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In view of massive and not always precise information about amendments into IP enforcement practice in Russia our team has prepared a brief digest of the anti-sanction measures and latest amendments introduced into the Russian legislation. 

First of all, IP is not abolished in Russia, neither for Russian IP owners, nor for IP owners in other countries. Indeed, in view of sanctions different counter-measures are discussed, but by now the threats are rather potential than actual.  

We would sort out two types of measures already taken or ready to be taken: 

  • general exemptions from IP protection measures;
  • targeted measures regarding special legal instruments only.

General exemptions are set up by the Federal Law No. 46-FZ of March 08, 2022, which allows the Government in 2022 to define the list of certain goods, for which IP enforcement will not be applied (subparagraph 13 of article 18 of this Law). 

In particular, the following provisions of the Civil Code will not apply to the affected goods according to the the Government’s Ruling No. 506 dated March 29, 2022:

  • Part 6 of Article 1359 — Actions that are Not Infringing the Exclusive Rights to an Invention, Utility Model or Industrial Design — which disallows the import to Russia, use, marketing, sale, commercial transacting with, or storage of a product in which an invention, utility model or industrial design is used without consent by the IP holder.
  • Article 1487 — Exhaustion of the Trademark Right — which disallows the use of a third-party trademark without the trademark owner's consent.

However, the Order was criticized for the lack of precise wording, therefore, on June 28, 2022, the  Federal Law No. 213-FZ was signed, which stipulates a provision abolishing for 2022 liability for IP infringement in the goods listed by the Government.

To the date, in accordance with the above Ruling of the Government No. 506, this list of the goods is stipulated by the Ministry of Industry and Trade and relates only to parallel importation allowance for a certain type of goods and brands (please see below). But potentially the list may be widened in accordance with this Law. By now, there is no discussion about abolishing liability for other types of IP infringements.

It is likely that these measures are to be considered temporary and would not affect companies selling their goods, works, services in Russia including those that manufacture their products in the Russian Federation. Still, the rules are too vague to be sure that they cannot be used to influence the protection of the IP in Russia on the whole.

As for the targeted measures, by now, we would set up the following legal institutes affected:

  • parallel importation allowance for certain goods and services;
  • compulsory license under article 1360 of the Civil Code;
  • procedure of royalties payment by Russian licensees to IP owners from the countries, which commit unfriendly acts against Russia, failing to fulfill their obligations under license agreements;
  • duration of already executed licenses, where the licensee is a Russian entity. 

But these institutes are also affected in a limited way due to the following.

  1. Allowance of parallel importation into Russia.

On March 29, 2022, the Government adopted the Ruling No. 506 in accordance with the above Federal Law No. 46-FZ of March 08, 2022. According to the legal act in question, the Ministry of Industry and Trade (MinPromTorg) set up a list of goods, for which parallel importation into Russia is allowed, in its Orders of  May 06, 2022. The list of goods, contained in the Order, includes:

- certain types of goods, without exceptions for any brands, 

- certain types of goods with exception of some brands, for which parallel importation is not allowed;

- certain types of goods with limited list of brands, for which parallel importation is allowed.

The Order includes a requirement that the products to be imported must have been legitimately introduced into circulation by the IP rights owners somewhere else before import into Russia.

It is a debating point whether this kind of different legal regime for different brands is in line with the TRIPS agreement.

But it is important to mention that, firstly, this list does not clearly differentiate goods from «countries committing unfriendly actions» and from all other countries, and, secondly, that trademark owners who did not cease supplies into Russia can file an application to be excluded from the list. 

We are now using this procedure for some of our clients and will be glad to assist our clients to exclude their products or brands from the list. 

According to the Order of the Ministry of Industry and Trade of the Russian Federation No. 2299 dated June 03, 2022 (registered with the Ministry of Justice on July 04, 2022), the list of goods subject to parallel importation was extended, in particular, to perfumes and cosmetics, personal care products, watches, articles made of plastic, rubber, non-precious metals and some other product groups. For a number of items, the list is supplemented by products of companies that have stopped supplying to Russia. Products of certain right holders were excluded from the list.

We have been carefully monitoring changes to the list and clarifications on the application of the new rules. We are available to assist with identifying whether particular products or brands are likely to be affected by these developments.

  1. Compulsory license (under article 1360 of Civil Code of the Russian Federation)

0% license fee for compulsory licenses, which was mistakenly announced by some media as «nullification of compensation for the use of IP», was set up by the amendment into the Methodic of calculation of compensation for compulsory licensed patents adopted last year.

This Methodic is applied only to compulsory licenses granted in accordance with article 1360 of the Civil Code, due to which the Government of the Russian Federation has the right, in case of emergency, caused by the need to ensure defense and security of the state, and/or protect the life and health of citizens, to grant a patent license to a certain entity without the consent of the patent owner, having notified him concerning this as soon as possible and paying him a proportionate compensation. The amount of «proportional compensation» is calculated in accordance with the above Methodic. A regular amount of compensation is 0,5 percent from the factual turnover, while the license fee for the use of patents belonging to the patent owners connected with the countries making unfriendly steps towards Russian Federation will be 0. 

There are two compulsory licenses taken by now, both related to remdesivir (antiviral agent), patent holder - Gilead Sciences. One of them was granted on December 31, 2020 (basing on the need in this pharmaceutical during Covid), the next one - on March 05, 2022. 

State Duma Committee on Health Protection declared that they are preparing documents to be ready to grant compulsory licenses in case foreign manufacturers stop importation of pharmaceuticals into Russia.

There was information in mass media that compulsory license may be applied to software, but the current law allows to apply article 1360 only to patents and not applied to copyright. Therefore most likely for allowance of software other instruments may be used, most likely the one described below.

  1. The way of payment of royalties by Russian licensees to IP owners from the countries, which commit unfriendly acts against Russia, failing to fulfill their obligations under license agreements

On May 27, 2022 the Decree of the President No. 322 «On the Temporary Procedure for Fulfillment Obligations to Certain Right Holders» came into force.

The Decree establishes the temporary procedure for payment of royalties and compensations to the foreign IP owners, refraining from fulfillment of their obligations under license agreements, to special ruble accounts with some restrictions to use money from such accounts.

In fact, this Order was adopted to prevent one-side termination of license agreements due to non-payment, because a lot of licensees in Russia cannot fulfill their obligations to pay royalties because of sanctions in the banking system. The same procedure was set up in the beginning of May 2022 for payment of obligations arising from credits and financial instruments to foreign companies.

If the Order is construed only in this narrow way - that it is applied only to license obligations - then the foreign IP owners, who are not leaving the Russian market, continue communication with their licensees. and provide necessary goods (if any), information (if agreed), brand management (if agreed), and accept license fees, are not affected by this Order. 

But the wording is quite vague, and it may be construed in the way that compensations for infringement of IP rights also should be paid in accordance with this Order. Although on July 19, 2022, the Clarifications were given by the Ministry of Economical Development on the application of this Order, which allow professionals to suppose, that the Decree was not intended to be construed in such a broad way. 

  1. Duration of already executed licenses, where the licensee is a Russian entity (Measures under consideration)

A draft of amendment to the Law on Introducing the Civil Code is now under consideration, due to which the following provisions are suggested:

- during application of unfriendly measures, one-side termination of a license for IP is not allowed, unless the counterpart significantly breaches its obligations under the license;

- during application of unfriendly measures, the licenses where a licensee is a Russian company, are prolongated, unless the licensee notifies the counterpart about waiver of such prolongation. 


Court practice  

Recently, the so called «Peppa Pig» decision has obtained great resonance, where a regional economic court refused to satisfy the claims of «Peppa Pig» copyright owner, referring to the fact that since the Plaintiff originates from a country committing unfriendly actions towards Russia his filing a suit against a Russian company is considered an abuse of right. 

This decision was reversed by the Court of Appeal on June 27, 2022. The Court of Appeal issued a new judicial act by which the claims were satisfied (in part).

The Appeal Court specifically stressed that due to part 2 of Article 8 of the Constitution of the Russian Federation individuals and organizations on the territory of the Russian Federation are equally guaranteed the protection of all forms of property, including intellectual property.

On the basis of paragraph 1 of Article 7 of the Civil Code of the Russian Federation, generally recognized principles and norms of international law and international treaties of the Russian Federation are, in accordance with the Constitution of the Russian Federation, an integral part of the legal system of the Russian Federation.

Thus, equal protection of intellectual property of foreign organizations, including those registered in the UK, is guaranteed on the territory of the Russian Federation.

Consequently, the filing of a claim itself cannot be recognized as an unfair action in relation to Article 10 of the Civil Code of the Russian Federation. The reasons given in the decision of the court of first instance for which the court refused to satisfy the claim are not based on the correct application of the norms of substantive law.