defense of a right to invention, utility model or industrial design on the grounds that the defense of a right was granted to them in violation of the requirements of civil legislation. Such legal position was reflected in the decision of the Court for Intellectual Property Rights of November 21, 2019, case No. CIP-280/2019.

To summarize, in cases on challenging the decisions of Rospatent the conclusion of an agreement of lawsuit is possible, but no confirmation of this fact has been found in the court practice. At the same time, under such a category of disputes, it is allowed to conclude an agreement between the claimant and a third party which is not an agreement of lawsuit but testifies to the reconciliation of the claimant and the third party and serves as a basis for Rospatent to reconsider the opposition.