On the ratio of the amount of compensation for the illegal use of a trademark and the price of a license agreement

By virtue of paragraph 4 of Art. 1515 of the Civil Code of the Russian Federation [1], the trademark owner has the right to demand, at his choice, from the infringer of the exclusive right to the trademark, instead of compensation for losses, payment of compensation. In particular, the amount of compensation can be determined at twice the value of the right to use a trademark, determined on the basis of the price that, under comparable circumstances, is usually charged for the legitimate use of a trademark (subclause 2, part 4, article 1515 of the Civil Code of the Russian Federation).

Within the meaning of paragraph 3 of Art. 1252 of the Civil Code of the Russian Federation, the court is not entitled, on its own initiative, to reduce the amount of compensation, which is determined in this way [2].

As a rule, as a justification for calculating the amount of compensation, right holders submit to the court license agreements that indicate the methods and cost of the right to use the relevant IP object.

Thus, in case No. A57-7606/2022, the court of first instance [3] accepted as the basis for calculating the amount of compensation for the illegal use of a trademark the cost of the right to use it, specified in the license agreement submitted by the plaintiff.

However, the Court of Appeal [4] changed the decision, indicating that it is necessary to take into account the method that the infringer actually used, and therefore only the cost of the right for a similar method of use should be taken as the basis for calculating the amount of compensation.

The court of first instance did not take into account that in the license agreement the price is set per quarter, provides the right to use several classes of the Nice Classification and is not differentiated by headings and classes in respect of which the trademark is protected. At the same time, the trademark was used by the infringer once and belonged to only one class of the Nice Classification, the plaintiff did not provide evidence to the contrary.

As a result, the Court of Appeal calculated the amount of compensation based on the ratio of the terms of the contract and the actual circumstances, defining it as the cost of the monthly remuneration divided by the number of classes.

At the same time, the court noted that the submission of a license agreement to the court does not imply that compensation in all cases should be determined by the court at twice the price of the agreement. The determination by the court of the amount of compensation in the amount of two times the value of the right in a smaller amount compared to the stated claim, if the court determines the amount of compensation on the basis of the value of the right established by it, which turned out to be less than that declared by the plaintiff, is not a reduction in the amount of compensation.

The IP Court [5] supported the algorithm for determining the amount of compensation applied by the appeal, indicating that it does not contradict Art. 1515 of the Civil Code of the Russian Federation and clarifications of the Supreme Court of the Russian Federation [6], from which it follows that when such compensation is required, its amount is determined based on the price that, under comparable circumstances, is usually charged for the legitimate use of the sign in the way that the infringer used.

Sources:

1."Civil Code of the Russian Federation (Part Four)" dated December 18, 2006 N 230-FZ (as amended on December 5, 2022)

2.Ruling of the Court for Intellectual Property Rights dated 02.12.2022 N C01-1842/2022 in case N A57-7606/2022

3.Decision of the Arbitration Court of the Saratov Region dated June 17, 2022 in case No. А57-7606/2022

4.Resolution of the Twelfth Arbitration Court of Appeal dated 08/03/2022 in case N A57-7606 / 2022

5.Ruling of the Court for Intellectual Property Rights dated 02.12.2022 N C01-1842/2022 in case N A57-7606/2022

6.Clause 61 of the Resolution of the Plenum of the Supreme Court of the Russian Federation of April 23, 2019 N 10 “On the application of part four of the Civil Code of the Russian Federation”