A draft law amending Part IV of the Civil Code of the Russian Federation was considered in the third reading. These amendments affect the methods of recovering compensation for infringement of exclusive rights to intellectual property objects.
The already adopted draft law systematises general provisions on compensation. It introduces a clear definition of «infringement» – unlawful use of one object in one way. Previously, this concept was derived from paragraphs 56 and 89 of the Plenum Resolution No. 10 of 23.04.2019, according to which the use of an object in different ways was considered separate violations.
For systematisation, the bill proposes to introduce a new article 1252.1 – «Compensation for infringement of the exclusive right», which regulates in detail the methods of calculation and individual cases of compensation recovery.
The bill significantly increases the amount of compensation for infringement of exclusive rights in a fixed amount. The maximum threshold has been doubled from 5 to 10 million roubles.
| Article number | Subject | As now | As will be |
| Changes in the context of the general rules on compensation | |||
| Article 1252.1 (2) of the Civil Code of the Russian Federation | Introduces the concept of «method of calculation of compensation» | There is no term in the law, the methods of calculation are given in separate articles in relation to specific objects. | The methods of calculation of compensation will be fixed in the universal Article 1252.1 of the Civil Code of the Russian Federation – 3 methods at the choice of the right holder: – compensation in a fixed amount; – compensation in multiples of the value of the infringing media; – compensation multiple of the value of the licence to use the IP object. New term: «counterfeit tangible media» New regulation: if the court concludes that the chosen method of calculation of compensation is not relevant to the case at hand, the court has the right to recover compensation in a fixed amount. |
| Article 1252.1 (5) of the Civil Code of the Russian Federation | A provision on «auxiliary» (interrelated, subordinate) methods of utilisation is introduced The provision is absent in the law, but is found in court practice. | For example, the explanation of ‘single economic purpose’ in paragraph 56 of Resolution of the Plenum of the Supreme Court of the Russian Federation No. 10[1]. | Compensation shall not be recovered if the use of an intellectual property object in one way was technically necessary for another way of use and did not bring a separate benefit. In case of technical interconnectedness of separate ways of use, they are considered as one infringement of the exclusive right. |
| Article 1252.1 (6) of the Civil Code of the Russian Federation | Rules on liability for infringement of rights to an object with multiple right holders | 1) If all right holders apply to the court: the court shall determine the total amount of compensation for the infringement, after which the amount shall be divided equally among all right holders, unless they have agreed on a different distribution. If only one right holder has applied to the court: the court determines the total amount of compensation, then decides what share is due to the applicant right holder. The other parties are involved in the case as third parties and retain the right to an independent claim. 2) The law only mentioned an agreement between co-owners. | An explicit obligation is introduced for the claimant to distribute compensation among all right holders, unless otherwise provided for by law, by agreement between them or arising from the substance of the relations between them. However, liability for failure to fulfil this duty is not provided for. A new ground for «unequal» distribution is added – not only the agreement, but also the substance of the relationship. It is now expressly stipulated in the law that if a result of intellectual activity has several right holders, the unlawful use of such a result will be considered as a single infringement. |
| Article 1252.1 (7) of the Civil Code of the Russian Federation | New limits of liability for bona fide entrepreneurs (‘did not know and should not have known that he was committing an offence’) | There is no general rule for entrepreneurs (they are liable without fault) in the law. Exception: compensation is not recoverable when the unlawful use was made on the instructions of[2], and the performer did not know and should not have known about the unlawful use[3]. | The amount of compensation for a ‘good faith’ entrepreneur is limited: from 10,000 to 500,000 rubles in a fixed amount or in the range from 1 to 2 times the value of the counterfeit or the right of use. The criteria for bona fide «ignorance» are not established. |
| Article 1252.1 (8) of the Civil Code of the Russian Federation | Joint and several liability for a chain of uncoordinated infringements | There is no separate regulation in the law for the case where several persons have committed independent infringements in relation to a single intellectual property object. | The court now has the right to recover compensation jointly from infringers, even if their actions are unrelated, if separate recovery would result in unjust enrichment of the right holder. The infringer who has paid the compensation: – Is entitled to claim compensation from the other infringers in proportion to their contribution to the infringement; – less its share of liability. |
| Article 1254 of the Civil Code of the Russian Federation | Joint nature of protection of the rights of the exclusive licensee and the right holder | There is no independent clarification for the case of simultaneous application to the court by both the right holder and the exclusive licensee. | The law will now expressly provide that if both the right holder and its exclusive licensee file claims for compensation for the same infringement against one and the same defendant, their claims shall be considered joint and several. |
| Self-compensation for “technical” infringements contributing to the infringement of an exclusive right | |||
| Article 1256 of the Civil Code of the Russian Federation | Limits of liability for failure to identify the author | There is no indication in the article of the means of defence that the author could have used. The position of judicial practice: 1) Point 13 of the Review of the Supreme Court of the Russian Federation of 29.05.2024: the absence of information about the author of the work in the cited source on the Internet does not exempt the person who allowed the subsequent citation of the work without indicating the author from the application of liability provided for by paragraph 1 of Article 1251 of the Civil Code of the Russian Federation[4]. 2) Failure to indicate the author does not constitute an independent violation of the exclusive right to the work, but, as a rule, is ‘absorbed’ by the fact of unlawful use of the work. [5]. | If the work was used legally (without the author’s permission and without payment, for example, for quotation purposes), but did not indicate the author because he was not in the original source – this does not infringe exclusive rights, and therefore it is impossible to recover compensation under the general rules of Art. 1301 of the Civil Code of the Russian Federation. But there remains the use of other methods of protection (paragraph 1 of Article 1251 of the Civil Code of the RF): – recognition of the right; – restoration of the situation that existed before the violation of the right; – suppression of actions that violate the right or threaten to violate it; – compensation for moral damage; – publication of the court decision on the infringement committed. Consequently, the clarification from the Review has passed into the Law. |
| Article 1299 of the Civil Code of the Russian Federation | A stand-alone type of compensation for the manufacture and dissemination of technologies and technical devices to circumvent copyright remedies. | In case of violation of the prohibitions on circumvention of technical protection[6] the author could demand: compensation for damages or compensation under Article 1301 of the Civil Code under the general rules up to 5,000,000 roubles. | A fixed range of compensation has been established: from 10,000 to 5,000,000 roubles (under the new rules, the upper limit of ‘total’ compensation is 10,000,000 roubles). |
| Article 1300 of the Civil Code of the Russian Federation | Self-compensation for removal of author information | Violation of any of the prohibitions: deletion of copyright information or distribution of the work with deleted information, allows the right holder to demand: compensation for damages or compensation under Article 1301 of the Civil Code (the amount is determined by the court). Formally, failure to indicate the author / deletion of information about the author may entail the recovery of compensation for violation of exclusive rights to the work (Article 1300.3 of the Civil Code of the Russian Federation)[7]. | Independent amount of compensation for the removal of information about the author: now only for the removal/modification of copyright information (sub-clause 1, clause 2) it is possible to claim damages or fixed compensation from 1,000 to 100,000 roubles (without reference to Article 1301 of the Civil Code of the Russian Federation). |
| Maintaining risks for parallel importers | |||
| Article 1515 of the Civil Code of the Russian Federation | Changing the concept of «counterfeit» | Current wording: – Goods/packages on which the “illegally placed trade mark” is “illegally placed” are considered counterfeit; – the right holder shall demand seizure and destruction of goods, labels, packages of goods on which the “illegally used” trademark is placed; – the right holder has the right to demand compensation in the amount of two times the value of the counterfeit goods on which the trademark is illegally placed. Conclusion: the current wording uses two discordant notions: “illegally placed” (1) and “illegally placed” (2). The difference between (1) and (2) is unclear. As a consequence, original goods are under the threat of seizure, destruction, double compensation. | The words in paragraph 2 “illegally used” are replaced by “illegally placed”. Thus, the legislator seeks to unify the concept of “counterfeit”, but the question remains undisclosed: does “unlawful placement of a trademark” mean counterfeiting of goods or does it also apply to other cases of infringement? Consequence: there is still uncertainty in the definition of “counterfeit”. The term “illegally placed” remained undisclosed in the law. Parallel importers are at risk of collecting compensation in the amount of two times the value of counterfeit (?) goods. |
New procedure for calculating compensation
It is worth noting separately the changes regarding the rules for calculating compensation in the event of infringement of rights to several results of intellectual activity or means of individualisation in a single counterfeit media (Article 1252.1, paragraph 4, of the Civil Code of the Russian Federation).
At present, the law provides that if the infringement affected several objects of intellectual property rights (for example, trademarks, patents, etc.), the compensation is calculated for each of them separately (paragraph 3 of Article 1252.3 of the Civil Code of the Russian Federation, after the amendments this paragraph will become invalid). Now, in case of multiple infringements, compensation is calculated as follows:
| Type of compensation | Amount of compensation |
| Compensation in a fixed amount | In the range from the minimum to twice the maximum amount established by law for a single infringement. Special rule: if different types of objects (e.g., both trademarks and works) are used on a medium, the highest minimum and maximum limits of compensation possible are taken. |
| Compensation in “multiples” of the cost of infringing materials | In the amount from 1 to 2 times the value of the infringing media. |
| Compensation in “multiples” of the value of the right of use | Within the limits of 1-fold to 2-fold of the value of the right to use the intellectual property object that has the highest value among all illegally used in the given counterfeit media. |
Context of the draft law:
Within the first round of consideration, the draft law was sent for revision primarily because the draft law proposed to change the concept of ‘counterfeit’ and define it as any goods, including original goods, to which the trademark is applied by the right holder himself and which have been imported into the territory of the Russian Federation without the right holder’s consent. Adoption of the amendment in this wording would lead to an increased risk of seizure of original goods that are imported by parallel importers.
As a consequence, it was decided to abandon such a radical proposal in the interests of importers. However, in the end, parallel importers still found themselves in a disadvantageous position. The concept of counterfeit was changed: now it is any goods with illegally placed trademark on it, the reference to the fact of ‘illegal use’ in paragraph 2 was removed.
At the same time, paragraph 4 of Article 1515 of the Civil Code of the Russian Federation in the part devoted to multiple compensation has remained unchanged in terms of its meaning and the reference to ‘counterfeiting’ has been retained, which formally allows right holders to claim compensation in double amount also in respect of parallel imported goods.
Perspectives:
Increasing the amount of compensation is an effective preventive measure in combating offences. One should also note the ‘gradation’ of compensations and infringements (for example, the new norm on compensation in the amount of 100 thousand roubles for the removal of information about the author and the independent amount of compensation for circumvention of technical means of protection of works). This suggests that the legislator is clearly seeking to find a balance between the seriousness of the violation and the measure of liability for it.
However, it should be noted that the adopted draft law does not make life easier for parallel importers: the change in the concept of ‘counterfeit’ does not make it clear whether original goods on which the trademark is placed by the right holder itself, but these goods were introduced into civil turnover in the territory of the Russian Federation without the consent of the right holder, are considered counterfeit. Given the lack of clarity in the definition of ‘counterfeit’, parallel importers are still at risk, when they may be charged compensation in the amount of two times the value of the goods.
At the stage of the first reading of the draft law, the Official Review of the Government of the Russian Federation emphasised that the illegal placement of a trademark defines exactly the sign of counterfeit goods and does not cover cases when the trademark was placed on the goods by the right holder himself or with his consent. As a consequence, we can expect judicial clarifications of the highest courts on this issue. In any case, the changes introduced are substantial, and we are likely to expect new clarifications from higher courts and active formation of new judicial practice.
[1] Paragraph 2 of paragraph 56 of the Resolution of the Plenum of the Supreme Court of the Russian Federation No. 10 of 23.04.2019: “at the same time, the use of a result of intellectual activity or a means of individualisation by one person in different ways aimed at achieving one economic goal forms one violation of the exclusive right. For example, storage or transportation of counterfeit goods, provided that they are completed by the actual introduction of the goods into civil turnover by the same person, are an element of the introduction of goods into civil turnover and do not form a separate violation in this case; the sale of goods with their subsequent delivery to the buyer forms one violation of the exclusive right”.
[2] For example, Ruling of the Intellectual Property Rights Court of 07.06.2024 N C01-402/2023 in the case N A40-243622/2021: the courts concluded that the Respondent did not know and could not have known about the illegality of the use of the trademark, since the Respondent Company only fulfilled its obligations under the contract for processing of goods made on commission and used in the production of packaging provided to it by the Customer under this contract, as well as relied on the reliability of the register, which reflected the registration of the trademark, the legal protection of which at the time of manufacture of the products.
[3] Paragraph 3 of point 73 of Resolution of the Plenum of the Supreme Court of the Russian Federation No. 10 of 23.04.2019
[4] Paragraph 13 of the Review of judicial practice of consideration of civil cases related to infringement of copyright and related rights in the information and telecommunications network ‘Internet’ (approved by the Presidium of the Supreme Court of the Russian Federation 29.05.2024)
[5] For example, the Decision of the Arbitration Court of St. Petersburg and Leningrad Region dated 22.03.2024 in case N A56-129297/2023 (supported by the Decision of the Intellectual Property Rights Court dated 27.12.2024 N C01-2360/2024 in case N A56-129297/2023).
[6] Technical means of copyright protection are technologies, technical devices or their components that control access to a work, prevent or restrict actions that are not authorised by the author or other right holder in relation to the work (Article 1299(1) of the Civil Code of the Russian Federation). Example of violation: unlicensed software without the stipulated protection key is installed on the infringer’s system units (Resolution of the Intellectual Rights Court of 20.05.2015 N C01-359/2015 in case N A53-28630/2013, Resolution of the Intellectual Rights Court of 30.03.2018 N C01-45/2018 in case N A32-19345/2016).
[7] ‘In the event of a violation of the provisions provided for in paragraph 2 of this Article, the author or other right holder shall have the right to demand, at his option, from the infringer compensation for damages or payment of compensation in accordance with Article 1301 of this Code.’