Determining liability
Authorities and rights holders
Other issues
On February 17 2011 the Supreme Arbitrazh Court approved the Decree on Certain Questions Regarding the Application of the Special Part of the Administrative Code. Among other things, the decree addresses questions arising from arbitrazh (ie, commercial) court practice on the application of Article 14(10) of the Administrative Code, which covers unlawful trademark use.
Determining liability
Article 14(10) provides that administrative liability for the unlawful use of another party's trademark, service mark, appellation of origin or similar designation, in respect of homogeneous goods, applies only if the infringing item bears an unlawful reproduction of such a mark, appellation or designation. The Supreme Arbitrazh Court's decree explains that courts should not interpret the term 'infringing item' in such a way that only the party which affixed the infringing mark is liable.
Articles 1484 and 1519 of the Civil Code refer to the ways in which a trademark, service mark or appellation of origin may be said to be used; they do not limit 'use' to the mere placement of such signs on products. A rights holder enjoys an exclusive right to use a mark by any means consistent with the law. Among other things, Article 14(10) of the Administrative Code covers actions such as:
- placing on the market, within the Russian territory, a product that bears an unlawful reproduction of a means of individualisation (whether on the product itself or on labels, packaging or documentation); and
- importing such products into the Russian territory with a view to placing them on the Russian market.
A party which engages in marketing goods that bear an unlawful reproduction of a trademark can be held liable under Article 14(10); such liability is not limited to the first seller of the goods. However, the Supreme Arbitrazh Court explained that the courts should start from the premise that under Article 1484 of the Civil Code, no administrative offence is committed under Article 14(10) of the Administrative Code where a party:
- acquires (for whatever reason) a product bearing an unlawful reproduction of a trademark; or
- stores or transports such a product with no intention of placing it on the market in Russia.
When analysing the potential liability of a legal entity or an individual entrepreneur for an administrative trademark offence, the courts should consider the following points:
- According to Section 2, Article 2(1) of the Administrative Code, a legal entity is liable for an administrative offence if it had an opportunity to comply with the relevant rule or regulation, but did not take all reasonable measures within its power to do so. Thus, a legal entity is liable for an Article 14(10) offence where it uses another party's trademark, but fails to check whether such a mark is protected in Russia or whether such use is legal.
- The code provides that an Article 14(10) offence is committed irrespective of whether the party acts intentionally or recklessly. Therefore, an individual entrepreneur may be held liable where he or she is aware or should be aware that he or she is using another party's trademark, but has failed to check whether such use is legal.
Authorities and rights holders
When examining a case in which administrative action is sought against a party for an Article 14(10) offence, and when verifying the authority of the body that reported the alleged infringement under Article 205, Section 6 of the Arbitrazh Procedural Code, the court should proceed as follows:
- Pursuant to Article 28(2), Section 2, Paragraph 12 of the Arbitrazh Procedural Code, customs officials (as well as officials of interior affairs bodies and other regulators)(1) are authorised to report an Article 14(10) offence. Article 6, Section 1, Paragraph 9 of the Customs Code empowers Customs to ensure IP rights protection within its field of competence (ie, over goods that are or have been under customs control). Customs can exercise such powers in respect of exports as well as imports - in both cases, goods cross a customs border. Article 205, Section 6 of the Arbitrazh Procedural Code provides that a court may not deem a party administratively liable for an Article 14(10) offence if the customs official in question is found to have reported an administrative offence in respect of an item which was outside the scope of Customs' powers.
- A rights holder that seeks administrative penalties against a party under Article 14(10) can be acknowledged as an injured party by virtue of Articles 25(2) and 28(2) of the Administrative Code. A rights holder that is recognised as an injured party must be informed of the time and place of the relevant hearing. Article 25(2) governs the procedural status and rights of an injured party. A rights holder may appeal against a court's decision to find an infringer administratively liable in appeal and cassation procedures, as well as a decision to submit judicial acts in such cases for judicial review.
- As provided by Article 205, Section 5 of the Arbitrazh Procedure Code, an administrative authority which reports an Article 14(10) offence and applies to bring an administrative action against an alleged offender must prove that the item in question bears an unlawful reproduction of a trademark, service mark, appellation of origin or similar designation. In seeking to determine this question, the courts must consider that a rights holder's opinion on this issue does not amount to a forensic expert's opinion under Article 86 of the Arbitrazh Procedure Code or Article 26.4 of the Administrative Code. Nonetheless, the rights holder's opinion constitutes evidence and must be considered as such.
When considering cases of administrative liability for use of a designation that is confusingly similar to a trademark, the court should seek to interpret the issue of similarity by putting itself in the position of the average consumer. Among other things, a consumer survey may provide proof of similarity between the allegedly infringing designation and the trademark from a consumer perspective.
Article 82 of the Arbitrazh Procedure Code allows the court to arrange for an expert examination to deal with issues that require special knowledge.
The decree addresses the question of when an administrative offence ends. It sets out a procedure for courts in cases where the offence of unlawful use of a trademark, service mark, appellation of origin or similar designation is committed by importing goods bearing an illegal reproduction into Russian customs territory. 'Importation of goods' implies actions in connection with goods physically crossing a customs border, as well as all further actions relating to such goods until the customs authorities release them. The trademark offence in question is deemed to have been committed as soon as:
- infringing goods cross Russia's customs border; and
- a customs declaration (or other document required for the application of customs procedures) is filed in respect of the goods, where such procedures allow the goods to be placed on the Russian market.
For further information on this topic please contact Eugene Arievich or Alisa Fomina at Baker & McKenzie - CIS Limited by telephone (+7 495 787 2700), fax (+7 495 787 2701) or email ([email protected] or [email protected]).
Endnotes
(1) Namely, regulatory bodies with responsibility for monitoring consumer protection and the consumer market.