The article is devoted to the problematic issues that arise in law enforcement practice on the protection of the exclusive right to a company name, using the example of a recent case from this category, the cassation complaint on which reached the Court for Intellectual Property Rights. The lower courts made multiple mistakes in applying Art. 1473-1474 of the Civil Code of the Russian Federation.

Despite the rather long existence of Articles 1473 and 1474 of the Civil Code of the Russian Federation in the current version (the last significant change took place in connection with the adoption of the federal law of March 12, 2014 N 35-FZ), practice still demonstrates difficulties with the unambiguous application of these legal norms.

As an example, let’s turn to the following ruling of the Intellectual Property Court in the case of the protection of the exclusive right to a trade name, coming from the decision of the Arbitration Court of St. Petersburg and the Leningrad Region dated September 20, 2021. In the case, JSC Goznak, the first of whose legal predecessors was registered in 1995, filed a lawsuit against NPO GOSZNAK LLC to prohibit the use of the company name and to change it.

JSC Goznak referred to its inextricable connection with the state. In Paragraph 3 of the Decree of the President of the Russian Federation of 06/04/2014 N 404, the production of bank notes, change and commemorative coins, etc., is indicated as a priority for the Goznak company.

Satisfying the claims, the court of first instance proceeded from the fact that the GOSZNAK element can cause the consumer to have a strong association with the Goznak company and belonging to the Russian Federation, and therefore came to the conclusion that the company name NPO GOSZNAK doesn’t match the requirements of the law.

At the same time, in support of its position, the trial court indicated that, in accordance with pp.2 p.4 art.1473 of the Civil Code of the Russian Federation, a company name cannot include designations that are contrary to public interests (due to the use of words that cause a strong association with the participation of the state in the activities of this organization, or with the special significance of the activities of this organization in the public interest).

The court of appeal recognized the conclusions as justified, although the defendant disputed both the correctness of the recognition of the name as illegal, and the very right of the plaintiff to demand a change in the defendant’s company name.

The defendant believed that Article 1473 of the Civil Code of the Russian Federation does not contain restrictions on the use of the prefix “GOS”; moreover, there were no grounds for taking into account the plaintiff’s statement about the contradiction of the name to the public interests, since the plaintiff had no authority to file a corresponding claim on the named basis, and the court unlawfully applied two methods of termination violated right – the prohibition of the use of the company name and the obligation of the defendant to change it.

(With regard to the specified grounds for changing the company name, law enforcement practice has developed in such a way that the inclusion of the word “state”, as well as the abbreviation “state”, in company names, is recognized by the courts as illegal for organizations without state participation precisely because that the prohibition on the inclusion of these designations is not directly named in Article 1473 of the Civil Code of the Russian Federation. See, for example, the rulings of the Intellectual Property Rights Court dated July 2, 2020 N С01-692/2020 in case N А73-20515/2019, dated May 17, 2019 N C01-307/2019 in case N A40-213716/2018)

The IP Court, sending the case for a new trial, pointed to multiple legal errors of the lower courts.

Firstly, regardless of the correctness of the conclusions about the inconsistency of the company name of OOO NPO GOSZNAK with the requirements of Paragraph 4 of Article 1473 of the Civil Code of the Russian Federation, it was necessary, first of all, to consider the issue of a proper plaintiff on the demand for compulsion to change the company name. In Paragraph 152 of the Resolution of the Plenum of the Supreme Court of the Russian Federation of April 23, 2019 N 10, it is explained that only the body that registers legal entities, on the basis of Paragraph 5 of Article 1473 of the Civil Code of the Russian Federation, has the right to bring a lawsuit to compel a change in the company name, and only if the company name of the legal entity does not meet the requirements of Paragraphs 3 or 4 of this article. Other persons are not endowed with such a right.

Secondly, the court drew attention to the basic issue of the case, which the lower courts considered a presumption: that the plaintiff’s succession in relation to the GOSSNAK Association and FSUE Gosznak also creates a succession in respect of the company name. At the same time, the IP Court indicated that the current legislation does not provide for the transfer of the exclusive right to a company name to other persons in the order of succession; instead, it is inextricably linked with a specific legal entity, and the exclusive right to a commercial name can only be transferred to another person together with the enterprise under the terms of reorganization or by universal succession.

Thirdly, the IP Court highlighted errors in the analysis of the circumstances relevant to the claim for the termination of the use of a company name that is confusingly similar to the name of another person. In such cases, the identity or confusing similarity of company names, the similarity of activities and the date of inclusion of company names in the Unified State Register of Legal Entities must be established. However, it did not follow from the acts of the lower courts that the spheres of the actual activity of the plaintiff and the defendant were taken into account and analyzed; the court of first instance, believing that the firm name of the defendant is contrary to the public interest, ruled to prohibit the use of the name, even without specifying the types of activity.

The IP Court agreed that in case of non-compliance of the company name with the requirements of Paragraph 4 of Article 1473 of the Civil Code of the Russian Federation there is no obligation to analyze the types of activities carried out by legal entities. However, the plaintiff did not have the right to make a claim that entails an assessment by the courts of the company name for compliance with the law. At the same time, the involvement of the tax inspectorate as a third party in the case could not compensate for the filing of a claim by an improper person.

The court of cassation separately dwelled on the wording of the operative part of the court decision, which sounded like “Prohibit OOO NPO GOSZNAK from using the name GOSZNAK in its company name, which is confusingly similar to the company name Goznak JSC. To oblige ... to change its trade name ...”.

In this regard, the IP Court noted that the choice of the method for terminating the infringement of the exclusive right – the termination of the use of the company name in relation to specific types of activities determined by the court or the change of the company name – belongs not to the plaintiff, but to the defendant. (According to the clarifications from Paragraph 152 of the Decree of the Plenum of the Supreme Court of the Russian Federation of April 23, 2019 N 10, the choice of the method of execution of such a court decision is carried out by the defendant at the stage of execution of the court decision.) Therefore, in the operative part of the court decision that established the fact of violation of the right to the company name of the plaintiff, should be indicated only on the prohibition of the defendant to carry out certain types of activities under a certain company name.

Thus, it should be noted that, despite the sufficient “traditionality” of claims for the protection of the exclusive right to a company name, the practice still cannot be considered monotonous and well-established.