The Russian Constitutional Court stated when a right holder shall not reimburse legal costs

12 November 2021
Elizaveta Gromova
Anna Kuminova
Associate

On 28 October 2021, the Russian Constitutional Court passed a decision in which it examined Art. 110 para. 1 of the Russian Commercial (Arbitrazh) Procedure Code for compliance with the Constitution and clarified when right holders shall not reimburse legal costs to a defendant if the court reduced the compensation.

The Animation Studio Melnitsa LLC’s (Applicant) complaint was a reason for such examination. The Applicant filed a suit with Tambov Region Commercial (Arbitrazh) Court to the individual entrepreneur on the infringement of 8 trademarks claiming minimal compensation for each infringement. The court reduced the compensation down to RUB 2 500 for each infringement as the entrepreneur had for the first time infringed the exclusive right for trademarks and had a child. The court interpreted this fact as partial satisfaction of the claim and charged the defendant proportionally for the legal costs incurred. The higher courts upheld the decision.

The Constitutional Court pointed out that reducing the compensation below the minimum fine does not constitute partial satisfaction of a claim as the relevant decision certifies, despite the reduction, that there has been an exclusive rights infringement.

Moreover, the Constitutional Court noted that the obligation of the right holder, whose exclusive right has been infringed, to reimburse legal costs of a defendant’s representative in full when the court reduced the amount of the claimed compensation contradicts the principle of good faith (Art. 1 para. 4 of the Russian Civil Code) and prevents the right holder from protecting his infringed right in a court.

Therefore, the Constitutional Court concluded that Art. 110 para. 1 of the Russian Commercial (Arbitrazh) Procedure Code does not provide for the payment of legal costs incurred by the infringer of an exclusive right from the right holder if compensation is reduced below the minimum fine.

Thus, the provisions of Art.110 of the Russian Commercial (Arbitrazh) Procedure Code could not be given a different meaning, which would lead to the right abuse by the defendant, as well as to a violation of the fundamental principle of equality before the law and courts. In our view, such an understanding is comply with the fair justice principle.