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26 May 2022PatentsAnton Koval and Valeriya Sokolova

Legalising the illegal: how Russia is replacing foreign brands

After the invasion of Ukraine, over 10,128 sanctions on Russia were imposed, including the export ban of high technology products, dual use products and some other goods. Additionally, more than 600 world-famous brands have announced their exit from the Russian market.

To leave some goods and technologies available, the Russian government has applied some changes to the regulations on IP. In early March it also announced the list of “unfriendly” countries, which included most of Europe, as well as the US, Japan, Australia and more. Bearing this in mind, the situation with the pending protection of IP rights in Russia is worth exploring in more detail.

Compulsory licensing

Firstly, on March 6, 2022, it announced the Decree No 299, by which the compensation for unauthorised use of IP objects for patent holders, who are registered in “unfriendly countries”, was established in the amount of 0% of the profit.

This applied to article 1360 of the Civil Code of the Russian Federation, according to which the government may, in case of necessity, decide on the use of the invention, utility model or industrial design without the consent of the patent holder.

Under Article 8 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), members may adopt measures necessary to protect public health and nutrition, provided that such measures are consistent with the provisions of this agreement.

At the same time, article 2 of the Paris Convention and article 3 of the TRIPS agreement grant national treatment to countries of the union. According to article 5 of the Paris Convention, the only purpose of compulsory licensing is to prevent the abuses, which might result from the exercise of the exclusive rights conferred by the patent.

Article 31 of the TRIPS provides a list of the demands for compulsory licensing to be legitimate, including adequate compensation to the patent holder. Therefore, the relevant Decree No 299 does not exactly correlate with the relevant provision of international law.

Russia has also announced the intent to legalise compulsory licensing for software programs and there is the same discussion around other copyright objects such as films and music.

Similarly, the national treatment is granted by article 5 of the Berne Convention for the Protection of Literary and Artistic Works. Article 13 provides equitable remuneration in case of compulsory licensing, and article 14 prohibits the compulsory licensing of the cinematic works.

Article 11 of the TRIPS agreement grants authors and their successors in title the right to authorise or to prohibit the commercial rental to the public of originals or copies of their copyright works in respect of at least computer programs and cinematographic works. Hence, the compulsory licensing of such objects shall not be applied.

Therefore, the relevant legislative initiatives and proposals of the Russian Federation are controversial by international standards, granting fair compensation for the use of the IP objects.

Obviously, this right shall not be limited or denied for political reasons only or on the grounds of the location of the rightsholder as it may lead to discrimination and reduce the interest in the further development of the technological innovations and/or artistic expression in Russia.

Rise of infringing activities and the absence of protection

Secondly, after the exit of many foreign companies, the rapid growth of trademark applications for the designations, similar to well-known brands, like ‘Uncle Vanya’ with McDonald’s stylistics and ‘IDEA’ in the style of IKEA, was noticed.

Only in May, 2022, the applications for Lavazza, Persil, Henkel were filed for the identical or similar classes of goods as the original brands. More “creative” options included ‘SuperBurger’ (in the style of HESBURGER), and YaCloud (instead of ICloud) designations. The list is not extensive and can be continued with dozens of knock-offs, filed for registration in a few months only.

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