Preclusive Effect in Disputes Over Intellectual Property

This paper is a reflection on issues related to the exemption from proving in a civil action the circumstances established by a legally effective judgment on a previously considered case, using the example of various court cases on disputes about the protection of intellectual property rights.

Prejudice is a beautiful word, isn’t it? This legal term derives from the Latin praejudicialis which means relating to a previous judicial decision or, simply put, standing by what’s decided.

The literal translation from Latin, however, does not clarify what “standing to a prior court decision” means, so I refer the reader to the explanation by the Constitutional Court of the Russian Federation in its Decision No. 30-П of December 21, 2011 on the ruling concerning the complaint submitted by V.D. Vlasenko and E.A. Vlasenko and examining the constitutionality of Article 90 of the Code of Criminal Procedure of the Russian Federation (hereinafter the Code of Criminal Procedure).

Based on the fourth and fifth paragraphs of clause 3.1 of the above decision, the general rules of distribution of the burden of proof in all types of legal proceedings provide for exemption from proving the circumstances related to the subject of proof, where the procedural legislation includes circumstances established by a judgment that took legal effect in an earlier case as provided for in Article 90 of the Code of Criminal Procedure, Article 61 of the Code of Civil Procedure of the Russian Federation. 

This ground for exemption from proving manifests prejudicialness as a property of the legal force of judicial decisions, the binding nature and enforceability of which as acts of the judiciary is due to its prerogatives. Recognition of the prejudicial value of a judicial decision, being aimed at ensuring stability and binding nature of a judicial decision, excluding possible conflict of judicial acts, implies that the facts established by the court in one case, until their refutation are accepted by another court in another case in the same or another type of proceedings, if they are relevant to resolving the case. Thus, the prejudicial nature serves as a means of maintaining consistency of judicial acts and ensures the principle of legal certainty.

The Supreme Court of the Russian Federation described in very beautiful legal language what prejudice is and what it serves for in judicial disputes. I am afraid, however, that for a non-lawyer, these explanations will be difficult to grasp, so I will try to formulate in simple words in one sentence what will be clear to all readers.

Prejudice are specific facts established by the court, enshrined in the reasoning and (or) the operative part of the enforceable court decision, not subject to proving and when the court considers another case involving the same persons. The legislator refers these circumstances to the grounds exempt from proving.

At the same time, it should be taken into account and remembered that the factual narrative when considering another case, rather than procedurally relevant conclusions, legal assessments of the court in an earlier case, have preclusive effect, since the assessment of evidence with the presentation of the relevant conclusions in the judicial act is the competence of the court considering the case. That follows from the principle of judicial independence and is one of the manifestations of discretionary powers of the court of appropriate judicial instance, as required by the law.

In the case of consideration of issues of preclusive effect in relation to disputes over intellectual property protection, the parties often resort to such a legal mechanism in proving the existence of an exclusive right, the fact of illegal use of the intellectual property and other circumstances. 

For instance, the right holder in the case of claiming the compensation for the illegal use of the marks in proving the fact of the illegal use of the visual identity may use the court decision on the case by which the infringer was brought to administrative responsibility provided by the part 2 of the Article 14.10 of the Administrative Offences Code of the Russian Federation for illegal use of the marks.

Asimilar situation was in the case No. A46-3137/2019. The plaintiff filed claims for compensation for infringement of exclusive rights to trademarks under international registrations, citing the decision of the Commercial Court of the Omsk Region from September 13, 2017 in case No. A46-14005/17 as evidence of illegal use of trademarks. As a result, the right holder’s claim was partially granted. The courts considering the dispute took into account that the fact of the defendant’s violation of the plaintiff’s exclusive rights to its trademarks was established by enforceable judicial acts with preclusive effect for the present case, which per se excludes the possibility of releasing the defendant from pecuniary liability measures in the form of compensation.

Let us consider this issue using the example of disputes about early termination of legal protection of trademarks due to their non-use. Within the framework of the case No. СИП-889/2020 on the claim of sole proprietor A.V. Ibatullin against Bytovik LLC, the question of early termination of legal protection of the trademark under the certificate of the Russian Federation No. 198937 was considered. The IPR Court in its decision dated February 19, 2021, case No. СИП-439/2019 supposedly acknowledged the lack of the plaintiff’s interest in early termination of legal protection of the  trademark. This was an independent ground for dismissal of the claim.

Another interesting, although rare, case is the use in proving the circumstances established during the consideration of a case on the issue of recognizing the actions of a person as an act of unfair competition. But in this case, what is going to be taken into account is not the circumstances established by the commission of the competition agency and its reflection in its decision, but the facts set forth in the reasoning of the court decision, by which the said decision of the competition agency will be upheld in the framework of judicial control.  

A similar narrative is reflected in the judgment of the Court for Intellectual Property Rights (hereinafter the IPR Court) of March 27, 2014 in case No. A34-3036/2013. In that case, the decision of the Kurgan Regional Department of the Federal Antimonopoly Service on bringing to responsibility under part 2 Article 14.33 of the Code of Administrative Offences of the Russian Federation for unfair competition was challenged. Unfair competition was expressed in the commercialization of goods with illegal use of the results of intellectual activity and similar visual identity of a legal entity.

We would like to pay special attention to a detail that is worth knowing. As indicated above, according to the general principle, the circumstances established by an enforceable judicial act on an earlier case, are not proven again when the court considers another case involving the same persons. In this regard, it can be assumed that if a particular individual or legal entity has not personally participated in any dispute, it cannot be subject to the principle of prejudicialness.  

However, it is not that simple or straightforward. Paragraph 2 of the Resolution of the Russian Federation Supreme Arbitration Court Plenum No. 57 dated July 23, 2009 on some procedural issues in cases related to nonfulfillment or improper fulfillment of contractual obligations provides for as follows. Regardless of the composition of parties to a case over recovery of a debt arising from the contract and regardless of the composition of parties to a case where the contract is disputed, the court takes into account the circumstances which were established in a case considered earlier. In the event that the court hearing the second case comes to a different conclusion, it must indicate the relevant reasons.

This legal approach is applied by the courts not only in disputes relating to non-performance of obligations or contestation of contracts, since the mandatory consideration of judicial acts in other cases is based not on the rules on prejudice (Article 69 of the Code of Commercial Procedure of the Russian Federation), which apply only to disputes between the same parties, but on general principles of procedural law regarding the binding nature of judicial acts (res judicata). Thus, in accordance with paragraphs 1 and 2 of Article 16 of the Code of Commercial Procedure of the Russian Federation, an effective decision of a commercial court is binding on government agencies, local authorities, other bodies, organizations, officials and citizens, and is enforceable across Russia.

Therefore, I would also like to recommend to all litigants who try to criticize the need for the court considering the dispute to take into account the judicial act referred to by the opponents on formal grounds (this does not concern us, as we were not involved in that case), to take all necessary efforts to refute the circumstances established in the previously considered case by presenting relevant evidence. 

To summarize, I would like to note that the preclusive effect is a very convenient and useful tool not only in intellectual property disputes but also in other categories of disputes. In addition to ensuring stability and binding nature of a court decision, exclusion of possible conflict of judicial acts, the preclusive effect is aimed at ensuring procedural economy, which is also of great importance given the huge number of cases that are under consideration by courts.