Trademark infringement costs dearly

It seems the Russian courts value intellectual property much higher than one might think.

A Teleross company owns service marks Mope TB (Sea TV) and OKeaH Internet (Ocean TV) (registration numbers 335478, 335479, and 339790) for services for the provision of internet access and cable TV services.

The respondent was a subsidiary of the plaintiff with whom he had signed an assignment contract providing for a free transfer of the trade marks. The assignment was not registered by the Patent Office as required by law. Some time after the contract was concluded the assignor sued the assignee for the unlawful use of the marks. The assignee (respondent) justified his use of the trade marks arguing that the assignor (plaintiff) did not have a licence for communication services (cable TV and internet) and that there was a contract between them, even though unregistered.

The judgment of the first instance court found the assignment signed by the parties to be invalid because it had not been registered by the Patent Office and therefore could not be used as evidence of lawful use of the trade marks by the assignee. Nor did the court take in the account the fact that the plaintiff and the respondent were associated companies though one could consider the abuse of rights by the plaintiff (assignor). The plaintiff claimed compensation for the infringement of his rights in the amount of $35 million. According to the law the plaintiff may claim either damages or compensation as an alternative. While damages have to be proved, compensation should be simply claimed without submitting evidence of damages. The amount of compensation may be moderated by the court. In this case the plaintiff claimed compensation as double the cost (also allowed by law) of the services of the cable TV provider from 2008 to 2010 and his claim was satisfied in full.

It could hardly be expected but the courts of first instance, appeal and cassation all upheld the judgment of the first instance court and confirmed that the respondent should pay compensation in the exorbitant amount of $35 million.

The respondent appealed the judgment to the Supreme Commercial Court (the ruling was dated February 1 2013) and one may expect that the judgment will be reconsidered. Indeed, the position of the plaintiff is questionable. The plaintiff initially agreed to assign the trade marks to his subsidiary so his subsequent actions could be viewed as abuse of rights — there is a relevant provision in the law.

However the salient point in this case is the amount of compensation which shows that the courts are not shy of awarding exceptional amounts of money for trade mark infringement. Another lesson from this case is that one should not neglect registration of licences and assignments. Though there are no penalties for failure to register the contracts, practice shows that the recipient of IP becomes vulnerable to possible claims by the IP owner.