A Perfect Storm: New IP Regulations in Russia
Since Russia’s invasion of Ukraine, more than 10 000 sanctions on Russian Federation were imposed and more than 1 000 companies have already left Russian market place. This is the answer of the world’s community to such actions, aiming to economically persuade Russia to stop the war.
Russia, instead, declared all the countries, which supported or imposed sanctions to the list of unfriendly countries, which nowadays includes most of the European countries, USA, Australia and some other countries as well.
Trying to override sanctions, Russian government has applied some changes to its legislation, many of which concern the intellectual property. At the same time, they are contrary to the most of the international agreements in the sphere of IP, which Russia is a member of.
According to the Russian legislation, a compulsory licensing of the invention, utility model or industrial design is possible if such decision was made by the government. But if previously rightsholder was entitled to compensation, by new Decree No 299 of 6 March 2022, such compensation for patent holders, who are registered in “unfriendly countries”, was established in the amount of 0% of profit. Nowadays, there is a possibility that compulsory licensing may be applied also to the software programmes, as well as films and music, which is directly prohibited by Berne Convention.
Next, Resolution No 506 of 29 March 2022, and Decree No 1532 of 19 April 2022, allowed the parallel import of many goods from the unfriendly countries. While it is not prohibited by any international agreements, this means that no consent of the rightsholders is needed for their goods to enter Russian market.
According to the new Decree No 322, all the payments for the use of the IP objects of the rightsholders from the unfriendly countries shall be paid to the special bank account, and they can be transferred to the rightsholder only if the special Committee will allow such transition. Even more, if the rightsholder has not given consent to the debtor to put the money to this account, the debtor may not provide payments without any legal consequences.
Also, there is a draft of the law in Russia, permitting the external temporary management of the foreign corporations by the decision of court. Therefore, some companies already fear that closing activities in Russia would lead to an expropriation of their assets.
The relevant legislative initiatives of Russian Federation are controversial by the international standards, granting national treatment to the foreigners, the fair compensation for the use of the intellectual property objects and exclusive rights of the owner to use and to prohibit the use of the IP objects. Even more, such initiative has led to the complete disregard of the IP rights in fact, as the Russian companies are already trying to register copycats or to use similar to famous brands designations on the market, and some courts already recognized the claims of the foreigner rightsholders for the damages compensation to be the “abuse of the right”.
Compulsory licensing, introduction of parallel import, seizure of foreign enterprises and absence of the legal protection for the foreign rightsholders are antonyms for the international standards of intellectual property, showing disrespect and complete neglect of the international obligations, taken by Russian Federation.
Intellectual property became a mean of influence in Russia, and the only way to change this is to stay strong and act united. For instance, by stopping business in Russia, addressing a WTO DSB for the further suspension of concessions for Russia and/ or by suspending Russian Federation from the intellectual property agreements and conventions, as well as international intellectual property organizations, in order to cut it off from the international market completely, until the infringement is terminated and the respect for the other countries’ sovereignty is restored.
Anton Koval, partner at Doubinsky & Osharova
Valeriya Sokolova, associate at Doubinsky & Osharova