Court imposes an asset freezing order on 65 trade marks
Natura Siberica (a well-known Russian manufacturer of cosmetics) whipped up its followers on social networks by sharing news about an “attack on our business” and asked for their support. The attack mentioned by Natura Siberica is a claim for damages of RUB 4.5B (approximately USD 63.5M) filed by their landlord as well as a court order freezing 65 Russian trade mark registrations. for a very unusual order for Russian courts.
Earlier this year a large fire damaged an industrial complex in Dmitrov, in the Moscow region. The fire started in premises rented by Pervoe Reshenie, LLC (controlled by Natura Siberica), however, the manufacturing facility was unaffected.
In May the court received a civil claim filed by the landlord. The owner of the industrial complex is En+ Recycling, LLC. The company used to be (and might still be) affiliated with one of the largest Russian companies dealing with aluminum production. In its claim for the interim injunction the plaintiff claimed that the leaseholder Pervoe Reshenie, LLC was a “shell corporation” and doesn’t have any valuable assets, apart from Natura Siberica trade marks. The Arbitration Court of the Moscow region took into account the arguments supplied by the plaintiff and froze 65 trade marks of Natura Siberica (including registrations connected with their most popular brand “Grandmother Agafia”). Essentially, the court suspended any actions on transfer, assignment, and all other types of disposal of trade mark rights (including licensing). However, it doesn’t prevent the rights holder from using its marks.
This decision is uncommon. Russian judges are hypercautious if they deal with interim injunctions. The core principal says that the value of assets arrested by the court in terms of an interim injunction shouldn’t exceed the amount of the claim, should be fair and keep the balance between the interests and the rights of the parties. This also applies should the roles be reversed – it would be unusual for a rights holder to obtain an interim injunction as a judge is “unable to correlate value of infringed trade marks and assets of the defendant”.
In this particular case “the stars have aligned” – the defendant which might be liable for multimillion-dollar losses has the only valuable asset – the trade mark portfolio of a well-known and recognised cosmetics manufacturer. As the defendant could potentially transfer these assets to a third party - it makes understandable that the court chose freeze the marks.
The preliminary hearing was adjourned by the court to 27 July, due to the recent lockdown in Moscow, and the need to review arguments and evidence submitted by the parties. One thing is for certain that Natura Siberica should be more flexible in their negotiations with the landlord if they want to meet a settlement agreement, not a court decision. And it’s likely that their alarming posts on social networks demonstrated they knew their position may not be particularly strong.
This case may set an interesting precedent in terms of the value of IP assets and the active use of IP assets as a tool in economic disputes between businesses. We will report back when the results of the preliminary hearing are known.