10.05.2019 — President Signed Law On Sovereignty Of Russian Internet

On 1 May 2019 the Russian President Vladimir Putin signed the law on the safe and sustainable work of the Russian Internet. According to the explanatory note to the bill, it is aimed at ensuring the stable operation of the Russian Internet in case it is disconnected from the infrastructure of the global network. The legislative amendments provide for new responsibilities of telecom operators, such as the installation of special technical devices to counter threats to the Russian Internet and the observance of message routing rules.

Amendments to the Federal Laws “On Communications” and “On Information, Information Technologies and Information Protection”, often referred to as the law on sovereignty of the Russian Internet, enable the responsible Russian state authority (Roskomnadzor) to establish traffic routing rules. In order to implement them telecom operators will have to install special technical devices to counter threats to the Russian Internet. Roskomnadzor will provide such devices to the telecom operators free of charge, and the operators will have to report on their installation.

In addition the law provides for the creation of a special monitoring center under the jurisdiction of Roskomnadzor, which will manage telecom networks in critical situations. Thus, in the event of threats to the Russian Internet Roskomnadzor will have the right to give binding instructions to the telecom operators. Moreover, the telecom operators will have to observe the rules of message routing established by Roskomnadzor, if a recipient or a sender is a Russian user.

Most of the amendments will enter into force on 1 November 2019. 


09.05.2019 — Supreme Court Plenum Adopted Guidance On Intellectual Property Issues

On 23 April, on the World Book and Copyright Day, the Supreme Court Plenum adopted the guidance on intellectual property issues based on the case law on these matters. The Supreme Court Plenum summarized the established court practice on a wide range of IP issues. The Plenum provided guidance on such issues as jurisdiction, disposition of intellectual property rights and compensation for their infringement, admissibility of evidence and other important issues related to intellectual property protection.

First of all, the Plenum explained issues concerning adjudication of disputes: the special Court for Intellectual Property Rights has priority when there are several related claims in one lawsuit, one of which shall be resolved by arbitration court and the other by the Court for Intellectual Property Rights. If in the course of the litigation the court discovers that it lacks jurisdiction to resolve the dispute, the case files must be transferred to the appropriate court.

In addition the Plenum summarized the case law on the disposition of intellectual property rights, license agreements, compulsory license, trust management of intellectual property and pledge of exclusive rights. For instance, the Supreme Court clarified that the pledge agreement shall contain information that allows identifying the intellectual property, the exclusive right to which is pledged.

The Plenum also explained issues related to admissibility of evidence in intellectual property disputes. The Supreme Court stated that courts should consider evidence obtained from the Internet, in particular, printouts of materials published online, screenshots of websites with an indication of the website’s address and the time when the screenshot was taken, along with other evidence. The court may examine the website during court session in cases where time is of the essence.

The Supreme Court confirmed that the domain holders are also entitled to demand cancellation of the registration of an identical or confusingly similar domain in the Internet.

With regard to import issues the Supreme Court indicated that the acquisition, storage or transportation of goods with trademarks, not aimed at selling them in the territory of the Russian Federation, do not violate the exclusive rights.

08.05.2019 — Parent Company May Be Held Liable For Debts Of Its Subsidiary, Even If It Owns Less Than 50% Of SharesParent Company May Be Held Liable For Debts Of Its Subsidiary, Even If It Owns Less Than 50% Of Shares

The Supreme Court explained that the absence of a formal control (50% or more of shares in the charter capital of subsidiary) does not preclude courts to establish that the parent company determines decisions of its subsidiary. When establishing that the parent company exercises control, the courts should assess evidence presented by the parties, in particular, take into account the corporate structure of the company, the participation of the parent company in managing the affairs of the subsidiary and other relevant circumstances. If court establishes, that the parent company exercises control over subsidiary, the parent company may be held liable for the transactions of its subsidiary executed pursuant to the parent company’s instructions or in case of the subsidiary’s bankruptcy caused by the parent company.

In the Case Law Digest published by the Supreme Court No. 1 (2019) includes a court case concerning the creditor’s right to hold liable the parent company for the debts of its subsidiary if the subsidiary violated the terms of a contract concluded pursuant to the instructions or with the consent of the parent company (Decision of the Supreme Court of the Russian Federation dated 18.12.2018 No. 305-ES18-12143). In the present case the claimant filed a claim on the contract termination and the recovery of damages to both the parent company and its subsidiary.

The courts of the first and the appellate instances granted the claim. However, the cassation court dismissed the claim to the parent company on the basis that its share in the subsidiary was less than 50%, and therefore, according to the cassation court, the parent company was not able to determine decisions of its subsidiary.

The Supreme Court overruled the decisions of the lower courts and remanded the case for a new trial, explaining that the ability of the parent company to determine the decisions of its subsidiary does not depend directly on the share in the charter capital or on the existence of a contract between the companies. Effective control can be predetermined by the corporate structure of the companies, the procedure for exercising transactions, the degree of participation in the subsidiary’s business affairs and other circumstances. Thus, the absence of a formal control (50% or more of shares in the charter capital) does not preclude the creditor from proving that the parent company exercised effective control over the subsidiary company at the time particular transaction was concluded. The court should assess the existence of effective control taking into account not only the share in the charter capital, but also the degree the parent company involvement in the management of its subsidiary.

07.05.2019 — Supreme Court Clarified Criteria For Dismissal For Repeated Failure To Perform Job Duties

In the recent case the Supreme Court examined one of the most problematic grounds for dismissal of an employee, namely, the dismissal for repeated failure to perform job duties without good reasons. The Supreme Court emphasized that dismissal on this ground is possible only in two cases. The employer is entitled to terminate the employment contract, provided that the employee already has a previously imposed disciplinary sanction and commits a labor law violation again, or if the employee continues to perform his job duties improperly despite the imposition of a disciplinary sanction. At the same time, the dismissal for repeated violations is illegal if after the last violation for which the employee was punished, the employee did not commit disciplinary offenses.

In accordance with Article 81, para. 1 (5) of the Russian Labor Code, an employer has the right to dismiss an employee for repeated failure to perform his job duties without good reason, provided that an employee has a disciplinary sanction. In other words, dismissal is possible only in case of systematic violations, when the employee continues to violate labor discipline after a sanction has been imposed on him. At the same time, it is extremely important for employers to comply with the procedure of imposition of disciplinary sanctions in every case of violation of labor duties by employees.

In one of the recent cases, the Supreme Court adjudicated the dispute on challenging the dismissal (Decision of the Russian Supreme Court dated 25 March 2019 No. 5-KG18-305). In this case the employee committed several violations in the beginning of the month, and at the end of the month the employer reprimanded him for the last violation and subsequently dismissed. The Supreme Court declared the dismissal unlawful, because after the employer imposed disciplinary sanction on the employee in the form of a reprimand, the employee has not committed any new violation. Therefore the employer was not entitled to dismiss the employee with reference to previously committed violations for which the employee was not punished. According to the Supreme Court, this does not amount to repeated and systematic violation of labor discipline by the employee, and as a result, there are no grounds for dismissal under Article 81, para. 1 (5) of the Russian Labor Code.


06.05.2019 — Rosreestr Will Provide Information About Public Easements From Property Register

The Ministry of Economic Development introduced changes to the procedure for providing information from the Property Register, which will allow any interested third parties to obtain extract from the Property Register in order to check whether the land plot is encumbered by public easement. Public easement is an encumbrance of a land plot; therefore, it is important to identify it in the course of due diligence of the land plot.

Let us remind you that on 1 September 2018 amendments were introduced to the Land, Town Planning and Forest Codes of the Russian Federation, as well as to the Federal Law “On the State Registration of the Real Estate” concerning the public easements. The establishment of a public easement enables to locate linear facilities (electric grid facilities, water supply networks, heating networks, communication lines, gas supply linear facilities) without expropriating the land plot from its owner. Previously, the state authorities used to expropriate the land plots from their owners for public needs for such purposes, but nowadays public easement will be established, and the respective record will be made in the Property Register.

Since public easement is an encumbrance of a land plot, the Ministry of Economic Development has introduced amendments to regulations to allow interested third parties to obtain information about its existence. Now applicants will be able to receive information on public easement from the Property Register in the respective extract.