A D A M S & A D A M S | B R I C S I P F O R U M 2 0 1 6

VLADIMIR BIRIULINGORODISSKY & PARTNERS, Partner

Head of Legal Practice

Vladimir Biriulin

Partner

DISPOSAL AND

ENFORCEMENT

OF IP RIGHTS

IN RUSSIA

BRICS IP Forum - 2016

London

November 21, 2016

TRANSFERABLE SUBJECT MATTERS

Patents

know how

trade marks & service marks

software & databases

copyrights

IP TRANSACTIONS

assignments

licenses

franchises

security interests

IP TRANSACTION

execution of agreement (in writing)

essential elements (as required by law)

signatures & titles of signatories (duly

authorized officers)

corporate seals (if any)

notarization/legalization (not required!)

recordal of transaction

(for registrable IP)

power of attorney (notarization/legalization is

not required)

original agreement, excerpt or statement of

disposal

statement of trademark license (under the

provisions of Singapore Treaty)

duly certified translation (to be attached to

original agreement)

payment of official fees (as set out by state

schedule of fees)

REGISTRATION

state agency: Patent Office

all transactions with patents & designs

all transactions with trade marks & service marks

assignments involving registered software, databases

(licenses need not be registered)

term: 2 months (no expedited recordal proceedings are available!)

DIAGRAM: PATENTS & DESIGNS*

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2007 2008 2009 2010 2011 2012 2013 2014

Assignments Licenses

Source: Annual Report by ROSPATENT of 2014

DIAGRAM: TRADE MARKS & SERVICE MARKS*

0

2000

4000

6000

8000

10000

12000

14000

16000

2007 2008 2009 2010 2011 2012 2013 2014

Assignments Licenses Franchises

Source: Annual Report by ROSPATENT of 2014

DIAGRAM: SOFTWARE & DATABASES

0

50

100

150

200

250

300

350

2007 2008 2009 2010 2011 2012 2013 2014

Assignments

Source: Annual Report by ROSPATENT of 2014

ASSIGNMENT: LEGAL CONCEPT

under assignment agreement one party (assignor) transfers or is

obliged to transfer in full its exclusive rights vested in result of

intellectual activity or means of individualization to other party

(assignee)

ASSIGNMENT: ESSENTIAL ELEMENTS

parties (assignor/assignee)

subject of agreement (IP registration number/description)

full transfer of exclusive rights (no retention of title or rights)

consideration (lump-sum payment, periodic payments or other)

ASSIGNMENT: DISTINCTIVE FEATURES

moment of conclusion (signature date vs. recordal date)

no indication of ‘full transfer of rights’ means license

partial assignment (not for every case!)

ASSIGNMENT: TAX CONSIDERATIONS

value added tax (VAT) – 18%

exemption (as of 01.01.2008*) for IP assignments involving:

patents & designs

know how & trade secrets

software, databases & mask works

(trademarks are not exempt from VAT)

Source: Letter of Ministry of Finance dated 1 April 2008

No. 03-07-15/44 and Tax Code

LICENSE: LEGAL CONCEPT

under license agreement one party – holder of exclusive rights vested in result

of intellectual activity or means of individualization (licensor) – grants or is

obliged to grant to other party (licensee) the right of use of such result or

means, subject to terms and conditions set forth by agreement

LICENSE: ESSENTIAL ELEMENTS

parties (licensor/licensee)

subject of agreement (IP registration

number/description)

licensed products/services (for trademark

licenses)

type of license (exclusive/non-exclusive)

scope of licensable rights (permitted IP use)

consideration (lump-sum

payment/royalties/both)

quality control (for trademark licenses)

territory (if agreement is silent – license is valid

for the whole territory of Russia)

term (if agreement is silent – license is effective

for 5 years)

LICENSE: TAX CONSIDERATIONS

corporate income tax (CIT) – 20%

tax relief may be achieved under

relevant avoidance of double taxation

treaties

value added tax (VAT) – 18%

exemption (as of 01.01.2008*) for IP licenses

involving:

patents & designs

know how & trade secrets

software, databases & mask works

Source: Letter of Ministry of Finance dated 1 April 2008

No. 03-07-15/44 and Tax Code

TAXATION BENEFITS

Avoidance of double taxation treaties with Russia:

0% Austria, Belgium, the United Kingdom, Hungary, Germany,

Denmark, Ireland, Iceland, Italy, Cyprus, Korea, Luxembourg,

the Netherlands, Norway, the USA, Finland, France,

Switzerland, Sweden

FRANCHISE: LEGAL CONCEPT

under franchise (‘commercial concession’) agreement one party (rights

holder) obliges to grant for consideration to other party (user), within or

without term, the right of use in user’s business of a set of rights

holder’s exclusive rights combining trade mark rights, service mark

rights and other IP rights, as set out by agreement, particularly trade

name, trade secrets (know-how)*

FRANCHISE: ESSENTIAL ELEMENTS

parties (franchisor/franchisee)

subject of agreement (trademark and other

IP registration numbers/descriptions)

franchisor’s goodwill & commercial experience

(to the extent as permitted)

area of business (sale of goods, provision of

services, etc.)

franchised products/services (according to

trademark registration)

type of franchise (exclusive/non-exclusive)

scope of franchisable rights (permitted IP

use)

consideration (lump-sum

payment/royalties/both)

territory (if agreement is silent – franchise is

valid for the whole territory of Russia)

term (if agreement is silent – franchise is

effective for 5 years)

SECURITY INTEREST: LEGAL CONCEPT

by operation of security interest, lender - under secured obligation

(secured party) - has the right - in case of borrower’s default - to

obtain preferential satisfaction from the amount of collateral

against other lenders of owner of collateral (grantor)

SECURITY INTEREST: ESSENTIAL ELEMENTS

parties (grantor/secured party)

subject of agreement (IP registration

number/description)

scope of secured rights (in full or within

certain limits)

appraised value of collateral (specific monetary

amount – as agreed by parties)

description of secured obligations (nature,

amount and term of facility/credit)

location of document evidencing legal title (with

grantor/with secured party)

WHAT HAPPENS IF THE LICENSE FEE IS DEPENDENT ON

THE PROFITS (INCOME) GENERATED FROM THE USE OF A

TRADEMARK, BUT THE TRADEMARK IS NOT REALLY

USED?

Situation/Agreement

Trademark License Agreement (between Profit

Pharm and Slavyanskaya Apteka)

Scope of License: the right to use the trademark

(TAUFON) for a specific consideration

Consideration: 5% of Net Production

Issue/Non-payment of License Fees

License Agreement is terminated earlier by the

parties

Profit Pharm claims unpaid license fees in the

amount of Rb 6,860,840

Slavyanskaya Apteka asserts non-use of the

licensed trademark in commerce

WHAT HAPPENS IF THE LICENSE FEE IS DEPENDENT ON

THE PROFITS (INCOME) GENERATED FROM THE USE OF A

TRADEMARK, BUT THE TRADEMARK IS NOT REALLY

USED?

Case Summary

First Instance Court (FIC) – Satisfies claims

(partially)

Appellate Court (AC) – Upholds the decision of

the FIC

IP Court (IPC) – Upholds the decisions of the

FIC/AC

Conclusion

License agreement shall not be regarded as

invalid or not concluded in this case

Non-use of the licensed asset under the

agreement is irrelevant in this case

Amount of license fees shall be compared with (valued under) the amount

usually determined in a situation when the trademark is actually/lawfully

used (by the licensee)

LICENSING PENDING APPLICATIONS?

WILL SUCH LICENSE BE VALID AND SUBJECT TO RECORDAL?

No ban to conclude an agreement

No registration

Risks involved

INFORMATION AS KNOW-HOW

Know-how is

Any information or data of any kind

(industrial, economical, organizational or other)

related to technologies or business activities

actual or potential commercial value

unknown to third parties

third parties have no access on legal grounds

appropriate measures to keep know-how secret are taken

THE DAY AFTER

THE DAY AFTER:

ENFORCEMENT OF IP RIGHTS (PATENTS)

What is infringement?

Import into Russia, manufacturing, use, offer to

sell, sale, other forms of marketing or storage

for these purposes of a product in which the

invention is used.

The actions as above in respect of a product

obtained directly by the patented method. If the

product obtained by the patented method is

new, an identical product shall be considered

obtained by the patented method unless proven

otherwise.

Dealing with a product intended

for its use in accordance with the

new patented purpose,

The realization of a method in

which the invention is used, in

particular by the application of that

method.

Article 1358 Civil Code

THE DAY AFTER:

ENFORCEMENT OF IP RIGHTS (TRADEMARKS)

What is infringement?

Import into Russia, manufacturing, use, offer to sell, sale, other forms of

marketing or storage for these purposes of a product labeled with trademark.

Use of trademarks during rendering services (doing works).

Use of trademarks on documents

Use of trademarks in proposals for sale, signboards, etc.

Use of trademarks on the Internet

Use of trademarks for similar goods if confusion is possible

Article 1484 Civil Code

ENFORCEMENT OPTIONS

CIVIL ACTION

ADMINISTRATIVE ACTION

CRIMINAL ACTION

UNFAIR COMPETITION ACTION

CIVIL REMEDIES

IP owner may claim:

Injunction - cessation of the infringing actions

Removal from the channels of commerce and destruction of the counterfeit

goods, labels and packages, the equipment and materials used for

infringement

Full recovery of real and circumstantial damages including unfair profits

Compensation (instead of damages) for the fact of violation (the IP owner is

not obliged to prove the amount of damage) in the amount of:

~3,500 – 165,000 USD;

in the double amount of the total cost of the counterfeit products, or

royalties which would have been due if the infringer had requested

authorization to use IP

Publication of court decision

Liquidation of legal entity if infringement is recurrent!!

CEASE AND DESIST LETTER

Case under jurisdiction of the common courts

– No obligation to send a C&D letter

Case under jurisdiction of the commercial courts

– C&D letter must be sent

A lawsuit can be filed in 30 days from the date of sending

PRELIMINARY*/INTERIM** INJUNCTION

Seizure of property or monetary funds

Ban on performing certain actions

Ordering to perform certain actions

Transfer of disputed property to the plaintiff

Other

INJUNCTIONS SHOULD BE ADEQUATE TO THE CLAIMS

* Before filing the lawsuit (up to 15 days for filing)

** After filing the lawsuit or along with the lawsuit

COLLECTING AND SECURING EVIDENCE

Evidence should be collected by the plaintiff:

Proof of infringement;

Duration of infringement;

Amount of damages.

COLLECTING AND SECURING EVIDENCE

Without assistance

Detective

Notary Public

Court Order

Within the frame of administrative

or criminal case

No discovery proceedings are provided by the law

COLLECTING AND SECURING EVIDENCE

Plaintiff himself or:

DETECTIVE:

Report of a detective may be used as evidence

Respective documents confirming facts stated in the Report (receipt,

invoice, contract, etc.) should be attached

Detective may be invited to the hearings as a witness

COLLECTING AND SECURING EVIDENCE

NOTARY PUBLIC:

The Notary Public can secure evidence in case there is a risk that it would be

difficult or impossible to obtain evidence in future.

Printouts from the web-site

Test purchase

Demonstration of a product and/or distribution of materials at an exhibition

EXPERTISE

Experts:

May be entrusted to a State

expert organization

Individual expert

Group of experts

Rights of the parties:

propose experts

propose questions

challenge the experts

requesting new or

repeated expertise

Payment:

burden lies on the party which filed the motion (Plaintiff, Defendant or both)

DAMAGES

Lost profit

Expenses related to restoration of the infringed rights

DAMAGES

SUPPORTING ARGUMENTS:

There is a granted license with respect to the same subject-matter –

license fees

Standard license fees

Valuator’s report

Court expertise

Marketing research

DAMAGES OR COMPENSATION

In case of infringement the right holder can claim, instead of payment of

damages, a statutory compensation:

Up to $165,000 to be determined by the court, or

double price of a license in comparable circumstances

RUSSIAN COURTS

STRUCTURE OF RUSSIAN COURTS

1st instance

Appeal instance

Cassation instance

Supervisory instance

Supreme Court of the Russian Federation

Supreme Courts of constituent unit of the

RF/ City Courts

City and District Courts

District Courts/ Magistrates

Federal Commercial Courts

/ IPR Court

Commercial Courts of Appeal

Commercial Courts of constituent unit of the

RF/ IPR Court

IPR Court

Common courts Commercial courts

THE INTELLECTUAL PROPERTY RIGHTS COURT (IPR COURT)

•Cases considered by IPR Court as a court of the first instance (to be considered by the Presidium);

• IP infringement cases considered by commercial courts of the constituent units of the Russian Federation and courts of appeals (to be considered by a Panel of Judges).

Cassation Instance

• NO APPEAL INSTANCEAppeal

Instance

• Appeals on decisions of the Patent Office (expertise, oppositions, etc.) and FAS RF;

• Validity of legal and non-legal acts in the IP field;

• Trademarks non-use cancellation actions;

• Cancellation of Patents and Trademarks (except those handled by PTO)

1st Instance

IP INFRINGEMENT CASES• A supervisory appeal may be filed within 3 months.

Presidium of the Supreme Court is a supervisory instance. It can reconsider a case on limited grounds

• Further cassation appeal may be filed within 2 month. It is considered by the Judicial Chamber on Economic Disputes

• Cassation appeals may be filed within 2 months. A panel of 3 Judges considers the appeals. Checks compliance with the law. Not empowered to revise the case on the merits

IPR Court

• Appeals may be filed within 1 month after the first instance court decision. A panel of 3 Judges considers the appeals. Appeal courts empowered to reconsider judgments of the first instance courts on the merits

21 Commercial Appeal Courts

• Cases are considered by a single judge84 Local Commercial Courts

IP infringement suit to be filed with the court at the defendant’s location

2months

2months

1month

3 months

NUMBER OF CASES IN IPR COURT AS FIRST INSTANCE

65

32224381

461

460

0

100

200

300

400

500

600

700

800

900

from July 3, 2013 2014 2015

Civil cases

Cases ofpublic interest

NUMBER OF CASES IN IPR COURT AS CASSATION INSTANCE

304

1390 1451

0

200

400

600

800

1000

1200

1400

1600

from 3/07/2013 2014 2015

The number ofcases…

IP CIVIL PROSECUTION

603 574 865 1112 770 636 579 627

27463482 3234 2996

5069

9091

1010910974

0

2000

4000

6000

8000

10000

12000

2008 2009 2010 2011 2012 2013 2014 2015

Cas

es

Co

nsi

de

red

by Common Courts

CIVIL PROSECUTION OF IP INFRINGEMENT

IN COMMERCIAL COURTS

87 81 81 100 115 145 110 128321 344 449

772

1406

2234 2072

3006

18362261

18961455

2192

4593

51914857

0

1000

2000

3000

4000

5000

6000

2008 2009 2010 2011 2012 2013 2014 2015

patents trademarks copyrights & related rights

GENERAL ASPECTS

Duration:

6-8 months (1st instance)

2-3 months (appeal instance)

2-3 months (first cassation instance)

2-4 months (second cassation instance)

2-4 months (supervisory instance)

New evidence: limited possibility at the appeal

instance

Legal costs can be reimbursed in the

reasonable amount to be determined by the

court

Invalidity defense: patent infringement action in

the commercial courts is not suspended in case

of invalidation action launched in the

administrative order

CRIMINAL PROSECUTION

122 125 167 140 103 136 173 2081 3 0 0 1 5 3 2

27752570

2676

2335

1473

1226

944 957

0

500

1000

1500

2000

2500

3000

2008 2009 2010 2011 2012 2013 2014 2015

Nu

mb

er

of

Co

nvi

cte

d P

ers

on

s

Trademarks

Patents

ADMINISTRATIVE ACTION

(CODE OF ADMINISTRATIVE OFFENCES)

Art. 7.12 Infringement of

copyright, inventors’ and

patent rights:

Art. 14.10 Unlawful use of a

trademark:

Fines up to $70 (individuals),

up to $700 (officers), $1000

legal persons

Confiscation of infringing items

Art. 14.33 Unfair competition

Fines: up to $1700 (officers),

$17000 legal persons

PROTECTION OF IP RIGHTS IN THE EURASIAN ECONOMIC

UNION

Eurasian Economic Union

Structure

MEASURES ON BORDER

CUSTOMS CODE OF CUSTOMS UNION

PARALLEL IMPORT

Regional exhaustion of rights

Positive court practice

Eurasian Economic Commission examines PA

issue

Automotive spare parts, cosmetics,

pharmaceuticals?

No light in the “parallel tunnel”

September 28, 2016, Minsk –EAEC TM and

Parallel import discussed

CIRCULAR FIRING

SQUAD

DESTRUCTION

Report on destruction

Place and time

Basis for confiscation

Quantity

Description of goods

Cost of goods

WARNING LETTER SENT

O

R

I

G

I

N

A

L

C

O

U

N

T

E

R

F

E

I

T

WARNING LETTER RECEIVED

Voluntary destruction

COUNTER ACTIONS OF

DEFENDANT

DEFENDANT’S STRATEGY

Attempt to prove absence of the infringement

Invalidation of the patent

Patent term extension nullity action

Use of file wrapper estoppel doctrine

Use prior-right doctrine

Use of subsequent-right doctrine

INVALIDATION OF PATENT

Granted patent validity can be opposed and the

patent can be invalidated in case of:

Non-correspondence of the claimed subject-

matter(s) to criteria of patentability

Revealed introduced new subject-matter

Revealed double patenting

Improper inventorship or assigning

Granted patent can be considered invalid:

Totally

Partially – new patent with the amended claims

shall be issued

RESTRAINT ON ABUSE OF PATENT RIGHTS

Doctrine of equivalents:

An equivalent feature should be known in the

art as such equivalent before the filing (priority)

date of the inventions the allegedly infringing

actions

Prior-User-Rights Defense

“Prior user” right shall be available

in respect of identical technical solution

as well as equivalent technical solution

THANK YOU FOR YOUR ATTENTION!

G0RODISSKY & PARTNERS

+7 (495) 937 6116 / 6112

+7 (495) 937 6104 / 6123

biriulinV@gorodissky.ru

B.Spasskaya str., 25, bldg. 3

Moscow 129090, Russia

www.gorodissky.com

© Gorodissky & Partners, 2016