Russia mulls suspension of IP rights to counter sanctions

The Ministry of Economic Development of Russia is considering suspending IP rights that protect goods and services that currently cannot be protected due to sanctions.

In an announcement made on Saturday, March 5, the department noted that patents and trademarks could be suspended in order to facilitate the free use of technologies that were “deprived” from Russian citizens following the wave of sanctions from international businesses.

The ministry reinforced that this would be a “temporary measure for the period of supply restrictions,” at a press conference according to Russian state-affiliated media TASS.

"The possibility of lifting restrictions on the use of intellectual property contained in certain goods, the supply of which to Russia is limited, is being considered. This will smooth out the impact on the market of breaks in supply chains, as well as the shortage of goods and services that arose due to new sanctions by Western countries," said the ministry.

The ministry also noted that the measure could affect both inventions and computer programs, as well as trademarks, but goods and services manufactured within Russia will not be considered.

Flavia Ștefura, senior associate at MPR Partners said: “Since the measures seem to be sanctioning companies that leave Russia, it may be that Russian officials hope for such measures to serve as a deterrent for those Western companies that have not yet limited or terminated their activity in Russia.”

Russia is “obviously worried” about its ability to supply its citizens with goods and services, amidst public sanctions and the exodus of Western companies from the country, said Ștefura.

However, the suggested measures are likely to harm intellectual property rightsholders, for example by impairing their right to forbid the import of infringing goods into Russia, she added.

The ministry also told TASS: “We are talking about a symmetrical measure in relation to companies that have not fulfilled contractual and other obligations to our country… The measure will allow, on the one hand, to organise the production and use of technologies that were presented in products that Western companies were deprived of our citizens, on the other hand, the measure legalises the import of such products from third countries.”

Risk to Russia's IP market

A suspension of IP rights would go further than previous decisions on granting obligatory licensing to boost the production of domestic generic medicines, said Agnieszka Sztoldman, adjunct professor in IP law at the University of Poland, who warned that it may marginalise the Russian market.

"We cannot exclude the risk that Russia may be reduced to a market that is purely reproductive and based on slavish imitation," said Sztoldman.

"In my opinion, this may also restrict the transfer of technology to Russia, which is already prohibited by the European Commission. It may discourage large stakeholders such as those from Japan and the US."

On the form that these “suspensions” will take, Sztoldman noted that Russia could use a security exception under 73 point b(iii) of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement.

The Russian government could also exercise a compulsory licensing provision stipulated in articles of the Civil Code of the Russian Federation in order to achieve the IP rights suspension.

Sztoldman added: “Article 1360 and 1362 allows the Russian government to permit the use of inventions, utility models and industrial designs without the consent of the rights owners in the interest of national security. The Russian government submitted a law revising Article 1360 on November 22, 2019, allowing the government to give a compulsory license without a judicial procedure notwithstanding the lack of express provision.”

‘Harm rightsholders’

Breaching these international agreements could impact certain rightsholders more than others and potentially lead to an increase in known brand counterfeits. Ștefura added:

“It is likely that the most affected intellectual property rights would be patents and designs, which are used directly in the production of goods, but the impact on trademarks may also be significant since the recognisability of established brands could be used by look-alikes to capture the consumers who were left without the possibility to buy original goods.”

Many international brands have announced that they will suspend all of their Russian operations, including Starbucks, McDonalds, Coca-Cola, Pepsi and KFC.

Tech companies have also joined in suspending their services in the country, with the Netflix Paypal and Mastercard confirming that they will halt all their services in the country, according to TechCrunch.

International condemnation

This announcement comes as a slew of international companies and IP offices have cut ties with Russia following the country’s violent invasion of Ukraine.

The European Patent Office confirmed on March 1, that it would be cutting ties with Rospatent and the Eurasian patent office.

Similarly, the US Patent and Trademark Office also decided to terminate its engagement with both offices in accordance with wider US government guidance.

“Like so many, we are deeply saddened by the events unfolding in Ukraine. We hope for the restoration of peace and human dignity,” the USPTO said in a short statement released on Friday, March 4

World IP Review’s senior editor Muireann Bolger also spoke to Kyiv-based lawyers Julia Semeniy of Asters Law and Yuliya Prokhoda CEO, patent and trademark attorney at Intels IP.

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