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Author
Roman Larshin

Senior lawyer

10 November 2019

The change in the position of the courts as applicable to jurisdiction of the cases related to the disputes on the means of individualization

For a long time, the lawyers practicing in the field of intellectual property have lacked a clear understanding as to which court they needed applying with a statement of claim on the defense of the rights to the means of individualization, when the defendants were the individuals, who did not have a status of an individual entrepreneur.

Such issues used to arise mainly regarding the domain disputes, where the administrators of the domain names were, as a rule, individuals, as well as in the cases on the defense of the trademark rights, when the violation was committed by an individual entrepreneur, for example, he bought a counterfeit product, but at the date of applying for the judicial defense, the defendant had lost a status of an individual entrepreneur, in connection with which the right holder was forced to apply to the court of general jurisdiction.

Of course, there should be no difference for the participants to the dispute, in which court the dispute is considered, whether it is in the arbitration court or in the court of general jurisdiction.

After all, if we are guided by the general principles enshrined in the Constitution of the Russian Federation, then according to Article 118 (Parts 1 and 2), justice in the Russian Federation is exercised only by the court through the constitutional, civil, administrative and criminal judicial proceedings.

By implication of this Article in conjunction with Article 10 of the Constitution of the Russian Federation, it is the court that has the exclusive authority to make the final decisions regarding the disputes, including in the cases arising from the legal relations related to the subject matters of intellectual property and the means of individualization equated to them.

At the same time, the judicial proceedings in all courts of the Russian Federation are exercised on the basis of the principles of competitiveness and equality of the parties, by the independent judges, who are governed only by the Constitution of the Russian Federation and the Federal Law.

However, everything is not as simple as it seems at the first glance, because everyone, who applies for the judicial defense, wants to get a judicial act, which, in addition to the fact that it will allow restoring the violated rights, will also be adopted quickly enough, and it is based on the norms, which are applicable in this field of the law, in compliance with the principles of uniformity of the judicial practice.

And for a reason there is a division into boards in all courts, for example, there are a civil board, an administrative board and a criminal board in the courts of general jurisdiction, in arbitration courts, there are all the above boards except for the criminal one.

The boards, in turn, are divided into judicial compositions, which consider the cases of certain categories, for example, the administrative board of the arbitration court considers the cases related to disputing the decision and the order of the antimonopoly body, or the materials of the administrative case collected by the customs regarding the issue of bringing the person to an administrative responsibility for the illegal use of the trademark, while the judicial composition in the civil board in the court of general jurisdiction specializes in considering the disputes related to the defense of the rights of consumers or labor disputes.

Such division allows the judges to focus on the study and improvement of the law enforcement practice, to be the professionals in the field of the law, in which they administer justice.

At the same time, coming back to the topic of the article, we cannot but touch upon the provisions of the Arbitration Procedural Code of the Russian Federation and the Civil Procedural Code of the Russian Federation related to the determination of jurisdiction of disputes.

The arbitration courts resolve economic disputes and consider other cases involving the organizations being legal entities, the citizens having the status of an individual entrepreneur, and in the cases stipulated by the Arbitration Procedural Code of the Russian Federation and other Federal Laws, and involving the citizens, who do not have the status of an individual entrepreneur (Part 2 of Article 27 of the Arbitration Procedural Code of the Russian Federation).

At the same time, the cases related to the disputes on the means of individualization, which involve the citizens, who do not have the status of an individual entrepreneur, are not stipulated separately in the Arbitration Procedural Code of the Russian Federation, whereupon the issue of considering such cases by the arbitration court has been left at the discretion of the court.

Thus, in accordance with Paragraph 1 of Part 1 of Article 22 of the Civil Procedure Code of the Russian Federation, the courts of general jurisdiction consider and resolve the claim cases involving citizens, organizations, public authorities, local self-government authorities regarding the defense of the violated or disputed rights, freedoms and legitimate interests, regarding the disputes arising from the civil, family, labor, housing, land, ecological and other legal relations.

It is easy to guess that, based on the aggregate of the criteria: a subjective composition of the parties to the dispute, a nature of the dispute and the lack of exclusive jurisdiction of the dispute to the arbitration courts, the cases regarding the defense of the trademark rights involving individuals are subject to the courts of general jurisdiction.

However, everything is not as simple as it seems at the first glance, as the professional representatives in the field of intellectual property have been at a loss about the positions of both the arbitration courts and the courts of general jurisdiction regarding the issues of jurisdiction of such cases.

For example, the statement of claim is filed pursuant to the rules of jurisdiction to the court of general jurisdiction, due to the fact that the defendant is an individual.

In turn, the court of general jurisdiction rejects to accept the statement of claim or, having accepted the statement of claim for the proceedings, terminates the proceedings in the case due to the lack of jurisdiction of the dispute to the court.

As an example, I cite below from the Decision of the Moscow City Court of 23.11.2015 No. 4g/8-12382/2015, 2-3036/2015 On rejecting to transfer the cassation petition against the judicial acts in the case on the cancellation of the registration of the disputed domain name and the registration of the disputed domain name in the plaintiff's name for the consideration in the judicial session of the Court of Cassation, in which the Court of Cassation confirmed the legality of the decision adopted by the first-instance court on the termination of the proceedings in the case specifying the following: “In this case, the dispute regarding the use of the plaintiff's trademark by the defendant – the citizen, who is not the entrepreneur, has arisen. The fact of the availability or lack of the profit from the activities involving the use of this trademark by the defendant is not relevant for the consideration of the issue on jurisdiction of the case to the arbitration court. The issue is about defending the rights to the trademark, which is possibly used by the defendant. Therefore, the legal relations arisen relate to the field of the economic activities, and the dispute is connected with carrying out such activities, thus the dispute is subject to jurisdiction of the arbitration court. Involving the individual, who is an administrator of the domain on the Internet to the case as a defendant are not the grounds to conclude that the dispute lacks jurisdiction to the arbitration court.”

Thus, a qualifying feature in determining jurisdiction for the courts of general jurisdiction was the availability in the case of such grounds as the defense of the rights to the trademark.

The arbitration courts, while terminating the proceedings in the cases on the defense of the rights to the trademarks involving individuals, were also not behind in the desire to show off the pungency of the theses in interpreting the norms of the procedural law.

As an example, I shall refer to Resolution of the Intellectual Property Court of 12.07.2017 in case No. A40-253219/2016, in which the court upheld the decision of the first-instance court, which had terminated the proceedings in the case due to the fact that the defendant was an individual and he did not have the status of an individual entrepreneur.

Thus, the Court of Cassation states the following in its Resolution: The arbitration courts shall resolve economic disputes and consider other cases involving the organizations being legal entities, the citizens having the status of an individual entrepreneur, and in the cases stipulated by the Arbitration Procedural Code of the Russian Federation and other Federal Laws, and involving the citizens, who do not have the status of an individual entrepreneur (Part 2 of Article 27 of the Arbitration Procedural Code of the Russian Federation).

According to the explanations contained in Paragraph 1 of Resolution of the Plenum of the Supreme Court of the Russian Federation and the Plenum of the Supreme Arbitration Court of the Russian Federation of 18.08.1992 No. 12/12 “On some issues of jurisdiction of cases to the courts and arbitration courts,” the civil cases shall be considered in the court, if at least one of the parties is a citizen without the status of an entrepreneur, or in the case, when a citizen has such status, but the case has arisen not in connection with carrying out the business activities by him.

Review of the Judicial Practice of the Supreme Court of the Russian Federation No. 1 (2014), approved by the Presidium of the Supreme Court of the Russian Federation of 24.12.2014, contains an explanation on the issue of jurisdiction to the arbitration courts of the economic disputes involving individuals (Section VI), from which it follows that a citizen can be a person involved in the arbitration process as a party, solely in the cases, if at the date of applying for the arbitration court he has the state registration as an individual entrepreneur, or if the involvement of the citizen without the status of an individual entrepreneur in the arbitration process is stipulated by the Federal Law (for example, Articles 33 and 225.1 of the Arbitration Procedural Code of the Russian Federation).

As it was established correctly by the courts of the lower instances, defendant Nikitaev F.I. acts in the legal relations regarding the present case as the individual, who does not possess the status of an individual entrepreneur.

At the same time, the current legislation in a general matter does not contain the norms according to which the dispute on a violation of the rights to the trademark can be considered by the arbitration court involving an individual as a defendant.”

To be fair, but without reproach to the courts of general jurisdiction, it is worth saying that the plaintiffs in this category of disputes have always sought the arbitration courts. We can only guess, whether this is due to the fact that these courts have more practice regarding such cases and predictability of the upcoming judicial act is higher, or with the fact that the amount of the damages recoverable from the violators is larger, but the reality is that the representatives wishing to have the proceedings in arbitration have developed a strategy, with the help of which the dispute could be transferred highly likely from general jurisdiction to arbitration.

The statement of claim was initially filed with the court of general jurisdiction, where the court as a rule was a success to reject accepting it for the proceedings or terminated the proceedings in the case, then, upon the expiration of the period to appeal, the plaintiff as a rule having attached, beside the payment order, the proofs in support of the claims lodged to the statement of claim and other required attributes specified in Article 126 of the Arbitration Procedural Code of the Russian Federation attached the relevant decision of the court of general jurisdiction.

At the same time, in the statement of claim, the court's attention was separately paid to the fact that, based on a systemic interpretation of Paragraph 1 of Article 46 of the Constitution of the Russian Federation, Paragraph 4 of Article 39 of the Arbitration Procedural Code of the Russian Federation, subject to the provisions of Part 5 of Article 3 of the same Code and the unity of the right to the judicial defense, the costs of jurisdictional uncertainty should not be laid on the interested parties, the disputes between the courts regarding jurisdiction were inadmissible, in this connection the arbitration court was forced to consider the dispute, which, in the opinion of some judges, was not of its jurisdiction.

At the same time, it is worth noting that the arbitration courts did not always consider the disputes on the defense of the rights to the means of individualization involving individuals being “under pressure” of inadmissibility of the disputes on jurisdiction of the case between the courts.

Thus, the Intellectual Property Court, in its Resolution of 17.04.2018 in case № A56-31629/2016, while rejecting the argument of the defendant about the violation by the first-instance court and the Court of Appeal the rules of jurisdiction in considering the dispute, leaving the disputed judicial acts in force, indicated that, despite the fact that the defendant lacked the status of an individual entrepreneur, the information posted on his website was presented in the interests of a legal person and related to carrying out the economic activities.

Moreover, the Intellectual Property Court also took into account the legal position stated in Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation of 18.05.2011 No. 18012/10, Decision of the Supreme Arbitration Court of the Russian Federation of 16.05.2014 No. VAS-5672/14, according to which the involvement in the case as the defendants of the individuals, who were the administrators of the domains on the Internet, was not in itself the grounds for concluding on the lack of jurisdiction of the dispute to the arbitration court, in this connection it did not see the grounds for the cancellation of the judicial acts in view of the availability of the arguments on the violation of the rules of jurisdiction of the dispute in the cassation petition.

It was the Supreme Court of the Russian Federation that was forced to put an end in this long-running match with overthrowing the ball from one end of the field to another one, and it pointed out in unnumbered paragraph 3 of Paragraph 4 of Resolution of the Plenum of the Supreme Court of the Russian Federation of 23.04.2019 No. 10 “On the Application of Part Four of the Civil Code of the Russian Federation,” that regardless of the subjective composition of the persons involved in the case, the disputes on the means of individualization (except for the disputes on the names of the places of origin of the products) were subject to the consideration in the arbitration courts.

Thus, we can say that legal certainty regarding jurisdiction of the disputes on the means of individualization, which involve the citizens, who do not have the status of an individual entrepreneur, is finally established.

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