IP in Russia: “dura lex, sed lex” is still

Kirill Osipov

Since February 2022, Russia has faced with the unprecedented pressure from other countries, mainly EU, UK and US, which have strengthened their sanctions against it dramatically. Intellectual property does not seem the first thing that comes to mind in the event of sanction wars between countries. However, as IP assets are of great importance, IP rights would be involved into the conflicts eventually.

At first glance, a rather routine case that was considered at the Arbitration Court of the Kirov Region resulted in a decision, which became resonant (case #A28-11930/2021, dated March 03, 2022). In the case, Entertainment One UK Limited sued a Russian entrepreneur for copyright infringement with regards to the cartoon characters Peppa Pig and Daddy Pig, and IR 1212958 and 1224441 for trademark infringement. However, the judge rejected the statement of claim filed by Entertainment One UK Limited as an abuse of rights, and referred to the Decree of the President of the Russian Federation “On application of special economic measures in connection with unfriendly actions of the United States of America and affiliated foreign states and international organizations” No. 79 of February 28, 2022, because the claimant is a legal entity from an “unfriendly” country.

It is worth noting that the above Decree does not contain any provisions to allow lawsuits filed by foreign claimants to be considered an abuse of rights. The issued decision became hotly debated, and many lawyers believed that it could form a new approach of the Russian courts. Other lawyers stated that the decision would be successfully appealed at the appellate court. The claimant, Entertainment One UK Limited, actually filed an appeal, which was satisfied. Thus, IP rights of the foreign claimant were followed. It should be added that later, having considered the defendant’s cassation appeal, the Court for Intellectual Rights affirmed the judgment issued by the appellate court.  

Several days later, in mid-March, the Arbitration Court of Saint Petersburg and Leningrad Region made decisions on several lawsuits filed by the same foreign claimant against Russian individual entrepreneurs and a Russian legal entity. The lawsuits also concerned trademark and copyright infringement with regard to Peppa Pig cartoon characters and IR 1212958, 1224440, 1224441. The court considered the lawsuits on the merits and ruled in favor of Entertainment One UK Limited. The cases are of #A56-584/2022, A56-590/2022, A56-695/2022. In the first two cases, the defendants did not appeal the decisions made, and in the third case the appellate court substantially maintained the decision too. 

In another case, #A12-24261/2021, the Arbitration Court of Volgograd Region and then the Twelfth Arbitration Appellate Court also made judgments in favor of Entertainment One UK Limited, which sued a Russian individual entrepreneur for IR 1212958 and 1224441 infringement as well as copyright infringement with regard to Peppa Pig cartoon characters. Having considered the defendant’s cassation appeal, the Court for Intellectual Rights rejected it.

Also in mid-March, the Arbitration Court of Saint Petersburg and Leningrad Region held in favor of the right holder from the Republic of Korea, ROI VISUAL Co., Ltd., in the dispute with a Russian entrepreneur regarding trademark and copyright infringement (court case #A56-214/2022). The court recognized that the defendant infringed ROI VISUAL Co., Ltd.’s rights to IR 1213307 “ROBOCAR POLI” and Robocar Poli cartoon characters. The court decision was not appealed by the defendant.

Thus, Kirov Region’s judge’s decision issued in #A28-11930/2021 being unprecedented showed an interpretation of new circumstances by the particular judge rather than reflecting a new approach of the Russian courts.

However, the Russian case law has got one more case, wherein a judge’s reasoning was similar to that in the above judgment from #A28-11930/2021. Thus, in case #A84-453/2022 the Arbitration Court of Sevastopol (Crimea) considered a trademark infringement lawsuit brought on by American company ABRO Industries, Inc. against a Russian entrepreneur. In the judgment of April 13, 2022 the court confirmed that the use of a trademark owned by the other party without the right holder’s permission is illegal; however, it was indicated that the claimant is an American company – therefore, the lawsuit was rejected while referring to the above President’s Decree No. 79. Like case #A28-11930/2021, the claimant filed an appeal, which is currently under consideration. In light of the aforesaid, the probability of reversal of the judgment seems extremely high.

As it can be seen, the existence of even two such judgments made by the different courts does not reflect the opinion of the large majority of Russian judges, although it seems that the reference to President’s Decree No. 79 has started being used as the defending strategy for Russian defendants in IP disputes with foreign right holders.

Nevertheless, the efficacy of such strategy is not high. Thus, in case #A71-16163/2021 initiated on a lawsuit of Entertainment One UK Limited against a Russian entrepreneur, the latter called a judge’s attention to a country of origin of the claimant, which is considered “unfriendly”. However, said argument of the defendant was ignored by the judge of the Arbitration Court of the Udmurt Republic, which satisfied the lawsuit entirely in its decision made on April 08, 2022. The decision was kept in force by the appellate court and the Court for Intellectual Rights being the court of cassation.

The analogous argument of the defendant was already considered by the Arbitration Court of Tomsk Region in case #A67-988/2022. The case was initiated on a lawsuit of MGA Entertainment Inc. (US) against a Russian defendant, which was accused of trademark and copyright infringement. The judgment of April 11, 2022 states that the defendant’s argument supported by a reference to the President’s Decree No. 79 was rejected because “the Decree does not contain provisions that would restrict the protection of the exclusive rights of foreign companies or other provisions that govern relations in the field of intellectual property”[1], and “as of today the Russian Federation and the United States of America remain parties of the Berne Convention and the Protocol to the Madrid Agreement dated 1989 with all rights and obligations that have not terminated their validity in the territory of the Russian Federation”[2]. Apart from this, in the decision, the court specifically noted that “the decision of the Arbitration Court of Kirov Region issued in case #A28-11930/2021 is not a prejudicial judgment”[3].

Thus, in the judgment of April 11, 2022 issued in case #A67-988/2022, the court emphasized that regardless of Decree No. 79, the obligation to observe IP rights in Russia, which obligation is provided for by Russian national law and international law, is still in force. The present position of the court does not change the essence of Decree No. 79, but separates its action from IP because the Decree does not concern the IP field. As a result, said judgment became the first one issued by the Russian court that assessed how relevant the current relationships between Russia and other countries to the protection of IP rights are.

The court upheld the IP rights of MGA Entertainment Inc. and the decision was affirmed by the appellate court and the court of cassation.

It is worth noting that other Russian courts have also decided in favor of MGA Entertainment Inc. in disputes regarding copyright or trademark infringement with Russian defendants: the decision made by the Arbitration Court of Tatarstan dated March 15, 2022 in case #A65-29944/2021 and the decision made by the Arbitration Court of the Perm Region dated March 15, 2022 in case #A50-31389/2021. The two decisions were not appealed by the defendants. However, it is to be added that, according to the texts of the judgments, in those cases the defendants did not refer to Decree No. 79 in order to substantiate the abuse of rights by the claimant.

The fact that Decree No. 79 does not regulate relationships in the field of intellectual property was also noted by the Arbitration Court of the Kemerovo Region in case #A27-10992/2021. The Russian defendant, inter alia, referred to the Decree, but said argument was rejected by the court. Thus, the court noted that the Decree determines the procedure for the sale, circulation of foreign currency, shares of public joint-stock companies, as well as the right of credit institutions to open a bank account and transfer funds from individuals under sanctions. Moreover, the court’s decision contains a reference to Article 62(3) of the Constitution of the Russian Federation, according to which, foreign citizens enjoy rights and bear obligations in the Russian Federation on an equal basis with citizens of the Russian Federation, except in cases established by federal law or an international treaty of the Russian Federation. Decree No. 79, however, is not a federal law or an international treaty of the Russian Federation, does not contain rules aimed at limiting the protection of the exclusive rights of foreign companies or other rules that regulate legal relationships in the field of intellectual property. The court emphasized that neither the United States of America nor the Russian Federation imposed mutual or targeted sanctions (restrictive measures) regarding the use of intellectual property objects (objects of copyright, trademarks).

The court’s decision of April 11, 2022 in case #A27-10992/2021 was maintained at the appellate court and the court of cassation.

In case #A16-1724/2020, the Arbitration Court of the Jewish Autonomous Region issued a Notification on dismissing a preliminary injunction on April 15, 2022, which notification discloses the court position in reference to Decree No. 79 as follows: “The fact itself that the defendant belongs to a state unfriendly to the Russian Federation does not indicate that the defendant has taken actions of an unfriendly nature and contrary to international law”[4].

Thus, it is safe to say that the Russian courts adhere to law and reject defendants’ attempts to use the political aspect as the defense strategy. In those cases where judges considered it possible to refuse foreign claimants to protect their legal rights only on the ground that the claimants are from unfriendly states, either the higher courts cancelled such decision or such outcome is expected.

On the basis of the aforesaid, the Russian jurisdiction remains committed to the provisions of national legislation and international agreements (conventions) for protection of intellectual property rights. The Russian court system continues to provide reliable enforcement the intellectual property rights of IP right holders.