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Author
Sergey Zuykov

Managing Partner / Patent Attorney of the Russian Federation / Eurasian Patent Attorney

25 January 2023

IP Court considered cases with claims for large compensations

In one of the cases [1], the trading house, being an authorized representative of the foreign right holder of the trademark N 966078 in the territory of the Russian Federation, applied to protect the exclusive rights of the latter after acquiring counterfeit goods from the company. The declared amount of compensation amounted to the maximum amount - 5,000,000 rubles.


It is noteworthy that the court of first instance came to the conclusion that the claim for compensation was stated lawfully and should be satisfied, despite the fact that no justification for reducing the claimed amount of claims was provided. However, the court of appeal radically changed the situation, assessing that the amount of compensation recognized by the court of first instance does not correspond to the nature of the allowable calculation, and deciding to recover from the defendant in favor of the plaintiff only 132,440 rubles. It is interesting to read the argumentation of such contrasting approaches.


In the cassation complaint, the plaintiff predictably referred to the fact that the amount of compensation sought was commensurate with the consequences of the infringement, since the company had been profiting for a long time from the illegal use of the trademark in the course of its economic activities. The trading house stressed that the amount of compensation to be satisfied could not be less than twice the value of the goods purchased during the test purchase, namely 264,880 rubles.


The Court for Intellectual Property Rights noted an obvious contradiction in the position of the plaintiff - on the one hand, during the consideration of the case on the merits, in support of the claimed amount of compensation, he referred to paragraphs. 1 p. 4 art. 1515 of the Civil Code of the Russian Federation (compensation in a fixed amount), while in the cassation appeal - at paragraphs. 2 p. 4 art. 1515 of the Civil Code of the Russian Federation (double the cost of goods on which a trademark is illegally placed).


The IP Court pointed out that since the court is not entitled to change the type of compensation chosen upon presentation of claims on its own initiative, and the claim was not specified in this part, it was necessary to be guided precisely by the rule on a fixed amount of compensation. The court noted that when requesting the maximum amount of compensation allowed by the current legislation, the right holder had to specify such a calculation, but the proportionality of the claimed amount of compensation was not substantiated.


At the same time, the sale of counterfeit goods was not an essential part of the economic activity of the defendant, the duration of the illegal use of the disputed trademark was not confirmed, and the violation was not of a gross nature - all these factors were taken into account by the court when the amount of compensation was repeatedly reduced. It is noteworthy that there were no motivated objections of the defendant regarding the need to reduce the requested compensation (which was one of the reasons for the full satisfaction of the claim by the court of first instance). However, the SIP drew attention to the fact that imposing on the defendant the risk of non-commission of a procedural action obviously violated the balance of interests of the parties and deprived the violator of the right to a fair trial, since the defendant did not recognize the requirements.


Justifying the specific amount of compensation awarded, the court indicated that the amount to be recovered should be compared with the actual loss of the right holder, confirmed by the invoice and amounting to 132,440 rubles.



In the second case [2], the copyright holder became aware that the defendant, without his consent, illegally used in his business activities confusingly similar to trademarks to individualize the services of a public catering enterprise, in connection with which he demanded to recover 4,000,000 rubles from the violator.


In this case, the calculation of the amount of compensation claimed for recovery was based on a double amount of the cost of the right to use the disputed trademarks, provided for by commercial concession agreements concluded by the plaintiff with third parties. The court of first instance considered it possible to halve the amount of compensation, that is, to 2,000,000 rubles, taking into account the defendant's petition for a reduction in compensation, the nature of the violation committed, the degree of guilt of the infringer, the absence of violations of the exclusive right of this right holder previously committed by the person, the possible losses of the right holder , as well as proportionality of compensation to the consequences of the violation.


However, 2,000,000 rubles was not the final amount - the decision was canceled by the court of appeal, and the amount of compensation was determined as 333,333 rubles 33 kopecks. It is this approach that was supported by the Intellectual Property Court.


The IP Court noted that in claims in which compensation is determined at twice the cost of the right to use a trademark, the amount is both the minimum and the maximum [3], but can be challenged by the defendant.


The main reason for the significant discrepancy between the claimed amount and the final amount was that the commercial concession agreements submitted by the plaintiff were not recognized as proper evidence of the actual value of the right to use the disputed trademarks for the following reasons:

  • the contracts did not fully cover the period during which the defendant used signs similar to trademarks;
  • the subject of the agreements was the granting of the right to use a set of exclusive rights, including the rights not only to trademarks, but also to the secret of production, therefore, the price agreed by the parties to the agreements could not be the price solely of the cost of the right to use trademarks.


Since the cost of the right to use the trademarks for three years was 1,000,000 rubles, the court indicated that the cost of the right to use trademarks for 1 year is 333,333 rubles 33 kopecks, and twice - 666,666 rubles 66 kopecks.


The court decided to reduce this amount as much as possible, guided by the fact that the amount of such compensation can be reduced by no more than half - in order to prevent excessive intrusion into the defendant's property, on the one hand, and, on the other, to deprive him of incentives for the uncontractual use of intellectual property.



In another case where the maximum compensation was claimed [4], the plaintiff's desire coincided with the final decision in the case. The owner of the trademark "Из Сибири с любовью" N 698703 found out about the violation of his exclusive right by the Tomsk manufacturer and went to court.


The courts of all instances agreed with the need to recover compensation for infringement of the exclusive right to a trademark in full in the amount of 5,000,000 rubles, taking into account that the defendant had been a direct manufacturer of a significant amount of counterfeit products for a long time with large income from sales.


The courts noted that the defendant did not use his right to present evidence to the contrary, in particular, despite the court's proposal to provide evidence to establish information about the volume of sales of goods marked with the disputed designation, the defendant refused to provide them.


1.Ruling of the Court for Intellectual Property Rights dated 10/19/2022 N С01-1585/2022 in case N А41-75506/2021, Tenth Arbitration Court of Appeal dated 05/23/2022 N 10AP-5535/2022, decision of the Arbitration Court of the Moscow Region dated 02/16/2022

2.Ruling of the Court for Intellectual Property Rights dated 10/13/2022 N С01-1703/2022 in case N А32-44689/2021, Fifteenth Arbitration Court of Appeal dated 06/06/2022 N 15AP-6463/2022, decision of the Arbitration Court of the Krasnodar Territory dated 03/03/2022

3.At the same time, according to paragraph 31 of the Review of the Judicial Practice of the Armed Forces of the Russian Federation N 2 (2021), approved. By the Presidium of the Supreme Court of the Russian Federation on June 30, 2021, the court, in exceptional cases, with a reasoned statement by the defendant, has the right to reduce the compensation calculated in this way.

4.Resolution of the Court for Intellectual Property Rights dated 10/21/2022 N С01-1785/2022 in case N А67-10738/2021, the Seventh Arbitration Court of Appeal dated 08/03/2022 N 07AP-5632/2022, decision of the Arbitration Court of the Tomsk Region dated 05/16/2022

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