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Intellectual Life News

The civil law in Russia gradually evolves under the general roar of probably historically significant events. This also concerns the intellectual property rights: in March 2014 a package of amendments to part 4 of the RF Civil Code was adopted. The importance of intellectual property rights for the civil turnover found expression in establishment of a special Court for Intellectual Property Rights. This Court began its work in July 2013. This article is assumed to give an overview of the results of work of the Court, as well as major legislative amendments and changes of the law enforcement practice in the field of intellectual property over the past year.

For a start let’s outline the range of cases falling within the jurisdiction of the Court for Intellectual Property Rights:

1. Cases of challenge of regulatory and legal acts on intellectual property rights;
2. Cases of disputes of granting or termination of legal protection of results of intellectual activity, including:

  • challenging non-regulatory legal acts on intellectual property rights;
  • challenging decisions of the Federal Antimonopoly Service on recognition unfair the competition of actions related to the acquisition of the exclusive right to the means of individualization;
  • identification of the patentee;
  • invalidation of the patent for invention, utility model, industrial design or selection invention, decision to grant legal protection to a trademark, appellation of origin of goods;
  • early termination of legal protection of a trademark due to its non-use;
  • cases of disputes of compensation for damage caused by a regulatory or non-regulatory and legal act on intellectual property rights, decisions and actions (inaction) of the Federal Service for Intellectual Property.

The aforementioned disputes are considered by the Court regardless of who are participants of the legal relations, which the dispute raised from: organizations, individual entrepreneurs or citizens.

As a cassation instance, the Court for Intellectual Property Rights considers cases it considered in the court of first instance, as well as cases of protection of intellectual rights, considered by arbitration courts of first and appellate instance.

The Resolutions of the Presidium of the Court for Intellectual Property Rights are of the greatest interest in terms of development of intellectual property rights. One of the most notable acts adopted by the Court during its operation is the overview of the judicial practice on unfair competition.

Acquisition of a trademark as a form of unfair competition

The acquisition of the exclusive right to a means of individualization and its use related to unfair competition is a violation of antitrust laws. This violation may be considered under administrative procedure by the federal antimonopoly authority. However, the Court for Intellectual Property Rights considers it lawful to demand recognition of acquisition of the exclusive right to means of individualization unfair competition directly through the court.

By virtue of provisions of the RF Civil Code the judicial recognition of actions of the right holder of a trademark unfair competition or abuse of the right implies the possibility to challenge provision of legal protection to such trademark. The criterion for qualifying actions as both aforementioned violations can be the preceded use of the disputed designation. If before the priority date of the disputed trademark the disputed designation was widely used by third parties, the registration of the trademark by one of the competitors can be carried out only in order to remove third parties from the market of the relevant goods. According to the Court for Intellectual Property Rights, such registration does not meet the basic function of the trademark to individualize the goods of the right holder.

In addition, the registration of the designation previously used without registration as a trademark only by third party and that become known as a result of namely such use can also be recognized unfair competition. In this case, if the right holder registered as a trademark a designation that became known for its economic activity and investments made prior to the registration of the trademark, its actions can not be qualified as unfair competition.

Use of a domain name as a form of unfair competition

In March past year, the Court for Intellectual Property Rights generalized the practice of considering domain disputes. The Courts treats domain disputes as disputes of use of domain names that are identical or confusingly similar to trademarks or other means of individualization. Under the common rule, violation of the exclusive right to the trademark is the actual use of similar domain name. However, the mere fact of registering a domain name that is identical or confusingly similar to a well-known trademark, is a violation of the exclusive right to the relevant trademark. If the registration of the domain name is recognized violation of the exclusive right, the court may meet the demand for cancellation of such registration.

The court found that the demand on the illegal use of domain name, expressed in violation of the rights to trademark can be filed against the administrator of the relevant existing domain name. The claim for damages within the domain dispute may be submitted to the administrator of the domain name and the person who actually used the domain name. The administrator of the domain name can not absolve themselves of the responsibility for the violation of the exclusive rights and/or pass it on to another person by entering into a contract, in particular the so-called “domain name lease” contract.

The demand to discontinue the use of the domain name may be denied if based on specific factual circumstances such demand may be qualified by the court as an abuse of right. In particular, the abuse of right may be evidenced by the statement of demand to prohibit the use of the domain name in the following situation: the right holder registered as a trademark the designation that previously became widely known due to the person that used this designation in the domain name.

As for the domain disputes the Court broadly interprets the concept of unfair competition. The act of unfair competition (as well as abuse of right), which is expressed in the registration and use of domain name that is identical or confusingly similar to a means of individualization, may be allowed by a person that is not direct competitor in the commodity market, as participants of legal relations related to the use of designations in the Internet are persons not involved in business as well.

The Court for Intellectual Property Rights confirmed the past practice of application to disputes of domain names that were identical or confusingly similar to trademarks, of the Uniform Dispute Resolution Policy related to domain names (hereinafter the UDRP), approved by the Internet Corporation for Assignment of Names and Numbers (ICANN). In particular, according to the UDRP the cancellation, transfer of registration or the change of the domain name are carried out on the basis of all of the following criteria:

1. The disputed domain name of the defendant is identical or confusingly similar to the trademark of the claimant;
2. The administrator of the domain name (defendant) has no rights to and legitimate interests related to the disputed domain name;
3. The disputed domain name is registered and used by the administrator of domain name (defendant) in bad faith.

The Court for Intellectual Property Rights also settled some of the issues of interim measures within domain disputes. To save the current state of relations (status quo) between the parties to the dispute the Court ordered to the lower courts to prohibit the administrator to perform any actions with the domain name, as well as to prohibit the registrar to cancel the domain name and transfer the rights to administrate the domain name to another person. The Court pointed out that to apply the interim measures it is sufficient for the claimant to provide:

  • evidence of their right to the result of intellectual activity or means of individualization;
  • evidence of violation of this right;
  • justification of the reason for claiming the application of interim measures.

It is important to note that the Court considered it unnecessary to require the parties to the domain dispute to provide specific evidence that the failure to take interim measures may make it difficult or impossible to execute a judicial act in a domain dispute. The Court justified this procedural advantage with high tradability of domain names.

Amendments to civil legislation

Besides the practice of law enforcement in the field of intellectual property the past year was marked by a number of amendments to the RF Civil Code in the part governing intellectual rights. Most of them came into force on 1 October 2014. The rules on joint ownership of exclusive rights to results of intellectual activity were improved. Earlier right holders disposed of the exclusive right jointly, and otherwise could only be found only by law. Now the procedure of disposal of this right can be established in the contract of right holders. However, the law does not yet lay down requirements to the form and content of such contract. Therefore, it is unclear whether the provision, for example, that one of the right holders has the power to transfer the right to use the result of intellectual activity to third parties without the consent of the other right holder can be included in the contract. This and other issues of joint ownership of exclusive right, still wait for their solutions.

The right of the right holder to unilaterally repudiate the contract on alienation of the exclusive right is limited. Earlier if the exclusive right to the acquirer has not yet passed, a simple breach of the obligation to pay was enough for unilateral repudiation. Now, if the exclusive right has not yet been transferred to the acquirer, only a material breach of this obligation gives the right holder the right to repudiate the contract of alienation. But again, the law does not settle the issue in full: the criteria of materiality of violations are not specified. The contract is terminated after 30 days from the moment of notification of the right holder about the repudiation of the contract: up to the moment where the acquirer can still perform the obligation to pay the fee.

From 1 October 2014 license contracts on granting the right to use the software or databases can be laid down in an electronic form . Earlier conclusion of such contracts was possible in the form of a contract of adhesion, when its conditions were set out on the copy or the package of the software (database). The law calls the procedure for concluding contracts in electronic form simple. The written form of the contract is considered observed if the user agreed to sign it, i.e. started using the software or the database. The license contract made in electronic form is gratuitous by default, unless the contract provides otherwise. As part of this contract only a simple (non-exclusive) license can be transferred.

An open list of items that are not utility models is made up. This list includes, in particular:

1. Discoveries;
2. Scientific theories and mathematical methods;
3. Decisions on appearance of items only and aimed as meeting the aesthetic needs;
4. Rules and methods of games, intellectual or economic activity;
5. Software;
6. Decisions consisting only in provision of information;
7. Plant varieties, animal breeds and biological processes to obtain them;
8. Topographies of integrated circuits.

The list of items that are not inventions was similarly changed. The criteria on which basis a result of intellectual activity must be assigned to a category from the list, are not provided for by the law. Earlier the list of items that are not recognized utility models was closed – thus, the powers of Rospatent to assign an item to utility model were extended.

The term of validity of the exclusive right and the design patent was reduced from 15 to 5 years. At the request of the patentee, this term can be repeatedly extended for 5 years, but in general it shall not exceed 25 years from filing of the patent application. Under the previous edition of the RF Civil Code, the maximum possible term of protection was also 25 years, but it was formed in a different way: the original term of the exclusive right to industrial design was 15 years able to be extended for another 10 years. Since the beginning of the new year the possibility of extending the term of the exclusive right to the utility model was excluded. Earlier this term could be extended at the request of the right holder for 3 years. These changes apply to the exclusive rights to industrial designs, issued under the applications filed after 1 January 2015.

A special rule on liability for violation of the exclusive right to an invention, utility model or industrial design is established . Along with the use of other applicable methods of protection of exclusive rights the holder of the exclusive right to an invention, utility model, industrial design is entitled to demand from the violator instead of compensation for damages a compensation:

1. In the amount of 10,000-5,000,000 rubles determined at the discretion of the court on the basis of the nature of the violation;
2. Two times the cost of the right to use the object of intellectual property, determined based on the price, which under comparable circumstances is usually charged for the use of the same object in a way that was used the violator.

This innovation takes effect on 1 January 2015 and applies to legal relationships arising from the said date.

Intellectual property is the youngest and dynamically developing property item - the evolution of the intellectual property right seems inevitable in this regard. The establishment of the Court for Intellectual Property Rights seems a reasonable and logical step towards creation of an effective legal regulation in the field of intellectual activity.