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Author
Sergey Zuykov

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

26 September 2022

Overview of 2022 IP Court rulings in trademark infringement damages cases

Art. 1252 of the Civil Code of the Russian Federation allows you to present a claim for damages against a person who illegally used the means of individualization and caused damage to the right holder. At the same time, losses recovered in the protection of exclusive rights are determined taking into account the general norms of civil law on compensation for losses.


It should be noted that there are relatively few cases in which right holders would choose to claim damages instead of collecting appropriate compensation, which, of course, is due to the complexity of proof.


Basically, we are talking about losses in the form of lost profits. Practice shows that in order to bring to civil liability in the form of recovery of lost profits, it is necessary to establish the presence of a corpus delicti, including the occurrence of harm, the wrongfulness of the behavior of the tortfeasor, the causal relationship between these elements, and also, in cases established by law, the guilt of the tortfeasor.


In order to recover lost profits, the plaintiff must prove what income he would actually have received if his exclusive right had not been violated under normal conditions of civil circulation (typical conditions for the functioning of the market, which are not affected by unforeseen/force majeure circumstances).


A necessary condition for satisfying the claim for the recovery of lost profits is the establishment of the violation committed by the defendant as the only obstacle to the receipt of income by the plaintiff when he takes all the necessary measures to obtain it.


It is advisable for the right holder to choose this method of protecting his right if it is economically justified (the lost profit is more than the probable compensation) and / or the plaintiff has a ready evidence base (for example, in connection with the administrative legal prosecution of the defendant). Also, the practical benefit in recovering damages lies in the fact that their size, being established by the court, is not reduced, in contrast to compensation for violation of an exclusive right.


In 2022, all successful trademark infringement cases that went to cassation had Chanel SARL and/or Christian as the plaintiffs Dior . All cases are characterized by the presence of prejudicial acts on bringing violators to administrative responsibility, which greatly facilitated the proof. The amount of damages in different cases varied significantly.


In case N A63-6499/2021, 125,500 rubles of damages were recovered for infringement of rights to trademarks N 731984, N 951058 'DIOR',  as well as to the well-known trademark N 492476 'CHANEL' (in the amount in favor of both copyright holders). The violation was the sale of counterfeit goods.


Despite the defendant's position on the need to calculate the amount of lost profits on the basis of the cost of counterfeit copies sold, the courts of all instances supported the calculation of the amount on the basis of the value of the original products of the plaintiffs at the time the entrepreneur committed the offense, based on the principle that one unit of counterfeit products displaces one unit of original products from the market. Thus, the amount received corresponded to the lost income that the plaintiffs would have received under normal conditions of civil circulation if their exclusive rights had not been violated.


The violator referred both to the severity of his financial situation and to the grounds for reducing the amount recovered, however, neither the first nor the second applies to situations in which damages are recovered.


At the same time, the defendant managed to convince the Intellectual Property Rights Court not to take into account the reference of the court of first instance to the Resolution of the Plenum of the Supreme Court of the Russian Federation of April 26, 2007 No. patent rights, as well as the illegal use of a trademark". The court of first instance pointed out that, according to this decision, when calculating the amount of damage to the right holder, one should proceed from the retail value of the original copies of works or phonograms at the time of the crime, and this provision should be applied by analogy with the law, since disputed relations are not directly regulated by regulatory legal acts.


The IP Court noted that these clarifications relate to the procedure for determining the amount of damage caused as a result of the commission of a crime under Art. 146 of the Criminal Code of the Russian Federation, and for this reason have no legal significance for the purposes of determining the amount of recoverable damages for violation of exclusive rights. It should be noted that the withdrawal of this part of the argument in any case did not bring any changes to the operative part of the judicial act, since the calculation of lost profits based on the cost of the originals corresponds to the concept of lost profits given in Art. 15 of the Civil Code of the Russian Federation.


In case N A08-494/2021, the plaintiffs demanded damages in the amount of 170,350 rubles and 263,153 rubles, respectively, for violation of the exclusive right to trademarks N 31339 'CHANEL', N 426432A, N 1205417 when selling counterfeit shoes.


The losses were calculated by the plaintiff in the form of lost profits, the amount of which was determined, also based on the prices for original products that were current on the date of seizure of counterfeit goods.


At the same time, in the first instance, the basis for refusing to satisfy the claims was the omission of the limitation period, with which the Court of Appeal did not agree, being supported by the SIP. The key issue for this ground was the question of the moment from which the plaintiffs became aware of the trademark infringement.


As the beginning of the calculation of the term, the defendant referred to the letters of the Ministry of Internal Affairs of Russia (whose bodies revealed the offense) sent to the plaintiffs, however, there was no evidence of the date of receipt of these letters, so the appellate court proceeded from the date of the answers to them.

In case N A32-38394/2021, a claim was made for the recovery of damages in a much larger amount in comparison with the cases described above - 1,625,600 rubles. - in connection with the illegal use of the trademark N 31339 'CHANEL'.


The defendant tried to import counterfeit goods, but the customs authority did not allow it to be released.


When determining the amount of damages, the courts referred to the fact that it was determined based on the prices for original products that were relevant on the date of seizure of counterfeit products, but the defendant pointed out that the conclusions about the sufficiency of evidence for assessing the market value of the original product are based on a certificate of damage to the company-right holder, which is not relevant evidence.


The defendant also believed that, since the sale had not yet begun, and the goods had only just been imported into the Russian Federation, the conclusion about the replacement of one unit of production with a violation of the same unit of production belonging to the plaintiff did not correspond to the case materials, and there were no grounds for recovering lost profits due to lack of evidence of deriving income from the sale of products.


The courts took into account that the defendant did not provide other information about a different market value of the original goods to the court of first instance, the company did not make a counter settlement , and the goods were imported for the purpose of sale.


In case N A32-15898 / 2021, the plaintiffs received more than 3,500,000 rubles as damages for trademark infringement N 37532 'DIOR', N 37531 'CHRISTIAN DIOR', N 31339 'CHANEL'.


The courts, as in other cases, calculated the damages at the price of the originals, and rejected the defendant's arguments about the need to calculate the damages based on the price of counterfeit products.


The court also noted that as a result of the defendant's violation of the exclusive rights to other people's trademarks, some consumers of the right holders' goods went to the infringer; the reputation of the right holders was damaged by the use by consumers of low-quality counterfeit goods put into circulation by the infringer, and the right holders incurred expenses for restorative advertising; the violator profited from the illegal use of someone else's trademarks, while the consumer, buying counterfeit goods marked with someone else's trademark, purchased the goods under the brand of the copyright holder.

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