The Supreme Court allowed not to recover damages for the sale of fakes of famous brands

The Judicial Collegium for Economic Disputes of the Supreme Court (SC) sent for a new consideration the claim of Chanel and Christian Dior against the individual entrepreneur Olga Prudnikova, from whom these companies demanded 125,000 rubles. lost profits from the sale of counterfeit sunglasses from these brands. The corresponding ruling was issued on January 31, 2023 (published only on February 7).

The matter came to the Supreme Court after the department of the Ministry of Internal Affairs of Pyatigorsk established in November 2018 that Prudnikova was selling counterfeit goods under well-known brands. In April 2019, the Arbitration Court of the Stavropol Territory brought her to administrative responsibility, issued her a warning and instructed her to destroy the counterfeit goods. Swiss Chanel and French Christian Dior filed a lawsuit with the same court to recover 125,000 rubles from it. losses in the form of lost profits, based on the cost of original products, which were allegedly replaced by fakes on the market.

This requirement was satisfied, the appellate and cassation instances agreed with it. Prudnikova, in August 2022, filed a complaint with the Supreme Court, whose judicial panel for economic disputes considered that the companies did not prove that the violation committed by the entrepreneur was the only obstacle that prevented them from making a profit. The court decision states that damages should restore the property status of the injured person, and losses “in the form of lost profits” should be compensated if the defendant prevented the plaintiff from selling the goods.

The Supreme Court, motivating the decision to send the case for a new trial, drew attention to the fact that Chanel and Christian Dior “indicated that the entrepreneur sold counterfeit goods and that they did not receive income that could have been from the sale of its original.” True, the courts did not investigate the issue of “the similarities and differences between original and counterfeit goods in order to determine whether an ordinary consumer could understand that he was buying” a fake.

In other words, the Supreme Court clarifies, the courts did not take into account that “the parties do not compete in the same market”: there is no evidence that the copyright holder directly loses customers who are ready to buy original products due to counterfeit goods.

The court concluded that there is a difference between the sale of fakes under the guise of the original and obviously counterfeit goods, lawyers point out. In fact, you can see a reference to a high-profile story with the sale of fake bags in a boutique of a well-known company instead of the original ones, believes Maria Lyubimova from the Regionservis Bar Association. In August 2022, the Mash Telegram channel reported that a merchandiser at the Hermes Moscow warehouse was exchanging Birkin and Kelly bags for fake ones.

It turns out that the sale of counterfeit products that are indistinguishable from the original (the so-called “replicas”), in conditions close to the usual places for the sale of branded goods, would give grounds for collecting compensation in the amount of the original cost, points out Vladimir Ozherelyev, head of the intellectual property practice at DRC law firm. But such an approach, he said, cannot be applied if the “branded” goods are sold in places where the appearance of original expensive brands is obviously impossible.

At the same time, this approach of the Armed Forces left open the issue of liability for the illegal use of a trademark, which opens up a field for abuse among counterfeit sellers, Lyubimova points out. Ozherelyev believes that this will eventually affect the counterfeit goods market. “Now sellers of fakes will feel more confident, realizing that if they are held liable, they will only reimburse the cost of counterfeit goods, and not the original,” he said.

“Infringers should take into account that, in addition to confiscation and destruction of counterfeit goods, the courts will continue to impose sanctions for trademark infringement, which still exceed the cost of the products they sell by several times,” says Zoya Filozop, partner at the Central District law firm.