Business Litigation Lawyer

Arbitration courts of the Russian Federation are specialized judicial bodies that consider economic disputes and other legal conflicts arising in the sphere of entrepreneurial and other economic activities. These courts form a separate branch of the judicial system of the country along with courts of general jurisdiction, military courts and the Constitutional Court of the Russian Federation. This does not apply to arbitration specified in the New York Convention of 1958 — an arbitration court is not a non-state arbitration center. Arbitration courts are full-fledged state courts dealing with the resolution of various legal issues arising between business entities, legal entities and individual entrepreneurs. The decisions of arbitration courts form the basis of the legal position in the field of economics and business.

Categories of cases considered by arbitration courts:

• Disputes arising from contractual obligations: consider claims under contracts for the sale and purchase, supply of goods, provision of services, lease of real estate and other property, loans of funds and other transactions related to business activities.
• Corporate disputes: Resolve disagreements within organizations, such as challenging decisions of the governing bodies of legal entities, violation of the corporate rights of shareholders and participants of companies.
• Challenging non-regulatory acts of government agencies: Consider complaints from entrepreneurs about decisions of tax authorities, antimonopoly services, customs authorities and other government agencies that violate their rights and legitimate interests.
• Bankruptcy cases: Deal with issues of recognizing a debtor as bankrupt, determining the procedure for settlements with creditors, selling the debtor’s property and restoring the solvency of enterprises.
• Intellectual property protection: Resolving issues of copyright, patent and related rights infringement, protection of trademarks and trade names in cases where the plaintiff and defendant are business entities. Bankruptcy of an individual is also considered in the arbitration court
• Administrative offenses in the field of economic activity: Consider administrative proceedings on cases of violations of legislation on taxes and fees, customs regulation, environmental legislation, etc.
• International commercial disputes: Consider cases with a foreign element, including international contracts and agreements
• Defamation: protection of business reputation in the field of entrepreneurial and other economic activities
• Investments: disputes arising from the activities of depositories related to the recording of rights to shares and other securities and the exercise of other rights and obligations provided for by federal law
• Other economically or businees oriented cases between commercial entities or between entrepreneurs and the state, if the subject of the dispute relates to economic, commercial or entrepreneurial activity

Thus, the arbitration court in the Russian Federation is a state economically oriented court created specifically for entrepreneurial litigation.

Remote participation in a court hearing is implemented in two forms: by using videoconferencing systems (Article 153.1 of the Arbitration Procedure Code of the Russian Federation) or by using a web conference system (Article 153.2 of the Arbitration Procedure Code of the Russian Federation), which is also known as an "online hearing". What is the difference?

Participation via videoconferencing is carried out with the assistance of another arbitration court or a court of general jurisdiction at the location specified in the petition for participation in the court hearing via videoconferencing. If the petitioner is in a place of detention or a place of imprisonment, the videoconferencing systems of these institutions are used. That is, when a party, for example, is in another region and files a "petition for a conference call", this means that if it is granted, the party will need to come to the court specified in the petition, where it will be seated in front of a computer and connected to the court hearing the case. Another judicial body simply acts as a link between the party to the arbitration case and the court in which the relevant arbitration case is being processed.

Frankly speaking, I have always opposed the idea of participating in a court hearing via videoconferencing in courts of first instance. Because petitions for this are almost never granted. Clause 5 of Article 153.1 of the Arbitration Procedure Code of the Russian Federation stipulates that the arbitration court considering the case shall refuse to grant a petition for participation in a court hearing via videoconferencing systems in cases where there is no technical capability to participate in the court hearing using videoconferencing systems. And the courts have always interpreted this rule so broadly that the reasons for refusing to grant the above petition were given in a variety of formulations.

In the best case, the court will simply indicate that there is currently no technical possibility without any explanation, but with a mandatory remark that satisfying the petition will lead to an unreasonable delay in the trial and the impossibility of promptly considering the dispute on the merits. The court may indicate that the petitioning party did not provide circumstances that objectively prevent the live participation of the party’s representative in the court hearing — there is also a possibility of running into a paragraph that the party could find an arbitration lawyer in the city where the arbitration court is located. I was once lucky enough to observe how the Arbitration Court of Krasnodar Krai refused to satisfy my opponent’s "petition for videoconferencing" because the schedule of court hearings using the videoconferencing system provided that such a hearing could be held from 10:00 to 17:00 (A32−41 380/2019). And our hearing was at 9:00.

In general, there are endless reasons to deny a motion to participate in a court hearing via videoconferencing, and new "excuses" continue to appear in real time. It may also be that the arbitration court satisfies the "motion for videoconferencing", the party arrives at the said intermediary court, and there the very same technical impossibility suddenly becomes clear. As a result, the party will be considered absent from the court hearing, and will have no choice but to launch into endless appeals of what happened.

Most often, such motions are satisfied in cases of proceedings in arbitration courts of appeal or cassation instance. I believe that the use of videoconferencing systems can be left to persons in places of detention and places of imprisonment, and to institutions supervising these persons. In the modern world, there is a more appropriate solution.

The 2020 coronavirus pandemic led to the closure of courts, which in turn made it impossible to consider cases even via videoconferencing, which requires at least some courts to implement the procedure itself. And so during this period,a unified technology emerged that made it possible to hold court hearings remotely (although at the initial stages it was possible to "meet" via Zoom and even WhatsApp).

An online hearing (participation in a court hearing using a web conference system) is no different from "calls" via the same Zoom, Google Hangouts, SberJazz, audio chats in Telegram groups or other video conferencing services that can be launched inside a browser. The usual functionality with turning on/off the microphone and camera, the "Raise Hand" button and all that stuff. The arbitration court hearing the case may refuse to satisfy the petition for participation in the court hearing by using the web conferencing system only in two cases: if the case is heard in a closed court session or if there is no technical possibility to participate in the court hearing using the web conferencing system. But the technical possibility is always present if the judge has a working computer, sound on it, a microphone and the Internet. I have never encountered a case where the arbitration court refused to hold an online hearing.

The petition is submitted electronically through the My Arbitrator system (arbitr.ru). An electronic digital signature is not required to submit the petition. After the petition is satisfied, the secretariat of the judge hearing the case will send a notice of the hearing, indicating the date and time of the hearing. Everything is extremely simple.. You can participate in an online hearing from anywhere: from home, from the airport, from a hotel, from any other establishment or premises. The main thing is to somehow remain within the bounds of decency, a businesslike atmosphere and common sense, as well as maintain a respectful attitude towards the court and the order of the court hearing in accordance with Art. 154 of the Arbitration Procedure Code of the Russian Federation.

Since the coronavirus pandemic, humanity has shed all remaining mistrust of videoconferencing systems, and they have become commonplace in business practice (including in the civil service). I have never noted that the factor of a party’s participation in an online hearing has in any way negatively affected the satisfaction of his claims or the perception of his position by the court. There is no confirmation of the advantage of being physically in the courtroom over participating in an online hearing. After all, the arbitration process revolves around documents, not fiery speeches and the mandatory personal presence of participants (in many cases this may even be unnecessary). In the modern world, many important decisions are made on Zoom — very serious negotiations are also conducted there. And everyone has gotten used to it.

So, participation in an online hearing in an arbitration process is not just an excellent tool for ensuring the attendance of the parties, but also an opportunity that frees one from the need to travel to another region/city to participate in a court hearing. If a party to a case is sure that personal presence in his case is simply necessary, then he should take into account both time factors and economic ones, i.e. travel expenses, which, in principle, can be recovered in the event of winning the arbitration case.

As an example, we will use the practice of the Arbitration Court of the Krasnodar Krai, because The Arbitration Court of Krasnodar Krai is repeating the federal trend: if earlier the recovery of lost profits was practically impossible, now with a reasonable and thoughtful approach to proof (which will include an objective, competent reflection of the defendant’s action, the plaintiff’s lost income after this action, as well as a strong and adequate cause-and-effect relationship between these factors), it is possible to confidently sue for lost profits. Although not always in the amount that one would initially like.

Proof should be based on the presentation in the materials of the arbitration case of evidence of actions taken to prepare for receiving profit (lost profits) in the declared amount; evidence of the correlation between the cause-and-effect relationship and the amount of lost profits; evidence of the existence of a real possibility of receiving a benefit in the amount of the declared sum. A person must prove that the opportunity to receive a profit actually existed, and not as his subjective idea, and the violation committed was the only obstacle that prevented him from receiving the corresponding income (this position was voiced by the Supreme Court of the Russian Federation in case A19−1917/2013). In case of difficulty in calculating the amount of lost profit, it can be established with the help of a forensic examination (A32−7825/2023)

. As a general rule, the amount of lost profit is equal to the amount by which the property of the injured party could have increased, but did not. The amount of lost profit is determined based on the nature of the violation of contractual obligations, and not the content of the obligation itself. In other words, it is necessary to find out: what would have been the position of the injured party if it and its counterparty had properly performed the contract. It is also necessary to determine the amount of money, the receipt of which would have put the injured party in the same financial situation as if the contract had been performed. In this case, special attention must be paid to objective factors influencing the amount of profit. For example, one cannot ignore seasonal fluctuations in prices and production volumes, extraordinary circumstances (including in cases where they could not affect the fulfillment of obligations by the debtor, but caused a decrease in the creditor’s profit), etc., that is, everything that affects the presence of a cause-related connection between the breach of obligations and the resulting losses in the form of lost profits.

In case A32−40 769/2019 the claimant for lost profits claimed that his loss was incurred as a result of the early unilateral termination of the contracts. At the same time, the case materials included a calculation of the estimated profit, in which the amount of lost profit was 82% of the estimated profit. The court noted that the defendant in the claim for damages did not submit any objections to the documented amounts provided. As a result, the plaintiff recovered 31,490,170 rubles in damages in this claim, part of which consisted of lost profits.

The subject of the claims in case A32−31 687/2022 was the recovery of lost profits without any actual damage. Of the claimed 62,049,841 rubles, 53,020,800 were recovered. One of the defendants was the Rosreestr Office for Krasnodar Krai. The case background: the plaintiff entered into a land lease agreement, but a year later an entry was made in the Unified State Register of Real Estate that the lessee of the land was another person — one of the defendants — on the basis of a lease agreement that had been terminated by court order. Then this person entered into a lease agreement with an individual entrepreneur, who subsequently also became a defendant in this arbitration case. The plaintiff successfully challenged the actions of Rosreestr in a court of general jurisdiction, after which he began to seek compensation for the losses incurred — due to the actions of the Krasnodar Rosreestr, the individual entrepreneur and another person, the plaintiff lost the opportunity to cultivate the land plot that he legally owned under a lease. The disputed land plot was no longer in the temporary possession and use of the lawful lessee due to the illegal actions of the defendants in the case, which resulted in the Plaintiff incurring losses in the form of lost profits.

Initially, the plaintiff provided his calculation, but subsequently a judicial appraisal was appointed, which established the amount of lost income for the entire period of the land plot being in the possession and use of the two defendants. This amount was ultimately awarded to the plaintiff.

The plot of the case A32−44/2023: the plaintiff was forced to send 29 damaged freight cars for repairs. The damage occurred on the non-public track of the Defendant. Due to the fact that the train was undergoing current repairs, the plaintiff did not receive rent from third parties with whom he had concluded a lease agreement. Having established the lost income in accordance with the rate established by the contracts and the number of days spent on restoring the cars, the plaintiff filed a claim for recovery of lost profits in the amount of 192,375 rubles. The arbitration court considered that the claims for non-receipt of rental payments (lost profits) were overstated, since they were calculated not from the moment the cars were transferred to the non-working park, but from another time. As a result, after the counter-calculation, the amount of lost profits awarded to the plaintiff amounted to 31,725 rubles.

Case A32−35 322/2023 flared up around such a popular circumstance as the need to "clean up after the previous tenant", whose lease agreement was declared invalid by a court. The plaintiff decided that he had not received the income that he could have received due to the fact that the defendant did not clean up his trade pavilion, and filed a claim for payment of lost profits for the entire period of the defendant’s property being on the land plot. But the court came to the conclusion that the plaintiff had not proven the existence of illegal behavior on the part of the defendants, who had not allowed him to receive the lost income. Also, the plaintiff could not confirm the real possibility of receiving a profit in the declared amount (taking into account the seasonality of income generation in Sochi). Plus, in the arbitration case it was established that the plaintiff had actually used the defendant’s property until the execution of the court decision, which declared the lease agreement invalid.

The forerunner of the dispute A32−38 928/2023 were other arbitration cases, as a result of which the plaintiff successfully achieved the invalidation of the auction for the right to conclude an agreement on the sale of a land plot and the concluded agreement on the sale and purchase of the relevant land plot. The court imposed on the administration of the Tbilisi district the obligation to prepare and send to the "winner" a draft agreement on the sale and purchase of the land plot within 10 days after the decision came into legal force. In the case before us, the plaintiff filed a claim for the recovery of lost profits in the amount of 8,113,822 rubles caused by the untimely provision of the disputed land plot to him. It was alleged that due to the actions of the defendant, the plaintiff did not receive certain income for 2020, 2021, 2022, 2023.

However, the court completely dismissed the claim and concluded that the plaintiff had failed to prove that he actually intended to use the disputed land plot for his own purposes, and that the calculation of lost profits presented was not documented. At the court hearing, the plaintiff explained that he did not have documentary evidence of the expenses incurred in relation to the disputed land plot. The court considered the fact of specific actions and preparations aimed at generating income that was not received due to the defendant’s actions to be unproven. The court decision also stated that the sales contracts presented in the case materials, confirming the plaintiff’s commercial activity in selling agricultural products with various contractors and information from the Chamber of Commerce and Industry on the market value of agricultural products, were presumptive in nature and did not constitute evidence of the plaintiff’s actions aimed at generating income. And the desire to conclude a contract of sale of real estate in the future does not mean that the company will suffer lost profits in the form of lost income for the period stated in the claim.

In case A32−25 777/2023, the claim for payment of lost profits was denied because its amount actually corresponded to the total amount of actual damage and the income already earned, i.e. the court rightly considered that in this case the plaintiff was already put in the position in which he would have been if the obligation had been properly fulfilled.

Case A32−25 436/2021 is an example of how the supply of low-quality components of food products can lead to a justified claim for payment of lost profits. The plaintiff purchased ingredients from the defendant, which he used to manufacture products sold to a third party, who in turn sold the goods at retail. Due to the discovery of poor quality of the transferred product, the delivery of goods to the third party was stopped, as a result of which the plaintiff incurred a loss in the form of lost profit in the amount of 366,901.50 rubles. The plaintiff calculated the lost profit based on the minimum quantity of goods that the plaintiff could produce and deliver to the third party. At the same time, the materials of the arbitration case included information on the average monthly volume of products manufactured and delivered by the plaintiff to the third party, as well as on the cost of one unit of manufactured goods. Having checked the calculation, the court recognized it as correct and, in the absence of documented objections from the defendant, satisfied the claim for recovery of lost profits in full.

Bankruptcy of a foreign company is possible in the Russian Federation, despite the fact that there is currently no clear legislative regulation of this aspect, and the practice of cross-border bankruptcy is in the process of formation — while the provisions of the UNCITRAL Model Law on Cross-Border Insolvency of 1997, as well as the Belgian Law "On the Code of Private International Law" and the European Union Regulation No. 1346/2000 "On Insolvency Procedures" of 29 May 2000 are clearly taken into account. In general, a foreign organization can become a debtor in a bankruptcy case if the center of its main interests is in the Russian Federation.

On February 8, 2024, the Supreme Court of the Russian Federation issued Ruling No. 305-ES23−15 177 in case No. A40−248 405/2022, which for the first time in the history of domestic bankruptcy law proclaimed specific signs of a debtor's close connection with Russia, by which it can be determined whether it is possible to "bankrupt" a foreign organization. The following circumstances may serve as confirmation of the above connection (the list is, of course, open — it cannot be otherwise in a judicial act):

• the organization steadily carries out systematic economic activity on the territory of the Russian Federation;
• commercial activity is aimed at persons located within the jurisdiction of the Russian Federation;
• the center of the main interests of the controlling persons is located on the territory of Russia;
• the governing body, branch or representative office of a foreign entity is located on the territory of the Russian Federation;
• persons controlling the organization have Russian citizenship, a temporary residence permit or a residence permit in the Russian Federation, or are connected by corporate legal relations with Russian legal entities;
• controlling persons were brought to subsidiary liability by the Russian arbitration court;
• the organization’s property assets, including real estate and lease rights to land plots, are located on the territory of the Russian Federation;
• a significant portion of creditors are Russian legal entities or individuals, as well as entities whose activities are closely connected with the territory of the Russian Federation;
• the organization carried out a significant number of transactions with the place of execution in Russia;
• The main evidence in the case is located on the territory of the Russian Federation.

It is sufficient for the applicant in a bankruptcy case to confirm the materiality of the circumstances indicating the debtor’s close connection with the territory of the Russian Federation, after which the burden of refuting the stated position is placed on the debtor if it has objections regarding Russian jurisdiction. The Supreme Court also noted that it should not be difficult for the debtor to refute the applicant’s explanations, since it is he who must have all the evidence regarding his own economic activity. In all cases of doubt regarding the issue of jurisdiction, the arbitration court has the right to demand directly from the debtor the evidence necessary to eliminate such doubts.

After establishing the debtor’s close connection with the territory of the Russian Federation, the court determines domestic territorial jurisdiction in accordance with the provisions of the Arbitration Procedure Code of the Russian Federation, for which the same list of circumstances may be examined as in determining national jurisdiction, but with regard to the internal territory of the Russian Federation.

When determining the center of the debtor’s main interests, the court may take into account the following:

• location of the debtor’s main property;
• the location of the majority of the debtor’s creditors;
• location of the debtor’s production resources;
• place of business of the debtor;
• the place where the majority of profits are extracted/the debtor’s main income is received;
• the place where the debtor’s reorganization takes place;
• the nature of the debtor’s main obligations, in particular the place of their occurrence and execution;
• location of persons controlling the debtor, their center of main interests;
• other circumstances indicating the presence of a significant connection between the debtor’s activities and the territory of the state.

If a legal entity is only formally (nominal) registered outside the Russian jurisdiction, but is in fact a Russian organization, i.e. when the center of its main interests is located in the territory of the Russian Federation, the court will introduce the main bankruptcy proceedings against this organization, which will create an effect for all other jurisdictions.

In a situation where the center of the main interests of the organization is located in the jurisdiction of a foreign state, but the debtor has a permanent establishment or property in the territory of the Russian Federation, the court in certain cases has the right to introduce secondary proceedings against it in a cross-border bankruptcy case, which extends its effect to creditors and property associated with the activities of the legal entity in the territory of Russia. Such proceedings are introduced in order to ensure the protection of the interests of domestic creditors in the absence of effective access to the jurisdiction in which the main bankruptcy proceedings should be carried out in the presence of various factors limiting their right to access to justice. If the court establishes the reality of the grounds for initiating secondary (local) proceedings against the debtor in a cross-border bankruptcy case, the corresponding procedure is introduced in relation to the separate property mass of the debtor located in the territory of the Russian Federation or associated with it. The bankruptcy trustee will have his standard powers, only they will extend only to the above-mentioned assets.

The Supreme Court also noted that the distribution of the burden of proving the circumstances of the case between the parties to the dispute must take into account the objective capabilities of the participants in the turnover to ensure confirmation of facts that are important for the case. An unfavorable outcome of the dispute for a party cannot be predetermined by imposing on this party an obligation to prove that it obviously cannot fulfill. At the same time, a change of management and the transfer of the company’s assets to another person immediately before filing an application do not exclude the consideration of the bankruptcy case by a Russian court, since the legal significance for determining the proper jurisdiction is the circumstances preceding (within a reasonable period) the initiation of proceedings on the application, and not the circumstances existing on the date of consideration of its validity. The Supreme Court referred to the Ruling of the Judicial Collegium for Economic Disputes of the Supreme Court of the Russian Federation dated March 21, 2019 No. 308-ES18−25 635 in case No. A63−9583/2018, which stated that such a maneuver does not save an organization from bankruptcy within the Russian jurisdiction. And even if it were legal, then unscrupulous debtors would have the opportunity to artificially change the court’s jurisdiction, regardless of the objective economic indicators of their activities.

It should also be noted that, in accordance with paragraph 1 of clause 6 of Article 1 of the Bankruptcy Law, the Russian Federation has a conventional exequatur regime, under which decisions of foreign courts on bankruptcy cases are recognized in the jurisdiction of the Russian Federation in accordance with international treaties. At present, Russia has not concluded any international treaties under which decisions on bankruptcy cases made by foreign courts could be recognized.

In accordance with paragraph 3 of Article 1252 of the Civil Code of the Russian Federation, in certain cases provided for by law, the copyright holder has the right, instead of compensation for damages, to demand compensation from the infringer, which may be collected in the following amount (Articles 1301, 1406.1, 1515 of the Civil Code of the Russian Federation): in the amount of 10,000 to 5,000,000 rubles, determined at the discretion of the court based on the nature of the violation; in double the cost of the right to use the intellectual property object, determined based on the price that, under comparable circumstances, is usually charged for the lawful use of the object in the manner used by the infringer; for copyright objects — in double the cost of counterfeit copies of the work; for trademarks — in double the cost of the goods on which the trademark is illegally placed. The copyright holder may choose the form of compensation to be collected from the infringer.

Unlike the amount of damages, the amount of compensation does not need to be proven. But it must be substantiated: in accordance with paragraph 61 of Resolution of the Plenum of the Supreme Court of the Russian Federation No. 10 of April 23, 2019 "On the Application of Part Four of the Civil Code of the Russian Federation", a claim for compensation in the amount of 10,000 to 5,000,000 rubles must be supported by a justification for the amount of compensation to be collected, confirming, in the opinion of the plaintiff, the proportionality of the amount of compensation to be collected to the violation committed, with the exception of a claim for compensation in the minimum amount; a claim for compensation in the amount of twice the cost of the right to use an intellectual property object must be substantiated by a calculation and documents confirming the cost of the right to use or the number of copies (goods) and their price.

Here a problem arises: compensation "in double the amount" can always be argued with the help of direct evidence, expressed in an objective reflection of the established price. But in the case of "from 10,000 to 5,000,000" the justification cannot be built on the same solid documentary evidence, clearly and harmoniously providing the basis for calculation. Clause 62 of the "plenum" in this case simply indicates that when determining the amount of compensation, the following must be taken into account: "…the circumstances associated with the object of the violated rights (for example, its public awareness), the nature of the violation (in particular, whether the trademark was placed on the product by the copyright holder himself or by third parties without his consent, whether the copy was reproduced by the copyright holder himself or by third parties, etc.), the period of illegal use of the result of intellectual activity or means of individualization, the presence and degree of guilt of the infringer (including whether the violation was of a gross nature, whether it was committed repeatedly), the probable property losses of the copyright holder, whether the use of the results of intellectual activity or means of individualization, the rights to which belong to other persons, was a significant part of the economic activity of the infringer" - on the basis of these factors, the court makes a decision in compliance with the principles of reasonableness and fairness, as well as the proportionality of compensation to the consequences of the violation. Therefore, the recovery of compensation "from 10,000 to 5,000,000" is often an unpredictable event, during which you can find out that it is not possible to "draw" the desired amount just like that.

We will rely on the practice of the Arbitration Court of Krasnodar Krai — all-Russian practice is no different.

If we draw a general conclusion on the practice of collecting compensation for violation of an exclusive right in the Arbitration Court of Krasnodar Krai, we can state the following:
● if the defendant objects, one should expect an award of 10,000 rubles;
● if there is an evidentiary basis (an existing concluded license agreement is sufficient — (the Intellectual Property Court agreed with this approach back in case No. A45−7079/2015), then it is better to resort to collecting compensation in the amount of double the cost of the right to use the result of intellectual activity or means of individualization;
● the tactic "demand more — you will get more" does not work.

Copyright objects:

Collection of compensation for violation of exclusive rights to works of photography almost always ends with partial satisfaction of the amount collected, namely, an award of 10,000 rubles for the violation (A32−57 368/2023, A32−48 710/2023, A32−41 534/2023, A32−57 356/2023, A32−57 269/2023, А32−38 547/2023, А32−56 200/2023, А32−56 141/2023 ,A32−24 793/2023). If the defendant does not file a motion to reduce the amount of compensation, the court may fully satisfy the claims for its collection in full (A32−50 713/2021, A32−63 055/2022, A32−61 669/2022, A32−53 275/2023).

But the collection of compensation for the violation of exclusive rights to a musical work may end with overcoming the "ten" and reaching the "twenty": in cases A32−54 893/2023, A32−15 584/2023 and A32−33 685/2020 (and in all similar cases), RAO collects 20,000 rubles in compensation for each unlawfully used work.

In case A32−52 290/2023, the plaintiff managed to collect all of the required 40,000 rubles despite the defendant’s motion to reduce the amount of compensation: the court noted that the defendant had repeatedly violated the intellectual rights of copyright holders, and then referred to the position of the Supreme Court that bringing to justice for a similar violation is essential for this category of case and indicates the defendant’s awareness of the violation of exclusive rights and the systematic nature of their violation. Therefore, his request to reduce the amount of compensation was denied.

Claims for satisfaction of "double the amount" are usually satisfied in full.

Trademarks:

A fine of 10,000 rubles for one violation of exclusive rights to a trademark is normal practice (A32−49 050/2021, A32−57 164/2022, A32−49 425/2022, A32−53 106/2023, A32−458/2023, A32−24 855/2022). But if the defendant does not file a motion to reduce the amount of compensation, the court will satisfy the claims in full (and these amounts are often very impressive — A32−2026/2021, A32−22 647/2023, A32−22 482/2023, A32−62 840/2022, A32−58 636/2021, A32−4560/2020).

But in cases on the recovery of compensation for violation of exclusive rights to a trademark, it is still possible to achieve much more significant compensation than in cases on the recovery of compensation for violation of exclusive rights to copyright objects.

In the dispute on case A32−37 219/2023 the court stated: "Each individual product card posted by the defendant on the marketplace contains a unique identifier (web link), thus, the number of product cards (links) corresponds to the number of violations of exclusive rights to the trademark committed by the defendant in the literal application of current legislation, within the framework of the circumstances described in this statement of claim (the nature of the violations committed, the degree of guilt of the defendant, etc.), the calculation of the amount of compensation can be reasonably carried out by multiplying the number of violations by an amount equal to 100,000 rubles. Based on the principles of reasonableness and fairness, the plaintiff considers the declared amount of compensation in the amount of 150,000 rubles for the illegal use of trademarks by the defendant sufficient to restore the violated right." The court concluded that compensation should be collected in the stated amount, stating that the awarded amount did not entail unfair enrichment of the plaintiff, nor excessive interference in the defendant’s property sphere, although it deprived the latter of incentives for non-contractual use of the intellectual property.

A textbook example of collecting compensation in the amount of twice the cost of the right to use a trademark is given in case A32−45 748/2019: the plaintiff collected 200,000 rubles on the basis of a license agreement with a third party presented in the case materials, under the terms of which the licensee paid a fee of 100,000 rubles once a year. The Arbitration Court of Krasnodar Krai agreed with the arguments of the trademark owner and concluded that it was necessary to collect compensation in the amount of 200,000 rubles. In general, the highest amounts of compensation are collected in cases on "double the amount".

In case A67−10 240/2021, the plaintiff calculated 6,809,781 rubles in compensation, but received only 500,000. The provided calculation of lost profits predictably did not play any role in collecting compensation for the violation of exclusive rights, because it was not properly reflected in relation to which specific product (goods) this calculation was made. The plaintiff also pointed to the fact that the defendant’s products (and the parties were competitors and worked in the same product market) were found to have an excess of yeast and mold and the presence of E. coli. But the court noted that this circumstance does not indicate the presence of grounds for awarding the maximum amount of compensation. Given the nature of the violation, its duration, as well as the degree of recognition of the trademark, the Krasnodar court considered compensation in the amount of 500,000 rubles fair and proportionate.

Interesting outcome of case A32−18 803/2020: a foreign company filed a claim for compensation in the amount of 80,000 rubles for violation of exclusive rights to the PJ Masks game set (Heroes in Masks), placed in cardboard packaging with images on it that were similar to the point of confusion with the plaintiff’s trademarks, with signs of counterfeiting. The fact of sale of the said goods was confirmed by the disputed goods, as well as video filming, made for the purposes and on the basis of self-defense of the plaintiff’s civil rights in accordance with Article 14 of the Civil Code of the Russian Federation. However, the defendant managed to reduce the amount of compensation by 50% based on the following: the court established that the defendant and his spouse are dependent on and care for the latter’s sister, who is a disabled person of the first group since childhood (certificates of disability and certificates of family composition were presented). The defendant also has a dependent daughter, who is a full-time student at the higher educational institution "Orthodox St. Tikhon’s University for the Humanities" and the defendant independently bears the costs of her maintenance. The defendant’s difficult financial situation is confirmed by a certificate from the Pension Fund of the Russian Federation in the Starominsky District of the Krasnodar Territory, according to which the amount of the old-age insurance pension is 10,201.91 rubles; a certificate of the borrower’s debt under the agreement, according to which the debt on the loan is 244,257.31 rubles. It was also established that the goods purchased by the plaintiff were sold by the defendant for the first time; the goods were the only ones and were not a significant part of the defendant’s business activities; the violation of the plaintiff’s exclusive rights was not of a gross nature; the plaintiff did not suffer significant losses as a result of the defendant’s illegal actions. Thus, the court found that in this case the amount of compensation of 80,000 rubles was disproportionate for the defendant in relation to the circumstances of the offense and the factual circumstances of the case, and such compensation could not be aimed at restoring the plaintiff’s violated right. The declared amount of compensation was considered excessive for the defendant. It was noted that the amount to be collected contradicts the principles of reasonableness and fairness, is of a "punitive" nature for the defendant, and does not meet the requirements of differentiation of liability depending on all essential circumstances. "Collection of compensation in the declared amount (80,000 rubles) will undoubtedly upset the balance of interests of the parties and will entail the termination of the defendant’s business activities." Thus, the court satisfied the claim only partially — in the amount of 40,000 rubles.

Patents:

The claim for compensation for infringement of an exclusive right in the amount of twice the value of the right to use is the most popular subject of the claim in patent protection cases (A32−8025/2020, A32−35 517/2015, A32−31 281/2015). It is not surprising — objects of patent law are usually actively present in civil circulation, often act as the subject of contractual relations and almost always have an objective reflection of the cost of the right to use. In rare cases of recovery "from 10,000 to 5,000,000" the claims are satisfied by the usual "ten" (A32−2676/2020).

The only time the court reduced the amount of compensation for violation of exclusive rights to an object of patent law is found in case A32−4570/2022: two defendants (both persons jointly sold the goods) were presented with a claim for joint collection of 100,000 rubles in compensation for violation of intellectual rights to an industrial design for a rocking chair. Before the court hearing, the plaintiff made a purchase of a piece of furniture with delivery to the address specified by him (more precisely, he instructed a certain LLC to make this purchase). In his explanations, he indicated that the rights were violated on the Internet, i.e. this circumstance allows a wide range of people to gain access to the offer and purchase of counterfeit goods. The plaintiff then stated that he has been on the relevant product market for more than 9 years and has a strong business reputation, and as a result of his marketing efforts, the chairs he produces have become widely known among consumers. Thus, the offer for sale and sale of counterfeit goods by the defendants forms in the consumer of the relevant product the idea that these goods belong to one manufacturer. At the same time, the quality of the products differs significantly, which entails additional certain reputational risks for the copyright holder. The plaintiff also noted that the amount of compensation was determined taking into account the period of violation of exclusive rights.

However, when resolving the issue of the amount of compensation for the violation of the plaintiff’s rights, the court found that the monetary claim made by the plaintiff was disproportionate. Moreover, the court indicated that the defendants had committed the violation for the first time, that the sale of the disputed rocking chair after the patent was registered was an isolated case (the plaintiff’s purchase was this case) and that the profit from the sale of this chair was only 6,828 rubles.

Thus, the court simultaneously took into account the facts of the sale of the goods and the plaintiff’s failure to document the amount of compensation and granted the defendants' motion to reduce the amount of compensation, as a result of which the amount collected was 50,000 rubles.

Naturally, a bankruptcy creditor will want to challenge such a transaction. But the problem is that, in accordance with paragraph 1 of Article 61.9 of Federal Law No. 127-FZ "On Insolvency (Bankruptcy)", the right to file an application to challenge a debtor’s transaction belongs to the arbitration manager (during external management or bankruptcy proceedings) either on behalf of the debtor on his own initiative or on the basis of a decision of the creditors' meeting or the creditors' committee.
Thus, a creditor who has information (even indirect evidence) about the debtor’s execution of a suspicious, unequal transaction, a transaction with preference or other actions that can be challenged under the rules of Chapter III.1 of the Bankruptcy Law, has two options:

1. Ensure that issues on challenging the relevant transaction are included in the agenda of the creditors' meeting and receive an approving decision of the meeting. If a creditor interested in challenging the transaction holds more than 50% of the votes at the creditors' meeting, he himself may include this issue in the agenda and make a decision that will outweigh the votes of other creditors — in accordance with paragraph 3 of Article 12 of the Bankruptcy Law, bankruptcy creditors (including authorized bodies) have a number of votes at the creditors' meeting proportional to the size of their claims to the total amount of claims for monetary obligations (and for payment of mandatory payments) included in the register of creditors' claims on the date of the creditors' meeting. The same procedure applies to an appeal to the creditors' committee, if there is one in the bankruptcy case.

If the creditors' meeting does not make a decision to challenge a specific transaction, the bankruptcy creditor has the right to challenge this decision within the framework of a separate dispute in the bankruptcy case in the arbitration court. However, in such a case, he will need to prove that the "refusal" of the creditors' meeting/committee resulted in a violation of the rights and legitimate interests of the persons participating in the bankruptcy case. To do this, it is necessary to provide the court with all available information about the relevant transaction of the debtor, justify the need for challenging it and prepare a position that challenging this particular transaction will lead to replenishment of the bankruptcy estate, i.e. the unwillingness to challenge it violates the interests of the bankruptcy creditors and the authorized body (if there are no other grounds for recognizing the meeting’s decisions as invalid).

2. Initiate an initiative with the bankruptcy trustee. Clause 1 of the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated 23.12.2010 N 63 (as amended on 30.07.2013) "On Certain Issues Related to the Application of Chapter III.1 of the Federal Law "On Insolvency (Bankruptcy)" enables an individual bankruptcy creditor to apply to the bankruptcy trustee with a reasoned proposal to challenge suspicious transactions (Article 61.2 of the Bankruptcy Law) or transactions with preference (Article 61.3 of the Bankruptcy Law). In the event of a refusal or inaction of the bankruptcy trustee on the appeal of an individual creditor, this creditor has the right to apply to the arbitration court with a complaint about the refusal or inaction of the bankruptcy trustee within the framework of a separate dispute in the bankruptcy case. If the complaint about the inaction (refusal) of the bankruptcy trustee to challenge the transaction is recognized as justified, the court also has the right to indicate that the person who filed the complaint has the right to file an application to challenge it himself — i.e. the arbitration court can, as it were, grant the creditor the right to file an application to challenge the debtor’s transaction in the event of a successful appeal of the refusal/inaction of the external/bankruptcy trustee. But the problem is that courts often refuse to recognize as illegal the actions of an bankruptcy trustee who has not challenged the debtor’s transactions at the request of the creditor, in the absence of significant evidence of the existence of grounds for challenging the transactions — and this despite the fact that creditors do not have the same powers and opportunities to collect evidence that bankruptcy trustee has (at the same time, the Federal Tax Service has special powers, which often does not even provide the insolvency practitioner with evidence, citing tax secrecy).

In general, it is worth noting that the recognition by the court of any negative (refusal or inaction) reaction of the bankruptcy trustee as illegal is sufficient grounds for removing him from fulfilling obligations. But in order to minimize "refusals" of both the bankruptcy trustee and the creditors' meeting/committee, it is necessary to approach these entities with a fully prepared position for a separate dispute (roughly speaking, so that the bankruptcy trustee uses already "ready" material) with all possible documentary evidence and an already prepared statement (on behalf of the bankruptcy trustee) challenging the debtor’s transaction.