The cause and effect of legislative changes

From one of our favourite books, Lives of the Twelve Caesars, by Suetonius, we learned that after economic changes, considerable efforts shall be directed to adapt legislation in a way that provides the most benefit to business. Every year, Russia continues to undergo economic and political changes, and as the economy changes, the legal and, in particular, the intellectual property regulations, also change to secure the basis for further growth.

Russia’s accession to the World Trade Organization in 2012 has required bringing its IP rules into line with the requirements of international treaties, such as the TRIPS Agreement, and with IP legislation in other countries, to better protect the newly created technologies and products, both domestic and imported. Now, in Russia, it is well understood that the more sophisticated and knowledge-based the industry, the better protection it needs in terms of IP law.

Here is a brief review of some of the changes in terms of the economic ‘cause’ and legal ‘effect’.

Utility models

Before October 1, 2014, a patent for a utility model was granted without examination. A considerable number of utility models had been issued, and were sometimes used as a tool for unfair competition.

If a company interested in importing or producing goods in Russia initiated invalidity proceedings, the process did not go smoothly. This was because any earlier use outside Russia could not bar a utility model from being registered in Russia.

Utility models: what changed (from October 1, 2014)

According to a new version of article 1390 of the Civil Code of the Russian Federation (CCRF), utility models will be examined for novelty and industrial applicability criteria, while the prior art for novelty examination includes both published information and prior use worldwide.

This change is aimed at preventing abuse of IP rights and removing an undue burden for lawful producers and importers during invalidity proceedings.

Dependent inventions

In recent years in Russia, several contradictory court decisions were taken when the owner of an invention/utility model with an earlier priority and one with a later priority had overlapping claims and could use their patents independently.

These decisions were often taken without consideration of whether an older patent was used in the product protected by a patent with the later priority.

Dependent inventions: what changed (from October 1, 2014)

The new article 1358.1 of the CCRF defines a dependent patent as protecting a product or process that cannot be practised without the use of another patented invention, utility model, or industrial design patent that has an earlier priority.

In particular, a dependent invention could relate to a patentable new use of a product protected by a patent with an earlier priority. Further, it will be illegal to use a dependent invention without permission of the owner of an older patent.

Industrial designs

Before October 1, 2014, the infringement of an industrial design was established by comparing the features of a product in question with a written set of features of a design patent. This put an undue burden on applicants that had to compile a set of features when filing a design application in Russia, and often resulted in an unpredictable scope of protection defined during the examination.

Industrial designs: what changed (from October 1, 2014)

According to the revised article 1352 CCRF, an industrial design is considered novel if a set of features reflected in the drawings is not known, meaning there is no need to define it in writing. The originality is determined by the general impression that a design produces on the informed consumer. While ergonomic characteristics are excluded, architectural forms and forms having unstable shape can now be patented as designs.

Transfer of ownership

Before October 1, 2014, to register the transfer of IP rights, such as an assignment or licensing agreement, two original copies of the agreement had to be submitted. These often contained commercially sensitive information that parties were reluctant to disclose, so instead shortened versions of the contracts were prepared.

In many cases, this complicated and slow process negatively affected the enforcement of IP rights. In particular, during litigation an IP owner could not exercise its right to claim against an alleged infringer, or request royalties until the agreement was properly executed—which could take between four to six months.

Transfer of ownership: what changed (from October 1, 2014)

After October 1, 2014, article 1232.3 CCRF said either a notification of an agreement or an extract from it must be submitted for registration instead of the agreement itself. Furthermore, the information that should be included in the request is explicitly listed, while financial terms are no longer required. The change will significantly simplify the process and ensure fast registration.

Liability for patent infringement

Based on the previous version of the Civil Code, patent owners were put in an unequal position compared with copyright and trademark owners with respect to the remedies available in civil cases of infringement. In particular, while trademark owners could seek double the cost of counterfeit products, a patent owner had to prove actual damages resulting from the infringement. This significantly limited the amount that could be awarded to the patent owner and reduced the desire to raise claims in court, considering the high costs of litigation.

Liability for patent infringement: what will change (from January 1, 2015)

According to article 1406.1 of the CCRF, in cases of patent infringement a patent owner will be able to seek compensation amounting to either: (a) double the price of using the patent lawfully; and (b) between €200 and €100,000, at the discretion of the court.

Patent term extension

According to the previous IP rules, a patent could be extended when a product, such as a pharmaceutical or agrichemical, could not be used without marketing authorisation and the first marketing approval was obtained later
than five years after the patent application was filed.

Therefore, a patent term for particular claims could be extended only once, since the first marketing authorisation could not be obtained twice. In case a company launched several pharmaceutical products covered by a single patent, only one of these products could benefit from a patent term extension.

Patent term extension: what will change (from January 1, 2015)

According to the new version of article 1363.2, a supplemental patent with an extended validity term will be issued with claims corresponding to the actual marketed product for which authorisation is granted. It can be assumed that for each separate pharmaceutical product for which marketing authorisation is obtained, separate supplemental patents can be issued.

Maria Nilova is managing partner at Patentica. She can be contacted at: maria.nilova@patentica.com

Elena Dmitrenko is head of the legal department at Patentica. She can be contacted at: elena.dmitrenko@patentica.com