I have IP in Russia, is my IP at risk?
The Russian government has demonstrated that it will decide on the use of IP rights without the IP holder’s consent and without issuing compensation to the rights holder. A first mechanism for allowing IP infringement, Article 1360, applies to patents, utility models and industrial designs only, whereas a second mechanism, Federal Law No. 46-FZ, applies to IP rights more broadly and includes trademarks. The abuse of rights statute has also been used to deny foreign held rights.
Patents, Utility Models and Industrial Designs
In the interest of national security
Under Article 1360 of the Russian Civil code, the Russian government may decide that the use of a patent, utility model or industrial design by a third party without the consent of the right holder is permitted if it is in the interest of national security.
Thus, if the use of a patent, utility model or design is not in the interest of national security it, theoretically, should not be used without the owner’s consent according to article 1360.
Protecting the life and health of citizens
Since 2021, the definition of what is in the interest of national security was expanded to include: in case of emergency related to ensuring the defense and security of the state, and for protecting the life and health of citizens. This expansion could then allow use of patented technologies without the patent holder’s consent to combat the coronavirus pandemic.
0.5% or 0% Compensation
According to the 1360 statute, compensation should be paid in the amount of 0.5% of the profits of using the invention to the non-consenting rights holder. However, in a decree on the 6th March this was dropped to 0% for patent holders associated with foreign states who commit unfriendly acts against Russia (i.e. impose sanctions). Norway is one of these unfriendly states as are: Albania, Andorra, Great Britain, EU, Iceland, Canada, Liechtenstein, Micronesia, Principality of Monaco, New Zealand, Republic of Korea, San Marino, North Macedonia, Singapore, United States of America, Taiwan, Ukraine, Montenegro, Switzerland, and Japan.
A patent holder is considered associated with an unfriendly state if they are a citizen of that state or have their main place of business in that state.
At present, it is not clear what technology the Russian government would consider ensuring the defense of the state and protecting the live and health of citizens. With the exception of coronavirus technology, there does not appear to be any other examples. However, one can speculate that it could include: weapons, energy, food production, medicines, medical devices and transport. Given the Kremlin’s history of interpreting their own laws, it would not be unreasonable to anticipate that it would implement Art. 1360 on any technology that is of interest.
The flowchart below shows various outcomes from Art. 1360.
All IP Including Trademarks
Restricted Goods
Another piece of legislation that was implemented on the 8th March is even harder to determine the meaning off. It appears to suggest that any IP including patents, computer programs and trademarks could be used without the rights holder’s consent if they relate to goods whose supply into Russia is restricted.
Retaliation against McDonalds, Coca-Cola etc.
The intended purpose of Federal Law No. 46-FZ may be to allow franchises of companies that have suspended their activities in Russia to continue to operate under their brand. For example, where a license to use a Trademark has not been renewed by the Trademark owner, the former licensee cannot be prevented from continued, non-consensual use. In which case, companies who wish to continue activities in Russia would not be affected.
Abuse of Rights
Peppa Pig Judgement
An even more worrying developing in relation to Russian treatment of foreign owned IP rights, is the “Peppa Pig” judgement in which a UK national was prevented from asserting their exclusive rights to the Peppa Pig and Daddy Pig drawings against an infringer.
The string of logic from the Russian civil court went as follows: foreign national has rights in Russia → but is a national of an unfriendly country → so asserting their rights constitutes an abuse of rights → and the court can deny protection.
According to Russian law, an abuse of rights is normally considered to be solely with the
intention of causing harm to another person, bypassing the law with an unlawful purpose, or any other knowingly unconscientious exercise of civil rights. It is hard to see how this scenario falls within any of these definitions.
IP as a Weapon of War
The point is that Russia is stretching the normal interpretation of legal terminology and practice such that analyzing risk to IP rights is becoming increasingly difficult. It seems that they are not making decisions in good faith but rather as an additional weapon of war.
The European, US and EU intellectual property offices have all issued statements regarding their view on Russia’s actions and their further engagement with patent offices of the Federation of Russia, of Belarus and the Eurasian Patent Organisation.
We will be monitoring the situation regarding Russian IP and will provide updates here on our website. For more tailored advice get in touch with one of our experts.
Written by
Laura Mannering
European Patent Attorney Masters. M1.Physics
