ArticlesIs a domain pledge the key to success?
The rapid development of the information space gives rise to fierce competition among its subjects. The hardest hit are startups that are just becoming part of the “business” ecosystem. And in order not to be overboard, young companies often resort to external sources of financing, such as loans. At the same time, the fulfillment of credit obligations must be secured by something, however, as a rule, business newcomers have little to offer as such. One undervalued asset is a website with a unique domain name. Despite the fact that the domain name is still looking for its own place in civil law, in practice the question has already arisen regarding the possibility of providing a domain name as, for example, a pledge under an obligation secured by it. What will be the answer? Let's figure it out.Let's start with the fact that the legal definition of a domain name is enshrined in paragraph 15 of Article 2 of the Federal Law of July 27, 2006 No. 149-FZ "On Information, Information Technologies and Information Protection", which is understood as "a symbol designation intended for addressing sites on the network "Internet" in order to provide access to information posted on the "Internet".Since domain names are of an intangible nature, as such they cannot be entered and circulated in civil circulation, and therefore the subjects of transactions will not be the domain names themselves, but the rights in relation to them (by analogy with paragraph 4 of Article 129 of the Civil Code of the Russian Federation (hereinafter referred to as the Civil Code of the Russian Federation).As you know, Article 128 of the Civil Code of the Russian Federation contains a closed list of objects of civil rights, which include: “things (including cash and documentary securities), other property, including property rights (including non-cash funds, book-entry securities, digital rights); results of work and provision of services; protected results of intellectual activity and equivalent means of individualization (intellectual property); intangible benefits.Considering the above list, the right to administer a domain name should be attributed to a property right that has an independent economic value determined by the participants in civil circulation and market conditions, as has been repeatedly pointed out by the courts (for example, in the ruling of the Supreme Court of the Russian Federation dated 05.08.2021 in case No. А76-51680/2019, in the decision of the Arbitration Court of the Moscow District dated July 20, 2020 in case No. А40-122333/2015, etc.).Can such a right be pledged?Proceeding from paragraph 1 of Article 336 of the Civil Code of the Russian Federation “any property, including things and property rights, can be the subject of pledge, with the exception of property on which foreclosure is not allowed, claims that are inextricably linked with the personality of the creditor, in particular claims for alimony, about compensation for harm caused to life or health, and other rights, the assignment of which to another person is prohibited by law."As a separate type of pledge, civil legislation singles out a pledge of rights of obligations, which states that “the subject of pledge may be property rights (claims) arising from the obligation of the pledgor. The pledger of the right may be a person who is a creditor in an obligation from which the pledged right (right holder) follows (paragraph 1 of Article 358.1 of the Civil Code of the Russian Federation).Thus, the provisions of the Law provide an opportunity to conclude a pledge agreement, the subject of which will be the property right to administer a domain name.Russian courts come to similar conclusions despite the fact that the issue considered in this article is far from a frequent subject of judicial consideration.Thus, one of the first judicial acts, in which the idea of a domain name as a pledge was noted, is the decision of the Presidium of the Supreme Arbitration Court of the Russian Federation dated November 11, 2008 in case No. А56-46111/2003.Unfortunately, due to the fact that the issue we are considering was not included in the subject of this dispute, but was only one of the circumstances of the case, the Supreme Arbitration Court of the Russian Federation was unable to provide a detailed legal position, pointing only to the fact that it is possible to use a domain name as a pledge to secure an agreement leasing.Later, the Ninth Arbitration Court of Appeal, in its decision dated 06/04/2021 in case No. A40-114510/2020, considered the issue of providing a domain name as a pledge, indicating the following:«On February 25, 2019, in order to ensure the proper fulfillment of obligations under the above agreement, between AEROTEMA LLC and IP Glazkova A.L. a contract of pledge of property rights No. 1 was concluded, according to which, in order to ensure the proper fulfillment of the obligation, the domain names aerotema.ru, vetromer.ru were pledged.The current legislation does not prohibit the pledge of any property, including property rights (Article 128, clause 1 of Article 329, Article 334 Civil Code of the Russian Federation).A domain name pledge agreement may establish restrictions on the rights of the domain name owner, for example, provide for a ban on the use of the domain name, restrict the scope of use, prohibit the alienation of the domain name, its provision for use, or transfer the rights to administer the domain name to third parties, etc.The specified Pledge Agreement has not been challenged by anyone, has not been declared invalid in the manner prescribed by law, and is binding on the Claimant, including in terms of transferring the administration of the domains aerotema.ru and vetromer.ru (subject of pledge).Therefore, both the Law and the Courts do not prohibit granting domain names, or rather, the rights to administer them, as security for the performance of obligations.If a domain name can be pledged, it means that in case of non-fulfillment or improper fulfillment of the obligation secured by it, there is a possibility of foreclosure on the subject of pledge.In this case, it must be emphasized again that since the subject of the pledge agreement is the right to administer the domain name, insofar as the foreclosure will also take place precisely on the specified property right, and not on the domain name itself, in accordance with Article 75 of the Federal Law of 02.07.2007 No. 229- Federal Law "On Enforcement Proceedings".By virtue of paragraph 1 of Article 358.7 of the Civil Code of the Russian Federation,“unless otherwise provided by the agreement, in the event of a violation of the obligations provided for in Article 358.6 of this Code, the pledgee has the right to demand from the pledgor early performance of the obligation secured by the pledge, and in case of its failure, to levy execution on the subject of pledge in the prescribed manner.".Foreclosure on a pledged right can be carried out by a court decision or out of court if the parties agree on such a method in a pledge agreement (paragraph 1 of Article 349 of the Civil Code of the Russian Federation).Realization of the pledged right is carried out, as a rule, through its sale at (public) auction or by assignment of the pledged right by the pledgor to the pledgee (Article 358.8 of the Civil Code of the Russian Federation).So, for example, in the above decision of the Ninth Arbitration Court of Appeal dated 06/04/2021 in case No. A40-114510/2020, the rights to administer domain names were transferred to the pledgee in fulfillment of the main obligation:“Since the resulting debt was not paid by the plaintiff, IP Glazkova A.L. sent a pre-trial claim to AEROTEMA LLC and a notice of extrajudicial foreclosure of the collateral, which offered to pay off the resulting debt within 10 days, leaving the collateral for itself in the absence of payment under the transaction.In view of the foregoing, the administration rights to the domain were acquired by the plaintiff and transferred with his consent in payment of the debt to the defendant, in connection with which the defendant is the proper administrator, the claims made by the plaintiff in the framework of this case are aimed at unilateral refusal to fulfill obligations under payment for services for tailoring windsocks and obligations under a pledge agreement on the part of the plaintiff.Given the above, why has this method of securing obligations not yet gained due popularity?Firstly, as already mentioned at the beginning of this article, today there are still disputes regarding the legal regime of a domain name and its place in civil law, in connection with which its use as a pledge to secure an obligation, where the relationship itself already bear a possible risk of non-execution, raises doubts on the part of the subjects of civil circulation.Secondly, one of the essential conditions of the pledge agreement is the assessment of its value, which, by virtue of paragraph 1 of Article 340 of the Civil Code of the Russian Federation, as a general rule, is determined by agreement of the parties. And if in the case of other objects of civil rights, the parties to contractual relations, as a rule, turn to an independent appraisal organization that determines the value of the pledge, guided by the approved federal appraisal standards, then as for domain names, at the moment there is no such single standard for them which makes it difficult for the parties to determine its value. Of course, there are organizations that provide domain name valuation services, but each of them relies on its own methodology with its own valuation criteria, which can lead to significantly different results, causing an unnecessary dispute between the parties to the contract.In conclusion, I would like to note that while the legal community is conducting doctrinal research on the legal nature of a domain name, in practice there has long been a need for legislative regulation of its legal regime, as well as civil law relations associated with it . The possibility of using a domain name as a subject of a pledge agreement is especially important for the development of start-up companies, which is undoubtedly a priority in a situation where the Russian market has become empty after the departure of many international companies. Thus, until domain names are legally bound, pledging them, unfortunately, will remain an unclaimed way to enforce obligations.The right to patent protection
In order to encourage authors to create new objects in the scientific and technical field, the authors were given the opportunity to secure monopoly rights to the results of the intellectual activity they created. The confirmation of the exclusive right to such objects is a patent, which certifies the priority, authorship, and exclusive right to an invention, utility model, or industrial design (paragraph 1 of Article 1354 of the Civil Code of the Russian Federation (hereinafter referred to as the Civil Code of the Russian Federation).According to the statistics provided by Rospatent in the annual report 2021, an average of about 35,000 patents for inventions, utility models, and industrial designs are issued annually. These indicators illustrate the active participation of the authors in the scientific development of our state.It should be borne in mind that after filing an application for registration of an invention, utility model, or industrial design, the fight for a patent does not end, but only begins since there are still people who would also like to use similar objects in their activities. Here, the future copyright holders have a question, from what moment do they have the right to protect their object?Ways to protect patent rights are listed in Article 1252 of the Civil Code of the Russian Federation and involve, among other things, the use of measures to recognize, restore, and suppress the illegal use of objects of patent rights, as well as recover damages/compensation for such illegal use.By virtue of Article 1353 of the Civil Code of the Russian Federation, “the exclusive right to an invention, utility model or industrial design is recognized and protected subject to state registration of the relevant invention, utility model or industrial design, on the basis of which the federal executive authority for intellectual property issues a patent for the invention, utility model or industrial design".Accordingly, the emergence and protection of exclusive rights to patent objects are made dependent on their mandatory state registration, as a result of which a corresponding patent is issued by the federal agency for intellectual property.The above provision is continued in paragraph 1 of Article 1363 of the Civil Code of the Russian Federation, which indicates that the exclusive right to an invention, utility model, industrial design, and the patent certifying this right are valid subject to the requirements established by this Code, from the date of filing an application for a patent to the federal executive authority for intellectual property or in the event of separation of the application (clause 4 of Article 1381) from the date of filing the original application <…>.”.Despite the fact that this paragraph indicates that the exclusive right to objects of patent law arises from the date of filing an application for a patent, the legislator in the next paragraph, nevertheless, clarified that the protection of the exclusive right certified by a patent can be carried out only after state registration of an invention, utility model or industrial design and the grant of a patent.It follows from this that the legal regulation of relations related to the use of exclusive rights to inventions, utility models, or industrial designs provided for by law implies the possibility of protecting the rights to the objects in question and, accordingly, the possibility of applying civil liability measures for their illegal use only after the occurrence legally significant circumstances, due to the occurrence of which all third parties are considered notified of the emergence of patent rights from the right holder. Such circumstances are the state registration and grant of a patent for an invention, utility model, or industrial design.Given that, unlike other objects of intellectual property, the creation of inventions or industrial designs, as a rule, requires more financial and time costs, the legislator decided to provide temporary legal protection for such objects.So, in accordance with article 1392 of the Civil Code of the Russian Federation, an invention or industrial design, for which applications have been filed with Rospatent to the federal executive body for intellectual property, from the date of publication of information about these applications until the date of publication of information about the grant of a patent, temporary legal protection is provided.Since, after the publication of information about applications for an invention or industrial design, the claims or essential features of an industrial design become publicly available, the interests of the person who filed such applications may be affected and have negative consequences.At the same time, according to paragraphs 2 and 3 of the same article, temporary legal protection is considered not to have occurred if the application for an invention or industrial design was withdrawn or recognized as withdrawn, or a decision was made to refuse to grant a patent on an application for an invention or industrial design and the possibility of filing an objection against this the solution provided for by this Code has been exhausted.It is this paragraph of the norm of the law that makes the legal protection granted to new inventions and industrial designs “temporary”, setting the conditions for their activation.If the person who filed the application has been granted a patent for an invention or industrial design, a such patent owner has the right to receive monetary compensation from the person using the claimed invention or industrial design during the period specified in paragraph 1 of Article 1392 of the Civil Code of the Russian Federation. The amount of such remuneration is determined by agreement of the parties, and in the event of a dispute - by the court.Consequently, this provision does not give the future right holder the right to prohibit the use of inventions or industrial designs, applications for which were filed with Rospatent, before the date of issue of the relevant patents to him, however, it warns third parties that if a special federal body decides to grant patents for such objects, they will have to compensate for the losses, by paying remuneration, that have been incurred by the patent owner in connection with the use of his patents.From the systematic interpretation of the above norms, it can be concluded that the current legislation does not provide for the possibility of the patent owner using liability measures in the form of recovery of damages or compensation to persons who used the invention or industrial design in the absence of the patent owner's consent, for the period between the date of filing an application for the invention or an industrial design and the date of registration of patents.In turn, in order to ensure the legitimate interests of entities that have filed an application for a patent for an invention or industrial design, the current rules of law provide for the possibility of such persons using protective measures, expressed in receiving remuneration for the use of the claimed industrial design by a third party from the date of publication of information about the application until the date of publication of information on the grant of a patent, the amount of which is determined by agreement of the parties, and in the event of a dispute - by the court.Considering a court case on the issue that is the subject of this article, the Intellectual Property Court stated the following:“The legal regulation of relations on the creation and use of industrial designs implies the possibility of protecting exclusive rights to the relevant intellectual property objects and, thus, the possibility of applying civil liability measures for their illegal use only after the state registration of such objects and the issuance of a patent for them, that is after the occurrence of legally significant circumstances, due to the occurrence of which all third parties are considered notified of the emergence of patent rights from the right holder.Along with the guarantee of protection of the exclusive rights of persons who have received a patent for an industrial design, the current legislation also provides for the possibility of ensuring the legitimate interests of entities that have filed an application for a patent for an industrial design. This possibility is expressed in the right of such persons to receive remuneration for the use of the claimed industrial design by a third party from the date of publication of information about the application until the date of publication of information about the grant of a patent. The amount of this remuneration is determined by agreement of the parties, and in the event of a dispute - by the court.Thus, the regime of legal regulation of relations for the creation and use of industrial designs is not uniform, and its content depends on the occurrence of specific legally significant circumstances that constitute the procedure for obtaining a patent for an industrial design provided for by law.”.Summing up, we can conclude that the current Russian legislation guarantees the protection of the exclusive rights not only of holders of patents for an invention or industrial design but also of persons who have just filed an application for a patent for such an invention or industrial design, which, it seems to me, encourages authors to the creation of new objects of intellectual property.Use of a trademark with "defects" in early termination cases
In view of the limited civil circulation, the legislator established an antimonopoly instrument that deprives the right holder of a legal monopoly (exclusive right) in relation to a trademark registered by him, by means of early termination of his legal protection in relation to all or part of the goods/services due to non-use by the right holder of this trademark continuously for three years (paragraph 1 of article 1486 of the Civil Code of the Russian Federation (hereinafter referred to as the Civil Code of the Russian Federation)).Having received a claim for early termination of a trademark, the right holder must prove the use of the trademark in relation to each product for which the trademark is registered, and for which the person who applied for early termination proved his interest (paragraph 166 of the Decree of the Supreme Court of the Russian Federation No. ).Thus, paragraph 2 of Article 1486 of the Civil Code of the Russian Federation establishes that “for the purposes of this article, the use of a trademark is recognized as its use by the right holder or a person to whom such a right is granted on the basis of a license agreement in accordance with Article 1489 of this Code, or by another person using the trademark under the control of the right holder, provided that the use of the trademark is carried out in accordance with paragraph 2 of Article 1484 of this Code <…>.”At the same time, paragraph 38 of the Review of judicial practice in cases related to the resolution of disputes on the protection of intellectual property, approved by the Presidium of the Supreme Court of the Russian Federation on September 23, 2015, clarifies that for the purposes of applying the provisions of Article 1486 of the Civil Code of the Russian Federation, not any use of a trademark by the right holder is taken into account, but only the performance of actions provided for by paragraph 2 of Article 1484 of the Civil Code of the Russian Federation, directly related to the introduction of goods into civil circulation.Specifying the methods of using a trademark, paragraph 2 of Article 1484 of the Civil Code of the Russian Federation establishes the possibility of its placement:1) on goods, including on labels, packages of goods that are produced, offered for sale, sold, demonstrated at exhibitions and fairs, or otherwise introduced into civil circulation on the territory of the Russian Federation, or stored or transported for this purpose, or imported to the territory of the Russian Federation;2) when performing work, rendering services;3) on documentation related to the introduction of goods into civil circulation;4) in proposals for the sale of goods, for the performance of work, for the provision of services, as well as in announcements, signboards, and advertisements;5) on the Internet, including in a domain name and with other addressing methods.In the meaning of the above norms, the main task of the right holder in the category of a dispute under consideration is to prove the introduction of products (provision of works/services) marked with a trademark into civil circulation and bring it to the consumer.However, a situation often arises when the right holder actually carried out actions to individualize his goods (works and services) with a trademark but violated the norms of other legislation when introducing these products into civil circulation.It would seem that this fact should not have legal significance if paragraph 1 of Article 1484 of the Civil Code of the Russian Federation did not stipulate that “the person in whose name the trademark is registered (right holder) has the exclusive right to use the trademark in accordance with Article 1229 of this Code by any in a manner that does not contradict the law (exclusive right to a trademark), including the methods specified in paragraph 2 of this article.”Is it possible to state from the above norm that the use by the trademark owner in a manner contrary to the law cannot confirm its proper use, which is required by Article 1486 of the Civil Code of the Russian Federation in the framework of a case on early termination?Consider specific examples from judicial practice.The Presidium of the Intellectual Property Rights Court, in its ruling dated April 30, 2015, in case No. SIP-531/2014, where the copyright holder violated the provisions of the legislation on the production and circulation of alcoholic beverages, indicated that “the procedure for the circulation of ethyl alcohol, alcoholic and alcohol-containing products is regulated by the provisions of Law No. 171 -FZ, article 10.2 of which contains a list of accompanying documents certifying the legality of such production and circulation.Since, by virtue of the provisions of paragraph 2 of Article 1484 and paragraph 2 of Article 1486 of the Civil Code of the Russian Federation, a circumstance of significant importance for the consideration of this case is the fact of the introduction into civil circulation of goods marked with contested trademarks, which, in turn, for alcohol-containing products on the territory of the Russian Federation The Federation is governed by the norms of Law No. 171-FZ, the application of the norms of this Law in the consideration of this dispute was mandatory.Thus, the court of the first instance correctly concluded that the defendant did not provide evidence confirming the introduction into civil circulation of goods on which the disputed trademarks would be used.The court concluded that there was no evidence of the proper use of the trademark in the ways specified in paragraph 2 of Article 1484, due to the illegal production and circulation of alcoholic products by the copyright holder.Later, the judicial practice changed the vector of direction, focusing on the purpose of using a trademark within the meaning of paragraph 1 of Article 1477 of the Civil Code of the Russian Federation.Thus, the Presidium of the Intellectual Property Rights Court, in its ruling dated January 16, 2017, in case No. SIP-185/2016, where the copyright holder violated the requirements of legislation on certification, as well as on tax and accounting, indicated that “within the meaning of Article 1486 of the Civil Code of the Russian Federation, by itself, the non-compliance of the goods introduced into civil circulation with the requirements of legislation on certification or violation of the legislation on tax and accounting in the course of such circulation cannot be grounds for early termination of the legal protection of a trademark if proper evidence is provided that such goods are actually introduced into civil circulation.Violations of the requirements of other legislation of the Russian Federation are not the subject of this dispute.».The Presidium of the Intellectual Property Rights Court came to a similar conclusion in its ruling dated 08/05/2019 in case No. SIP-222/2018, where the right holder violated the requirements of the law for declaring products, indicating that “The reference of the applicant of the cassation complaint to the fact that the defendant did not provide evidence of the declaration of products - drinking water in accordance with the Federal Law “On Technical Regulation” and the Technical Regulations, is subject to rejection since the determination of whether the product is certified from the point of view of state bodies, controlling such proceedings is not included in the subject of the court's investigation in the case of early termination of the legal protection of a trademark due to its non-use and does not affect the resolution of a specific dispute.A similar approach can also be found in the decision of the Court for Intellectual Property Rights dated June 21, 2017, in case No. SIP-84/2016, the decision of the Presidium of the Court for Intellectual Property Rights dated January 18, 2019, in case No. SIP-125/2018, the decision of the Court for Intellectual Property Rights dated May 15 .2020 in case No. SIP -782/ 2019, the decision of the Court for Intellectual Property Rights dated June 17, 2021, in case No. SIP-373/2021.Thus, according to the prevailing judicial approach, the circumstances related to compliance with the law when goods (works, services) are introduced into civil circulation are not included in the subject of research in cases of early termination of the legal protection of trademarks due to their non-use and do not affect the resolution of a specific dispute over essence.The above also follows from the fact that paragraph 2 of Article 1484 of the Civil Code of the Russian Federation specifically draws attention to the need to analyze not the circumstances associated with the placement of a trademark on a product, but the circumstances associated with the introduction of goods into civil circulation - that is, with bringing it to the consumer.In summary, the current position taken by the courts is more justified than the original one, since cases of early termination of the legal protection of a trademark due to its non-use should be considered through the prism of the main function of a trademark, which is to individualize goods (works, services), in connection with which it is necessary to take into account the actual use of the trademark, even if it is carried out in violation of the provisions of other legislation of the Russian Federation.