Recent Russian Intellectual Property Legislation is Better for Business
30 March 2015One of the main concerns in the past has been that enforcement bodies in Russia, such as courts and the police, are biased in favour of local companies, however, this is simply not the case. The courts, customs authorities and police are completely indifferent to the nationality of the person whose rights have been infringed and will uphold the law without regard to the country of origin.
It is however important that you keep to the correct procedure in order to ensure that your rights are adequately protected, and use a specialist firm like us here at Gorodissky to guide you through the process.
What is the law that regulates intellectual property in Russia?
Intellectual property rights in Russia are mainly regulated by Part IV of the Civil Code, which was updated in October last year (with some changes coming into force on 1 January 2015) and contains consolidated provisions relating to all kinds of intellectual property. The revisions to Part IV of the Civil Code have made it much safer for foreign companies to enter Russian markets.
Prior to the introduction of the amendments, there were no specifications set by Russian law as to what extent the claimed invention had to be described. The amended law now specifies that the invention should be disclosed in the application to the extent necessary for the making of the invention by a person skilled in the art.
Also the law, as amended, makes clear that when evaluating novelty of a utility model, account should be taken of any and all publicly available information, including that which became known via the open use or sale of a product anywhere in the world. Before this amendment, the prior art for utility models does not include the disclosure via the open use or sale outside Russia. The result was that foreign companies attempting to enter Russian markets without patent rights in Russia, were sued by Russian ‘trolls’ who had attained rights in Russia by filing utility models for what the foreign companies had already used outside of Russia. However, this problem has now been remedied with the addition of an article which defines prior art to include the use anywhere in the world.
In addition to the fundamental law relating to intellectual property rights, there are also Patent Office regulations that clarify filing, examination and maintenance of various intellectual property subject matters. The Patent Office have the power to issue these regulations as problems arise to assist with implementation of the new law.
As regards enforcement of intellectual property law, there is a wide array of laws ensuring that rights are protected. The Code of Administrative Offences, The Criminal Code, The Law on Competition in addition to other legal instruments mean that infringements of intellectual property rights can be dealt with effectively.
What should international firms entering the Russian Market keep in mind?
Foreign firms that are conducting, or planning to conduct their business in Russia should first protect all of their intellectual property by registering it with the Patent Office.
‘Trademark squatting’ is one of the problems that foreign companies face when entering the Russian market. When they attempt to register a trademark they may find that their mark has already been registered by a Russian company or businessman - this is because protection of a trademark under the Russian regime is granted only against a state trademark registration. Often, trademark squatters will then offer to foreign companies the opportunity to buy their own marks. After a squatter has registered a trademark, it is possible to retrieve it in some cases, however this involves a lot of unnecessary time and expense. These practices mean it is important that companies attempt to register their trademarks as soon as they believe they may enter the Russian market.
A similar issue that foreign businesses may wish to keep in mind is where they choose to use a distributer to distribute trademarked goods. If the trademark is not registered in Russia, in the name of the originator of the goods, and at some point the relationship originator and the distributor deteriorates, it is not uncommon for the distributor to register the trademark in his own name.
In order to register a Trademark in Russia your Trade Mark must be:
- Distinctive for the goods or services which you are applying to register it for
- Not deceptive, or contrary to law or morality
- Not identical or similar to any earlier marks for the same or similar goods and services.
It is also recommended, that those wishing to enter the Russian market purchase a relevant domain name, at least in ccTLD .ru. Many trademark owners have found that their trademarks had been registered as domain names by other legal entities or businessmen when they have gone to register them. This has meant that foreign businesses have had to purchase domains from these so-called ‘cyber squatters’ rather than engage in legal proceedings. However, litigation in relation to this does occasionally take place.
The importance of following the correct procedure cannot be overstated. A good example is that of the rejected petition of Ford Motor Company (FMC) for recognition of the Ford trademark as well-known in Russia. It was commonly believed that FMC’s petition was rejected simply because the company was American, and the Russian regime was hostile to foreign petitions. However, this is not the case. When you look closer at FMC’s petition, the issue is that they did not meet the requirements and had not properly followed the required procedure to recognize their trademark well-known. Rospatent (The Russian Federal Service for Intellectual Property) rejected FMC's well-known trademark petition due to the failure of FMC to provide evidence of the company's extensive use of the logo in Russia. Rospatent cited FMC’s lack of operations in Russia and also their failure to establish continued uniform use of the FMC name and logo in the country. The evidence provided by FMC included documentation from its joint venture company with Russian car maker Sollers, Ford Sollers Limited (FSL). This gave evidence of FSL's operations in Russia however this was rejected by Rospatent, as it did not demonstrate FMC’s operations in Russia as an entity in itself. Moreover, Rospatent decided that the evidence provided by FSL showed that the FMC name and logo had not been used consistently throughout the history of FMC history to qualify as a trademark deserving of protection.
Important changes have also been made to target online piracy. Previously, the law only included websites which pirated movies and other videos, however amendments have been made to extend the law to cover books and music. The holder of the rights can request that the website administrator block access to the pirated content within 24 hours of the request. If the administrator fails to do so, Roskomnadzor, a governmental body will block the content. Administrators are also required to provide their contact information to prevent infringement of the content removal requirement.
What remedies are available if my intellectual property rights are infringed?
Optional compensation, instead of damages has been in existence in relation to trademark infringement in Russia for quite some time. This means that in cases where it is difficult to prove actual damage caused by infringement of a trademark, the owner of the rights can simply claim compensation for the infringement instead.
Recent changes to intellectual property law introduced optional compensation instead of damages with also in relation to patents.
Compensation may be up to 5 000 000 Rubles for one intellectual property subject matter which could potentially be commensurate with damages. A good example is a case in which an infringer of registered trademarks imported original watches to Russia with the trademarks of three different companies. The court awarded compensation to the trademark owners in the amount of 10 000 000 Rubles – even though the damage caused to the business was difficult to asses. Whilst some businesses may believe their damages claim to be worth more than the compensation offered, it is far better to retrieve compensation that to be unable to prove damages and receive nothing.
Concluding Remarks
What can be taken from the outline of the Russian intellectual property regime is that where businesses are aware that they must follow the procedure correctly, and alert to the relevant law there is in fact a strong intellectual property system to support the rights of both local and international business. The recent changes to the law have improved and clarified protection of trademarks and patents, as well as providing a clear indicator of attitude about infringement of online copyright and piracy. In short, making is easier and safer for international businesses to enter the Russian market. It is advised that international firms work with local experts on the intellectual property regime to ensure they receive advise they can trust, and benefit from the wealth of experience such local advisers have in dealing with the Russian intellectual property system.
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