Competition Protection Practice in the Court Acts of the Intellectual Property

Competition is the main factor capable of ensuring economic growth, and its state issues are becoming increasingly important in the context of digital technologies development and the increasing innovation role, as indicated by the Protocol of the Federal Antimonopoly of Russia Presidium in the Development Strategy of Competition and Antimonopoly Regulation in the Russian Federation for the period up to 2030.

Since 2016 the Law N 135-FL has a number of “new” compositions (Articles 14.1-14.7) of unfair competition introduced by the so-called "fourth antimonopoly package," and the study of their application peculiarities by the Court of Intellectual Property Rights (hereinafter referred to as CIP) has significant practical importance.

1. Discrediting means disseminating false, inaccurate, or distorted information that can cause losses to an economic entity and (or) damage its business reputation (Article 14.1 of Law No. 135-FL).

According to Clause 9.1 of the Federal Antimonopoly Service of Russia letter, N IА =/74666/15 act of unfair competition can only be recognized as such dissemination of this information, which can give the person who disseminated the information advantage over competitors and causing them harm.

For example, in case No. С01-1278 / 2020, both the antimonopoly authority and the court found it a violation to send letters to the counterparties of a competitor with a message that the competitor's use of the designation "FROM TURAKOVO" on all food products is illegal. The basis for such a court decision was that the competitor had a valid exclusive right to the corresponding trademark. Although it was canceled, it turned out to be illegal (the Rospatent decision to invalidate the legal protection grant was successfully challenged).

In another case, a person disseminated information about the illegality of a competitor's using the Goods’ Origin Place Name, mistakenly believing that only one person could be a Goods’ Origin Place Name user, while both companies were entered In the register.

2. Misleading, including the quality, quantity, consumer properties of the goods offered for sale, and its other characteristics (Article 14.2 of Law No. 135-FL).

According to clause 9.2 of the Federal Antimonopoly Service of Russia letter N IА/74666/15, the article applies to cases of misleading any persons (consumers, counterparties, competitors), where misleading is a consequence of the dissemination of not negative information, as in discrediting, but positive (the one not corresponding to reality), and its content concerns the distributor’s activities himself and (or) his product. At the same time, the list of circumstances regarding which the consumer can be misled is open.

An example of misleading is the actions of the plant in case No. С01-986 / 2021, in which by producing and selling vodka "100 Let Cheboksarskaya", misleading the consumer regarding the goods’ production place manufactured in Yadrin, forming a false impression about the manufacturer in order to influence the buyer’s decision to purchase the goods.

On the contrary, in case no. С01-454 / 2018 the presence of the composition corpus delicti was not established in Art. 14.2, although the applicant assumed the opposite, pointing out that the participant of such a tender misled the tender organizer by referring to the products’ protection offered for delivery by patent rights. In the applicant's opinion, this consisted of the submission of a patent form containing false information.

However, the court noted that the patent form determines the state of the object technology concerning the industrial property protection and is intended to be presented to organizations (bodies) deciding questions of the object implementation in the country and abroad. Therefore, it indicates that the product does not contain patent infringement signs. It does not guarantee that this product was manufactured on the patent basis, the exclusive right to which belongs to a third party.

Moreover, the patent form itself is an internal document within the relationship framework between the seller and the buyer, which excludes the possibility of misleading both the tender organizer and other persons.

3. Unfair acquisition and use of the exclusive right to individualization means (Art. 14.4 Law N 135-FL).

Unfair acquisition of an exclusive right is most often found in the registration of individualization means and much less often in the acquisition under an agreement on the exclusive right alienation.

Regarding this composition, it is mandatory to establish the fact of bad faith, the exclusive right acquisition, and the object used as a whole.

In accordance with the explanations of the Federal Antimonopoly Service of Russia for recognizing such actions as unfair, the court establishes a set of circumstances: the use of the designation by other persons before the date of filing by the respondent-competing application for registration and the fact that the respondent is aware of this fact; intention to cause harm to the plaintiff, push him out of the product market, or gain unreasonable advantages; infliction (probability of infliction) on the plaintiff of harm by filing requirements for the termination of the designation used.

In this case, the unfair acquisition must be established in the period preceding the filing of the application for registration, while subsequent behavior can only confirm or deny this.

An example of unfair acquisition registration and use of a trademark is the Tornado case. The invention patentee (the future trademark owner) granted the user the right to use his invention, as a result of which he produced the product in which this invention is embodied under the name "TORNADO" (assigned by mutual agreement). However, the patentee registered this designation as a trademark for himself and began his own Tornado cultivators production, presenting appropriate claims to a competitor.

The court recognized that the purpose of the actions was not only to obtain an opportunity, without investing in the production and products’ promotion, to assign all the user's efforts results to develop and popularize the TORNADO brand, but also to oust the former co-production partner from the product market.

4. Sale, exchange, or other introduction of goods, if in doing so the results of intellectual activity were illegally used (Article 14.5 of Law No. 135-FL).

Examples of such actions are the sale of goods produced with using know-how, the exclusive right to which belongs to a competitor and which has been withdrawn from its possession, or the goods’ sale in packaging, which is confusingly similar to packaging designed by a competitor.

5 Actions (inaction) that can cause confusion with the activities of a competing economic entity or with goods or services put into the market by it (Article 14.6 of Law No. 135-FL).

Among other things, such actions include the illegal use of a designation identical to the individualization means or similar to it to the point of confusion, and copying or imitation of the product appearance, its packaging, label, name, color scheme, corporate identity.

For example, in case No. С01-760 / 2021 the use of a color gamut imitating the general applicant's gas stations style, as well as images confusingly similar to the trademarks to which the applicant has the rights - N 391296, N 340214, N 340215 was recognized as such a violation.  

According to Clause 9.6 of the letter of the Federal Antimonopoly Service of Russia No. IA /74666/15, copying (imitation) of the product appearance or its parts cannot be recognized as illegal if such copying is due solely to their practical use.

For example, in case No. С01-760 / 2021 courts found no violation of Art. 14.6, since the presence of a general similarity between the individual packaging elements of sealants, was due to the goods’ functional characteristics in this category and the prevailing customs of product design in this market. The courts noted that the use of colors for packaging sealants is traditional, as colors are associated with building materials.

6. Unfair competition associated with the illegal receipt, use, or disclosure of information constituting a commercial or another legally protected secret (Article 14.7 of Law No. 135-FL).

For example, the use by former employees and management in the work of a new legal entity of information constituting a trade secret of the legal entity-former employer and its production secrets in order to produce and sell products that are confusingly similar to those of a competitor.

7. Other forms of unfair competition (Art. 14.8 N 135-FZ).

The Court of Intellectual Rights has repeatedly pointed out that the determining factor for recognizing specific actions as unfair is not their specific mentioning in Law No. 135-FL, but their reach by the unfair competition composition in the context of paragraph 9 of Art. 4 and Art. 10. bis of the Paris Convention for the Protection of Industrial Property of 20.03.1883.

The unfair competition forms list is open, which corresponds to the legal position of the Constitutional Court of the Russian Federation, who noted that this expands the scope of judicial discretion in the field of suppression of unfair competition and is associated with a variety of forms and methods of unfair competition, not all of which may directly contradict legislation or business turnover.

It is quite rare that actions concerning intellectual property or its use that do not directly fall under the compositions established by Law N 135-FZ are recognized as unfair competition. For example, according to Clause 169 of the Russian Federation Supreme Court Resolution dated 23 April 2019 N 10, unfair competition outside the classification established in Law N 135-FL is unfair competition associated only with the exclusive right acquisition to individualization means (if it does not apply to usage). 

Thus, the Court of Intellectual Property practice concerning competition protection is quite extensive; the use of intellectual activity results and individualization means of competitors can provide significant advantages, while the Law provides a whole system of tools to suppress such violations.