5 April 2022
Selected aspects of IP rights protection of “unfriendly states” companies – recent trends

On March 02, 2022, the Arbitration Court of the Kirov Region made a ruling in widely discussed case No. A28-11930/2021, which refused to satisfy the claim of Entertainment One UK Limited for compensation for infringement of the rights to trademarks and works of art (“Peppa Pig”, "Daddy Pig").

Taking into account that the plaintiff is from an “unfriendly state” (Great Britain) and the introduction by the UK of restrictive measures against the Russian Federation, the court regarded the actions of the plaintiff as an abuse of rights and dismissed the claim with reference to Art. 10 of the Civil Code of the Russian Federation. In its decision, the court cited Decree of the President of the Russian Federation from February 28, 2022 No. 79 “On the application of special economic measures in connection with the unfriendly actions of the United States of America and foreign states and international organisations that have joined them” (“Decree No. 79”).

At the same time, after the decision of the Arbitration Court of the Kirov Region, other judicial acts have appeared that analyse similar factual circumstances.

When considering case No. A76-42835/2021[1], the Arbitration Court of the Chelyabinsk Region assessed the defendant’s arguments about the presence of signs involving the abuse of the right to enforce the rights to figurative trademarks (characters of the computer games “Angry Birds”) in the actions of Rovio Entertainment Corporation (United States of America). The Court noted that the issuance of Decree No. 79 in itself does not lead to an abuse of the right by a company from an “unfriendly state”. Since the defendant did not provide other evidence, the court dismissed the argument regarding the abuse of the right by the plaintiff.

The courts of appeal have adopted a similar approach, for example, in case No. A32-52717/2021 of March 29, 2022 by the Fifteenth Arbitration Court of Appeal.

South Korean company ROI VISUAL Co., Ltd. filed a claim for compensation for infringement of exclusive rights to a trademark and works of art – the characters of the animated series "Robocar Poli". The court of first instance satisfied the company's claim. When appealing the court's decision, the defendant referred to the abuse of the right by the plaintiff and asked to dismiss the claim due to the inclusion of South Korea on the list of “unfriendly” countries. The Court of Appeal noted that, in accordance with Art. 1194 of the Civil Code of the Russian Federation, the Government of the Russian Federation may establish retaliatory restrictions (retortions) in relation to the property and personal non-property rights of citizens and legal entities of those states in which there are special restrictions on the property and personal non-property rights of Russian citizens and legal entities. However, neither at the time of the infringement nor at the time of the consideration of the case in the court of first instance, did the Government of the Russian Federation accept retortions in respect to the exclusive rights belonging to legal entities from South Korea. In this regard, the court did not establish the abuse of the right in the actions of the plaintiff and left the decision of the court of first instance unchanged.

At the same time, the Fifth Arbitration Court of Appeal, in its decision of April 01, 2022 in case No. A51-20464/2021, noted that Decree No. 79, as well as Decree of the Government of the Russian Federation of March 06, 2022 No. 299, to which the defendant referred, does not provide for the introduction of measures providing for the release from liability for previously committed infringements. The court rejected the defendant's references to these regulations and upheld the decision of the court of first instance, which satisfied the claims of the American company MGA Entertainment, Inc. for the recovery of compensation for infringement of trademark rights to “L.O.L. SURPRISE!”.

Thus, an opposite approach is beginning to take shape in Russian case law: the fact that the right holders may originate from “unfriendly states” is not a sufficient reason to conclude that their actions constitute an abuse of rights.

It should be noted that the Federal Service for Intellectual Property (Rospatent) is paying strict attention to the current situation with trademarks in Russia.

In response to the numerous applications for trademarks (similar to those foreign brands leaving Russia), on April 1st, 2022, the agency announced that the previously existing rules remain unchanged. The presence of a senior trademark of a foreign company will continue to be an obstacle for the registration of a "new" identical or similar mark ipso jure.

Authors: Senior Associate Maxim Burda, Associate Maxim Tabolo

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[1] Decision of the Arbitration Court of the Chelyabinsk Region dated March 29, 2022 in case No. A79-42835/2021

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