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anti-counterfeiting and

trade-mark enforcement in russia

Legal Framework

• The Criminal Code (63-FZ) of June 13, 1996


Russia is a civil law country. Its legal system is
provides for the criminal procedures and criminal
based on codified laws — substantive and
liability for trade-mark infringement.
procedural. The basic laws relating to anti-
counterfeiting issues are as follows: • The Arbitration Procedural Code (95-FZ) of July
24, 2002 provides procedural rules for litigation
• Part IV of the Civil Code (230-FZ) of December in the arbitration courts. Russian arbitration
18, 2006 entered into force on January 1, 2008. courts are permanently functioning courts similar
It replaces the Trade-mark Law which was the to commercial courts. The arbitration courts
basis for Russian trade-mark legislation from handle the majority of trade-mark infringement
1992. Part IV Chapter 76 § 2 “Right to a Trade- disputes.
mark and a Service Mark,” among other clauses,
• The Criminal Procedural Code (174-FZ) of
provides for the legal regime of trade-marks,
December 18, 2001 provides procedural rules for
their registrability requirements and the
criminal investigation and litigation in the
procedure for registration with the Russian
criminal courts.
Patent and Trademark Office. It also defines the
scope of the trade-mark owner’s rights and the While Russian law also provides protection against
notion of ‘trade-mark use,’ and establishes civil copyright and patent infringements, this review
remedies for trade-mark infringement. focuses on trade-mark infringements only.

• The Competition Law (135-FZ) of July 26, 2006


provides for protection against unfair Border Measures
competition activities, including unauthorized
use of trade-marks. Under Russian law, Customs has no ex officio
powers. Chapter 38 of the Customs Code provides
• The Customs Code (61-FZ) of May 28, 2003 for a mechanism to inspect imported goods at the
provides a mechanism to prevent illegal traffic of customs border for infringement of trade-marks
counterfeit goods into Russia at the customs protected in Russia.
borders.

• The Administrative Code (195-FZ) of December To initiate customs inspection, the trade-mark
30, 2001 provides for an administrative owner must forward an application to the Federal
procedure and administrative sanctions for Customs Service of the Russian Federation
trade-mark infringement. requesting it to undertake protective measures and
to temporarily suspend circulation of allegedly
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counterfeit goods. The following information should Under the Customs Code, if the customs inspection
be attached to this application: reveals suspicious goods, the goods are detained for
10 days. Simultaneously with the detention,
• full corporate details, address and corporate Customs informs both the importer and the trade-
status of the trade-mark owner and its mark owner or its representative indicated in the
representative; register of the detention. Within a 10-day period,
• a power of attorney in the name of the which can be extended only once for a further 10
representative, if any; days, the trade-mark owner:

• a list of valid trade-marks in Russia along with • has a right to examine the goods, including the
copies of registration certificates; right to obtain samples and pictures; and
• a list of specific goods covered by the trade- • must inform Customs as to whether the goods
mark registrations in relation to which are counterfeit.
Customs should initiate its checks;
If the goods are counterfeit, the trade-mark owner
• a list of authorized dealers and importers of must initiate legal proceedings against the
the trade-marked goods in Russia; importer. Failure to initiate legal proceedings
• specific information about allegedly within the abovementioned period results in the
counterfeit goods; release of the goods.

• information on reported cases of trade-mark The customs recordal will be effective only if a
infringement; trade-mark owner appoints:
• the term requested for the recordal (maximum
• a local representative to liaise with various
five years with possibility of renewal);
customs contact points on a day-to-day basis;
• an undertaking by the trade-mark owner to and
reimburse any damage suffered by parties as a
• an expert who is officially authorized to
result of unlawful customs suspension; and
conduct an expert examination of alleged
• a document confirming that the trade-mark counterfeits on behalf of the trade-mark
owner has secured its undertaking by way of a owner to determine whether the detained
bank guarantee or insurance of liability for the goods are counterfeit, and to provide Customs
amount of Rb500,000 (approximately $20,000). with a written expert opinion within the
applicable timeframes.
Customs must consider the application within one
month of filing. This term may be prolonged for Failure to provide responses to customs requests
another month in the event that additional connected with the detention of allegedly
documents or information are required. counterfeit goods may serve as grounds to withdraw
the trade-mark from the register and to stop
Assuming that the information submitted complies customs detention.
with the Customs Code and the Federal Customs
Service requirements, the trade-mark will be Criminal Prosecution
included in the Register of Intellectual Property
Objects with the Federal Customs Service. This is Article 180(1) of the Criminal Code provides that
available for public inspection. unauthorized use of a trade-mark or a designation
confusingly similar to it for similar goods, if such
anti-counterfeiting and trade-mark enforcement in russia / page 3

activities have been committed repeatedly or have • the damage incurred by the trade-mark
resulted in substantial damage, is a criminal owner; or
offence. The sanctions include:
• the income obtained by the infringer.
• a fine of up to Rb200,000 or an amount
Criminal cases are launched and investigated by the
equivalent to the relevant person’s income for
Ministry of Interior and then tried by the criminal
a period of up to 18 months;
courts. Criminal charges may be brought against an
• compulsory work for between 180 and 240 individual or a top official of a legal entity involved
hours; or in unauthorized activities. Investigation usually
takes two to three months from the date the
• corrective labour for a term of up to two
proceedings are instituted. In exceptional cases,
years.
this term may be prolonged by up to 12 months.
Article 180(2) of the Criminal Code provides that The term for consideration in the court, including
the unauthorized use of a protection mark (i.e., the appeal stage, is not less than four months.
® or ™) in respect of a trade-mark which has not
been registered in Russia is also a criminal offence A key point in relation to criminal prosecution is
if such activities have been committed repeatedly that successful investigation and completion of the
or have resulted in substantial damage. The proceedings is possible only if the trade-mark
sanctions include: owner actively participates from the institution of
the proceedings up to the court ruling. Counterfeits
• a fine up to Rb120,000 or an amount may be seized during investigation of the case
equivalent to the relevant person’s income for based on a petition of an investigator, which has
a period of up to one year; been approved by the courts. The trade-mark
• compulsory work for between 120 and 180 owner has no opportunity to withdraw a criminal
hours; or action, for example, in the event of settlement
with the infringer.
• corrective labour for a term of up to one year.
Article 180(3) of the Criminal Code provides that Civil Enforcement
activities mentioned in Articles 180(1) and (2),
which have been committed by a group of Under Article 1515 of the Civil Code Part IV, the
individuals in conspiracy or by an organized group, goods, labels or packaging bearing unauthorized
is a more serious criminal offence. The sanctions reproductions of the trade-mark or a designation
are: confusingly similar to it are considered counterfeit.
The trade-mark owner may demand that:
• imprisonment for a period of up to six years
with a fine of up to Rb500,000; or • the infringing activities be stopped, damages
recovered, counterfeits be withdrawn from
• an amount equivalent to the relevant person’s
the market and subsequently destroyed; or
income for a period of up to three years.
• the infringing signs be removed from the
The Criminal Code provides that “substantial
counterfeits at the infringer’s expense.
damage” occurs when any one of the following
exceeds Rb250,000:
The trade-mark owner may also demand, in lieu of
damages, statutory compensation:
• the total price of the counterfeits;
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• from Rb10,000 up to Rb5 million; • The parties face no disclosure obligations. The
procedure does not include a discovery stage.
• double the price of the counterfeits; or
• No mandatory alternative dispute resolution
• double the cost of a licence taken under
procedure exists in the Russian legal system.
comparable circumstances for the lawful use
of a trade-mark. • Disputes are tried and resolved based on the
evidence submitted by the parties. Evidence
The amount of statutory compensation does not should be disclosed to other parties at the
depend on the actual damages incurred. preliminary hearings. Evidence can be also
submitted at the first instance trial.
Under the Arbitration Procedural Code, the Submission of evidence at the Court of Appeals
arbitration court has the authority to grant and the Cassation Court is possible only if a
preliminary injunctions. This includes, in particular, party can prove that submission in the lower
seizure of funds or assets, including alleged courts was impossible for reasons beyond its
counterfeits, owned by the infringer and control.
prohibition against certain activities. The
statement of claim must be filed with the court • Affidavits are not acceptable as evidence.
within 15 days of the motion’s grant. Failure to file
the statement of claim within this term results in Anti-Counterfeiting Online
the withdrawal of the preliminary injunction.
Unauthorized Internet Commerce

The Arbitration Procedural Code provides that the Under Part IV of the Civil Code, unauthorized use of
court cannot refuse and must grant a preliminary a trade-mark or a designation confusingly similar to
injunction when the claimant posts a deposit with it in association with similar goods on the Internet,
the court. The court determines the amount of the in domain names and email addresses constitutes
deposit, which cannot be less than 50 per cent of trade-mark infringement. In addition, if the court
the value claimed. The most recent court practice, finds that such use of the trade-mark in the domain
though, shows that the courts do not grant name constitutes trade-mark infringement, the
preliminary injunction motions in trade-mark Domain Name Registrar may cancel the domain
infringement cases. name registration, in accordance with the
Registrar’s Rules. The trade-mark owner will then
The consideration of cases in the arbitration courts, have the right to register the domain name.
including appeals to the Court of Appeals and to
the Cassation Court, may take eight to 12 months. Internet Security and Online Investigation
Strategies
Court decisions and other court documents are
There are specialized local investigation agencies
available only to the parties to the dispute. Access
offering services in the area of Internet security
by third parties to these documents is not possible,
and online investigations. Such services may
although some court decisions are now available on
include:
legal databases.

• online monitoring of trade-mark use;


Other points to bear in mind are as follows:
• collection of information online; and
• There is no full recovery of legal fees.
• identification of actual websites and domain
name owners.
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Preventive Measures/Strategies • competition between the trade-mark owner


and the infringer in the same segment of the
Administrative Procedures
Russian market; and
Russian administrative procedures operate in
• infringement of the trade-mark rights.
parallel to criminal and civil law procedures. The
administrative procedure provides remedies for
In the event that the Federal Antimonopoly Service
violations of law. Administrative sanctions are
considers the infringer’s activities as unfair
generally less severe than criminal penalties; they
competition, it issues a ruling prohibiting such
are applied to both individuals and legal entities,
activities. The Federal Antimonopoly Service ruling
while criminal penalties apply only to individuals.
may be appealed to the arbitration courts.

Administrative Sanctions
The Federal Antimonopoly Service procedure
Under Article 14.10 of the Administrative Code, usually takes up to six months.
unauthorized use of a trade-mark or a designation
confusingly similar to it for similar goods results in Use of Local Counsel and Investigators
administrative liability. Administrative sanctions The use of local counsel experienced in IP matters
include: is highly advisable for handling counterfeiting
matters, especially when dealing with law
• a fine of between Rb1,500 and Rb40,000; and
enforcement agencies. In practice, the initiation of
• the confiscation of the goods bearing the any anti-counterfeiting proceedings requires the
unauthorized reproduction of a trade-mark. collection of evidence of the infringement and the
infringer before filing a claim. Therefore, the
These sanctions are applicable both to individuals assistance of experienced investigators is essential
and legal entities. The sanctions for legal entities in the majority of anti-counterfeiting matters.
are harsher than those for individuals.
Controlling Contractual Relationships with Third
The investigation of an administrative case usually Parties
takes up to two months. The courts then consider
the case. It takes up to eight months to obtain a Contractual partners should be chosen very
final court ruling, including appeals to the Court of carefully. It is advisable to state explicitly in
Appeals and to the Cassation Court. licensing and manufacturing agreements that the
trade-mark owner has a right to control its
Antimonopoly Procedure counterparty’s activities at any time and to
Under Article 14 of the Competition Law, acts of terminate such agreements in the event of any IP
unfair competition, including those involving the rights infringement.
unauthorized use of intellectual property, are
Effective Use of Technology, Authentication and
prohibited. A trade-mark owner may petition the
Monitoring
Federal Antimonopoly Service, a governmental
authority supervising competition in the market.
It is advisable, when appropriate, to have simple
and detailed guidelines explaining differences
The essential requirements for antimonopoly
between genuine and counterfeit products. This is
proceedings are:
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very helpful in dealing with law enforcement and departments on IP rights and high-tech
customs authorities. Local marketing or specialized infringements within the Ministry of Interior and its
investigation agencies are recommended to monitor regional offices. The Federal Customs Service
the market, including online commerce. along with many local customs offices also have
specialized departments dealing with IP rights
Co-operation with National Anti-Counterfeiting infringements.
Agencies

National anti-counterfeiting agencies do not exist in


Russia. There are, however, specialized

About the Authors

Marina I. Drel, Partner, Head of Moscow Dmitry S. Semenov, Associate


Litigation and Enforcement dmitry.semenov@gowlings.com
marina.drel@gowlings.com
Dmitry S. Semenov is an associate with Gowlings
Marina I. Drel, partner, joined Gowlings International Inc. He practises primarily in the area
International Inc. in 1999 as head of the Moscow of copyright and trade-mark law. Mr. Semenov has
Litigation and Enforcement practice. Ms. Drel is a extensive experience in assisting Russian and
qualified Russian barrister and solicitor. She is a foreign clients, both corporations and individuals,
graduate of the Faculty of Law at Moscow State with copyright protection including the successful
University where she obtained her PhD, and a management of anti-piracy campaigns and
graduate of Canada’s Dalhousie University where copyright litigation. Mr. Semenov graduated from
she received her LLM. Moscow State University in 1998 and received his
LLM in 2000 from the Russian School for Private Law
Ms. Drel’s broad practice and legal experience of the RF Private Law Research Centre.
include advice to and legal representation of
multinational corporations in courts of general
jurisdiction, arbitration courts, and administrative
proceedings in the areas of intellectual property
and advertising. Ms. Drel has particular experience
in infringement and counterfeiting issues. She is
regularly recognized as a leading practitioner of IP
law by publications such as the PLC Which Lawyer?
Yearbook and Chambers Global Guide.

The information set out in this document is provided for general purposes only and is not to be
taken as legal advice. Never disregard or fail to seek legal advice based on this material.

© gowlings 2010.09