ArticlesDoctrine of equivalents
In accordance with paragraph 2 of Article 1354 of the Russian Federation Civil Code, “Protection of intellectual rights to an invention or utility model is granted based on a patent to the extent determined by the claims contained in the patent or utility model, respectively. The description and drawings, as well as three-dimensional models of the invention and utility model in electronic form, may be used to interpret the claims and utility model claims (Item 2 of Article 1375 and Clause 2 of Article 1376)".According to paragraph 3 of Article 1358 of the Russian Federation Civil Code “An invention is recognized as used in a product or method if the product contains, and the method uses each feature of the invention given in the independent clause of the claims contained in the patent, or a feature equivalent to it and which has become known as such in prior art prior to the priority date of the invention.…When establishing the use of an invention or utility model, the interpretation of the claims of the invention or utility model is carried out in accordance with paragraph 2 of Article 1354 of this Code."In accordance with paragraph 4 of Article 1358 of the Russian Federation Civil Code “If, when using an invention or utility model, each feature is also used, which is given in an independent clause of the claims contained in the patent of another invention, or a feature equivalent to it and which has become known as such in the given field of technology before the date priority of another invention, or each feature given in an independent claim contained in the patent formula of another utility model, and when using an industrial design, each essential feature of another industrial design or a combination of features of another industrial design that produces the same general impression on an informed consumer as an industrial design a sample, provided that the products have a similar purpose, another invention, another utility model or another industrial design is also recognized as being used."Thus, from the norms of paragraphs 3 and 4 of Article 1358 of the Russian Federation Civil Code, it follows that in order to establish the use of the invention, it is necessary to compare each feature of the invention given in the independent clause of the formula contained in the patent, or equivalent to it and which has become known as such in the given field of technology, with signs of the product of the alleged infringer.Despite the use of the term "equivalent feature" in patent law, its definition is not fixed anywhere. At the same time, both in domestic and foreign scientific literature, a considerable number of publications and articles are devoted to this issue.To define the concept of “equivalent feature”, law enforcement practice and methodological approaches are applied based on the provisions of paragraph 24 of the “Instructions on the procedure for paying remuneration for discoveries, inventions and rationalization proposals” of the State Committee of the Council of Ministers of the USSR for Inventions and Discoveries (Decree of January 15, 1974 ): “ The invention is also recognized as used in those cases when it is allowed to replace one or more features of the invention with other interchangeable elements (equivalents). The replacement of the feature or features specified in the claims is considered equivalent, if the essence of this invention does not change, the same result is achieved, and the means of execution are replaced with equivalent ones known in the field."At the same time, the essence of the invention as a technical solution is expressed in the totality of essential features sufficient to achieve the technical result provided by the invention. Signs are significant if they affect the possibility of obtaining a technical result, i.e. are in a causal relationship with the specified result.The technical result is a characteristic of the technical effect, phenomenon, properties, etc., objectively manifested in the implementation of the method or in the manufacture or use of the product, including the use of the product obtained directly by the method embodying the invention.Previously, prior to the recognition on the basis of the Order of Rospatent dated February 14, 2002 No. 25 “On the invalidation of departmental regulatory legal acts” of the Instructions for State Scientific and Technical Examination of Inventions (EZ-2-74) not valid on the territory of the Russian Federation, approved by the Chairman of the State Committee of the Council Ministers of the USSR for inventions and discoveries December 13, 1973, in paragraph 4.13. the following was stated:"4.13" Conclusion on the equivalence of the technical solutions used in the object to the features of the claims "the following conditions for the application of the doctrine of equivalents are given:4.13.1. The conclusion is drawn up only in those cases when, when using the invention, one or more features indicated in the claims are replaced by other interchangeable elements (equivalents).4.13.2. An equivalent replacement of the features specified in the claims with other technical solutions, and elements is recognized only if the following conditions are met:a) if the replacement of features with equivalents does not change the essence of the invention;b) if the same result is achieved by replacing the features of the invention with other elements (equivalents);c) if the means of execution are replaced by equivalent ones (equivalents);d) if the technical solutions (elements) that replace the features of the invention are known in the field. (Instruction 10, paragraph 24)”.The question of the equivalence of features is a matter of law; accordingly, the court must resolve this issue on the basis of the actual circumstances of the case.I propose to turn to judicial practice in order to analyze how Russian courts now interpret the term "equivalent feature" taking into account specific factual circumstances.Amazing analytical work was carried out by the Court of Appeal in case No. А56-71544/2015. Thus, the decision of the Thirteenth Arbitration Court of Appeal dated March 20, 2020, states the following: “As follows from the materials of the case, based on the results of the patent examination conducted in the court of the first instance, the expert came to the following conclusion: Without exception, all the features in the independent formulas of clause 1 and clause 4 of patent No. 2646553 in the inspected object (hangar gate lifting mechanism of the Nevskiye Masters company) was not used, namely, features Nos. 1-8 were used as they are included in the claims, and features Nos. 9 and 10 were changed.While maintaining the composition of the main structural elements (cable, rod, support arms, limit switch), the kinematic diagram of the interaction of the cable, rod, and support arms, one of which has a limit switch, has been changed. In the object being inspected (the lifting mechanism of the hangar gates of Nevskiye Masters LLC), a feature known in the field of lifting equipment until the priority date of the current patent for an invention according to application No., which at their first ends are rotatably attached to the structural components of the vertically lifted door, and the specified element (52) is a rod, which is attached with its ends to the ends of the support arms, allowing the bearing component to pass along the rod between the support arms (50a, 50b ), and which is designed to move from the first position to the second position by turning around the pivot pin (54) under its own gravity.The expert came to the conclusion that equivalent features do not change the essence of the invention while achieving the same result, and the means of replacement are equivalent: the movement under the action of gravity of the supporting arms is replaced by their movement under the action of stretched springs.At the same time, it is not seen from the study whether not the “movement” itself, but the reason for such a “movement” in one case “under the action of the own gravity of the supporting arms” in the other “under the action of stretched springs” is equivalent and equivalent.".The Court of Appeal, in its decision on the said case, also noted that “ Equivalent replacement of the features indicated in the claims with other technical solutions is recognized only if the following conditions are met:a) if the replacement of features with equivalents does not change the essence of the invention;b) if the same result is achieved by replacing the features of the invention with other elements (equivalents);c) if the means of execution are replaced by equivalent ones (equivalents);d) if the technical solutions (elements) that replace the features of the invention are known in the art.Thus, when analyzing equivalence, it is necessary to determine the function of the feature used in the patented invention and the function of the feature used in the Product, and the fulfillment of the above conditions is also revealed".The said decision of the Thirteenth Arbitration Court of Appeal in case No. А56-71544/2015 dated 03/20/2020 was upheld by the decision of the Intellectual Property Rights Court dated 08/05/2020.In case No. A41-70419/2014, the courts established the following (see the ruling of the Intellectual Property Rights Court dated February 1, 2017): two signs indicated in table No. 4 of the conclusion under numbers 7 and 8, which are replaced by equivalent ones, namely:1) feature number 7 “as a target additive for fluidity, it contains an ionic-lattice mineral with complex anionic groups of the gross formula [A l 2 O 3] 0.5-7.5 • [SiO 2] 40-50 • [ Na 2 O • K 2 O ]4.5-11.4•[Р 2O5]0.5-1.5•[ СаO ]5-9.1•[Fe2O3]12-20•[ FeO ]8-12•[ТiO3]7-11 and/or phosphorite flour with true with densities of at least 2.8 g/cm 3 "(hereinafter - feature 1) is replaced by the feature" as a target additive for fluidity, the fire extinguishing agent contains at least one substance from the series: neferelin concentrate, phlogopite, muscovite, labasin, perlite; predominantly nepheline concentrate” (hereinafter referred to as feature 1A);2) feature number 8 "as a water-repellent organosilicon liquid, it contains methylhydridesiloxane with an active hydrogen content of 1.6-1.7 wt .% or a mixture of methylhydridesiloxane as the basis of the water-repellent agent and curing catalyst - aminoethylaminopropyltrimethoxysilane in the ratio (5-70): 1, at the same time, the modifier - organosilicon water- repellent liquid is taken in the form of a 10-70% solution in an organochlorine solvent" (hereinafter - feature 2) is replaced by the feature " as hydrophobizing organosilicon liquid, it contains at least one substance from the series: polymethylhydrosiloxane liquid, alkyl halosilanes, sodium organyl siliconate, in an amount of not more than 1% by weight of the target additive for fluidity "(hereinafter - feature 2A). ".In No. A40-48304/2016, the courts came to the following conclusions (see the ruling of the Intellectual Property Rights Court dated December 05, 2017): according to the patent of the Russian Federation No. 2289391 when providing medical services in connection with the use of a device other than one needle with a lock, as required by the company's patent for the invention, considers it necessary to note the following. The Court of Appeal, within the framework of checking the arguments of the appeal of the company, summoned and questioned at the hearing the experts Pasynka M.S. and Agasarova L.G., who conducted the forensic examination appointed by the court of the first instance. Based on the results of their explanations, the Court of Appeal came to the conclusion that the sign according to the patent “needle” and the sign specified in the protocol for securing evidence dated December 25, 2015: “the device consists of two thin rods soldered together with round fixed tips at the top parts” should be recognized as equivalent, and the method of fixing the needle is not significant, since both used needles are the same in their function (affect acupuncture points ) and the result achieved. the same needle during the entire period of therapy, and acting immediately on a group of acupuncture (auricular) points. ".In the “fresh” case No. A40-29590-2020, the Court of Appeal, in its decision of 03/24/2022, came to the following conclusions: “ The replacement of a feature is considered equivalent if the essence of this invention does not change, the same result is achieved during the replacement, and the means for performing the replacement are equivalent, while the elements that replace the features of the invention are known in the art. According to the conclusion of the forensic expert Ermakova E.A. this analysis was carried out by the expert only in relation to the feature "transfer by the buyer's mobile device of a one-time unique code, a unique identification number of the mobile device to the payment system" of independent clause 1 of the patent claims. At the same time, the expert omitted the need to take into account the features “parallel” and “[transfer by the buyer’s mobile device] of the unique identifier of the seller’s cash system and their own payment data [to the payment system] through the second communication channel,” which are included in feature 9 of independent claim 1 according to A patent found to have been fully exploited in the Defendants' device by virtue of the doctrine of equivalence. Moreover, the analysis carried out by the expert recognizes "the transfer of a unique code (that is, one parameter) from the payment system to the merchant's mobile device" as equivalent to "the transfer from a mobile device to the payment system (that is, vice versa) of a unique code and a unique mobile device number" ( i.e. two parameters). The expert does not provide any justification for such a conclusion, indicating only that the purpose of the invention under the Patent (namely, the distribution of information flows) is fulfilled. In addition, the expert also does not provide any explanation for the lack of analysis of the remaining parts of feature 9 of the independent claim 1 of the patent claims. The expert also, in principle, does not provide a separate analysis of equivalence with respect to features 10 and 12 of the independent clause 1 of the patent claims, which are also recognized as used in the controversial device. In connection with the foregoing, the Conclusion of the forensic expert Ermakova E.A., obviously, cannot unconditionally testify to the use of features equivalent to features 9, 10, and 12 of independent clause 1 of the claims under the Patent and, accordingly, the proven fact of using all the features of the Patent in the investigated device. At the same time, the panel of judges takes into account that the above analysis of the equivalence of the features of the device under study to features 9, 10, and 12 of the independent clause 1 of the claims under the Patent was not carried out, which actually indicates that the court of the first instance incorrectly applied the substantive law provisions of clause 3 of Article 1358 of the Civil Code of the Russian Federation, since The patent is recognized as used, despite the fact that not every feature of the invention according to the Patent is used in the operation of the disputed device.The judicial practice discussed above allows us to conclude with a certain degree of clarity that the absence of a definition of the term “equivalent feature” does not affect the quality of justice. Moreover, if earlier there were grounds to assert that in judicial acts the issue of the equivalence of signs, as a rule, was not independently considered by the courts, now it can be argued that the courts began to independently determine the boundaries of the exclusive right of the patent owner.Goodwill as an intangible asset
In accordance with Clause 1 of Article 6 of Federal Law No. 402-FZ dated 06.12.2011 On Accounting (hereinafter referred to as the Law on Accounting) "An economic entity is required to conduct accounting records in accordance with this Federal Law, except as otherwise stipulated by this Federal Law.".In accordance with Paragraph 2 of Article 5 of the Law on Accounting, "Accounting objects of an economic entity are assets.".In accordance with Clause 7.2. "The accounting concept in the Russian market economy" (approved by the Russian Federation Ministry of Finance, the Presidential Council of the Institute of Professional Accountants of Russia; 29.12.1997.) "Аssets are economic means, over which an entity has control as a result of the fait accompli of its business activities and which are expected to give it economic benefits in the futurе.".In accordance with Clause 4.11. Conceptual Framework for Financial Reporting (adopted by the IASB) “Many assets, such as basic tangible assets, have a physical form. However, physical form is not a prerequisite for the asset’s existence; therefore, patents and copyrights, for example, are assets if they are expected to bring future economic benefits to the organization and if they are controlled by the organization. ".In the Ministry of Finance of the Russian Federation Letter dated October 9, 2015 No. 07-01-06/57871, it is noted that “when accepting property for accounting as an asset of a certain type, it is necessary to be guided by the criteria (conditions) established by the relevant regulatory legal acts on accounting.".In accordance with the Ministry of the Russian Federation Letter dated July 8, 2019 No. 07-01-10/50302 “When accepting assets for accounting as intangible assets - [it is necessary to be guided by] the conditions established by the Accounting Regulations PBU 14/2007 Accounting for Intangible Assets, аpproved by the Ministry of Finance of Russia Order dated December 27, 2007 No. 153n. ".In accordance with clause 3 of the above-mentioned Russian Ministry of Finance Order dated December 27, 2007, No. 153n “to accept an object as an intangible asset for accounting, it is necessary to fulfill the following conditions at a time:a) the object is capable of bringing economic benefits to the organization in the future; in particular, the object is intended for use for the products’ production, during work performance or when rendering services, for the organization management needs, or for use in activities aimed at achieving the goals of creating a non-profit organization (including in entrepreneurial activities carried out in accordance with the Russian Federation legislation);b) the organization has the right to receive economic benefits that this object is capable of providing in the future (the organization has appropriately executed documents confirming the asset existence itself and the existence of this organization rights to the result of intellectual activity or individualization means - patents, certificates, other protection documents, an agreement on the alienation of the exclusive right to the intellectual activity result or individualization means, documents confirming the exclusive right transfer without a contract, etc.), as well as there are access restrictions of other persons to such economic benefits (hereinafter - control over the object);c) the possibility of distinguishing or separating (identifying) an object from other assets;d) the object is intended to be used for a long time, i.e., the period of useful use exceeding 12 months or normal operating cycle if it exceeds 12 months;e) the organization does not intend to sell the object within 12 months or the normal operating cycle if it exceeds 12 months;f) the оbject actual (initial) cost can be reliably determined;g) the object has no physical material form.".Clause 4 of the Russian Ministry of Finance Order dated December 27, 2007, No. 153n states that "Goodwill arising in connection with the acquisition of an enterprise as a property complex (in whole or in part) is also taken into account as an intangible assets part. ".In accordance with Article 132 of the Russian Federation Civil Code (part one) dated 30.11.1994 No. 51-FZ (hereinafter referred to as the Russian Federation Civil Code) “An enterprise as an object of rights is a property complex used for carrying out entrepreneurial activities. The enterprise as a whole as a property complex is recognized as real estate. An enterprise as a whole or part of it can be an object of sale and purchase, pledge, lease and other transactions related to the establishment, change and property rights termination. The enterprise structure as a property complex includes all property types intended for its activities. It includes land, buildings, structures, equipment, inventory, raw materials, products, rights of claim, debts, as well as the rights to designations that individualize the enterprise, its products, work and services (commercial designation, trademarks, service marks), and other exclusive rights, unless otherwise provided by law or contract. ".In accordance with Clause 2 of Article 559 of the Russian Federation Civil Code, "Exclusive rights to the means of individualization of the enterprise, products, works or services of the seller (commercial designation, trademark, service mark), as well as the rights to use such means of individualization belonging to him on the basis of license agreements are transferred to the buyer unless otherwise provided by the agreement. ".According to Article 561 of the Russian Federation Civil Code, “The composition and value of the enterprise to be sold are determined in the enterprise sale contract on the basis of a complete enterprise inventory, carried out in accordance with the established rules for such an enterprise inventory. Before signing the enterprise sale contract, the parties must draw up and review: an inventory act, a balance sheet, an independent auditor opinion on the enterprise composition and value, as well as all debts lists (obligations) included in the enterprise, indicating creditors, nature, size and terms of their requirements. The property, rights and obligations specified in the above mentioned documents are subject to transfer by the seller to the buyer, unless otherwise stated in the Article 559 rules of this Code and is not established by parties’ agreement. ".In accordance with Clause 3.8. of the Ministry of Finance of the Russian Federation Order dated 13.06.1995 No. 49 On the Methodological Guidelines for the Inventory of Property and Financial Liabilities Approval, "During the intangible assets inventory, it is necessary to check: availability of documents confirming the organization's rights to use it; correctness and timeliness of reflection of intangible assets in the balance sheet."In accordance with Clause 42 of the Ministry of Finance of Russia Order dated December 27, 2007, No. 153n "For accounting purposes, the cost of acquired goodwill is determined by calculation as the difference between the purchase price paid to the seller when acquiring an enterprise as a property complex (in whole or in part), and the amount all assets and liabilities on the balance sheet at the date of its purchase (acquisition).". In accordance with Clause 43 of the Ministry of Finance Order No. 153n specified in this Paragraph, “A positive goodwill should be considered as a premium to the price paid by the buyer in anticipation of future economic benefits in connection with the acquired unidentified assets, and accounted for as a separate inventory item.".It should also be noted that in accordance with Clause 25 of the Ministry of Finance of Russia Order dated December 27, 2007, No. 153n, "When an intangible asset is accepted for accounting, an organization determines the duration of its useful life.Useful life is the period, stated in months, during which the organization expects to use the intangible asset to obtain economic benefits (or for use in activities aimed at achieving the goals of creating a non-profit organization). For certain types of intangible assets, the useful life can be determined based on the product's quantity or other natural indicators of the volume of work expected to be received due to using this type.Intangible assets for which the useful life cannot be determined reliably are considered intangible assets with an indefinite useful life. ".In accordance with Clause 42 of the Ministry of Finance of Russia Order dated December 27, 2007, No. 153n, "The acquired goodwill is amortized over twenty years (but not more than the period of the organization's activity). ".An intangible asset is registered for in accounting using a unified form card No. NMA-1, approved by the Russian Resolution of the State Statistics Committee dated October 30, 1997, No. 71a "On approval of unified forms of primary accounting documentation for accounting for labor and its payment, fixed assets and intangible assets, materials, low-value and wearing out items, works in capital construction. " It should be filled in for each intangible asset. The basics for filling it out are documents confirming the economic entity exclusive rights to intangible assets. Protection of a legal entity's business reputation
Despite there being no definition of the "business reputation" concept in the current legislation of the Russian Federation, there are mechanisms for its protection provided.Following paragraph 1 of Article 152 of the Russian Federation Civil Code (hereinafter referred to as the Russian Federation Civil Code), “a citizen has the right to demand from the court an information refutation discrediting his honor, dignity or business reputation if the person who disseminated such information does not prove that it is true".Following paragraph 11 of Article 152 of the RF Civil Code, “this article rules on the protection of citizen’ business reputation, with the exception of provisions on compensation for moral damage, which are accordingly applied to the protection of a legal entity's business reputation."The ways to protect a legal entity's business reputation are contained in Art. 152 of the Russian Federation Civil Code:Information refutation discrediting the honor, dignity, or business reputation of a person;Publication of the person's response in these media;Removal of relevant information.As follows from paragraph 7 of the Resolution of the Russian Federation Supreme Court Plenum dated February 24, 2005 No. 3 "On judicial practice in cases of protecting the honor and dignity of citizens, as well as the business reputation of citizens and legal entities" (hereinafter - Resolution No. 3), "circumstances, which, according to the Article 152 the Russian Federation Civil Code, are significant for the case, are the fact that the respondent disseminated information about the plaintiff, the inconsistency of their reality and the defamatory nature of this information. If at least one of these circumstances is missing, the court can’t satisfy the claim.The information dissemination discrediting the citizens’ honor and dignity or the business reputation of citizens and legal entities means the publication of such information in the press, broadcast on radio and television, demonstration in newsreel programs and other media, distribution on the Internet, as well as using other means of telecommunication, presentation in service characteristics, public speeches, statements addressed to officials, or communication in one form or another, including oral, to at least one person. The spreading of such information to the person they concern cannot be recognized as their dissemination if the person who provided the information has taken sufficient confidentiality measures so that they do not become known to third parties....Inappropriate information that does not correspond to reality is statements about facts or events that did not occur in reality at the time the disputed information relates. The information contained in court decisions and sentences, decisions of the preliminary investigation bodies, and other procedural or other official documents, for the appeal and challenge of which a different judicial procedure established by laws is provided for, cannot be considered as untrue (for example, cannot be refuted in the manner of Article 152 of the Russian Federation Civil Code, the information outlined in the order of dismissal, since such an order can be challenged only in the manner prescribed by the Labor Code of the Russian Federation).Defamatory, in particular, is information containing violation allegations by a citizen or legal entity of current legislation, committing a dishonest act, improper, unethical behavior in personal, public, or political life, dishonesty in carrying out production, and business and entrepreneurial activities, violation of business ethics or customs business turnover that detract from the honor and dignity of a citizen or the business reputation of a citizen or legal entity.".According to paragraph 5, "Practice review of consideration of cases on honor, dignity and business reputation protection", approved by the Presidium of the Supreme Court of the Russian Federation 03.16.2016 (hereinafter - Review of the Armed Forces from 03.16.2016), "When deciding, whether the disputed information is the plaintiff defamatory, as well as to assess their perception, taking into account the fact that disseminated information can be brought to the attention of third parties in various ways (figuratively, allegorically, offensive, etc.), the courts, if necessary, should appoint an examination (for example, linguistic) or involve a specialist (for example, a psychologist) for consultation”.Similar explanations are given in paragraph 6 of the Review of the Supreme Court of the Russian Federation March 16, 2016. As an exception, the Supreme Court of the Russian Federation indicated value judgments, opinions, convictions that are offensive in nature. Also, the Supreme Court of the RF, in its Review dated March 16, 2016, noted in paragraph 12 that “Damage to the organization business reputation can be caused by the dissemination of defamatory information both about the organization itself and in relation to persons included in its governing bodies, as well as employees of this organization.".Following paragraph 9 of Resolution No. 3 and under paragraph 1 of Article 152 of the Civil Code of the Russian Federation, the defendant is responsible for proving the validity of the disseminated information. The plaintiff is obliged to prove the information dissemination by the person against whom the claim is brought and the defamatory this information nature.Despite the Art. 152 of the RF Civil Code excludes the compensation possibility for moral damage to a legal entity in the event of its business reputation degradation; this does not prevent it from filing claims for compensation for damage caused to its reputation (Definition of the Constitutional Court of the Russian Federation of December 4, 2003, No. 508-О).At the same time, the harm caused to the business reputation should be understood as any diminution of it, which manifests itself, for example, in the presence of losses of a legal entity due to the defamatory information dissemination and other adverse consequences in the form of loss of competitiveness, the impossibility of planning activities, etc.According to paragraph 21, "Review of the Russian Federation Supreme Court judicial practice of No. 1 (2017)" (approved by the Presidium of the Russian Federation Supreme Court on February 16, 2017), the mere fact of the defendant's dissemination of information discrediting the business reputation of the plaintiff is not enough to conclude causing a business reputation damage, and for the monetary compensation payment. In this case, the plaintiff must prove the following:the presence of an established reputation in a business relations particular area (industry, business, services, education, etc.);the onset of unfavorable consequences for him as a result of the dissemination of defamatory information;the fact of loss or decrease of trust in his reputation.Next, we will consider specific examples from judicial practice on recovering reputational damage from defendants.The Arbitration Court of the Lipetsk Region in case No.A36-2639/2018, issued a decision of 26.10.2018, which charged for reputational damage of RUB 500,000 from the defendant in favor of the plaintiff. The plaintiff, in this case, assessed the reputational damage at the rate of 3,387,000 rubles. The plaintiff indicated that he calculated the damage as follows - 1% of retained earnings for 2017 (338,742,000 rubles).According to the plaintiff, the harm caused to business reputation was expressed in a decrease in sales of manufactured products, the inability to plan activities, and a loss of confidence on the part of counterparties, in confirmation of which they received letters from counterparties about the impossibility of continuing cooperation or considering the possibility of paying for the supply of pipe products upon shipment, or about the impossibility of working on a 100% prepayment basis, etc. In addition, the plaintiff submitted to the case materials an opinion on the possibility of concluding contracts upon the shipment of goods or deferred payment, from which it follows that this form of payment is unacceptable for the plaintiff since it produces products only "to order" and 62% of raw materials and materials, necessary for the production of products, itself acquires on a prepayment basis.At the same time, the court did not agree with the said calculation of the plaintiff and considered the amount of compensation for damage to business reputation declared by the plaintiff disproportionate to the damage caused. The decision of the Arbitration Court of the Lipetsk Region in case No. A36-2639 / 2018 of 26.10.2018 withstood in all higher instances.The decision of the Arbitration Court of the Rostov region on the case number A53-357 / 20 dated 07.17.2020 from the defendant to the plaintiff was charged intangible (reputation) damage in the amount of 1 000 000 rubles. The plaintiff determined the amount of reputational damage of 1,000,000.00 rubles based on the analysis of the turnover of the plaintiff's pharmacy organizations in the period from 01.01.2019 to 31.11.2019. According to the plaintiff's pharmacy organizations analysis turnover, in the period from 01.01.2019 to 31.11.2019, the turnover in September 2019 compared to August 2019 decreased by 20%. In October 2019, it decreased by another 20%, which, compared to September-November 2018, amounted to 40 %. The Fifteenth Arbitration Court of Appeal, by a resolution dated September 24, 2020, canceled the said decision, which rejected the claims in full. Also, the appellate instance noted that "Meanwhile, the evidence presented in the case does not confirm the infliction of any real or alleged damage to the plaintiff by the defendant actions. ". The Arbitration Court of the North Caucasus District upheld the ruling of the Fifteenth Arbitration Court of Appeal dated 09.24.2020 in case No. А53-357 / 2020. In case No. A54-4578/2017, the plaintiff filed a claim to recover damages from the defendant (reputational damage) in the amount of RUB 12,819,135.00. As evidence of the formed business reputation, the plaintiff presented copies of diplomas and letters of thanks from government authorities, local authorities, organizations, and the presence in the ratings. Furthermore, in support of the reputational harm caused to him, the plaintiff referred to the financial statements for 2016, 2017 presented by him in the case materials; a certificate reflecting the deviation of demand in the company from the usual level after publication, an expert opinion.The Arbitration Court of the Ryazan Region, refusing to satisfy the requirements in this part, proceeded from the following. As follows from the court of first instance decision text of 14.12.2018 in case No. A54-4578 / 2017 that the evidence presented by the plaintiff is presumptive, and any evidence that allows to reliably establish the existence of adverse consequences for the plaintiff, including financial losses, arising directly as a result of the distribution of the contested articles by the defendant, was not presented in the case materials. This decision survived in the cassation instance.Summarizing all of the above and considering the current jurisprudence, it can be concluded that the Russian Federation courts, when deciding to recover reputational damage, proceed exclusively from the case's specific circumstances and the proof incurring adverse consequences.An abuse of the right to file a claim on the defense of an exclusive right in the practice of the Intellectual Property Court
In accordance with Article 10 of the Civil Code of the Russian Federation, an abuse of the right – deliberately unfair exercising the civil rights – is not allowed; at the same time, the Constitutional Court of the Russian Federation repeatedly pointed out that in the absence of specific prohibitions in the legislation, the norms enshrining the general principles of the civil law could serve as a criterion for assessing the lawfulness of the behaviour. If such abuse is established when applying to the court for the defense of the right, then according to Paragraph 2 of Article 10 of the Civil Code of the Russian Federation, this constitutes the grounds to dismiss the claim (the judicial practice proceeds from the fact that the behaviour can be recognized as unfair not only if there is a reasonable statement of the party, but also at the initiative of the court). In the development of this provision, the Plenum of the Supreme Court of the Russian Federation points out to the fact that the court has the right to refuse the person in the defense of his right to a trademark on the grounds of Article 10 of the Civil Code of the Russian Federation, if, due to particular circumstances, the actions to apply particular defensive measures may be qualified as an abuse of the right. The abuse category is complex and difficult for assessing, and therefore it often becomes the grounds for sending over the cases for a new consideration. For example, the cassation instance may draw attention to the fact that some circumstances may be potentially recognized as an abuse on the part of the plaintiff, while the courts have not carried out a full-fledged analysis. So, in case No. S01-426/2021, the right holder of trademark No. 559404 revealed an introduction into circulation of the product illegally marked with his designation, applied for the defense of his exclusive right and received it; at the same time, despite the defendants’ argument that the said violation had already been considered within the framework of another case (with a decision in favor of the plaintiff), the Court of Appeal pointed out to the fact that filing multiple claims was not an abuse of the right, since the stated claims were aimed at restoring the plaintiff’s property sphere violated as a result of the illegal use of his means of individualization. However, the Intellectual Property Court noted that, although within the framework of the earlier case, the violation of the right to another subject matter had been considered formally (not the trademark as a means of individualization, but the work that makes up this trademark), that was the grounds for assessing the argument on the artificial “division” of the claims in order to maximize the total value of damages. However, the multiplicity of claims will not necessarily entail a conclusion on an abuse – if this multiplicity is justified. For example, the recovery of damages within the framework of another court case for the manufacture of the same counterfeit products, but from another defendant, in itself cannot be the grounds for recognizing the actions for filing the claim as an abuse. As the grounds for reviewing the case, procedural violations are also possible – for example, the court, applying on its own initiative the norms on an abuse of the right, did not bring to the discussion of the parties the circumstances testify to that, did not provide the plaintiff with an opportunity to give explanations, did not indicate particular evidence. Or, in another case, the grounds for sending over the case for a new consideration was the court’s ignoring the argument on an abuse of the right by the plaintiff, who had appealed to the court years after finding the violation of his copyright, and he had also constantly increased the claimed number of the subject matters, which rights had been violated (as a result, he had demanded in total more than 6 million roubles of damages for the violation of the exclusive rights to about 200 photos at once); moreover, he had not demand the termination of the violation. In what cases then was an abuse of the right established by the plaintiffs being the right holders? The most common reason for the dismissal of claims on the defense of the exclusive right in connection with an abuse is the non-use by the right holders of their trademarks. This corresponds to the position that due to the systematic interpretation of the norms of Articles 1484 and 1486 of the Civil Code of the Russian Federation, it follows that the right holder shall be obliged to use the registered trademark as a condition for preserving the right to it. As an example, we can mention the case, in which Individual Entrepreneur being the right holder of trademarks “” No. 307006 and No. 616102 was recognized as unfair, owing also to the fact that before filing the claim the trademarks had been used neither by the right holder nor the licensees, hence “they have been acquired for the purpose of prohibiting other users or recovering damages from them, which cannot be recognized as a lawful and faithful interest corresponding to the honest customs in the industrial and commercial affairs.” At the same time, in practice, the defendant’s references only to the plaintiff’s non-use of the trademark is not enough, because in addition to the fact of the non-use of the trademark by the right holder, the court must also take into account the purpose of registration, the real intention of the right holder to use the mark, the reasons for the non-use. The Plenum of the Supreme Court of the Russian Federation also points out that the non-use of the trademark by the right holder applying for the defense of the right belonging to him does not in itself indicate an abuse of the right. Along with the non-use of the trademark, there are other grounds for recognizing filing the claim as an abuse. For example, in the case No. S01-1182/2021, the claim of the right holder of trademarks “” “” No. 651808 and No. 651793 filed against LLC “Syrovarnya Dolchelatte,” wherein the right holder possessed the exclusive right to the company name from the date following the priority date of the marks, but preceding their registration, was dismissed due to an abuse of the right. In addition to the argument on the plaintiff’s non-use of the trademark, the court also noted that the defendant’s main activity was the manufacture of cheese and cheese products sold under the DolceLatte trademark, which was known to consumers. The fact that the plaintiff has multiple trademarks, in which composition there are common word designations, may also indicate an abuse of the right, as in the case No. S01-73/2021, in which filing the claim by the Individual Entrepreneur, who had acquired the exclusive right to the trademark from the “accumulator” of the trademarks (who had registered more than ten trademarks for himself during 1 year) was recognized as an abuse – the Individual Entrepreneur himself possessed more than a hundred trademarks. And in case No. S01-305/2021, among many marks, the plaintiff possessed, in particular, the trademarks with such well-known designations PIONEER, “Million melochey,” etc. In the same case, the court also stressed that the right holder was the plaintiff in a number of cases related to arguing the rights to the intellectual property subject matters or to recovering damages for the illegal use of the trademarks, moreover, the plaintiff’s representative himself was the plaintiff in more than 50 similar arbitration cases during the past three years. An artificial increase in the violation volume can also be recognized as an abuse. For example, if the plaintiff, in addition to the control purchase of 21 units of the counterfeit, ordered another 5,000 products with the illegal marking. The courts noted that the plaintiff’s actions had been clearly redundant, demonstrably not conditioned by the achievement of the reasonable procedural aims, and recovered damages without taking into account the additional lot. Case No. S01-156/2021 seems to be unusual - when recognizing filing the claim as an abuse of the right, the court referred to the fact that the plaintiff’s trademark was the illegal reproduction of the subject matter being a cultural value - the Hammer of Thor Pendant being a part of the collection of the State Historical Museum of Sweden, which was confirmed by the decision of Rospatent. The court stressed that the legal protection of the mark was left in force only by chance – due to filing an objection to Rospatent by an improper applicant. The parallel process of arguing the legal protection became the grounds to dismiss the claim in case No. S01-1716/2020 as well - at the time of filing the claim, the right holder was aware that Rospatent would consider the cancellation of his trademarks, which was a disregard for the principle of procedural economy. In case No. S01-607/2021, filing the claim was recognized as unfair due to the imposition on the defendant of such a contractual condition, which implied the need to use the trademark: the defendant being the buyer of the products was obliged to use in advertising the trademark, in the defense of the right to which the claim had been filed. Another contractual feature served the grounds for the dismissal of the claim in case No. S01-1029/2021 - the right holder of a series of trademarks had granted the defendant the right to use only some of them and filed a claim against him on the defense of the exclusive right to the “non-transferred” mark. The court concluded that the non-transfer of the right to use the mark was due to the possibility of reserving the right to file claims for recovering damages. It should be noted that any joint activity for involving the trademark, the right to which is defended, can serve a reason for analyzing the issue of an abuse of the right. For example, if the plaintiff and the defendant were carrying out the joint activities for a long period, while the plaintiff did not prevent the defendant from developing a chain of stores under the mark and opening new outlets. Or if the right holder of the trademark and a third party meet the criteria of interdependence (affiliation) due to the presence of a corporate connection, the commonality of their economic interests and the implementation of the interrelated activities in civil circulation, and the third party has ordered intentionally from the defendant the manufacture of the products with the plaintiff’s trademark, as in case No. S01-188/2021. The court pointed out to the fact that the third party had actually acted with the consent and under the control of the right holder of the trademark – the plaintiff, therefore, the right holder’s appeal for the judicial defense in the absence of the actual violation of the rights was an abuse of the right.Intangible Assets as Equity Stake
Under current legislation, intangible assets may be contributed to the charter capital of a legal entity. Only freely transferrable, i.e., alienable intellectual property rights may be contributed to the charter capital. Contributions of intangible assets to the charter capital are made both when incorporating a legal entity and when its assets are incremented.According to paragraph 1 of Article 66.1 of the Civil code of the Russian Federation (hereinafter referred to as the Civil code of the Russian Federation): “Contribution of a participant of an economic partnership or a society to its property may be money, things, shares (stocks) in the authorized (share) capital of other economic partnerships and companies, state and municipal bonds. Such contribution may also be exclusive and other intellectual property rights subject to appraisal and rights under licensing agreements, unless otherwise established by law”.According to paragraph 2 of Article 15 of the Federal Law of February, 8, 1998 No. 14-FZ on Limited Liability Companies (hereinafter referred to as the Law on LLC): “Appraised monetary value of the property used for payment of shares in authorized capital of a society shall be approved by the decision of general meeting of participants of a company, made by all participants of company unanimously. If a nominal value or increase of nominal value of share of shareholder of a company in authorized capital of a company, paid by non-monetary assets, makes more than twenty thousand rubles, an independent appraiser should be involved for the purpose of calculation of cost of this property, provided that otherwise is not provided by the federal law. The nominal value or increase in the nominal value of a share of a participant of a company, paid by such non-monetary assets, cannot exceed the amount of evaluation of the said property, determined by an independent appraiser”.The Federal Law of December 26, 1995 No. 208-FZ on Joint Stock Companies (hereinafter referred to as the JSC Law) contains similar provisions (Article 34, paragraph 3): “Monetary value of the property contributed as equity stake when incorporating a company shall be determined by agreement between the founders. When paying additional shares by non-monetary assets, the monetary valuation of property is made by board of directors (supervisory board) of a company according to article 77 hereof. Where payment for shares is made by non-monetary assets, an appraiser must be engaged to calculate the market value of such property, unless otherwise established by federal law. The value of property calculated by founders of a company and approved by the board of directors (supervisory board) of a company cannot exceed the value calculated by the appraiser”.Since exclusive rights to the results of the intellectual activity are referred to intangible assets, one must also keep in mind the requirements to such rights, which are reflected in the Order of the Ministry of Finance of Russia of December, 27 2007 No. 153н on Approval of the Accounting Reles “Accounting of Intangible assets” (Accounting Rules 14/2007)”. Under paragraph 3 of the mentioned Order: “in order to accept an object for accounting as an intangible asset, the following conditions must be met at a time:a) The object is capable of bringing economic benefits to the organization in the future, in particular, the object is intended for use in the manufacture of products, the performance of work or rendering of services, for the managerial needs of the organization or for use in activities aimed at achieving the goals of the non-profit organization (including in entrepreneurial activities carried out in accordance with the legislation of the Russian Federation);b) The organization is authorized to receive economic benefits that this object can bring in the future (specifically, the organization has duly executed documents confirming the existence of the asset itself and the rights of the organization to the result of intellectual activity or visual identity, including patents, certificates, other protective documents, the agreement on the disposal of the exclusive right to the result of intellectual activity or visual identity, or documents confirming the transfer of exclusive rights;c) The possibility of separating (identifying) the object from other assets;d) The object is intended to be used for a long time, i.e., a useful life of more than 12 months or a normal operating cycle, if it exceeds 12 months;e) The organization does not expect to sell the object within 12 months or the normal operating cycle, if it exceeds 12 months;f) The actual (original) value of the object can be calculated reliably;g) The object has no tangible physical form”.Under paragraph 11 of the Order of the Ministry of Finance of Russia of December 27, 12.2007 No. 15н: “The actual (original) cost of an intangible asset contributed to the charter (share) capital (including in case of contribution of state or municipal property as a contribution to the charter capital of open joint stock companies), the authorized fund, a share fund of the organization, is its cash value, agreed by the founders (participants) of the organization, unless otherwise provided for by the legislation’ of the Russian Federation.According to the Order of the Ministry of Economic Development of Russia of June 22, 2015 No. 385 on Approval of the Federal Standard of Appraisal “Appraisal of Intangible Assets and Intellectual Property (ФСО No. 11), hereinafter referred to as Order No. 385, there are three approaches to appraisal: 1) income approach; 2) cost approach; 3) comparative approach.In accordance with paragraph 12 of Order No. 385: “The income approach involves discounting cash flows (future economic benefits) generated by the evaluated object, or capitalization of the annual net income (benefits, effects) from the evaluated object, including income from possible compensation to others for access to economic benefits from using the evaluated object”.According to the current court practice (decision of the Arbitration Court of the Tyumen Region of August 3, 2020 in case No. A70-18226/2018): “the income approach to appraisal of intangible assets is based on the principle of expectation of income from their use and provides for the valuation by calculating the present value of expected income (benefits, effects) from the use of intangible assets in business. The income generated by the evaluated intangible asset may be obtained at the expense of reduced costs, operating costs, additional profit, excess income, etc., which in fact or hypothetically may be obtained by the right holder of the evaluated asset”.In accordance with paragraph 16 of the Order of the Ministry of Economic Development of Russia of May 20, 2015 No. 297 on Approval of the Federal Appraisal Standard “General Concepts of Appraisal, Approaches and Requirements for Appraisal (ФСО No. 1, hereinafter referred to as Order No. 297: “The income approach is recommended for use when there is reliable information allowing to predict the future income that the object of appraisal is able to bring, as well as costs associated with the object of appraisal”.According to the paragraph 18 of Order No. 297: “The cost approach is a set of methods for assessing the value of the object of appraisal based on determining the costs necessary to acquire, reproduce or replace the object of appraisal, taking into account wear and tear and obsolescence.According to the paragraph 12 of Order No. 297: “Comparative approach is a set of appraisal methods based on obtaining the value of the appraised object by comparing the evaluated object with similar ones”.In accordance with paragraph 45 of the Resolution of the Plenum of the Supreme Court of the Russian Federation of April 23, 2019 No. 10 on the Application of Part Four of the Civil Code of the Russian Federation" (hereinafter referred to as Resolution No. 10): “In the case of making an exclusive right, other intellectual right (for example, the right to obtain a patent) or a right under a licensing agreement subject to monetary appraisal as a contribution to the authorized (share) capital of an economic partnership or society (paragraph 1 of Article 66. 1 of the Civil Code of the Russian Federation), provided that such indication is mentioned in the decision on establishment (the decision on contribution of the property into the authorized (share) capital or the agreement on establishment of the partnership or the company), as well as provided that such decision contains all essential conditions, which shall be respectively included into the contract on alienation of an exclusive right or the license contract, no separate contract on alienation of an exclusive right or the license contract complying with the requirements of Part 4 of the Civil Code of the Russian Federation is concluded (clause 1 of Article 1233) is required. In this case, state registration of the alienation of the exclusive right to the intellectual activity result or visual identity subject to state registration, as well as the right to use such result or means may also be carried out by the request of the founder, provided that the decision on the incorporation of a partnership or a company (in the relevant part) is submitted.Previously, according to the explanations of the Plenum of the Supreme Court of the Russian Federation and the Plenum of the Supreme Arbitration Court of the Russian Federation dated March 26, 2009 No. 5/29, in case of contributing exclusive rights to the charter capital, it was necessary to conclude a separate agreement on the disposal of an exclusive right or a license agreement in addition to mentioning it in the deed of incorporation.YouTube Channel Monetization and Copyright Enforcement
Protection of patent rights and disputing patents are key areas of activities of «Zuykov & partners». Patent grants the author of the intellectual property object exclusive rights for it and can be for inventions, utility models and designs. The author or other physical person or legal entity can be the patent holder. Patent for inventions, utility models and designs confirms exclusive right which quite often is infringed by unfair manufacturers of goods. Sometimes such infringements can be unintentional: when the competitor is not aware that his business activities infringe somebody’s rights. In this case the right holder can send a letter of claim. The requirements of the letter of claim should be unquestioningly executed. But ignorance of right is no defense against any liability for this right infringement. More often the unfair competitors infringe patent rights deliberately; they get profit from the sales of goods manufactured with the use of another person's intellectual property.Today at the top of the list of legal cases there are a lot of cases related to protection and disputing of patents. Such cases are reviewed in Rospatent, courts, including Intellectual Property Court, the Federal Antimonopoly Service (FAS), the police. They can be related to: Disputing refusal to grant patent;Disputing the validity of patent;Illegal use of the registered patents;Identification of patent holder;Determination of the right of prior use;Struggle against counterfeit products;Other cases. Besides the disputes concerning illegal use of the registered patents there are cases related to the competition and division of the market by the large manufacturers. As a rule by disputing existing patent and by prohibiting its use the large companies try to deprive competitor of leadership in the promising market.
04 March 2021#InformationInstagram Content Monetization and Copyright Enforcement
As of today, there are frequent practical situations of a non-contractual use of copyright-protected items on the Internet without the author's consent and payment of remuneration. The analysis of applicable case law shows that such use of copyright-protected items is regulated by Article 1274 of the Civil Code of the Russian Federation (hereinafter Article 1274).By and large, it is difficult to apply paragraph 1 of Article 1274 concerning citation, because the Civil Code does not clearly regulate either the definition of citation or the quoting procedure.Earlier, the Supreme Court of the Russian Federation in its ruling No. 78-G03-77 of December 5, 2003, stated that “Citing means including one or more passages from the work of one author in the work of another author. In particular, a graphic reproduction of a part of a work of fine art should be regarded as a citation, too. The latter include art works of painting, graphics, design etc.”Case No. A40-142309/2015 clearly characterizes the litigation practice concerning the application of citation provisions to photographs. In its decision of October 27, 2015, the Arbitration Court of Moscow stated that “At the same time, the legislation does not contain any restrictions related to the type of copyright-protected items that can be quoted, and does not exclude citation of photographs. Citation is the inclusion of someone else's work (part of it) in another work. Since a photo may be included in another work, including a text work, while becoming an integral part of it, such inclusion may be recognized as citation”.The court of first instance did not recognize the defendant's violation of the plaintiff's exclusive rights and dismissed a claim. The Ninth Arbitration Court of Appeal agreed with the arguments of the court of first instance and upheld the decision. In its ruling dated April 25, 2016, the court of cassation explained: “That is, citation is a literal repetition of any part of the author's text, not another graphic form (photo and video images). Thus, the use of photographs, fully expressed in graphic form, is not a citation, as they are actually used as illustrations to articles, which is allowed only in educational publications in accordance with the provisions of subparagraph 2 of paragraph 1 of Article 1274 of the Civil Code. In this case, the illustration is an additional material that enhances the reader's perception, but its absence does not affect the overall information component of the work, while the citation is an integral part of it. That is, citation cannot be removed from such a work without significant damage and distortion of meaning. In this regard, the Court of Cassation considers the provisions of subparagraph 1 of paragraph 1 of Article 1274 of the Civil Code not applicable to the dispute under consideration, since the disputed photographs, according to the circumstances of the case under claim, were used by the defendant as illustrations of the article itself”.Having made the corresponding conclusions, the Court for Intellectual Property Rights overturned the decision of the court of first instance and remanded the case for a new trial.At the new hearing, the Moscow Court of Arbitration satisfied the claims, recognizing the use of the disputed photos as illegal and not subject to common use in as a citation. The court of appeal also found that the use of photographs is illegal and not subject to common citation. However, as soon as the case reached the court of cassation again, the Court for Intellectual Property Rights in its ruling of June 5, 2017 made the opposite conclusions regarding the dispute in question: “It follows from the content of this rule that any works of science, literature and art protected by copyright, including photographic works, can be commonly used without the consent of the author and payment of remuneration subject to the presence of four conditions: the use of the work for information, scientific, educational or cultural purposes; citation with obligatory indication of the author; source of borrowing and to the extent justified by the purpose of citation. According to the above rules of law, a work may belong to the fields of science, literature and art regardless of its dignity and purpose, as well as the way it is expressed. That is, an article, other text work, a photograph, etc., is a way of expressing the work. Since a photograph may be included in another work, including a textual work, while becoming an integral part of it, such inclusion may be recognized as a citation”.The court of cassation reversed the decisions of lower courts and refused to satisfy the claims, recognizing the use of photographic works as lawful in the order of citation.Summarizing the case under consideration, the Supreme Court of the Russian Federation in a review of the litigation practice No. 3 (2017), approved by the Presidium of the Supreme Court of the Russian Federation on July 12, 2017 stated that “Any works of science, literature and art, including photographic works, can be commonly used without the consent of the author and payment of remuneration for citation purposes, subject to conditions established in the subparagraph 1 of paragraph 1, Article 1274 of the Civil Code of the Russian Federation.”Finally, the issue was clarified in the Resolution of the Plenum of the Supreme Court of the Russian Federation on April 23, 2019 No. 10 On the application of the fourth part of the Civil Code of the Russian Federation, paragraph 98 of which states that “it is allowed to cite any work”.This position regarding the conditions of citation lawfulness was supported and stated in the case No. A40-5830/2017. A common use without the author's consent and payment of remuneration is allowed with simultaneous compliance with 4 conditions: (1) the work must be used for information, scientific, educational or cultural purposes; (2) the author of a copyright-protected item is indicated; (3) the source of the original creation of the mind is indicated; (4) the use must be made to the extent justified by the purpose of the citation.The above conditions, except for references to authors and sources of the original creation of the mind, are speculative in nature and are at the discretion of a particular court.Let us take a look on the volume of citation, since this volume is not defined anywhere and in case when dispute is assessed by the enforcement agency, along with other circumstances of the case.Case No. A40-69432/15, in turn, clearly characterizes the court practice concerning the determination of the volume of citations. Prospekt Publishing House LLC filed a lawsuit with the Arbitration Court of Moscow claiming recovery of compensation from the Moscow Institute of Technology for violation of exclusive rights to a copyright-protected item. In support of its position in the case, the plaintiff pointed out that the defendant had violated its exclusive rights, since the volume of authors is 35 copyright sheets and the part of the work posted on the defendant's website is 5.11 copyright sheets, which is 14.6% in relation to the volume of the whole work.The plaintiff considered that such use of the work could not be considered as a citation, since this volume is not justified by the purpose of the citation. The Moscow Court of Arbitration rejected claim, stating that “Upon examination of the submitted evidence, and taking into account the circumstances of the case under consideration, the court, based on the criterion for determining the admissible amount of citation, established in paragraph 1 of Part 1 of Article 1274 of the Civil Code of the Russian Federation, namely, the purpose of citation, found the following. The use of the part of the text of the work History of Russia, 2nd Edition by the authors Shabelnikova N. A. and Derevyanko A.P. on the defendant's website as a the History training course content, was carried out to illustrate the statements of the author in the form of a citation in the original legally published work with an indication of the authors of the work and the source of original text, in the amount justified by the purposes of citation, which does not prevail over the volume of the main text, namely, for educational purposes and purposes of disclosure of the creative intent of the author to convey to students discussed in the training course the general idea of the authors of the work”.The Ninth Arbitration Court of Appeal agreed with the arguments of the court of first instance and upheld the decision. The court of cassation, in the decision dated April 11, 2016 has made opposite conclusions concerning the considered dispute: “Taking into account the stated above, the courts should have determined whether the training course published on the Institute's website has its own text of the author, which includes excerpts (citations) from the disputable works, or the training course represents the consecutive copying of various parts (excerpts) of the works of other authors in the absence of its own text, any own statements of the author of the training course. However, in order to examine the question of the extent of citations and their appropriateness to the purpose of citations, it is necessary to determine whether the reproduction of excerpts of controversial works was their citation in the author's text or whether such reproduction is a copy of such excerpts. As it follows from the materials of the case, the courts have not established the circumstances on the basis of which it was possible to conclude that the volume of the text of the works of the Publishing House used by the Institute was acceptable as a citation, namely, the courts have not established the ratio of the volume of the cited text to the volume of the work of the Institute, the ratio of the volume of the cited text to the volume of the author's text, as well as whether the quoted text was used as an illustration, confirmation or refutation of the author's statements”. In view of the above, the Ninth Arbitration Court of Appeal remanded the case for a new trial to the Arbitration Court of Moscow.In a new trial, the Moscow Court of Arbitration Court satisfied plaintiff’s claim, stating that “Thus, the citation looks like one or more excerpts from the works of other authors, on the basis of which the citing author illustrates his theses, confirms his assumptions, criticizes or challenges the arguments with which he does not agree, which determines the difference between citing and copying. The volume of the plaintiff's work is 35 sheets of authors' work. The part of the work placed on the defendant's website is 5.11 sheets. One sheet of authors is an average of 16 pages of the book, so the defendant “cited” more than 80 pages of the textbook. Thus, the defendant illegally used 80 pages of the plaintiff's textbook as sections of its course of study, which cannot be considered a quotation, but a copy of the work”. The Court of Appeal upheld the decision of the court of first instance dated March 6, 2017.Let us consider another example, which is the case No. A40-48760/2016. The lawsuit was motivated by the fact that the defendant, without the consent of the rights holder, illegally used the work Eat, Move, Sleep by Tom Rath, translated by the author Shalunova M.S., the rights to which belong to the plaintiff, through public disclosure, dissemination on the website www.smartreading.ru. The Moscow Court of Arbitration concluded that “since the summary is an excerpt of the main ideas of the original book, the Court concludes that it is possible to quote some excerpts from the original book.The Ninth Arbitration Court of Appeal upheld this decision without bringing new arguments. Disagreeing with the judicial acts adopted in the case, the plaintiff appealed to the Court for Intellectual Property Rights with a cassation appeal. The Court for Intellectual Property Rights agreed with the arguments of the lower courts, noting that “the court of first instance, taking into account the conclusion by the expert Savina V.S. dated February 15, 2017 that the defendant's work coincided with 13% of the plaintiff's text, based its reasoning on the fact that when creating the disputed work, the defendant legally used the quotation of the plaintiff's literary work. Having reviewed the dismissal of the claim on these grounds, the Court for Intellectual Property Rights considers that the decision on the specified grounds corresponds to the circumstances established, the evidence available and the law”.To summarize, it is worth noting that everything associated with copyright is a complex and nuanced relationship. The file of lawsuits is a clear example of different decisions made by different courts make decisions on similar situations.If you decide to use other people's copyright-protected items without the consent of the authors, please carefully read Article 1274 of the Civil Code and make sure that you adhere to all conditions of common use of an item.Legal Rationale for Arguments and Contesting Reply: Analysing Resolution of the Plenum of the Supreme Court of the Russian Federation No. 13 of June 30, 2020
To foster a uniform application of the Arbitration Procedural Code of the Russian Federation in arbitration courts of cassation instance, formed in accordance with the Federal Constitutional Law of April 28, 1995 No. 1-FKZ On Arbitration Courts in the Russian Federation, and the Court for Intellectual Property Rights (hereinafter the IPR Court), the Plenum of the Supreme Court issued a Resolution On the Application of the Arbitration Procedural Code of the Russian Federation in Reviewing Cases in Arbitration Courts of Cassation Instance, dated June 30, 2020 No. 13.For lawyers specializing in intellectual property law, this Resolution is important because some decisions are not subject to the appeal procedure.In accordance with paragraph 1 of Article 268 of the Arbitration Procedural Code of the Russian Federation: “when considering a case by way of appeal proceedings the arbitral tribunal reconsiders the case on the evidence available in the case andthe additional evidence submitted”. Pursuant to paragraph 2 of the above Article of the Arbitration Procedural Code of the Russian Federation: “additional evidence shall be accepted by the arbitration court of appeal if a person involved in the case justified the impossibility of submitting it to the court of first instance for reasons beyond its control, including in cases where the court of first instance had rejected a pretrial discovery claim, and the court finds these reasons to be valid.”Thus, the possibility of appeal is of great importance for the parties to a judicial dispute, as it allows in some cases to re-examine the case.In accordance with paragraph 2 of Article 273 of the Arbitration Procedural Code of the Russian Federation, legally effective decisions of the IPR Court, which were adopted by it as a court of first instance, may be appealed in cassation proceedings in whole or in part by persons participating in the case, as well as by other persons in cases stipulated by the Arbitration Procedural Code of the Russian Federation.The IPR Court is simultaneously a cassation instance for all arbitration courts in cases of protection of intellectual rights, as well as a cassation instance in cases heard by it as a court of first instance.In accordance with paragraph 1 of Article 286 of the Arbitration Procedural Code of the Russian Federation: “arbitration court of cassation reviews the legality of judicial decisions and resolutions adopted by the arbitration court of first and Board of Appeals, establishing the correctness of the application of substantive and procedural law norms when considering the case and adopting the appealed judicial act and on the basis of the arguments contained in the appeal and objections to the complaint, unless otherwise provided for hereof”.Thus, under current Russian law, the court of cassation does not consider new evidence.Paragraph 29 of the Resolution of the Plenum of the Supreme Court in question states: “When deciding on accepting additions, written explanations to a cassation appeal or a defense to it, the courts have to assume that the parties are entitled to give legal rationale for arguments and objections at all stages of the proceedings, if they are based on the evidence available in the case file and if such additions, explanations to a complaint contain neither new claims, nor new evidence, which, due to the Arbitration Procedural Code of the Russian Federation provisions, cannot be considered and examined. At the same time, when receiving additions and written explanations to the cassation appeal the court shall verify the compliance of the person who sent them with paragraphs 3 and 4 of part 4 of Article 277 of the Arbitration Procedural Code of the Russian Federation. If these requirements are not complied with, the appeal court will not have to accept the submitted documents.”Paragraph 30 of the Resolution of the Plenum of the Supreme Court under consideration additionally discloses: “New and (or) additional evidence relevant to the establishment of circumstances in the case shall not be accepted by the court of cassation instance.If a person involved in a case has submitted additional evidence to the cassation instance court which was not submitted by it to the court of first or appellate instance, including an attachment to a contesting reply to the appeal, such evidence shall not be attached by the cassation instance court to the case materials and if necessary, shall be returned, of which the order shall be rendered. The appeals court shall be entitled to render such an order together with the order that the cassation appeal has been admitted to proceeding.The arguments of the persons involved in the case regarding fact patterns, which were not previously referred to by such persons, which are not supported by available evidence in the case and were not established by the courts of the first and appellate instances, are not taken into account and cannot be the basis for the ruling of the court of cassation instance.This position is already being implemented in court practice, including Decision of the IPR Court of July 27, 2020 No. C01-558/2020 in case No. A12-40395/2019; Decision of the Presidium of the IPR Court of November 13, 2020 No. C01-1139/2020 in case No. СИП-214/2020; Decision of the Presidium of the IPR Court of November 16, 2020 N C01-1246/2020 in case No. СИП-152/2020; Decision of the IPR Court of July 20, 2020 No. C01-1177/2019 in case No. A52-5093/2018, Decision of the IPR Court of July 29, 2020 N C01-994/2017 in case No. A56-73772/2016.If a person involved in a case has submitted to the court of cassation instance evidence not accepted by the court of first or appellate instance in support of the argument that the court violated or misapplied the rules of procedural law, which led to the adoption of a wrong decision, ruling (expressed, for example, in refusal of the court to grant a request for the admission of such evidence or for a pretrial discovery), then if the court of cassation instance comes to the conclusion that there are Arbitration Procedural Code of the Russian Federation, the said evidence may not constitute grounds for it to take a judicial act on the merits of the dispute. In this case, the case shall be forwarded for a new examination to the court of appropriate instance.The Supreme Court of the Russian Federation has drawn the attention of the courts of cassation instance to the fact that the cassation instance must take into account the arguments of applicants on the unreasonable refusal to accept evidence by courts of lower instances and on the justification of the appealed judicial act on inadmissible evidence.This position is also reflected in the judgment of the Arbitration Court of the Far Eastern District dated August 7, 2020 No. F03-1636/2020 in case No. A51-17085/2019.Thus, subject to the conditions stipulated in the paragraph above, it is allowed to attach new evidence in cassation instance.Summarizing the above, in general, the provisions of the considered Resolution of the Plenum of the Supreme Court do not contain fundamental innovations or significant changes to the existing proceedings in courts of cassation instance.Solomon’s decision of the Supreme Court of the Russian Federation in the field of the customs law
In industrial Russia, intellectual property becomes, if not a fundamental element, then an integral one for the formation of a high-tech, innovative economy. In this regard, it is simply necessary to maintain a high level of the defense of intellectual property. The inclusion in the Customs Intellectual Property Register (hereinafter referred to as the CIPR) allows right holders, first of all, to defend themselves and direct consumers from the appearance of counterfeit products in the market, which are usually of poor quality; to identify the violators of the exclusive rights, to estimate the real volume of imported original products, to prevent the loss of profit and the decrease of the sales of the own products, respectively, and to strengthen the own positions in the market.A large volume of non-original products in the market leads inevitably to the decrease of the investment attractiveness of Russia, the competitiveness of the Russian enterprises, as well as to the decrease of the number of jobs, what also affects the country’s image in the international arena.The Federal Customs Service of Russia is designed to counteract the import of the counterfeit products into the territory of the Russian Federation. The greatest effectiveness in combating the import of the non-original products is achieved mainly, when the trademark is included in the Customs Intellectual Property Register.5141 subject matters are included in the CIPR as of December 31, 2019. Although the subject matters’ number is growing, these indicators are too small compared to, for example, the number of the trademarks registered in Rospatent, where more than seven hundred thousand subject matters are registered as of the date of writing this article.In 2019, the customs authorities of the Russian Federation identified 11.94 million units of the counterfeit products (the proceedings in respect of 4.28 million units are not completed as of 31.12.2019), while in the monetary terms, the prevented damage that could have been caused in connection with the introduction of the counterfeit products into civil circulation amounted to 8.1 billion roubles.Thus, the Federal Customs Service has special powers in the field of the defense of the rights to the subject matters of intellectual property. The defense of the intellectual rights by the customs authorities is, without exaggeration, a main barrier at the border that prevents the free movement of the counterfeit products.But currently, the matter of improving a procedure for entering the subject matters of intellectual property in the CIPR is acute again. Earlier, the relevant task has been to replace the obsolete Administrative Regulations of the Federal Customs Service for executing the state function of maintaining the Customs Intellectual Property Register, approved by Order of the Federal Customs Service of Russia of August 13, 2009 No. 1488 (hereinafter referred to as the obsolete Regulations) with a new one corresponding to the modern realities and trends of the informatization of the customs environment. The specialists in the field of the customs law (for example, P.N. Afonin, E.S. Lebedeva) have proposed to make the following, in their opinion, key changes, such as:A possibility to file an application via electronic portals – the Personal Account of the participant of the international economic activity and the website of the State Services;Minimizing the number of the documents required to file the application for the inclusion of the subject matters of intellectual property due to obtaining the required documents and the information from the authorized agencies through the IEIS;Reducing the time period for making a decision from 1 month to 20 days, etc. The new Regulations, approved by Order of the Federal Customs Service of Russia of January 28, 2019 No. 131, entered in force on July 8, 2019 (hereinafter referred to as the current Regulations). But instead of simplifying the process of the initial inclusion of the subject matter of intellectual property in the CIPR, they contain the paragraphs that are contrary to a sound logic and they have always raised questions. Let us examine, in my opinion, the most odious paragraph. In accordance with Paragraph 19.3 of the current Regulations, the application for the inclusion of the subject matter of intellectual property in the Register must contain the information on the identified cases of the violation of the right holder’s rights. Thus, if the applicant fails to give documentary evidence of either the import of the counterfeit homogeneous products marked with a confusingly similar designation, or of the fact of parallel imports, then the Federal Customs Service of Russia will simply refuse to include them in the CIPR. And what, in this case, should be done by those right holders, who have just started manufacturing their products? Should they create such cases themselves? In any case, it also takes some time for this and requires the right holders’ money.And if earlier the obsolete Regulations (Paragraph 95) has allowed to dispute the decision on the refusal in the inclusion in the CIPR according to a pre-judicial procedure in the Federal Customs Service of Russia, then in accordance with Paragraph 90 of the current Regulations, the pre-judicial (extra-judicial) appeal of the decisions and actions (inaction) of the Federal Customs Service of Russia, as well as of its officials, is not stipulated by Part 2 of Article 286 of the Federal Law, what is also not to the benefit of the right holders, because it increases significantly the time period for disputing the illegal decision of the Federal Customs Service of Russia.Do you remember Solomon’s decision of the Constitutional Court of the Russian Federation of February 13, 2018, which became a turning point in the field of parallel imports? Then, the decision of the Constitutional Court of the Russian Federation imposed in fact a prohibition on unfair competition, by means of which foreign importers were receiving hundreds of billions of dollars from Russia.In the case of the mandatory submission of the information on the identified cases of the violation of the right holder’s rights at the stage of filing the initial application for the inclusion in the CIPR, Limited Liability Company Trivium-XXI went all the way. And already Solomon’s decision was made by the Supreme Court of the Russian Federation on January 21, 2020 in case No. A40-241863/2018. When resolving the dispute, the courts, while guided by the provisions of Articles 305, 306 of the Federal Law of November 27, 2010 No. 311-FZ “On the Customs Regulation in the Russian Federation” (hereinafter referred to as the Law on the Customs Regulation), by the obsolete Regulations, proceeded from the fact that the appeal to the customs authorities with the purpose of the inclusion of the trademark in the Customs Intellectual Property Register was possible, only if there was the reliable and sufficient information on the actual violation of the rights of the owner of the trade mark by other persons during the customs clearance of the product.The courts upheld the position of the customs authorities that the applicant, when filing the application, had not provided evidence of the violation of his rights to the trademark, which should be obligatory attached, when filing the application for the inclusion of the information on the subject matters of intellectual property in the CIPR.As the Judicial Chamber on Economic Disputes of the Supreme Court of the Russian Federation established in its decision of January 21, 2020 in case No. А40-241863/2018, the obsolete Regulations established for the right holders a declarative nature of the procedure regulated in the legislation for the purpose of suppressing promptly the facts of importing into the customs territory of the Russian Federation the products violating the rights of intellectual property, for example, marked with someone else’s trademark. In this regard, the interpretation of Paragraph 25 of the obsolete Regulations as prescribing to provide together with the application the additional information on the facts of the already committed violations of the right holder’s rights was incorrect, since it did not correspond to the purpose of the measures stipulated by Chapter 57 of Law No. 289-FZ. Otherwise, the actions of the customs authorities for maintaining the CIPR would be associated only with the facts of the already committed violations of the law, what, in turn, would make it meaningless to maintain the CIPR as the means of contributing to the identification and the prompt suppression of the violations of the law and as the means of the defense of the right holders’ rights.The court session in the Arbitration Court of the City of Moscow in case No. A40-241863/2018 is scheduled for August 12, 2020. We shall continue to monitor the outcome of the dispute with the Federal Customs Service of Russia. P.S. I wonder whether the current Administrative Regulations of the Federal Customs Service of Russia for executing the state function of maintaining the Customs Intellectual Property Register, approved by Order of the Federal Customs Service of Russia of January 28, 2019 No. 131, in connection with decision of the Supreme Court of the Russian Federation of January 21, 2020 in case No. A40-241863/2018, will be revised, or the customs will further have its own way?
27 October 2020#InformationThe recovery of judicial costs
A huge number of judicial disputes between legal entities or individuals result in the recovery of judicial costs from the losing party. But in the disputes with administrative authorities, if they lose the case, it is not customary for some reason to recover the sums of the representative and other judicial costs other than a state fee.We shall omit the fact that the percentage of the cases lost by the administrative authorities tends to zero, but even if there are positive decisions, the heads of the organizations for some reason make a decision not to recover the judicial costs from the administrative authorities.Apparently, many heads do not want to spoil their relations with the administrative authorities, because the latter have much more opportunities to “answer back,” for example, during new checks.The same refers to the disputes on the subject matters of intellectual property, which are a long list of different situations that business may face, ranging from disputing the decisions of Rospatent regarding the registration of the subject matters of intellectual property to, for example, the disputes on the violation of the exclusive right to a trademark.However, there are many judicial decisions on the recovery of the judicial costs from the administrative authorities in reference systems and on the Internet, in the case with the subject matters of intellectual property – from the Federal Service for Intellectual Property (Rospatent). Not everyone is ready to “forgive” Rospatent his lost time and nerves, while proving his truth. Below, there are just some of them.Thus, according to the decision of the Intellectual Property Court of December 10, 2014 in case No. SIP-161/2013, 986,541 (Nine hundred eighty-six thousand five hundred and forty-one) roubles 34 kopecks were recovered from the Federal Service for Intellectual Property (Rospatent) in favor of EuroImp, Limited Liability Company to pay the judicial costs.According to the decision of the Arbitration Court of the City of Moscow of July 24, 2015 in case No. A40-82525/2011, 47,750 roubles 20 kopecks were recovered from Rospatent in favor of OKB RITM, CJSC.Again, according to the decision of the Intellectual Property Court of October 19, 2016 in case No. SIP-670/2014, 307,218 (Three hundred seven thousand two hundred and eighteen) roubles 75 kopecks were recovered from Rospatent in favor of Delta, Limited Liability Company to cover the judicial costs.According to the decision of the Intellectual Property Court of November 26, 2018 in case No. SIP-411/2017, already 880,353 (Eight hundred and eighty thousand three hundred and fifty-three) roubles 44 kopecks were recovered from the Federal Service for Intellectual Property (OGRN 1047730015200) in favor of Hlebprom, Open Joint Stock Company (OGRN 1027402543728) to pay the judicial costs.However, not everything is so transparent and not in every dispute, where Rospatent is a party to the case, it is possible to apply subsequently to the court and to recover the costs incurred in connection with its consideration in the court.On December 26, 2015, the Presidium of the Intellectual Property Court approved by its resolution No. SP-23/3 the Certificate on some issues of the payment of the state fee, when applying to the court and paying the judicial costs in the cases considered in the civil and administrative proceedings.The most controversial issues on the payment in favour of the parties involved in the case, the costs incurred in connection with the consideration of the case in court were analyzed in the Certificate.The Intellectual Property Court, in particular with regard to the recovery of the judicial costs from Rospatent, notes:1. In the disputes on appealing against the decisions of Rospatent, the court shall be entitled to refuse to pay the judicial costs in favour of the filer of the statement of claim, who has successfully appealed against the decision of Rospatent, if the court has made the decision being positive for the filer on the basis of the documents not disclosed at the stage of considering the objection by Rospatent (while the filer has not had the objective obstacles to the timely receipt of relevant evidence and its submission to Rospatent);1.1. This rule shall not be applicable to the right holder, whose trademark has been unlawfully cancelled by Rospatent on the initiative of the third party;1.2. Another exception to this rule is the cancellation of the Rospatent’s decision in favor of the Plaintiff on the basis of establishing the fact of the abuse of the right on the part of the right holder;1.3. If the fact of the unfair competition on the part of the right holder is established, the judicial costs of the party, who has appealed against the decision of Rospatent on granting the legal protection to the trademark, shall not be paid by Rospatent.Developing the above thought, the Presidium of the Intellectual Property Court approved by its resolution of January 17, 2020 No. SP-21/1 the Review of the practice of the Intellectual Property Court on the issues for distributing the judicial costs in the cases falling within the competence of the Intellectual Property Court as the first-instance court.The Review further notes:1. In the case of the refusal to recover from Rospatent the judicial costs recognized as actually incurred and reasonable, the judicial costs shall be distributed on the basis of the actual procedural behavior of the parties involved in the case, but they shall not be laid upon the winning party. At the same time, the court shall determine independently the proportion of such costs;2. When considering the issue on the recovery of the judicial costs, at first, it should be established in what part the judicial costs claimed for the recovery and actually incurred are reasonable, and then in what part the judicial costs incurred by the plaintiff (filer) are due to the actual procedural behavior of the particular party;3. Unless otherwise is proved, it shall be assumed that the judicial costs regarding each of the asserted claims are incurred equally. Such costs shall be divided by the number of the asserted claims and they shall be paid separately for each of the claims based on satisfaction, partial satisfaction, or refusal to satisfy each of the claims.The practice of paying the judicial costs is very diverse and it largely depends on how much the applicant will be able to justify the sums claimed for the recovery. For the recovery of the judicial costs to the maximum, it is advised to describe fully and in detail the complexity of the case and the volume of the work performed. One should not rely on the payment of the judicial costs in full; the court will find obligatory a way to reduce them. This happens in the majority of the cases. But it is still worth trying to recover them, it will not be superfluous.Summing up the above, it can be asserted that the recovery of the costs incurred in connection with the consideration of the case in court form the opponent is becoming less and less similar to the “secondary” stage of the proceedings and it is increasingly acquiring the features of the full scale proceedings, where an important role is the analysis of the actual circumstances of the case and their legal qualification.