‘Peppa Pig’ case portends Russia retaliation
Who would have thought that the children’s cartoon “Peppa Pig” would become something of a political magnet, including in the field of trademarks? Yet in the past few months, Peppa has had just as much screen time in the news as on a children’s TV channel.
In November 2021, UK Prime Minister, Boris Johnson, made headlines after discussing the ‘merits’ of Peppa Pig World at a conference. In his speech, he was enthused by the fact that “a pig that looks like a hairdryer... would be exported to 180 countries... [and evidence] the power of UK creativity”.
This week, a Russian court has ruled that the children’s cartoon trademarks relating to Peppa Pig can be used and infringed by a Russian ‘entrepreneur’, without fair payment to, or consent from, the registered owner of the Russian trademarks.
The judge overseeing the case reportedly dismissed the claim after stating the restrictive economic and political sanctions imposed on Russia allowed it to refuse the infringement claims, which it considered an abuse of right.
Reports have since been made that the Russian government has issued a decree that allows patented inventions and industrial designs from "unfriendly countries" to be used without permission or compensation. “Unfriendly countries” include the UK, US and affiliated foreign countries.
While a decree has not been given in relation to the validity of western trademark registrations and copyrighted works, following the “Peppa Pig” judgment and the decree regarding patents and industrial designs, it seems inevitable that it is a question of ‘when’ not ‘if’?
What does this mean for western brands?
Refusing to acknowledge existing IP rights reduces any element for competition; it allows for flagrant infringement and stifles creativity.
While at present many highly regarded western owned businesses have pulled out of, or have temporarily ceased sales in Russia, it is useful to consider what would happen in the event that any business would wish to re-open in Russia at a future point.
It is conceivable that in Russia, western brands may significantly reduce in value or smaller brands could even become worthless in the jurisdiction because of brand dilution. It is likely to become nearly impossible to stamp out copycats and infringers in a market where western brands have effectively been deemed unprotected. This is another unexpected cost of this awful war, one that the industry and government will have to face.
Brands will have to get creative with how they protect and enforce their IP rights; traditional enforcement methods such as cease and desist letters would become futile and there would be no option to bring enforcement actions in the courts.
The impact of the decision could also spill over into other territories outside of Russia; brands could see a rise in counterfeit and infringing goods being imported from Russia (although this is unlikely to be an immediate effect). Even where there are valid intellectual property protections in importing jurisdictions, brands with large intellectual property portfolios will already be aware of the difficulties and costs in enforcing these rights against infringers and counterfeiters.
The ruling and decree give free rein for Russian businesses, and individuals, to produce, manufacture and sell goods using western trademarks and patents; which they could sell at a much cheaper cost to ‘authentic’ goods and services, which may appeal to consumers in a world where inflation and the daily cost of living is soaring.
It is plausible that consumers may not be aware of where these cheaper goods are coming from if they are purchased from online marketplaces (which present their own enforcement challenges even in jurisdictions with valid IP protections).
Madrid Protocol
As a contracting party of the Madrid Protocol, it will also be interesting to see what impact this will have on Russia’s membership or whether the Russian Federation will denounce its membership entirely.
The Madrid system was established to facilitate and simplify the registration of trademarks globally; once a trademark has been registered by an office of a contracting party, it can then be the subject of an international application that designates contracting parties selected by the applicant, which may include Russia.
It seems at odds with the intention of the Madrid system that a contracting party can simply declare that trademarks owned by individuals or businesses in ‘unfriendly countries’ are no longer protected.
The effects of these decisions by the Russian government are also likely to impact on Russian businesses that do not agree with the war on Ukraine; western businesses have already pulled out or temporarily ceased sales in Russia no doubt resulting in the disruption of the livelihood of Russian people.
In the event that tensions do deescalate, faced with the disadvantage of having unprotected intellectual property rights and diluted brands that would require significant costs to rebuild and protect, western companies are likely to be further deterred from doing business with Russian entities.
Without the protection of ideas and brands, innovation is stifled and economic growth is likely to suffer as a result but like many other changes we have seen, it is irrelevant compared with the risk to the lives and the loss and destruction happening in Ukraine.
Terry Green is a partner at Katten Muchin Rosenman. He can be contacted at: terry.green@katten.co.uk
Tegan Miller-McCormack is an associate at Katten Muchin Rosenman. She can be contacted at: tegan.miller-mccormack@katten.co.uk
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