Unprecedented compensation award in infringement case

In Sibirsky Bereg v OOO Kropotkinsky Khlebokombinat (unreported), the Arbitration Court of Krasnodar has upheld the plaintiff's trademark infringement complaint and has ordered the defendant to pay an unprecedented amount of monetary compensation - Rb1 million (approximately $35,000).

Sibirsky Bereg is a Russian company that manufactures sukhariki (salted and flavoured brown bread snacks) under a number of marks, one of which is KIRIESHKI (in Cyrillic characters). OOO Kropotkinsky Khlebokombinat (KK), a company based in southern Russia, started manufacturing sukhariki under the name KIRIYUSHKI (in Cyrillic characters). Sibirsky Bereg filed a trademark infringement action against KK, arguing that KIRIYUSHKI was confusingly similar to its KIRIESHKI mark. It requested that KK cease use of the infringing mark and claimed compensation of Rb1 million, based on the estimated volume of infringing products manufactured by KK.

Before December 2002, the Russian Trademark Law did not envisage monetary compensation as a remedy for trademark infringement. An aggrieved trademark owner could only claim for the cessation of infringement and compensation for actual damages inflicted. Amendments to the Trademark Law adopted in December 2002 now allow mark owners to claim compensation of between Rb100,000 (approximately $3,450) to Rb5 million (approximately $173,000) instead of claiming damages. The amount of compensation awarded is determined by the court on a discretionary basis. Although the actual amount awarded in compensation claims is supposed to be based on the particular facts of the case, unlike damages claims, the plaintiff is generally not obliged to prove the basis of the amount claimed.

In the present case, the Arbitration Court of Krasnodar agreed with Sibirsky Bereg that the KIRIESHKI and KIRIYUSHKI marks were confusingly similar, and found that KK had infringed Sibirsky Bereg's trademark. The court also satisfied Sibirsky Bereg's request for Rb1 million in compensation - an unprecedented award in a trademark infringement case.

Experts and practitioners in the field of trademarks have welcomed the ruling. They feel that it is another important step towards better protection for trademark rights in Russia.

Pavel Arievich, Gowlings International Inc, Moscow