Compensation for the use of a disputed trademark may be reduced

The Rostov Arbitration Court has resumed consideration of the claim of Smolensk businesswoman Elizaveta Malik against the Don manufacturer of dry dietary bread, ZAO Molodets, demanding payment of 172 million rubles for the use of her patented trademark. At the first hearing, the judge ruled that Ms. Malik needed to justify the amount of damage. The plaintiff claims that the CJSC's brands are confusingly similar to her own patented brands, and estimates her lost profits at the said amount. CJSC Molodets does not recognize the similarity of trademarks.

The Smolensk businesswoman will have to justify the amount of compensation she requires from JSC Molodets.
Photo: Oleg Kharseev, Kommersant

Litigation between Smolensk businesswoman Elizaveta Malik and her companies Elizaveta and 2D Plus with Rostov-based ZAO Molodets over the payment of 172.7 million rubles. for his use of her patented trademark was resumed yesterday in the Don Arbitration Court. At the first hearing, the court considered that the amount of compensation needed to be justified. The consideration of its size and the demand, at the expense of the Rostov JSC, to destroy all the packages of bread with the controversial image it produced, has been postponed to November 6 of this year.

CJSC “Molodets” was founded in 2001 and produces bread under the brand “Khlebtsy-Molodtsy”. It supplies products to all major cities of Russia, as well as to Belarus, Kazakhstan, Azerbaijan, Moldova and Ukraine. It has two production facilities in the Rostov region with a capacity of 1.2 million kg per month. 100% of the shares of the company belong to Ekaterina Voloshina. Revenue in 2011 - 388.15 million rubles. “Molodets” occupies about 20% of the Russian market of dry dietary bread (company estimate).

Elizaveta LLC was registered in 2002, specializes in the production of dry dietary products under the same brand, and is developing a distribution network in all regions of the Russian Federation and neighboring countries. 100% of shares in the LLC belong to Elizaveta Malik

As follows from the case materials, the Smolensk businesswoman believes that the trademarks of the Don company are confusingly similar to the trademarks registered by Elizaveta LLC. Similar, in their opinion, are the labels depicting a sandwich consisting of two dry breads with cottage cheese and berries. As evidence, “Elizaveta” presented Rospatent licenses from 2009 and the results of an independent examination. As indicated in the case materials, the plaintiff insisted on a ban on the sale of bread under the controversial brands, the destruction of “counterfeit labels” and demanded compensation of 178.8 million rubles. lost profits. The Rostov residents did not recognize the claims of the Smolensk company. In November 2010, the first instance upheld the claim of “Elizabeth”, ordering the labels of the loaves to be withdrawn from circulation and destroyed at the defendant’s expense, and to pay the LLC 172.7 million rubles. The owners of Molodets filed an appeal. In February of this year, the court took the side of the Rostovites. Smolensk producers appealed to the Court of Cassation, which upheld the decision of the first instance. Subsequently, by decision of the Supreme Arbitration Court, the case was transferred to the first instance to resume the hearing due to newly discovered circumstances. “Previously, compensation was calculated by taking the annual revenue of the defendant who used the disputed brands. “Elizabeth” took our revenue and multiplied it by two (for 2009 and 2010). However, it is now necessary to indicate how much money the trademark owner lost on sales of a particular brand. But we know for certain that the Smolensk company practically did not use it, so the amount should be much less - about 5 million rubles,” Nikolai Dubovoy, general director of Molodets CJSC, explained to Kommersant. It was not possible to get a comment from Elizaveta Malik yesterday - at the reception desk of Elizaveta LLC, Kommersant was informed that the management was not there.

Earlier, Mr. Dubovoy told Kommersant that Rostov residents independently developed controversial brands and launched them on the market in 2008. In the same year, they presented their products at the Prodexpo exhibition, and representatives of Elizaveta were also present at the same event. Later it became known that they registered the trademarks used by “Molodets”, and then through the court they obtained the cancellation of the Rostovites’ licenses. Now Molodets JSC, through the intellectual property rights court, is trying to recognize the right to use the image. “Elizaveta” filed for bankruptcy of the Rostov company in June of this year, but in August the court refused to introduce a monitoring procedure at the Rostov enterprise, citing the fact that the payment of compensation cannot be equated to ordinary debt.

“The Rostov residents will be able to avoid paying compensation only in one case - if in an intellectual property rights court they prove that their trademark is not confusingly similar to the Elizabeth trademark. I think the Rostov arbitration will take a break and wait for the final court decision on this issue. As for the scheme for calculating compensation, it is still not clearly defined, and there are disputes about this. Usually it is left to the discretion of the judge,” says Sergei Radchenko from the Yug law bureau.

Tatiana Serbina

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