Amendments to certain legislative acts of the Russian Federation (the “Law”) went into effect in March 2022, particularly Federal Law No. 46-FZ “On Amendments to Certain Legislative Acts of the Russian Federation” (the “Law”) and Decree of the Russian Federation’s Government No. 299 “On Amendments to Article 2 of the Methodology for Determining the Amount of Compensation Payable to the Patentee When Choosing to Use an Invention, Utility Model, or Industrial Design Without His Consent, and the Procedure for Payment” (“Decree”).
The following are covered under the Law and the Decree.
Parallel importation of some types of goods is now legal
According to the Law, the Russian government now has the authority to establish a list of commodities to which some intellectual property provisions cannot be applied. In this connection, a draft decree is being drafted that will enable the parallel importation of lawfully marketed goods from other nations into Russia. The list of items will be decided based on federal executive authority suggestions. According to preliminary statistics, the list will comprise things required to supply the Russian market with vital supplies.
There are no intentions to exclude parallel import items from customs and control processes. It is believed that a warranty service will be required for such products.
Compulsory licensing without compensation
The Decree modifies the process of determining compensation for the unauthorized use of an invention, utility model, or industrial design. A free compulsory license will now be available. This modification affects rights holders related to foreign nations that perform hostile activities against Russian legal entities and individuals. The compensation for exploiting such right holders’ properties without their authorization will be 0% (rather than 0.5%) of the actual revenue.
A patentee is affiliated with an unfriendly state if he or she has citizenship or is registered in such states, predominantly does business in such jurisdictions, or principally profits from operations inside such states. Because this list is not exhaustive, other factors may be used to evaluate if a patentee is affiliated with an unfriendly state.
These legislative revisions indicate a desire to weaken foreign-owned intellectual property rights in Russia. However, the full amount of IP rights infringement remains to be known. Naturally, the consequences on foreign IP owners will differ in the near term depending on the degree and significance of their IP rights in Russia. Concerningly, the legislative amendments may allow for parallel imports.
However, concerns regarding intellectual property protection in Russia are not new. For example, Russia was named on the United States’ Priority Watch List in the Special 301 report on intellectual property protection last year. The nine nations on the list were stated to raise “significant concerns” about insufficient IP protection or enforcement or to have taken steps that would otherwise hinder market access for those depending on IP.
Russia’s retaliatory response might have long-term consequences that outlast the current restrictions. If the sanctions are finally lifted, a lack of regard for intellectual property rights and their enforcement may result in a decline or cessation of international investment in Russia. This would have ramifications for the country’s research and development, potentially affecting a wide range of sectors. Even if these new legislative measures are removed, it may take a long time for the country to recover its reputation and persuade overseas rights holders that it respects and enforces intellectual property rights.
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