X5 Retail is a fair competitor: proven by the Supreme Court of Arbitration of the Russian Federation

Lawyers at the Law Firm "YUST", advocate Arthur Rokhlin and Radmila Nikitina, helped “Agrotorg” LLC (the holding X5 Retail) to contest the decision and instruction of the Republic of Tatarstan Department of the Federal Antimonopoly Service (hereinafter – the DFAS), according to which the company was recognized as a violator of the Competition Law because of the use of the commercial name “Pyaterochka plus”. The DFAS believed that the name was similar up to a point of confusion with “Pyaterochka” brand, which “Agrotorg” LLC (“Agrotorg”) had granted to another company under an agreement of commercial concession. On 04.06.2010, the Court of Arbitration of the Republic of Tatarstan dismissed the claim by “Agrotorg” to rule invalid the decision and instruction of the DFAS. The Court acted on the premises that:

• It followed from the commercial concession agreement that “Agrotorg” had transferred the exclusive right to use the commercial name “Pyaterochka” within the territory of the Republic of Tatarstan;
• Use of similar commercial names by the company, in its turn, constituted unfair competition, since it was aimed at the obtaining of advantages in conducting business activity.

On 14.09.2010, the second instance upheld the position of “Agrotorg”, having ruled invalid the decision and instruction of the DFAS for the following reasons:

• According to Article 1033 of the Civil Code of the Russian Federation (the CCRF), it does not follow from the commercial concession agreement that the applicant has transferred the exclusive right to use the commercial name “Pyaterochka” within the territory of the Republic of Tatarstan (the parties did not stipulate this in the agreement);
• The first instance court failed to indicate, which actions exactly of the applicant were unfair competition. What is more, there is no evidence that such actions conform to the indications stipulated by clause 9 of Article 4 of the Competition Protection Law. Also, these actions may not be qualified under part 4 of Article 14 of the Competition Protection Law as they lack the qualifying indication – unfair obtaining of the rights to the trademark.

On 16.12.2010, the cassation instance court revoked the decision of the second instance court and left unchanged the decision of the first instance court.

The Board of the Supreme Court of Arbitration of the Russian Federation crossed all the “t”s of the case: on 20.09.2011, it revoked the court acts of the first and cassation instances and left unchanged the ruling of the second instance court.