Court denies repeated claim for compensation in Baiu-Bai trademark case

On May 21, 2024, the Ninth Arbitration Court of Appeal held a hearing for case No. A40-195148/2021, filed by Maximus LLC seeking compensation from Godovalov LLC for infringement of the exclusive rights to the trademark under Russian Federation Certificate No. 527696, amounting to 6,820,000 rubles.

In this case, the interests of the third party, Zdorovye LLC, on the defendant's side were represented by Zuykov and partners.

In a previous case No. A40-210216/2020, responsibility for offering for sale, wholesale, and retail sales of all units of the phyto tea "Baiushki-Baiu," produced between May 15, 2017, and November 2, 2020, was entirely placed on Zdorovye LLC, which compensated for the infringement of the plaintiff's exclusive rights to trademarks No. 338019 and No. 183422. Thus, the court had already awarded compensation previously, but according to the plaintiff, the court unjustifiably exempted Godovalov LLC from liability for distributing counterfeit goods.

Referring the case for a new examination, the Intellectual Property Court highlighted the necessity to investigate the number of infringements of the plaintiff's exclusive rights to the disputed trademark and, based on this assessment, determine all significant circumstances of the case.

According to paragraph 6.1 of Article 1252 of the Civil Code of the Russian Federation, if a single infringement of exclusive rights to the result of intellectual activity or means of individualization is committed by the joint actions of several persons, such persons are jointly and severally liable to the rights holder. The provision on joint and several liability applies when the infringement results from the combined actions of several persons aimed at achieving a single result. Paragraph 60 of Resolution No. 10 states that if the plaintiff determines the total required amount of compensation without dividing it by the number of violations, the court assumes that the stated compensation amount includes sums for each violation in equal shares.

Previously, the first instance court agreed with the defendant's argument that the proven infringements concerning Zdorovye LLC in case No. A40-210216/2020 fully cover the claims against Godovalov LLC. By awarding compensation in case No. A40-210216/2020, the plaintiff's rights were fully and maximally restored, with Zdorovye LLC bearing responsibility for the entire chain of violations aimed at achieving a single result, having paid the awarded compensation. The plaintiff's claim for additional compensation from Godovalov LLC for the infringement of exclusive rights cannot be considered lawful. This assertion aligns with paragraph 3 of the Constitutional Court of the Russian Federation's Resolution No. 40-P dated July 24, 2020, which stipulates that the punitive nature of compensation for the infringement of exclusive rights should incentivize lawful (contractual) use of intellectual property and contribute to restoring violated rights, not enriching the rights holder.

Moreover, the first instance court considered that the legal protection of the verbal designation "Baiu-Bai" is provided by three trademarks forming a series: Certificate No. 338019 for goods under Class 30 of the Nice Classification "tea," Certificate No. 338019 for goods under Class 05 "baby food," and Certificate No. 527696 for goods under Class 05 "dietary supplements." If the protected trademarks are essentially a group (series) of marks of one rights holder, dependent on each other, connected by a common dominant verbal or graphic element, having phonetic and semantic similarity, and only minor graphic differences that do not alter the essence of the trademarks, then infringement of several such trademarks constitutes a single violation.

In the current case, the plaintiff sought to protect rights to the same designation "Baiu-Bai," demanding compensation from Godovalov LLC for the same batches of counterfeit goods (herbal baby tea "Baiushki-Baiu") for the same period of infringement (2017-2020), effectively requesting compensation for an infringement previously assessed in case No. A40-210216/2020, but from a different party.

As a result of the case review, the court ruled to deny Maxim LLC's claims, leaving the decision of the Arbitration Court of Moscow dated October 25, 2022, in case No. A40-195148/22 unchanged and the appeal without satisfaction.