Counterfeit at a reasonable price – Newspaper Kommersant No. 2 (7447) dated 01/10/2023

The Supreme Court of the Russian Federation (SC) will decide what punishment will be fair for the sale of counterfeit branded items. In the context of the ban on the import of luxury goods from the EU and the USA into the Russian Federation, this issue is especially relevant. The dispute on the claim of Chanel and Christian Dior, who recovered losses from the Russian entrepreneur for the sale of counterfeit glasses, was submitted to the economic board of the court. The IP considers the punishment too harsh: he was charged the cost of original products. Lawyers say that in practice there is no single position, and the lack of official deliveries to the Russian Federation can serve as an additional argument against the copyright holder.

The Supreme Court will consider a dispute on how to calculate the damages caused to copyright holders for the sale of fakes. The hearing has been scheduled for January 31st. The story began in November 2018, when Pyatigorsk businesswoman Olga Prudnikova was caught selling glasses branded by Chanel and Christian Dior. As a result, she was brought to administrative responsibility for the illegal use of foreign trademarks (Article 14.10 of the Code of Administrative Offenses of the Russian Federation) with a punishment in the form of a warning and the destruction of six pairs of glasses.

After that, Chanel SARL (Switzerland) and Christian Dior Couture SA (France) won 125 thousand rubles from the individual entrepreneur in the Arbitration Court of the Stavropol Territory. losses in the form of lost profits. It was determined based on the prices of original products and the principle that “one unit of counterfeit products displaces one unit of original product from the market.” Olga Prudnikova asked to calculate the losses based on the price of counterfeit goods. But the appeal and cassation supported the decision of the first instance.

The IP appealed these findings to the Supreme Court, believing that the recovery of such an amount “contradicts the principles of reasonableness, fairness and proportionality of responsibility.” According to Olga Prudnikova, the courts did not take into account that the seized goods were destroyed, and the plaintiffs did not prove the connection between the fact that counterfeit products were put into circulation and they did not receive income. The case was referred to the Economic Board of the Armed Forces.

Since the start of the business, the situation on the market has changed a lot. Thus, the United States, Great Britain and the EU have banned the supply of a number of luxury goods to the Russian Federation. “But consumers can purchase original goods imported through parallel imports,” Denis Krauyalis, junior partner at the Yakovlev & Partners legal group, emphasizes. Sanctions do not prevent foreign copyright holders from tracking counterfeits and filing lawsuits against violators, “Chanel often goes to court,” adds Victoria Olkhova, senior lawyer at Kosenkov and Suvorov.

Responsibility for placing a trademark on fakes can be different, Denis Krauyalis clarifies: copyright holders have the right to demand compensation or damages. In Russian practice, a claim for damages is “exotic in the field of intellectual property,” adds Roman Lukyanov, managing partner at Semenov & Pevzner. More often they ask for compensation, it is easier to recover it, Anastasia Dudko, senior lawyer at BGP Litigation, confirms.

Firstly, in order to recover damages, it is also necessary to prove a causal relationship between the infringement and damages, which is not easy, says Veronika Popelenskaya, patent attorney and IP practice lawyer at Andrei Gorodissky and Partners. To recover lost profits, explains Roman Lukyanov, the plaintiff must prove that the defendant’s violation was the only obstacle that prevented him from receiving it. The second problem is in the calculation of losses. Victoria Olkhova notes that judicial practice is contradictory. Lawyers, whose opinions also differ, expect clear clarifications from the Supreme Court.

Anastasia Dudko considers the calculation of lost profits based on the price of the original product acceptable, adding that “a significant and unreasonable reduction in the amount of damages and compensation for violation of exclusive rights may lead to an increase in the number of violations.” The one-to-one calculation is fair, Veronika Popelenskaya agrees, specifying, however, that it was necessary to take into account the fact of the destruction of counterfeit products that were not sold and could not force out the original products from the market.

At the same time, Viktoria Olkhova considers the calculation based on the cost of original products unconvincing, since the arrival of fakes on the market does not mean that the consumer would buy the original. Moreover, in her opinion, the lack of official deliveries from the brand to the Russian market “may become an additional argument that the copyright holder has not incurred any losses as a result of counterfeit sales.”

Ekaterina Volkova, Anna Zanina