On August 15, the Supreme Court issued Ruling No. 305-ES24-8216 in case No. A41-62370/2021 on challenging a set of agreements on the alienation of exclusive rights to trademarks and industrial designs. According to the plaintiff, former shareholder of a company, these agreements were concluded without the intention of creating the corresponding legal consequences and in violation of corporate procedures. The lower courts refused to invalidate the transaction.

However, the Supreme Court considered that the company’s main activity, manufacturing household chemicals, is only possible with the trademarks and industrial designs in question. The judicial panel indicated that it means that the transaction in question did have unfavourable consequences for the company and also implies that it must be regarded as a major one requiring shareholders’ approval. The court also assessed that the disputed intellectual rights ultimately ended up with the plaintiff's former partners, which may indicate their intention to transfer the company’s business to themselves without observing the necessary procedures.

The TV&P lawyer Ekaterina Schmitt, in her commentary to the “Advokatskaya Gazeta” (Russian Advocacy Newspaper), noted that the Supreme Court once again pointed out to the lower courts the inadmissibility of a formal approach when assessing such transactions. Unlike real estate, equipment, and other inventory items, it can be challenging to evaluate intellectual property. In this regard, such items are often alienated at a reduced price on the eve of bankruptcy or amidst a corporate conflict. In this regard, the Supreme Court once again drew attention to the fact that a significant transaction is characterized not only by the quantitative criterion (cost) but also by the qualitative one.

Ekaterina Schmitt added that the alienation of a trademark may entail a significant change in the scale of the company's activities and even their complete cessation. In such cases, it is necessary to see how the transaction itself affected the company's business in general (and not only look at its price).

“Advokatskaya Gazeta” (Russian Advocacy Newspaper) is the official body of the Russian Federal Bar Association (published since 2007). The Newspaper’s publications are devoted to the most important legal topics, case law, as well as legal practice and issues of advocacy.

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