Practical aspects of bringing the owner of the online store to criminal liability for illegal use of trademarks (in terms of Article 229 of the Criminal Code of Ukraine)

Norms of Art. 214 of the Criminal Procedure Code of Ukraine provides that the investigator, prosecutor immediately, but not later than 24 hours after filing a statement, notification of a non-criminal offense or after self-discovery by him from any source of circumstances that may indicate the commission of a criminal offense, such information should be given to the applicant as an extract from the Unified Register of Judicial Investigations.

Given the special specificity and typicality of the criminal offense, the responsibility for which is provided by Art. 229 of the Criminal Code, the filing of an application for the commission of such a criminal offense usually does not lead to the introduction of relevant information in the ERDR.

Thus, investigators make a statement to the Unified Accounting Journal and report that there is no information that would indicate the commission of a criminal offense.

As a result, the applicant is either a natural person whose rights have been violated by purchasing counterfeit / low-quality / “non-warranty” goods in the online store, or a trademark owner who is forced to appeal to the court (investigating judge) with a complaint about the investigator’s inaction. 303 of the CPC of Ukraine, in order to oblige the latter to enter the relevant information in the Unified Register of pre-trial investigations.

Usually, a court hearing to consider a complaint about the inaction of the investigator is scheduled within one or two months from the date of filing such a complaint.

Thus, even before the criminal proceedings under Art. 229 of the Criminal Code of Ukraine we face additional expenses of time.

Further, it is quite problematic to “pre-criminal” establish the amount of damage caused to the victim by the owner of the online store, due to the possible lack of material damage as such or insufficient amount to qualify the act as a criminal offense.

Thus, even Part 1 of Article 229 of the Criminal Code of Ukraine provides for criminal liability for illegal use of a mark for goods and services, brand name, qualified indication of origin, or other intentional violation of the right to these objects, if it caused significant material damage.

Material damage is considered to be caused in a significant amount if its amount is twenty or more times the non-taxable minimum income of citizens, and for the qualification of criminal offenses tax-free minimum income of citizens is equated to the social tax benefit specified in subparagraph 169.1.1 Ukraine for the relevant year, and reaches 50% of the subsistence level for able-bodied persons.

For example, the social tax benefit in 2019 is UAH 960.50 that brings a person to criminal responsibility under Part 1 of Art. 229 of the Criminal Code of Ukraine, the available material damage in the minimum amount of UAH 19210.00 is required; for part 2 of Art. 229 of the Criminal Code of Ukraine – UAH 192100.00.

Thus, we faced with the need to conduct quite expensive “control” procurement in order to “create” material damage in the amount specified by the Criminal Code of Ukraine.

During the pre-trial investigation of criminal proceedings on the grounds of a criminal offense under Art. 229 of the Criminal Code of Ukraine, we face long-term identification of witnesses or their absence in general, unwillingness of the latter to testify or failure of witnesses to save relevant evidence (screenshots of correspondence, checks, payment orders, etc.) purchase of certain goods in the online store.

In addition, a lot of time is spent on judicial support of investigative (search) actions, such as searches, seizures of property or sites, as each search, temporary access, arrest requires a decision of the investigating judge, and on judicial appeal of the investigator’s inaction. The latter still carry out such investigative (search) actions.

As we have already stated in the article “Problems of determining the amount of damage caused during criminal prosecution for illegal use of rights to TM (Article 229 of the Criminal Code), during the examination or expert study to determine the amount of material damage caused by unauthorized use mark for goods and services, the amount of damage is not set by experts in full, at best Рby the royalty method, as a result of which the Notification of suspicion to the owner of the online store can be made only under Part 1 of Art. 229 of the Criminal Code, the sanction of which is a fine of one to two thousand non-taxable minimum incomes ( from UAH 17,000.00 to UAH 34,000.00).

And finally. The most difficult during the criminal proceedings under Art. 229 of the Criminal Code is the establishment of the actual subject of the criminal offense, the identification of a specific individual as the owner of a domain name or online store and the legal qualification of the actions of host providers as legal entities to determine their complicity in a criminal offense.

At the same time, all of the above in no way indicates the futility or impossibility of bringing the owner of the online store to criminal liability for illegal use of trademarks.

These are only difficulties on the way to restoring justice.

As you know, the road is conquered by those who walk.