Russian Intellectual Property under Siege in Europe

IP owners express concerns regarding their IP in Russia in the wake of publications in the media. Aside from individual writers misleading information was also published by respectable organizations. Specifically, the European Council issued 14th package of restrictive measures against Russia and answered questions in connection with those measures.

The 14th package imposed ban on accepting applications for registration of certain intellectual property rights from Russia. It explains that decision alleging that Russia does not respect IP rights of foreign stakeholders.

Indeed, there were two isolated cases of short duration which triggered a wave of invectives against Russia. Those cases were recognized in Russia to be mistakes. These were: COVID 19 hit Russia in 2020 with about 1000 daily deaths. Since TRIPS Article 31 allows the use of patents in extreme circumstances without permission of the patent owner Russian government allowed the use of several US patents without owner’s permission. Compensation was provided for the use of those patents.

1) Compensation was cancelled in 2022 by governmental Decree 299 in the wake of sanctions. That Decree was cancelled in early 2024.
2) Peppa Pig case: regional court dismissed an infringement claim of a UK company. The court of appeal satisfied the claim.

There were no patent or trademark cases denying protection of rights of foreign IP owners since then.

Notwithstanding, false information continues to appear (the Council’s text is given in italics). The Council of the European Union issued 14th package of restrictive measures in June 2024. It reads in Section 20:

“The Russian Government and Russian courts have been undertaking actions to illegitimately deprive Member State intellectual property rights holders of their protection in Russia….”

No reference to such actions is given in the above statement.
Also its Q&A reads that:

“Russia is on the offensive on depriving protection of intellectual property rights of our companies in Russia. Russia wants to get hold of Union industrial know-how, which is the result of R&D investments. It does that to localize production and cut economic dependency on the EU and ultimately neutralizing sanctions.”

No evidence is given to support the above statement.

None of the above allegations are true in the June issue of restrictive measures but for some reason new misleading information appeared in the media. On November 5, 2024 new questions and answers were published (comments follow after each paragraph):

Why has the European Union adopted Article 5s of Council Regulation (EU) 833/2014?

“This new obligation comes in response to the illegitimate actions undertaken by the Russian Government and courts to deprive Member State intellectual property rights holders of their protection in Russia, which has resulted in an undue competitive advantage for the Russian industry and contributed to Russia’s revenues, further enabling it to wage its war of aggression in Ukraine.”

The above passage repeats Section 20 above without adding evidence of any “illegitimate actions”.

“In particular, first, on 6 March 2022 [see comment below] Russia amended Article 1360 of the Russian Civil Code to enable its authorities to license patents of Union companies to Russian businesses, without the obligation to compensate the former. This means that Russian companies can infringe patents and related IPRs of Union companies without consequences.”

In fact, the last amendment of Article 1360 was made in 2021. The current text of Article 1360:

Article 1360. Use of an Invention, Utility Model, or Industrial Design in the Interests of National Security

1. The Government of the Russian Federation shall have the right in case of extreme necessity related to ensuring defense and security of the state, protection of life and health of citizens, to permit the use of an invention, utility model, or industrial design without the consent of the patent holder with notification to him as soon as possible and with payment to him of proportionate compensation.

2. The methodology for determining the amount of compensation and the procedure for its payment shall be approved by the Government of the Russian Federation.

Trips Article 31 allows the use of inventions without permission of the patent owner and such opportunity was used only once (US patents for Remdesivir) during Covid.

On March 6, 2022 Russian government issued the notorious Decree 299 (see above). However, the Decree was cancelled before publication of the 14th package of sanctions.

“Second, on 29 March 2022 Russia introduced a parallel import mechanism to allow its companies to procure certain goods and services from other third country markets without the consent of the Union trademark holder. Concerned goods are mostly those in short supply in Russia due to the exit of Union companies from the market or sanctions. The Russian Government claimed that this mechanism should have been made permanent.”

The list of goods allowed for parallel import exists and is regularly reviewed depending on the situation on the market: Some goods are added, other goods are excluded. There is no claim to the permanent nature of the list. It should be noted that parallel import is allowed in many countries without restrictions so Russia has a more stringent regime than in those countries. Russia has no international obligations to implement any regime of exhaustion of rights.

“Third, Russia recently adopted legislation whereby transactions concerning certain IPRs of Union companies in Russia need to be authorised by the Russian Government, which may entail de facto prohibition of Union companies e.g., from reshoring industrial know-how.” The above relies on Decree No 403 of May 20, 2024 however that Decree is dated May 14th, 2024 and concerns appointment of a minister of communication. There is another Decree No 430 dated May 20, 2024. It indeed concerns foreign right owners who, if they sell their IP to a Russian company, should get approval from the government. If the cost of the deal is less than 15 million rubles (150 000 USD) the Decree is not applied. So, it is not clear what the Council Regulation meant under “prohibition of Union companies and, more specifically, under e.g., from reshoring industrial know-how.”

“Fourth, it is known that Russian courts have illegitimately deprived protection of IPR holders from the Union.”

The statement refers to the Carlsberg brewery. Contrary to what is written in FAQ Carlsberg trademarks are valid and are due for renewal in due time. In 2022 Carlsberg wanted to dissolve a trademark license agreement with a Russian company unilaterally. The court did not allow that. Protection of IP was not an issue.

It is lamentable that a respectable European body allows itself to circulate information having nothing with reality while deprivation of Russian applicants of protecting their IP in Europe is a solid fact.

Finally, in the face of the above false information Yuri Zubov, Head of the Russian Patent Office, took part in the 65th Assembly of the Member States of WIPO in July 2024 in Switzerland and said:
«Russian Federation strictly observes all its international commitments and does not allow any form of discrimination or infringement of rights on its territory».