Protecting IP in the world’s biggest country
Russia is a mammoth country and it will come as little surprise to hear that a territory that spans two continents faces some significant IP challenges.
After hosting the 2014 Winter Olympics in Sochi, followed by the 2017 FIFA Confederations Cup, all eyes will again turn to the country as it prepares to host the FIFA World Cup 2018. From June 14 to July 15, sporting fans will make the pilgrimage to Russia in support of their home country’s team. Between December 1, 2017 and January 31 this year, more than four million tickets were requested for the tournament, according to FIFA.
While football supporters will flock to the world’s largest country for a month of celebrations (and commiserations), the event will also provide an opportunity for counterfeiters to exploit naïve fans and piggyback off its popularity.
With the whole world watching, how does a country that borders 14 other states protect against IP threats?
The issue must begin to be addressed from within, says Eugene Arievich, partner at Baker McKenzie.
“Police enforcement is still lacking,” he says. “This is due to the size of the country but it’s also a problem of insufficient police training specifically in IP matters, and also for the way police are stimulated.
For example, says Arievich, police forces are more likely to be interested in bigger cases where the level of counterfeits is high enough to qualify for criminal prosecution.
“If the volume is small, and the case would not qualify for criminal prosecution but rather administrative action, which is punished only by a small fine, then the police are not incentivised.”
On top of this, there is also the potential risk of corruption within the police force, especially in the more isolated parts of the country. Arievich tells WIPR that the less densely populated regions of Russia may not necessarily have the same level of experience when it comes to dealing with IP-related litigation.
Cities such as Moscow and St Petersburg are more experienced with dealing with IP infringements, he says. However, other cities may not necessarily know how to tackle these kinds of cases.
Open borders
Russia is part of the Eurasian Economic Union, a trading bloc and customs union including Belarus, Armenia, Kazakhstan and Kyrgyzstan which was formed in 2014. While the union was created to make trading easier, it has delivered some IP obstacles, Arievich says.
Currently to qualify for protection against counterfeiting and infringement a trademark must be registered in each of the five countries. A unified customs register of IP objects is in the works but its implementation has been postponed from year to year. This means that a system where trademarks are identified on a customs register in each of the countries is required. However, according to Arievich, the different countries have different levels of quality checks, “with Kyrgyzstan’s being inferior to those of the other countries”.
The open borders add another challenge in that counterfeit products can enter Russia using Kazakhstan and Kyrgyzstan as a primary gateway.
New resolutions
Valentina Orlova, head of IP at Pepeliaev Group, identified the most significant recent IP event as the Russian Constitutional Court’s adoption of a new resolution dated February 13, 2018. The resolution deals with whether a number of articles of the Russian Civil Code comply with the Russian Constitution. The resolution came after the national principle of exhaustion of a right allowed medical products to be imported into Russia without the consent of the trademark owner.
It was confirmed by the court that the articles in question were in line with the constitution. “The universally binding constitutional and legal sense of the above provision has been established,” Orlova explains.
“This means that no other interpretation of the above provisions is possible in administrative and judicial decisions.”
However, she continues, at the same time the court has established a restriction on the application of the principle of exhaustion of an exclusive right. The court has the right to refuse to apply the statutory consequences of labelled goods being imported into Russia without the rights owner’s consent.
“The court may give effect to such a right in cases when, by virtue of the bad-faith conduct of the rights holder of a trademark, the application of specified consequences at the request of the rights holder may create a threat to human life and health, and to the public interest in another way.”
Orlova believes that the courts need to comply as strictly as possible with the approaches set out in the Constitutional Court’s resolution.
“More precise criteria need to be developed for importers to be recognised as offenders and for rights holders to be recognised as acting in bad faith,” she says.
“The federal authorities need to use a more balanced approach to assessing bad faith and the abuse of a right. The procedure should be determined which describes the sequence of actions to be performed by the anti-monopoly authorities and by the courts.”
When the provisions of the resolutions are implemented, Orlova says that special attention should be given to the importation of medicines and medical devices.
“At this point, the issues should be immediately resolved that relate to the absence of the packaging and labelling for the Russian market that is reflected in the registration file, which is highly likely to cause a deterioration of the quality of goods in general.”
Compulsory licensing, according to Vladimir Biriulin, head of legal practice at Gorodissky & Partners, is another area worth keeping an eye on.
“If a patent is not worked during four years or is worked insufficiently, an interested person may apply to court and obtain a compulsory licence with payment of adequate royalties to the patent owner,” says Biriulin.
“The Russian anti-monopoly body has come up with an idea to grant compulsory licences on the basis of administrative decisions by the government in cases where the life and health of people are at stake. In the first place, this concerns pharmaceutical products.”
According to Biriulin, this proposition has been met with opposition, although the prospects of the proposal aren’t quite clear.
Arievich adds that generic companies are saying that this proposal would make a drug a lot cheaper, while originator companies are saying they deserve better protection for their investment in R&D.
Football crazy
Investment and IP will also interact in the FIFA World Cup 2018 which, as with any World Cup, requires huge sponsorship.
With its experience of hosting previous international sport events, Russia has prepared for the FIFA World Cup and released a publication providing guidelines: “On preparation and conduct in holding of the Russian Federation of the World Football Championship Cup FIFA 2018 and the Cup of Confederation of FIFA in 2017 and on introduction of certain legislative acts.”
The publication contains IP-related provisions relating to the World Cup. For example, misleading consumers “in particular by way of creating a false idea about the pertinence of the goods’ manufacturer and/or the advertiser to FIFA or the activities as a sponsor” will be deemed unfair competition and will be subject to sanctions.
Arievich says there have been cases of people unrelated to the World Cup trying to put FIFA trademarks and slogans on products although this problem has been successfully tackled so far.
“There was a rise in infringement in August 2017 during the Confederations Cup, then it went down,” he explains.
“We can expect it to rise again closer to the World Cup. It’s a challenge for FIFA, but they have a broad network of people monitoring the internet.” When an online counterfeiter is detected, swift action is taken to remove it.
Last October, FIFA reported 76,000 cases of illegal uses of its trademarks just on the internet, says Arievich.
Russia may have to contend with numerous challenges both internally and externally, but with systems in place and well equipped IP experts, the country is bracing to tackle them head-on.
Russia fact file
