Clarifications of Key Aspects of Applying Intellectual Property Legislation.

23.04.2010

LEGAL UPDATE No. 25.

Goltsblat BLP advises that Resolution No. 5/29 of the Plenum of the Supreme Court of the Russian Federation and the Plenum of the Supreme Arbitration Court of the Russian Federation dated 26 March 2009 “On Certain Issues that Have Arisen in Connection with the Enactment of Part IV of the Civil Code of the Russian Federation” (hereinafter - the “Resolution”) has been adopted. The Resolution clarifies a number of contested and ambiguous issues accumulated by courts and right holders with respect to application of intellectual property legislation since the enactment of this part of the Civil Code on 1 January 2008. The Resolution considers general problems (including correlation with previous legislation), copyrights and related rights, patent and know-how rights, the right to a corporate name, a trade mark and a commercial designation.

Certain key points presented in the voluminous Resolution are outlined below.

Disputes on the authorship of the results of intellectual activity should be heard by courts of general jurisdiction. The competence to hear disputes in connection with the infringement of intellectual property rights and disputes arising from contracts on the alienation of an exclusive right and from licensing agreements is determined proceeding from the composition of a group of persons that are the parties to the dispute, if said dispute is related to entrepreneurial or other business activities (clause 1).

The Resolution confirms that an exclusive right may be contributed to the charter (joint) capital of a company. In addition to a reference to this effect in the foundation agreement, such a contribution requires the conclusion of a separate contract on the alienation of an exclusive right or licensing agreement, which are subject to state registration in the cases listed in the Civil Code of the Russian Federation (clause 11).

A contract that stipulates the alienation of the right to use the result of intellectual activity or the means of individualisation and at the same time imposes restrictions on the methods of or term of use may be classified by the court as a licensing agreement. If this option is not provided, a court may invalidate the contract on the grounds that it contravenes the law (clause 13.1).

If a contract on the alienation of an exclusive right is subject to state registration, the time of the transfer of said right is determined imperatively as the moment of state registration (clause 13.3).

A licensing agreement is not deemed to have been concluded if it fails to explicitly stipulate that it is performed for no consideration or fails to contain any clauses stipulating the amount of consideration or the procedure for its calculation (clause 13.6).

An exclusive licensing agreement may explicitly stipulate that the licensor will not retain the right to use the licensing right granted to the licensee (clause 14).

A company that collectively manages copyright and related rights acts in the interests of the right holders. Irrespective of whether the company acts in court in their name or its own name, it is acting to defend the rights of the persons that assigned the company the right to manage their rights collectively and not its own rights (clause 21).

A tangible medium expressing the result of intellectual activity or a means of individualisation can only be declared counterfeit by a court (clause 25).
The use of a work implies, inter alia, its public representation, in other words either a live performance or technically assisted performance, and also the demonstration of an audio-visual work in a location with free access or in a place attended by a significant number of people outside the family circle.  The public performer (including “live” performances) can be a company or an individual organising, initiating and assuming responsibility for the holding of this event. Consequently this company or individual must conclude a contract on the receipt of the right to publicly perform the work with the right holder or the company managing the rights on a collective basis and pay an agreed fee (clause 32). In our opinion it follows from the above that in the event of an unauthorised public performance, the organiser of the event and not each individual performer should be the first person to be addressed for compensation.

The Resolution formulates a position on how to calculate compensation for infringement of copyright, related rights and rights to trade marks. Although the amount of compensation will be determined by a court, the value of a claim must be indicated as a fixed sum. Compensation is payable provided that the violation has been proven with no obligation to confirm the amount of the costs being imposed. The court will determine the amount of compensation, proceeding from the principles of reasonableness and justice and also on the basis of the proportionality of the amount of compensation to the consequences of the violation, with due account of the nature of the committed violation, the term of unauthorised use, the extent of the infringer’s guilt, previous violations (if any) of the exclusive right of the given right holder by the party and the expected losses of the right holder from said violation. The right to claim damages or compensation for a violation committed prior to the conclusion of a licensing agreement or agreement on the alienation of the exclusive right to a work (a trade mark) with a third party does not pass to a third party, but may be assigned under a contract on the assignment of a right (claim) (clause 43).

The use of an invention, utility model, industrial design or trade mark do not constitute a violation of the rights of the person holding the corresponding patent or trade mark if this patent or trade mark are subsequently declared invalid (clause 54).

The Civil Code of the Russian Federation does not stipulate any specific registration of corporate names intended only for commercial organisations. The exclusive right to a corporate name may not be pledged. Disputes on corporate names should be heard by arbitration courts. The names of not-for-profit organisations are not accorded such legal protection. The prohibitions established in respect of corporate names are similarly not applicable (Sub-clauses 12, 58).

A court may refuse to protect a person’s right to a trade mark if it transpires from case materials and the actual circumstances of the case that its actions in registering said trade mark might be classified as abuse of the right (clause 62). The abuse of a right or unfair competition in such actions also constitute grounds for the invalidation of the provision of legal protection for the trade mark. In the event of unfair competition, an objection to legal protection may only be lodged by the interested party (in other words, the person whose rights have been violated by the act of unfair competition). The party shall submit this objection, attaching also a decision of the anti-monopoly authority in which it recognises the registration of the trade mark as unfair competition. On receipt of the objection and decision of the anti-monopoly authority, Rospatent [The Federal Service for Intellectual Property, Patents and Trademarks] will invalidate the provision of the legal protection for the trade mark.

A decision issued by Rospatent may only be challenged on the grounds that there are no indicia of unfair competition in the right holder’s actions after the relevant decision of the anti-monopoly authority has been revoked. At the same time, however, the Resolution recognises that both decisions can be challenged within the scope of a single court proceeding (clause 63).

In a case that considers a challenge of a Rospatent decision not to recognise the registration of the trade mark as invalid, a court may at its own initiative state that the person’s actions aimed at registering the trade mark constitute an abuse of a right or unfair competition. In this case the court will invalidate the decision issued by Rospatent and instruct it to cancel the registration of the trade mark (clause 63).

All right holders should consider the provisions of the Resolution mentioned above and other provisions when performing any actions connected to the acquisition, exercise, transfer and protection of rights to intellectual property.

For further information, please contact:

Ekaterina Tilling, Partner,
Intellectual Property
Goltsblat BLP;
Tel: +7 (495) 287 44 44,
Email: info@gblplaw.com

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