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A call for truth

29 March 2022

Because of the current situation with Ukraine the media publish much information regarding intellectual property that is often incorrect or outright false. This may be understood because any important event may send waves throughout the media and people may express different opinions relying on facts or on what they consider as facts.

Some countries imposed sanctions on Russia. In turn, Russia termed them as “unfriendly” countries. The sanctions indeed inflict a blow on the Russian economy. The Russian government retaliated by taking some measures that may be understood as unfriendly too.

It is worthwhile to dot the “I”s and look not only at the top of the iceberg but explore what is underneath.

There is Article 1362 in the Civil Code that provides for a compulsory license if the invention is not used, or is used insufficiently during four years to cover the needs of consumers. This provision is in fact a duplication of relevant provisions of Paris Convention (Article 5 – Each country shall have the right to grant compulsory licenses to prevent abuses…), TRIPS (Article 15 allows the government or third parties to use patents without authorization of the patent holder if the national law allows), PLT (each contracting party shall comply with the provisions of the Paris Convention – a circumstantial provision allowing compulsory licenses).

Article 1362 has been dormant in Russia for a long time. The year 2019 saw the onset of a global pandemic of Covid-19. Russia was severely hit by Covid with thousands of deaths over a long span of time. Two (!) years later, when the situation became exceptionally serious the government issued a Decree 1767 dated October 18, 2021 regarding payment of compensation in the amount of 0.5% of the proceeds of the allowed user for the use of inventions. The basis for that decision was Article 1360 of the Civil Code allowing the use of an invention in the situation of extreme urgency in the interests of national security, health and life of people. The Decree did not detail the kind of patents allowed to be used but it was clear that the Decree had been issued with a view to combat Covid. Indeed a permission was issued in the wake of that Decree allowing the use of several inventions used in the production of a drug. That was and still is the only case of unauthorized use with the limited compensation 0.5%. The permission was issued for one year and was extended later to another year because of the Covid situation.

At the end of February 2022 Russia started, as it termed, a special military operation in Ukraine. We do not delve into the reasons thereof but many countries joined in applying economic sanctions against Russia. In response, Russia prepared a list of “unfriendly” countries in respect of which retaliatory measures were taken. One of such measures is a governmental Decree No 299 dated March 6, 2022.

It deals with the same cases of “extreme urgency” and establishes “0” compensation for the use of a patent without permission of the patent owner if he is “connected” with a country that applied unfriendly measures against Russia. As in the Decree No 1767, the kinds of patents were not specified. Nevertheless it is clear that there is only one case in relation to which this measure can be applied.

It is important to note that both decrees deal with the amount of compensation that will be paid (or not paid) in case the government issues a special permission to use an invention in extreme circumstances. The decrees per se do not give general permission to use any patent.

We do not know if there will be other IP allowed for the use without permission of the IP owner however we see that the government is not in haste to develop that practice.

Nevertheless, this single case of unauthorized use of IP with “0” compensation triggered a tsunami of articles in the English language media:

Russia permits misappropriation from unfriendly countries, Russia permits patent misappropriation from unfriendly countries, Russia retaliates against sanctions by curtailing foreign owners’ IP rights, etc., etc.

Unfortunately this kind of information is often taken from Russian sources that interpret decrees and other normative documents in a wrong way or simply wish to have more reads.

The Russian media not specializing in IP also include themselves in the race for “hot news”: the government nullified compensation to patent owners from unfriendly countries, Prime Minister Mishustin nullified compensation to patent owners from unfriendly countries, the government waived payments for patents from unfriendly countries and so on.

It is hoped that this wave of false information will calm down soon and the events take a routine course.