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On March 26, the Russian Constitutional Court held a hearing on a complaint filed by the board game publisher "Mir Hobby" (hereinafter – the Claimant).

What happened?

The Claimant had previously filed a lawsuit against the marketplace Wildberries, seeking RUB 9 million in compensation for the sale of counterfeit products. The seller who listed the disputed goods was involved as a third party, but no claims were made against him.

The Claimant sent a notice of counterfeiting in February 2023, filed the lawsuit in April, but the product listings were only blocked in May 2023.

The courts of first, appellate, and cassation instances found the notice insufficiently specific – allegedly, it was impossible to establish the fact of infringement from it. The courts also noted that the marketplace had promptly notified the seller of the complaint, and the seller disagreed with it.

Disagreeing with this approach, the Claimant filed a complaint with the Constitutional Court, seeking a review of the constitutionality of provisions of Article 1253.1 of the Russian Civil Code regarding information intermediaries.

What was the Claimant's position?

1. Marketplaces have no economic incentives to combat counterfeiting. They effectively simplify market access for counterfeit goods, and their ranking systems push counterfeits to the top of search results.
2. Marketplaces are not information intermediaries. The criteria set by the legislator for recognizing an information intermediary lack legal certainty, but the meaning of Article 1253.1 of the Civil Code suggests that only hosting providers can be considered intermediaries. Commercial intermediation cannot be classified as information intermediation.
3. Marketplace owners can be qualified as accomplices in the infringement due to their active role in the spread of counterfeiting. Marketplaces determine sales terms, participate in advertising, change product prices, receive payments from buyers, provide delivery and storage services, and derive income from the sale of counterfeits.
4. Courts apply a low standard of proof regarding the marketplace's lack of knowledge of the seller's IP infringement. It is enough for the marketplace to have a declaration from the seller that it holds all necessary intellectual property rights, even if the counterfeit nature of the listing is obvious to anyone.

What was the position of state authorities?

1. The complaint essentially seeks a review of the factual circumstances of the case. The status of an information intermediary is assigned based on specific circumstances, and the norm itself cannot be declared unconstitutional.
2. The law does not define what measures to stop infringements are considered sufficient and timely. Therefore, such a decision is made by the court. The evaluative nature of the norm in itself cannot be regarded as legal uncertainty.
3. The recently adopted law on the platform economy provides for preliminary verification of product listings and allows a rights holder to file a complaint with the marketplace to block a counterfeit listing.
4. The amendments proposed during the consideration of the platform economy bill regarding a specific procedure for handling rights holders' complaints and pre‑moderation of counterfeit listings were deemed inappropriate because they would impose significant costs on marketplaces for verifying intellectual property rights.
5. Processing a rights holder's claim within a certain period of time is justified by the risks of "patent trolling". Some persons who are not actual rights holders may file complaints against listings, and automatic blocking would create conditions for unfair competition between sellers.
6. The Prosecutor General's Office essentially supported the Claimant's complaint, noting the uncertainty of the norm and the need to establish a balance of interests between rights holders and marketplaces.
7. The provision of ancillary services by marketplaces (payment processing, storage and delivery of goods, advertising) does not deprive them of the status of information intermediaries, and these services are auxiliary to the marketplace's main function as an information platform.

What decision do we expect from the Constitutional Court?

Forecasts are a thankless task, but we will try to predict the outcome. We believe that the Constitutional Court will in any case recognize the norm as constitutional, but may give it a new, more precise interpretation. The Claimant and representatives of other bodies and organizations presented quite reasonable arguments in favour of a clearer regulation of the information intermediary's obligations to stop IP infringements.

The Claimant also rightly noted that the platform economy law does not solve the problems of rights holders at all. We have previously pointed out its shortcomings and noted that, for unknown reasons, amendments specifying the system for blocking counterfeit product listings were rejected. Moreover, the Claimant also pointed out the bad faith of some marketplaces, which, despite formally agreeing with the rights holder, may delay the actual implementation of their own decision to block a listing and even reinstate such listings due to a "system failure".

We eagerly await the final decision – and will compare our forecast with the result.

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