Friday, 10 February 2017

Constitutional Court Decision to protect infringers

On the 13th of December 2016 the Constitutional Court of Russia made important decision on authors, patent and trademark law aiming to protect infringers whose punishment might be too severe according to existing rules. Russian Ministry of Justice have already made a proposal for amendments…
Authors, patent and trademark law is the Part 4 of the Russian Civil Code and its art. (1) 1301, (1) 1311, (4) 1515 provide that in case of infringement an author or an owner of intellectual property can ask for compensation instead of proving losses, the amount of the compensation should be from 10 000 rubles to 5 million rubles for each infringement (today the rate is around 59 rubles for US dollar, so the amount is between 170 and 84746 dollars). 
The court stated that in general the compensation was purported to protect the intellectual property, as it was always difficult to prove losses as far as intangibles were concerned. When an infringer was a business legal entity, which acted at their own risk, the compensation amount couldn’t be considered unfair even in case it exceeded the losses of an intellectual property owner, several other examples of penalties in civil legislation being mentioned. However as far as individual businessman (businesswoman) was concerned all the case should be looked at from a different perspective. An individual businessman (businesswoman) is liable to creditors with all his (her) property. So in case the punishment was too severe, the hardship would affect not only the infringers but their family and children as weall. Thus in this case a court should have more discretion to compare all the circumstances in question to set a fair penalty, said the Court, and therefore a fix minimum of the compensation contradicted the Constitution.
Although the decision might seem to be an unjustified protection to violators, the sheer number of cases, where such protection could be applied, is tending to zero. So the Ministry of Justice unsurprisingly quickly made a proposal for the Civil Code amendments to fill the gap. It suggested to let a court set a compensation less that 10 000 rubles if it was the first infringement, the losses are ‘in several times’ less than the compensation minimum and, finally, the infringement is not 'severe'. All these general word should let a court made a ‘fair’ decision in each particular case but this flexibility is looking quite rhetorical.