Patents, trademarks, and copyrights are often among a company’s – or perhaps a country’s – most valuable assets. A belligerent can cause real financial damage by seizing such assets, making it impossible to supervise the activities of local licensees, or weakening enforcement against infringers. It’s no surprise that the battle over IP ownership has turned into a new front in modern warfare.
This is evidenced by recent developments in Russia. Reports in the press that Russia has fully ceased IP protection or seized patents and trademarks appear to be overblown, but wise businesses will stay informed and take action as soon as possible. US corporations may take action in Russia to preserve IP rights notwithstanding US economic and trade sanctions against Russia, according to a General License given by the US Office of Foreign Asset Control on May 5, 2022.
The Russian Civil Code has a long-standing law that permits the government to exploit inventions, utility models, and industrial designs without the approval of the patent holder if it is justified by the extreme national defense and security demands, or the protection of life or public health. The patent holder must be notified and compensated under these situations. (Article 1360 of the Civil Code.)
A new guideline sets the compensation rate for patent holders from most nations at 0.5 percent; however, any remuneration for patentees from “unfriendly states” is nullified. (Resolution No. 299 of the Russian Federation’s Government, dated March 6, 2022).
Enforceability of trademarks, copyrights, and patents is limited
Russia can “exempt” enforcement of IP rights such as patents, trademarks, and copyright of certain goods under a new law passed on March 8, 2022. This law is said to be meant to alleviate product shortages, but there is no indication of how broad the regulation will be applied or whether it would be used to address concerns other than shortages. The law appears to be only in effect until 2022, and there is no guidance on which commodities may be classified for “IP enforcement exemption.”
According to Russian IP legislation, an IP rights holder has the authority to prevent the unauthorized importation of branded products, even if the products were legally purchased outside of Russia.
As a result of recent sanctions, Russia amended the law to allow it to ignore an IP owner’s desires and allow the entry of specific categories of goods.
This would allow the government to alleviate some branded goods supply shortages. The Ministry of Industry and Trade issued Order No. 1532 on April 19, 2022, detailing a broad list of commodities for which parallel importation protection would be withdrawn and IP rights would be regarded as “exhausted.” Raw materials, finished items, and technological devices are all available. Any foreign manufacturer or distributor should check this list to ensure if their products or brands are included.
Changes in Russian law and practice not only jeopardize the IP rights of the US and other “unfriendly” countries, but there was also ambiguity until recently about whether US corporations could obtain, maintain, and defend IP rights in Russia without breaking US trade and economic sanctions. The good news is that the US Department of Treasury’s Office of Foreign Asset Control (OFAC) issued a General License on May 5, 2022, allowing for the acquisition, maintenance, and enforcement of IP rights despite sanctions.
The following is officially permitted by General License 31:
- The filing and prosecution of any application to obtain a patent, trademark, copyright or other form of intellectual property protection
- The receipt of a patent, trademark, copyright or other form of intellectual property protection
- The renewal or maintenance of a patent, trademark, copyright or other form of intellectual property protection and
- The filing and prosecution of any opposition or infringement proceeding with respect to a patent, trademark, copyright or other form of intellectual property protection, or the entrance of a defense to any such proceeding.
Payments through accounts for entities subject to Directive 2 of Executive Order 14024, debits on the books of US financial institutions of the Central Bank of Russia, the National Wealth Fund of Russia, or the Ministry of Finance of Russia, and transactions prohibited by Executive Orders (EO) 14066 (March 8, 2022) and 14068 (March 8, 2022) are not permitted under General License 31 (March 11, 2022).
It is critical for brand owners to register their most valuable trademarks in Russia. Russia is one of the “first to file” nations. It may be difficult to delete a pirate’s registration and reclaim the misappropriated rights if a pirate registers a mark first.
To avoid IP infringement, the rightful owner, to file in the trademark office, it is best practice to register all key marks you use or plan to use in Russia today. Before filing any new applications in Russia, make sure that the sanctions in place allow for such submissions. Thankfully, the recently granted General License 31 allows US businesses to file a trademark, copyright, and patent applications.
List of Russia IP Firms can be found here.