1 April 2014Jurisdiction reportsValentina Orlova

The IP court, unfair competition and abuse of rights

IP case law shows that the most pressing issues at present are those that relate to the actions of parties to different relationships being classified as unfair competition or abuses of rights. Several factors combine to make these problems so keenly felt, one being that there is insufficient legal regulation of competitive relationships in which an IP right is an element.

The Federal Antimonopoly Service has prepared a proposal to expand the list of forms of unfair competition. This will help to combat it more effectively because it will be possible to apply national legislation directly, avoiding the need for recourse to the provisions of Article 10 bis of the Paris Convention for the Protection of IP.

Article 15(4) of the Russian Constitution allows this provision of the convention to be applied directly in Russia. At present, the state commercial (arbitration) courts, including the IP court, apply the provisions of this international treaty when they resolve disputes, taking into account the fact that the article cited above contains a general prohibition on unfair competition. An event of unfair competition is understood to be any competitive action which is inconsistent with fair industrial and trading practices.

In particular, all actions are prohibited if they are capable in any way at all of causing confusion in relation to a competitor's enterprise, products or industrial or trading activities. Whether an individual’s or a company’s conduct may be classified as unfair depends on an evaluation of all the evidence available in a particular case.

However, there may simply be no such evidence; for example, when an appeal is submitted to the IP court against a legal ruling which is a decision of a federal executive authority for IP adopted when it has considered an objection to a trademark registration.

That authority has no jurisdiction over matters that relate to unfair competition or an abuse of rights. Its decision therefore may not contain assessments on these points, which may or may not be met with agreement by a party that has applied to the court asking that the action of registering a trademark be classified as an instance of unfair competition.

"The first session of the council has stated coordinated positions on matters that commercial courts often consider, including unfair competition and abuse of rights."

How should the court respond in such situations? Will it be entitled to consider this matter on its own initiative, without inviting the parties to the dispute to put forward their views? Would this not violate the adversarial principle?

Advisory council

These were some of the questions that were under discussion at the end of 2013 in the Academic and Advisory Council of the IP court. This council is an advisory body and its main task is to develop theoretically sound clarifications and opinions on how international treaties, laws and other regulatory legal acts may be applied with a view to creating consistent judicial practice. The council has also been asked to develop proposals for improving legislation in the area of protecting IP rights.

The regulatory act which governs the council’s proceedings makes specific provision for the council’s clarifications and conclusions, as well as the opinions of its members, to be solely of an informational nature and not to bind the IP court when it takes judicial decisions. The chairperson, currently Lyudmila Novoselova, approves the composition of the council and a regulation allows a fully representative membership to be created.

The council is democratic and efficient. It may gather in a full session or in meetings of working groups created to consider specific questions.

The first session of the council has stated coordinated positions on matters that commercial courts often consider, including unfair competition and abuse of rights. In particular, the position has been upheld that when a cassation court classifies legal relationships between parties to a dispute it may apply the provisions on unfair practices even if a lower-level court has not referred to this factor.

When considering the matter of abuse of rights, council members have quite justifiably noted that civil legislation lacks such a means of protecting civil rights as a claim to have the fact of an abuse of rights acknowledged; this often leads to such claims being dismissed by the courts.

This, in turn, means that there is no possibility to challenge a grant of protection for a trademark on the basis of a claim that the right holder has abused its right when registering the trademark.

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