The Constitutional Court: expenses in administrative proceedings should be reimbursable!

The Constitutional Court of the Russian Federation has ruled to develop legal norms and mechanisms regulating compensation of expenses incurred in the Chamber for Patent Disputes of the Russian PTO. Until corresponding changes are introduced into the legislation, the winning party may claim from the losing party the costs borne in the administrative proceedings in addition to court expenses, only if the decision is appealed in court.

The Constitutional Court of the Russian Federation has addressed the issue of compensating legal costs borne in the administrative proceedings over a patent dispute in its Resolution of January 10, 2023 N 1-P in connection with the complaint filed by “NIKA-PETROTEK”. In its ruling, the Court has pointed out first of all, that expenses incurred by a person in the course of administrative proceedings in a dispute on granting legal protection to the intellectual property are not subject to compensation as losses, rather, they should be attributed to court expenses. Further, the Court has mentioned that there are several problematic questions in this regard: formally both the subject of administrative proceedings in Rospatent and the subsequent litigation, as well as the procedural status of the participants in such proceedings do not coincide, furthermore, the outcome of the proceedings can have its variations.

At the same time, the Court has stressed that absence of possibility for recovering expenses incurred in the Chamber for Patent Disputes may prevent the parties from resorting to administrative proceedings, therefore, the gap in the legislation should be eliminated by corresponding norms on compensational mechanism. The Resolution does not prescribe the term within which the legislation changes are to be introduced, however, it contains the reimbursement principal for the transitional period. Namely, until the corresponding legal norms are taken, the winning party can add the costs incurred in the administrative proceedings to the court expenses and claim them from the losing party, however, this is possible only of the decision of the Chamber has been appealed in court. If the case does not go to court and stops at the administrative stage, compensation of costs is yet impossible.

Previously appealing examination decisions in the Chamber for Patent Disputes, oppositions and invalidation actions considered by the Russian PTO were at the parties own expense.  The Resolution of the Constitutional Court made a large step forward towards reimbursements of such costs.