Russia Amends Out-of-Court Procedure

On July 1, 2017, Russia approved amendments to the Russian Civil Code and the Arbitration Procedure Code, which change the out-of-court procedure in effect as of June 1, 2016. The amendments entered into force on July 12, 2017.

The out-of-court procedure rules stipulate that claimants have to first send a cease and desist letter and only initiate infringement proceedings in court if the infringers do not respond or refuse to fully settle the claim within 30 days, unless another period of time is agreed between the parties.

The amendments exclude certain claims from the out-of-court procedure, clarify how it correlates with preliminary injunctions and introduce the out-of-court procedure for non-use trademark cancellation actions.

Claims Exempt from the Out-of-Court Procedure

According to the new provision 5.1, added to Article 1252 of the Civil Code, claims related to exclusive right declarations, ceasing of the infringing act, seizure of infringing products and publication of court decisions are excluded from the out-of-court procedure, i.e. sending a cease and desist letter in these cases is not obligatory and right holders can bring an action directly before the court. Amendments to Article 4.5 of the Arbitration Procedural Code also list cases in which pre-trial demands are not required. These include affirmative actions and bankruptcy cases, among others.

Claims that Require a Cease a Desist Letter

Sending a cease and desist letter is obligatory if the rights holder wants to claim damages or compensation, and if the parties involved are legal entities or sole proprietors (Article 1252 of the Civil Code). Cease and desist letters are also obligatory in disputes arising from contracts and agreements or as a result of unreasonable gains (Article 4.5 of the Arbitration Procedural Code).

Preliminary Injunctions

The amendments clarify how preliminary injunctions correlate with the out-of-court procedure, for instance if a party files a preliminary injunction request and the dispute is subject to the obligatory out-of-court procedure, if the preliminary injunction is accepted, the judge should set deadlines for sending a cease and desist letter and filing a court action.

Non-Use Cancellation Actions

According to the amendments made to Article 1486 of the Civil Code, before filing a non-use cancellation action with the IP Court, a claimant should contact the trademark owner and request a surrender or a transfer. If the trademark owner of record does not transfer the trademark or file a surrender request within two months, the claimant can proceed with a non-use action within the next 30 days. If the claimant fails to do so, he is to send a new request to the trademark owner, no earlier than three months after sending the previous one.

In court, the trademark owner should prove use of the trademark within the three years preceding the date of the claimant’s request.

Implications

On the one hand, the amendments improve the existing out-of-court procedure and clarify when the right holder is not required to send a cease and desist letter. On the other hand, the amendments complicate and prolong non-use cancellation actions, which lasted 3-14 months before the introduction of the out-of-court procedure. Now, non-use actions will likely take 6-17 months and will inevitably incur additional costs.

By: Tatyana Kulikova

For more information, please contact Tatyana Kulikova at our Russia office.