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In­tel­lec­tu­al prop­erty: re­cent de­vel­op­ments
Over the past fort­night, there have been sev­er­al im­port­ant de­vel­op­ments in the field of in­tel­lec­tu­al prop­erty worthy of spe­cial men­tion. They re­late to par­al­lel im­ports and the pro­tec­tion of rights hold­ers from the so-called “un­friendly” states.Change in the reg­u­la­tion of par­al­lel im­portsOn 28 June 2022, the Pres­id­ent signed a law* amend­ing the pro­vi­sions of Fed­er­al Law No. 46 re­lat­ing to the reg­u­la­tion of par­al­lel im­ports.Ini­tially, Fed­er­al Law No. 46 gave the Rus­si­an gov­ern­ment the au­thor­ity to de­term­ine the list of goods al­lowed for par­al­lel im­ports. The gov­ern­ment del­eg­ated the au­thor­ity to is­sue this list to the Min­istry of In­dustry and Trade.In prac­tice, des­pite the ad­op­tion of the list, ques­tions arose about the leg­al pro­tec­tion of those who plan to en­gage in par­al­lel im­ports. Com­pan­ies feared that such meas­ures would not pro­tect them against claims from rights hold­ers.To ad­dress this is­sue, the de­cision was made to in­tro­duce more changes at the le­gis­lat­ive level.The new pro­vi­sions of the law sug­gest that the use of someone else’s in­tel­lec­tu­al prop­erty will not be an in­fringe­ment if the goods con­tain­ing that in­tel­lec­tu­al prop­erty are in the list of goods of the Min­istry of In­dustry and Trade per­mit­ted for par­al­lel im­port­a­tion.However, the ad­op­ted amend­ments leave one im­port­ant ques­tion un­answered: to what ex­tent can this reg­u­la­tion ap­ply to coun­ter­feit goods?If we delve deep­er in­to the mean­ing and pur­pose of the par­al­lel im­port­a­tion pro­vi­sions, it be­comes clear that coun­ter­feit goods should still be pro­hib­ited. It is not in the in­terest of the state to en­cour­age such activ­ity, par­tic­u­larly be­cause the pro­du­cers of coun­ter­feit goods will not be re­spons­ible for their prop­er qual­ity and safety, nor will they en­sure their war­ranty ser­vice. Fur­ther­more, the trans­par­ency of such activ­ity for tax pur­poses is at the very least ques­tion­able.This view is sup­por­ted* by, among oth­ers, of­fi­cials stat­ing that the leg­al­isa­tion of par­al­lel im­ports does not im­ply that coun­ter­feit­ing is al­lowed.Thus, tak­ing in­to ac­count the gen­er­al ap­proach of the le­gis­la­tion on this is­sue and the ob­ject­ives of the par­al­lel im­port­a­tion mech­an­ism, we can con­clude that the le­git­im­ate in­terests of rights hold­ers to re­move coun­ter­feit goods from the mar­ket should be pro­tec­ted, even in light of the ad­op­ted amend­ments. The am­bi­gu­ity of some of the word­ing of the new laws can prob­ably be ex­plained by the le­gis­lat­or’s haste rather than its in­ten­tion to leg­al­ise coun­ter­feit goods.Re­versal of the de­cision in the fam­ous “Peppa Pig” case*On 21 June 2022, the Second Com­mer­cial Court of Ap­peal quashed the de­cision of the Kirov Re­gion­al Court in the “Peppa Pig” case and sat­is­fied the rights hold­er’s claim for com­pens­a­tion for in­fringe­ment of its ex­clus­ive rights to a trade­mark.As a re­fresh­er, on 3 March 2022, the Kirov Re­gion­al Com­mer­cial Court dis­missed the claim of a Brit­ish com­pany for trade­mark in­fringe­ment of the im­age of the Peppa Pig char­ac­ter, stat­ing that the very fact that the plaintiff went to court was an ab­use of rights as the com­pany is re­gistered in a state which im­posed sanc­tions against Rus­sia.This case pro­voked much spec­u­la­tion that the in­tel­lec­tu­al prop­erty of for­eign rights hold­ers is no longer pro­tec­ted in Rus­sia.In a pre­vi­ous alert on the sub­ject, we noted that more re­cent court de­cisions rais­ing the is­sue of the so-called “un­friendly” ori­gin of com­pan­ies did not sup­port the view of the Kirov Re­gion­al Court.The high­er court also dis­agreed and re­viewed the de­cision on ap­peal. In its judg­ment, the court noted that for­eign com­pan­ies, in­clud­ing those re­gistered in the UK, are guar­an­teed to re­ceive equal pro­tec­tion of their in­tel­lec­tu­al prop­erty in Rus­sia.The ap­pel­late court’s find­ings con­firmed that the de­cision in the Peppa Pig case was the ex­cep­tion rather than the rule, and that pro­tec­tion of in­tel­lec­tu­al prop­erty rights could not be denied on the sole ground that the com­pany was re­gistered in a state that had im­posed sanc­tions against Rus­sia.* In Rus­si­anCo-au­thored by Sher­met Kur­b­an­ov, Paralegal in In­tel­lec­tu­al Prop­erty.
Anti-mono­poly re­stric­tions on the ex­pan­sion of large re­tail chains to be...
A law* tem­por­ar­ily lift­ing re­stric­tions on large re­tail chains to ex­pand their busi­ness (the “Amend­ments”) has been ad­op­ted.Rus­si­an law* cur­rently pro­hib­its re­tail chains with a mar­ket share of more than 25% from ac­quir­ing or rent­ing ad­di­tion­al re­tail premises. If this pro­hib­i­tion is vi­ol­ated, the trans­ac­tion may be de­clared in­val­id by a court.Ac­cord­ing to the Amend­ments, this re­stric­tion will not ap­ply from 15 June 2022 to 31 Decem­ber 2022 in­clus­ive to ac­quis­i­tions of re­tail chains and leases of space in re­tail fa­cil­it­ies from for­eign com­pan­ies leav­ing the Rus­si­an mar­ket.The ex­emp­tion from the re­stric­tion is val­id if the fol­low­ing con­di­tions are cu­mu­lat­ively met:the re­tail chain to be ac­quired is con­trolled by a for­eign leg­al en­tity; an­dthe own­er of the ac­quired re­tail chain has ceased to op­er­ate in the Rus­si­an mar­ket or de­clared a ces­sa­tion of activ­it­ies.The Amend­ments are de­signed to keep busi­nesses in Rus­sia that have been threatened with clos­ure by al­low­ing large re­tail chains to ac­quire ad­di­tion­al space and fur­ther strengthen their pres­ence in the mar­ket. The changes come in­to force on 15 June 2022.* In Rus­si­anCo-au­thored by Kristina Po­ta­pova, As­so­ci­ate, and Elena An­dri­an­ova, Seni­or As­so­ci­ate.
New grounds in­tro­duced for the im­port and sale of un­re­gistered medi­cines...
In the spring of 2022, the Rus­si­an gov­ern­ment ad­op­ted De­cree No. 593* aimed at en­sur­ing the sus­tain­ab­il­ity of drug sup­ply in the con­text of for­eign sanc­tions. One of the main meas­ures in­tro­duced is the pos­sib­il­ity to tem­por­ar­ily cir­cu­late batches or series of un­re­gistered medi­cines in Rus­sia on the basis of a spe­cial per­mit from the Min­istry of Health (“Per­mit”).The nov­elty primar­ily con­cerns medi­cines that are not re­gistered in Rus­sia, are au­thor­ised for use abroad and have ana­logues re­gistered in Rus­sia with the same in­ter­na­tion­al non-pro­pri­et­ary name.However, this meas­ure could not be ap­plied for a peri­od of time due to the fact a spe­cial inter-min­is­teri­al com­mis­sion (the “Com­mis­sion”), whose de­cision on the fol­low­ing is­sues must form the basis for is­su­ing the Per­mit, had not yet been set up:de­term­in­ing wheth­er there is a short­age of a medi­cine or the risk it may oc­cur;de­term­in­ing wheth­er a batch or series of un­re­gistered medi­cine can be cir­cu­lated tem­por­ar­ily.The Reg­u­la­tion on the func­tion­ing of the Com­mis­sion was ap­proved by Or­der No. 339n of the Rus­si­an Min­istry of Health* and came in­to force on 7 June 2022. The Com­mis­sion in­cludes rep­res­ent­at­ives of the Min­istry of Health, the Fed­er­al Ser­vice for Sur­veil­lance in Health­care, the Min­istry of In­dustry and Trade, the Min­istry of Fin­ance, the Fed­er­al Anti-Mono­poly Ser­vice and the Fed­er­al Cus­toms Ser­vice. At the ini­ti­at­ive of the Com­mis­sion, mar­ket­ing au­thor­isa­tion hold­ers and Per­mit ap­plic­ants may par­ti­cip­ate in its meet­ings without the right to vote.Ex­ec­ut­ive au­thor­it­ies and en­tit­ies in­volved in the cir­cu­la­tion of medi­cines (e.g. phar­ma­cies, dis­trib­ut­ors, man­u­fac­tur­ers) can be sources of in­form­a­tion on un­avail­ab­il­ity or risk of un­avail­ab­il­ity of a medi­cine.In mak­ing its de­cisions, the Com­mis­sion takes in­to ac­count factors such as the with­draw­al of mar­ket­ing au­thor­isa­tions, the risk that man­u­fac­tur­ers or sup­pli­ers of fin­ished medi­cines or raw ma­ter­i­als may dis­con­tin­ue busi­ness.The de­cision on the pos­sib­il­ity of tem­por­ary cir­cu­la­tion of a drug must be un­an­im­ous.Con­clu­sionThe Com­mis­sion is ex­pec­ted to start its activ­it­ies shortly. This will give for­eign com­pan­ies con­tinu­ing to op­er­ate on the Rus­si­an mar­ket ad­di­tion­al op­por­tun­it­ies to sup­ply medi­cines that are not re­gistered in Rus­sia to meet pa­tients’ needs.* In Rus­si­an
Pay­ment pro­ced­ure changed for use of for­eign in­tel­lec­tu­al prop­erty
On 27 May 2022, the Rus­si­an Pres­id­ent signed De­cree No. 322* (the “De­cree”) that sets up a spe­cial pro­ced­ure for the pay­ment of li­cens­ing and oth­er pay­ments to for­eign right­shold­ers from “un­friendly” states for the use of their in­tel­lec­tu­al prop­erty.Thus, in or­der to duly ful­fil the ob­lig­a­tions to such right­shold­er, the li­censee or oth­er per­son ob­liged to make pay­ment in fa­vour of the right­shold­er (the “Debt­or”) pays the ap­pro­pri­ate amount in roubles to a spe­cial “O” type ac­count opened in an au­thor­ised bank in the name of the for­eign right­shold­er. If the agree­ment provides for pay­ment in for­eign cur­rency, the Debt­or de­pos­its in­to the ac­count an amount in roubles equi­val­ent to the ob­lig­a­tions in for­eign cur­rency at the of­fi­cial ex­change rate of the Cent­ral Bank of the Rus­si­an Fed­er­a­tion.The pro­ced­ure in­tro­duced by the De­cree ap­plies in par­tic­u­lar to right­shold­ers as­so­ci­ated with “un­friendly” states and their con­trolled en­tit­ies (the “Right­shold­er”).However, the doc­u­ment also sets out spe­cif­ic ex­cep­tions. For ex­ample, this pro­ced­ure does not ap­ply to:right­shold­ers from “un­friendly” states if they are con­trolled by Rus­si­an in­di­vidu­als or leg­al en­tit­ies, provided that in­form­a­tion on such con­trol has been dis­closed to the Rus­si­an tax au­thor­it­ies;right­shold­ers from “un­friendly” states who duly ful­fil their con­trac­tu­al ob­lig­a­tions to their Rus­si­an coun­ter­parties;con­tracts re­lated to the im­port­a­tion of medi­cines or med­ic­al devices in­to Rus­sia, the pro­vi­sion of com­mu­nic­a­tion ser­vices, and the cre­ation and/or use of soft­ware in Rus­sia.The pay­ment mech­an­ism es­tab­lished by the De­cree is as fol­lows.A Debt­or sub­mits an ap­plic­a­tion to an au­thor­ised Rus­si­an bank to open a spe­cial “O” type ac­count in the name of the for­eign Right­shold­er. One Right­shold­er may only have one such ac­count.The bank no­ti­fies the Right­shold­er by post, email or tele­phone that an “O” type ac­count has been opened in its name.The Right­shold­er provides the Debt­or with writ­ten con­sent (in­clud­ing elec­tron­ic con­sent) to make pay­ments to the “O” type ac­count. Un­til such con­sent has been giv­en, the Debt­or is not ob­liged to make any pay­ments and no con­trac­tu­al pen­al­ties may arise. The Debt­or makes the pay­ment spe­cified in the agree­ment with the Right­shold­er to the “O” type ac­count and is deemed to have ful­filled its con­trac­tu­al ob­lig­a­tions as of that mo­ment, re­gard­less of wheth­er the Right­shold­er has con­sen­ted.Sub­ject to the pre­scribed pro­ced­ure, Debt­ors may con­tin­ue to use the li­censed in­tel­lec­tu­al prop­erty.The De­cree was ad­op­ted to sta­bil­ise the cur­rent situ­ation where some for­eign com­pan­ies either re­fuse the per­mis­sion pre­vi­ously gran­ted to use their in­tel­lec­tu­al prop­erty or can­not ac­cept pay­ment due to re­stric­tions on in­ter­na­tion­al trans­ac­tions, while Rus­si­an com­pan­ies are will­ing to con­tin­ue us­ing such in­tel­lec­tu­al prop­erty.* In Rus­si­an
The Product Reg­u­la­tion and Li­ab­il­ity Re­view
In today’s glob­al eco­nomy, product man­u­fac­tur­ers and dis­trib­ut­ors face a dizzy­ing ar­ray of over­lap­ping and some­times con­tra­dict­ory laws and reg­u­la­tions around the world. A ba­sic fa­mili­ar­ity with in­ter­na­tion­al product li­ab­il­ity is es­sen­tial to do­ing busi­ness in this en­vir­on­ment. An un­der­stand­ing of the in­ter­na­tion­al frame­work will provide thought­ful man­u­fac­tur­ers and dis­trib­ut­ors with a stra­tegic ad­vant­age in this in­creas­ingly com­pet­it­ive area. This treat­ise sets out a gen­er­al over­view of product li­ab­il­ity in key jur­is­dic­tions around the world, giv­ing man­u­fac­tur­ers a place to start in as­sess­ing their po­ten­tial li­ab­il­ity and ex­pos­ure.Read the Rus­sia chapter in the The Product Reg­u­la­tion and Li­ab­il­ity Law Re­view 2022, pre­pared by Sergey Yuryev in March 2022. The chapter provides an over­view of the Rus­si­an reg­u­la­tions in the product li­ab­il­ity in­dustry.This art­icle was pre­pared for and first pub­lished by The Law Re­views in May 2022. 
Sakhal­in car­bon ex­per­i­ment law to come in­to force on 1 Septem­ber 2022
The leg­al frame­work for the pos­sible mod­el of car­bon reg­u­la­tion in Rus­sia has been es­tab­lished in a Fed­er­al Law* ad­op­ted on 6 March 2022 (the “Law”). This mod­el will be tested dur­ing the ex­per­i­ment in the Sakhal­in Re­gion from 1 Septem­ber 2022 to 31 Decem­ber 2028.The main goal of the ex­per­i­ment is to achieve car­bon neut­ral­ity in Sakhal­in by the end of 2025.The ap­proved car­bon man­age­ment mod­el will likely be ex­ten­ded to oth­er re­gions of the Rus­si­an Fed­er­a­tion if the ex­per­i­ment proves suc­cess­ful.Main pro­vi­sions of the LawThe Law in­tro­duces quotas for green­house gas emis­sions as a new in­stru­ment for car­bon reg­u­la­tion and as the basis of the ex­per­i­ment.A quota is defined as a cer­tain amount of al­low­able green­house gas emis­sions an­nu­ally set by the com­pet­ent body for reg­u­lated com­pan­ies, based on an ap­proved meth­od­o­logy, to achieve car­bon neut­ral­ity. The re­gion­al gov­ern­ment will ap­prove the list of such com­pan­ies.If a com­pany ex­ceeds the es­tab­lished quota, it will be charged at rates that the Rus­si­an gov­ern­ment will ap­prove. On the con­trary, if the quota for the ac­count­ing year is met, units of ful­fil­ment of the quota in an amount cor­res­pond­ing to the dif­fer­ence between the es­tab­lished quota and the ac­tu­al mass of green­house gas emis­sions will be cred­ited to the ac­count of the or­gan­isa­tion in a spe­cial re­gister.Sub­sequently, the com­pany may cred­it such im­ple­ment­a­tion units to its ac­count in the re­gister to meet its as­signed quota or the com­pany may trans­fer them to an­oth­er en­tity for which they are ne­ces­sary to meet its own quota. In this way, the pre­requis­ites for the emer­gence of a mar­ket for trad­ing in quota im­ple­ment­a­tion units are cre­ated.In ad­di­tion to quotas, the Law en­vis­ages oth­er mech­an­isms to reg­u­late emis­sions and ab­sorp­tion of green­house gases:• An in­vent­ory of emis­sions will be made once a year at the re­gion­al level.• Reg­u­lated or­gan­isa­tions will have to con­duct man­dat­ory car­bon re­port­ing.• Eco­nom­ic and fin­an­cial mech­an­isms that stim­u­late emis­sion re­duc­tions will be es­tab­lished. They may be real­ised in the form of tax cred­its for reg­u­lated or­gan­isa­tions or sub­sidies for the re­im­burse­ment of pro­duc­tion costs.Com­mentsIn con­trast to the pre­vi­ously ad­op­ted fed­er­al law on lim­it­ing green­house gas emis­sions (which we re­por­ted on earli­er), the Law stip­u­lates stricter reg­u­la­tion of green­house gas emis­sions and ab­sorp­tion in the ex­per­i­ment­al area through quotas.Even though im­ple­ment­ing reg­u­la­tions provided for by the Law in fur­ther­ance of its pro­vi­sions have yet to be en­acted, the rules the Law cre­ates are already a bold step for­ward in the cli­mate-change agenda.However, in the cur­rent cir­cum­stances, the suc­cess­ful im­ple­ment­a­tion of the ex­per­i­ment with­in the an­nounced time­frame raises le­git­im­ate con­cerns. It is very likely that, by the time the Law comes in­to force in Septem­ber 2022, the plans for the ex­per­i­ment will have to be sub­stan­tially re­vised due to the need to real­loc­ate budget­ary re­sources for oth­er needs.* In Rus­si­anCo-au­thored by Elena Foteeva, Paralegal in Real Es­tate.
US re­moves in­tel­lec­tu­al prop­erty from scope of Rus­sia-re­lated sanc­tions
Since the in­tro­duc­tion of sanc­tions against Rus­sia, US com­pan­ies op­er­at­ing in Rus­sia have faced a num­ber of chal­lenges in con­tinu­ing busi­ness. For ex­ample, in the IP area one of the press­ing prob­lems has been the pay­ment of of­fi­cial fees for re­gis­ter­ing or main­tain­ing in­tel­lec­tu­al prop­erty in Rus­sia. In view of the US sanc­tions, com­pan­ies were con­cerned that US au­thor­it­ies would con­sider these ac­tions as fin­an­cing Rus­sia, with all the neg­at­ive con­sequences that would fol­low.On 5 May 2022, the US De­part­ment of the Treas­ury cla­ri­fied this and oth­er is­sues re­lated to in­tel­lec­tu­al prop­erty. The De­part­ment ad­op­ted Gen­er­al Li­cence No. 31 (the “Gen­er­al Li­cence”), amend­ing in part the Rus­si­an Harm­ful For­eign Activ­it­ies Sanc­tions Reg­u­la­tions.The Gen­er­al Li­cence ex­cluded trans­ac­tions re­lated to copy­rights, trade­marks and pat­ents from the sanc­tions re­gime, es­tab­lish­ing a list of trans­ac­tions that are not sub­ject to re­stric­tions. Such trans­ac­tions in­clude:fil­ing and pro­sec­u­tion of any ap­plic­a­tion to ob­tain a pat­ent, trade­mark, copy­right or oth­er form of in­tel­lec­tu­al prop­erty pro­tec­tion;re­ceipt of a pat­ent, trade­mark, copy­right or oth­er form of in­tel­lec­tu­al prop­erty pro­tec­tion;re­new­al or main­ten­ance of a pat­ent, trade­mark, copy­right or oth­er form of in­tel­lec­tu­al prop­erty pro­tec­tion; and­fil­ing and pro­sec­u­tion of any op­pos­i­tion or in­fringe­ment pro­ceed­ing with re­spect to a pat­ent, trade­mark, copy­right or oth­er form of in­tel­lec­tu­al prop­erty pro­tec­tion, or the en­trance of a de­fence to any such pro­ceed­ing.In gen­er­al, the US au­thor­it­ies have answered two ba­sic ques­tions:Wheth­er Rus­si­an com­pan­ies can re­gister, main­tain and pro­tect in­tel­lec­tu­al prop­erty in the US.Wheth­er US com­pan­ies can do the same in Rus­sia. Ef­fect on Rus­si­an com­pan­ies Both in Rus­sia and the US, the ter­rit­ori­al prin­ciple of in­tel­lec­tu­al prop­erty pro­tec­tion, es­tab­lished by a num­ber of in­ter­na­tion­al agree­ments, ap­plies. This means that these rights are lim­ited to the coun­try in which the in­tel­lec­tu­al prop­erty was cre­ated.There­fore, un­der cur­rent cir­cum­stances, Gen­er­al Li­cence ap­provals are cru­cial for the pro­tec­tion of pat­ent rights and trade­marks in the US be­cause their pro­tec­tion is dir­ectly linked to the re­gis­tra­tion of in­tel­lec­tu­al prop­erty in the coun­try.The situ­ation is slightly dif­fer­ent with copy­right. Ac­cord­ing to the pro­vi­sions of the Berne Con­ven­tion, each mem­ber coun­try grants to cit­izens of oth­er mem­ber coun­tries the same copy­rights as it grants to its own cit­izens. In oth­er words, we can say that the in­ter­na­tion­al prin­ciple of pro­tec­tion was es­tab­lished for copy­right, but with­in the coun­tries that signed the con­ven­tion (cur­rently, there are 181 sig­nat­or­ies, in­clud­ing Rus­sia and the US).However, the copy­right pro­vi­sions of the Gen­er­al Li­cence do not lose their rel­ev­ance.Thus, the US Treas­ury De­part­ment’s Gen­er­al Li­cence fa­vours the pro­tec­tion of in­tel­lec­tu­al prop­erty of Rus­si­an right­shold­ers in the US. Ef­fect on US com­pan­ies As men­tioned above, US com­pan­ies have faced un­cer­tainty about what to do with in­tel­lec­tu­al prop­erty re­gistered in Rus­sia. Com­pan­ies were con­cerned that con­tinu­ing to main­tain in­ven­tions or trade­marks through the pay­ment of of­fi­cial fees would be seen as fin­an­cing Rus­sia.To ad­dress this is­sue, in March 2022, the US De­part­ment of the Treas­ury is­sued Gen­er­al Li­cence No. 13, which spe­cifies that US com­pan­ies are al­lowed to pay taxes, fees or im­port du­ties, provided such trans­ac­tions are nor­mal and ne­ces­sary for their day-to-day op­er­a­tions. The li­cence is val­id un­til 23 June 2022.The is­su­ance of Gen­er­al Li­cence No. 13 did not an­swer oth­er ques­tions re­lated to the use of in­tel­lec­tu­al prop­erty in Rus­sia, nor did it an­swer the ques­tion of wheth­er it is pos­sible to pay state fees after 23 June 2022.These ques­tions were answered in the Gen­er­al Li­cence. Giv­en the per­mis­sions set forth in the Gen­er­al Li­cence, it is safe to say that the re­gis­tra­tion, main­ten­ance and pro­tec­tion of in­tel­lec­tu­al prop­erty, in­clud­ing the pay­ment of of­fi­cial fees for such ac­tions, is not pro­hib­ited in Rus­sia for Amer­ic­an com­pan­ies.Moreover, through these ac­tions, the US gov­ern­ment is ba­sic­ally re­com­mend­ing that US com­pan­ies keep con­trol of their in­tel­lec­tu­al prop­erty in Rus­sia. Dif­fi­cult times will even­tu­ally pass while in­tel­lec­tu­al prop­erty will con­tin­ue to play an im­port­ant role in busi­ness de­vel­op­ment.Con­versely, the loss of in­tel­lec­tu­al prop­erty in Rus­sia would be ac­com­pan­ied only by neg­at­ive con­sequences such as:loss of pri­or­ity to in­tel­lec­tu­al prop­erty;loss of brand in Rus­sia;cap­ture of the brand’s tar­get audi­ence by oth­er com­pan­ies that have con­tin­ued to op­er­ate in Rus­sia;gradu­al ob­li­vi­on of the brand by Rus­si­an con­sumers;loss of mar­ket­ing in­vest­ment that has been spent on pop­ular­ising the brand, etc.Clearly, re­gis­ter­ing and main­tain­ing in­tel­lec­tu­al prop­erty is a per­miss­ible and, in fact, re­com­men­ded busi­ness activ­ity in both Rus­sia and the US.Co-au­thored by Sher­met Kur­b­an­ov, Paralegal in In­tel­lec­tu­al Prop­erty
TP com­pli­ance amid cur­rent mar­ket con­di­tions
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Rus­sia sanc­tions 31 for­eign com­pan­ies
On 11 May 2022, the Rus­si­an Gov­ern­ment sanc­tioned 31 en­tit­ies from the EU, US, UK, Singa­pore and Switzer­land and their con­trolled en­tit­ies (the “Sanc­tioned Per­sons”) pur­su­ant to De­cree of the Rus­si­an Pres­id­ent No. 252* dated 3 May 2022 (the “De­cree”). The list of the above men­tioned en­tit­ies is set out in Rus­si­an Gov­ern­ment Reg­u­la­tion No. 851* (the “Reg­u­la­tion”). The Rus­si­an Min­istry of Fin­ance may sub­mit pro­pos­als to the Gov­ern­ment to amend this list.Un­der the De­cree, fed­er­al state au­thor­it­ies, state au­thor­it­ies of con­stitu­ent en­tit­ies of the Rus­si­an Fed­er­a­tion, oth­er state au­thor­it­ies, mu­ni­cip­al au­thor­it­ies, as well as leg­al en­tit­ies and in­di­vidu­als un­der the jur­is­dic­tion of the Rus­si­an Fed­er­a­tion (the “Reg­u­lated Per­sons”) are pro­hib­ited from:lower-al­phaper­form­ing trans­ac­tions (in­clud­ing for­eign trade con­tracts) with Sanc­tioned Per­sons;dis­char­ging out­stand­ing ob­lig­a­tions to Sanc­tioned Per­sons (in­clud­ing ob­lig­a­tions un­der for­eign trade con­tracts); an­d­car­ry­ing out fin­an­cial op­er­a­tions with Sanc­tioned Per­sons as be­ne­fi­ciar­ies. The Rus­si­an Min­istry of Fin­ance is en­titled to is­sue of­fi­cial cla­ri­fic­a­tions for para­graphs a) and b) above, and the Bank of Rus­sia may give cla­ri­fic­a­tions for para­graph c) above.The Reg­u­la­tion also sets out ad­di­tion­al cri­ter­ia for qual­i­fy­ing the fol­low­ing trans­ac­tions as re­stric­ted un­der para­graphs a) and b) above:trans­ac­tions to the be­ne­fit of Sanc­tioned Per­sons; trans­ac­tions provid­ing for the call at Rus­si­an ports of ves­sels owned and/or chartered by, for or on be­half of Sanc­tioned Per­sons; an­dtrans­ac­tions provid­ing for pay­ments or se­cur­it­ies trans­ac­tions in­volving and/or to the be­ne­fit of Sanc­tioned Per­sons.The re­stric­tions lis­ted above will ap­ply if Reg­u­lated Per­sons are aware that the ac­tions are taken to the be­ne­fit of Sanc­tioned Per­sons.The De­cree also im­poses a ban on the ex­port out­side of the Rus­si­an Fed­er­a­tion of products and/or raw ma­ter­i­als pro­duced and/or ex­trac­ted in the Rus­si­an Fed­er­a­tion if they are sup­plied to (i) Sanc­tioned Per­sons, and/or (ii) oth­er per­sons by Sanc­tioned Per­sons.Al­though the Reg­u­la­tion pro­hib­its trans­ac­tions with Sanc­tioned Per­sons only in the case of per­form­ance of the trans­ac­tions and op­er­a­tions un­der para­graphs a) to c) above, we be­lieve that, based on the De­cree, the list of Sanc­tioned Per­sons should also ap­ply for the pur­pose of pro­hib­it­ing rel­ev­ant ex­port op­er­a­tions (un­less oth­er­wise provided for in reg­u­la­tions or of­fi­cial cla­ri­fic­a­tions).Cer­tain trans­ac­tions with Sanc­tioned Per­sons may be al­lowed on the basis of spe­cial per­mits as may be pro­posed to the Gov­ern­ment by the Rus­si­an Min­istry of Fin­ance.We will con­tin­ue to mon­it­or these de­vel­op­ments and keep you in­formed of changes.* In Rus­si­an
The In­tel­lec­tu­al Prop­erty Law Re­view 2022
The coronavir­us pan­dem­ic has con­tin­ued to im­pact all as­pects of life over the past year, re­quir­ing gov­ern­ments, busi­nesses and in­di­vidu­als to ad­just and ad­apt. Now that bor­der re­stric­tions and shut­downs due to the vir­us are lessen­ing and in­ter­na­tion­al trade re­mains high, the need to main­tain the world’s in­ter­con­nec­ted­ness and re­li­ance on in­ter­na­tion­al trade is en­hanced and, at the same time, the stakes in­volved with that trade have in­creased con­sid­er­ably. Against this back­drop, in­tel­lec­tu­al prop­erty prac­ti­tion­ers must nav­ig­ate a vari­ety of leg­al sys­tems and in­tel­lec­tu­al prop­erty laws in which many dif­fer­ences re­main, des­pite some move­ments to­ward har­mon­isa­tion. Read the Rus­sia chapter in the In­tel­lec­tu­al Prop­erty Law Re­view 2022, pre­pared by Ant­on Bankovskiy in early Feb­ru­ary 2022. The chapter provides an over­view of the Rus­si­an reg­u­la­tions in the in­tel­lec­tu­al prop­erty in­dustry.This art­icle was pre­pared for and first pub­lished by The Law Re­views in April 2022. 
Morator­i­um on bank­ruptcy in Rus­sia un­til 1 Oc­to­ber 2022 already im­pact­ing...
The Rus­si­an Gov­ern­ment has in­tro­duced* a morator­i­um on cred­it­ors fil­ing bank­ruptcy cases from 1 April 2022 and un­til 1 Oc­to­ber 2022. The new morator­i­um (un­like the COV­ID-re­lated morator­i­um of 2020) ap­plies by de­fault to all in­di­vidu­als, in­di­vidu­al en­tre­pren­eurs and leg­al en­tit­ies (ex­cept for cer­tain real es­tate de­velopers who are debt­ors that have already been in­cluded on the Re­gister of Prob­lem­at­ic Prop­er­ties).How does the morator­i­um af­fect cred­it­ors’ rights?Cred­it­ors can­not file a new bank­ruptcy pe­ti­tion against any debt­or un­til 1 Oc­to­ber 2022 un­less such a debt­or has de­clared a waiver of the morator­i­um. Cred­it­ors’ ap­plic­a­tions filed dur­ing the morator­i­um peri­od with a com­mer­cial court will be re­turned. A cred­it­or’s no­tice of in­ten­tion to ap­ply for bank­ruptcy of a debt­or is also not sub­ject to pub­lic­a­tion in the pub­lic re­gister un­til the end of the morator­i­um.The morator­i­um does not ap­ply to bank­ruptcy cases that have already been ini­ti­ated. Thus, courts will hear as usu­al cases in which the courts have ruled on the ac­cept­ance of a bank­ruptcy pe­ti­tion be­fore 1 April.Debt­ors will have the dis­cre­tion to waive ap­plic­a­tion of the morator­i­um, which will mean that bank­ruptcy pro­ceed­ings can be ini­ti­ated against them and oth­er en­vis­aged re­stric­tions can be lif­ted (see sec­tion be­low). To waive the morator­i­um, the rel­ev­ant in­form­a­tion must be entered in the Uni­fied Fed­er­al Re­gister of Bank­ruptcy In­form­a­tion.Hav­ing said that, the morator­i­um does not pre­vent debt­ors from fil­ing for their own bank­ruptcy on their own ini­ti­at­ive. However, as a gen­er­al rule, dur­ing the morator­i­um peri­od, the fail­ure of man­age­ment to file a bank­ruptcy pe­ti­tion – if there are signs of bank­ruptcy or in­solv­ency – does not res­ult in man­age­ment be­ing held sub­si­di­ar­ily li­able for the debt­or’s ob­lig­a­tions (un­less signs had already oc­curred be­fore the morator­i­um was in­tro­duced).How does a morator­i­um af­fect on­go­ing busi­ness op­er­a­tions?The morator­i­um already af­fects busi­nesses by im­pos­ing cer­tain re­stric­tions not re­lated to bank­ruptcy pro­ceed­ings, such as:Par­ti­cipants and share­hold­ers are not al­lowed to exit the com­pany, and debt­ors can­not buy back out­stand­ing shares or par­ti­cip­at­ory in­terests.It is not per­mit­ted to ter­min­ate the debt­or’s ob­lig­a­tions by set-off if this would vi­ol­ate the or­der of pri­or­ity of cred­it­ors’ claims.It is not per­mit­ted to pay di­vidends or in­come on par­ti­cip­at­ory in­terests or to dis­trib­ute profits among the debt­or’s par­ti­cipants.No for­feits, fines, pen­al­ties and oth­er fin­an­cial sanc­tions will be ap­plied for fail­ure to ful­fil mon­et­ary ob­lig­a­tions and ob­lig­at­ory pay­ments.No fore­clos­ure of pledged prop­erty, wheth­er through court or out-of-court pro­ceed­ings, is al­lowed.En­force­ment pro­ceed­ings on prop­erty claims arising pri­or to the morator­i­um are sus­pen­ded (in this case, seizures on the debt­or’s prop­erty and oth­er re­stric­tions on the dis­pos­al of the debt­or’s prop­erty are not lif­ted).What can cred­it­ors do be­fore the morator­i­um ex­pires?The morator­i­um sig­ni­fic­antly af­fects the cred­it­or’s means for en­for­cing the debt­or’s ob­lig­a­tions. Dur­ing the morator­i­um peri­od, we re­com­mend that cred­it­ors:file a law­suit to col­lect the ex­ist­ing debt from the debt­or in or­der to be able to col­lect the debt through en­force­ment pro­ceed­ings or to ini­ti­ate bank­ruptcy pro­ceed­ings after the end of the morator­i­um;ob­tain writs of ex­e­cu­tion and ap­ply to bailiffs or a bank to col­lect the debt in the fu­ture. Al­though en­force­ment pro­ceed­ings are sus­pen­ded for the dur­a­tion of the morator­i­um, this does not de­prive the cred­it­or of the right to ob­tain a writ of ex­e­cu­tion. Courts con­tin­ue to is­sue writs of ex­e­cu­tion and en­force­ment pro­ceed­ings may be ini­ti­ated on their basis. No en­force­ment is car­ried out by bailiffs dur­ing the morator­i­um peri­od. If the cred­it­or ap­plies to a bank (or cred­it or­gan­isa­tion), the bank will ac­cept the writ of ex­e­cu­tion, but will leave it un­ex­ecuted un­til the end of the morator­i­um. However, dur­ing the sus­pen­ded en­force­ment pro­ceed­ings, the bailiff is still en­titled to seize or pro­hib­it the dis­pos­al of the debt­or’s prop­erty in or­der to pre­serve the pos­sib­il­ity of fore­clos­ure after the morator­i­um has been can­celled;mon­it­or the debt­or’s fin­an­cial situ­ation and the pre­ser­va­tion of its prop­erty. The morator­i­um does not im­pose a ban on cred­it­or chal­len­ging the debt­or’s di­vest­ment trans­ac­tions or the ap­plic­a­tion of in­ter­im meas­ures in court dis­putes and en­force­ment pro­ceed­ings in re­la­tion to the debt­or’s as­sets (pro­hib­i­tions on the dis­pos­al of prop­erty or seizure);take great care in gath­er­ing and pre­par­ing evid­ence of losses to suc­cess­fully prove these losses. Since no pen­al­ties for the debt­or’s fail­ure to ful­fil its mon­et­ary ob­lig­a­tions are pay­able from the be­gin­ning of the morator­i­um, the cred­it­or is en­titled to re­cov­er dam­ages from the debt­or without hav­ing to wait un­til the end of the morator­i­um to com­pensate for its losses.* In Rus­si­an
What will hap­pen to for­eign in­tel­lec­tu­al prop­erty in Rus­sia?
In re­sponse to in­ter­na­tion­al sanc­tions, Rus­sia is­sued a series of reg­u­la­tions in the area of in­tel­lec­tu­al prop­erty.Dur­ing the last two months, there have been alarm­ing sig­nals that the in­tel­lec­tu­al prop­erty of for­eign right­shold­ers could be threatened or lose pro­tec­tion in Rus­sia. However, these con­clu­sions ap­pear pre­ma­ture.In re­sponse to the cur­rent de­vel­op­ments, the at­ten­tion of vari­ous mar­ket play­ers and stake­hold­ers has been drawn to the fol­low­ing is­sues:• Can Rus­si­an com­pan­ies use for­eign pat­en­ted in­ven­tions, util­ity mod­els or in­dus­tri­al designs without ob­tain­ing con­sent or without the need to pay the right­shold­ers?• Do the same rules ap­ply to oth­er types of in­tel­lec­tu­al prop­erty?• What does the in­tro­duc­tion of par­al­lel im­port­a­tion in Rus­sia mean for for­eign com­pan­ies?• Is trade­mark squat­ting now al­lowed in Rus­sia?• Fol­low­ing the so-called “Peppa Pig” case, will the rights of for­eign com­pan­ies be pro­tec­ted be­fore the Rus­si­an courts?Based on ex­ist­ing le­gis­la­tion and case-law, the fol­low­ing an­swers to these ques­tions con­firm that in­tel­lec­tu­al prop­erty will re­main pro­tec­ted in Rus­sia.Use of for­eign pat­en­ted in­ven­tions or in­dus­tri­al design­sOn 6 March 2022, the Rus­si­an Gov­ern­ment (the “Gov­ern­ment”) is­sued De­cree No. 299*, which amended the meth­od for de­term­in­ing the amount of com­pens­a­tion to a right­shold­er for the use of its pat­ent-pro­tec­ted ob­ject without con­sent (“Com­puls­ory Li­cens­ing”). For pat­enthold­ers from for­eign states that com­mit “un­friendly acts” against Rus­sia (“Un­friendly States”), this com­pens­a­tion was re­duced to zero.It is im­port­ant to note that this pro­ced­ure only ap­plies when the Gov­ern­ment trig­gers the mech­an­ism of Com­puls­ory Li­cens­ing set out in Art­icle 1360 of the Rus­si­an Civil Code.The art­icle al­lows for the use of an in­ven­tion, util­ity mod­el or in­dus­tri­al design without the con­sent of the pat­entee, sub­ject to the fol­low­ing lim­it­a­tions:•  the pro­vi­sions may only be ap­plied in the lim­ited cases strictly laid down in the art­icle;•  this de­cision is taken by a sep­ar­ate Gov­ern­ment de­cree and ex­tends solely to the spe­cif­ic pat­ent held by a par­tic­u­lar right­shold­er for a lim­ited peri­od of time;•  such a de­cision gives this pat­ent use to a spe­cified com­pany, not to any per­son or en­tity;•  the pat­entee must be provided with the com­pens­a­tion es­tab­lished by Gov­ern­ment de­cree (for com­pan­ies from “Un­friendly States” – zero, for com­pan­ies from oth­er coun­tries – a 0.5% roy­alty, as has been the case since 2021);•  this de­cision does not lim­it the right­shold­er’s abil­ity to ex­er­cise its rights with­in the Rus­si­an Fed­er­a­tion or to li­cense these rights to someone else.An­swer­ing the ques­tion of wheth­er Rus­si­an com­pan­ies are ob­liged to pay com­pens­a­tion to pat­ent own­ers from “Un­friendly States” when us­ing their pat­ent-pro­tec­ted ob­jects, the an­swer is yes, they do. The Gov­ern­ment can make ex­cep­tions for a par­tic­u­lar Rus­si­an com­pany and a par­tic­u­lar pat­ent.As for ex­cep­tions, Art­icle 1360 of the Rus­si­an Civil Code has been used only twice for the peri­od of its ex­ist­ence since 2008, and in both cases it was re­lated to vi­tal drugs.In ad­di­tion, it should be re­called that Art­icle 1360 of the Rus­si­an Civil Code was ad­op­ted in ac­cord­ance with the pro­vi­sions of Art­icle 31 of the TRIPS Agree­ment and it is sim­il­ar to the same leg­al pro­vi­sions in oth­er coun­tries.Can Com­puls­ory Li­cens­ing be ap­plied to oth­er types of in­tel­lec­tu­al prop­erty?Art­icle 1360 of the Rus­si­an Civil Code (the rule on Com­puls­ory Li­cens­ing) ap­plies only to in­ven­tions, util­ity mod­els or in­dus­tri­al designs and can­not be ap­plied to oth­er in­tel­lec­tu­al prop­erty, in­clud­ing soft­ware or trade­marks.Fur­ther­more, there is no oth­er sim­il­ar reg­u­la­tion for oth­er in­tel­lec­tu­al prop­erty ob­jects in Rus­sia.Par­al­lel im­port­a­tion in Rus­siaOn 29 March 2022, the Gov­ern­ment is­sued De­cree No. 506*, which partly leg­al­ised par­al­lel im­port­a­tion, by es­tab­lish­ing the in­ter­na­tion­al prin­ciple of ex­haus­tion of rights to in­ven­tions, util­ity mod­els, in­dus­tri­al designs and trade­marks.This means that if genu­ine goods have been leg­ally put on the mar­ket by the right­shold­er in any part of the world, these goods can then be freely sold in the ter­rit­ory of Rus­sia without the ad­di­tion­al con­sent of the right­shold­er. This prin­ciple will not ap­ply to all goods, but only to those lis­ted in a spe­cial list* pre­pared by the Rus­si­an Min­istry of In­dustry and Trade. The De­cree is meant for products of com­pan­ies that de­clared their exit from the Rus­si­an mar­ket and do not im­port their products to Rus­sia.The Rus­si­an Min­is­ter of In­dustry and Trade noted* that the list of goods al­lowed for par­al­lel im­ports will be nar­rowed (goods will be ex­cluded from the list) if for­eign com­pan­ies de­cide to con­tin­ue op­er­at­ing in Rus­sia and sup­ply their products to the Rus­si­an mar­ket.A sim­il­ar sys­tem with cer­tain spe­cif­ic fea­tures also ap­plies in the US.Is trade­mark squat­ting now al­lowed in Rus­sia?Over the past few weeks, amid news of for­eign com­pan­ies leav­ing the coun­try, sev­er­al dozen trade­mark ap­plic­a­tions have been sub­mit­ted to the Rus­si­an Trade­mark Of­fice, “Rospat­ent”, that were identic­al or con­fus­ingly sim­il­ar to well-known for­eign brands.However, the pro­ced­ure for re­gis­ter­ing a trade­mark at Rospat­ent, as in any oth­er pat­ent of­fice around the world, gen­er­ally con­sists of the fol­low­ing steps:•  sub­mis­sion of a trade­mark ap­plic­a­tion to the pat­ent of­fice for re­gis­tra­tion;•  a trade­mark ex­am­in­a­tion (in­clud­ing check­ing wheth­er the re­gis­tra­tion in­fringes someone else’s rights on their trade­marks);•  a trade­mark re­gis­tra­tion.Any­one is en­titled to ap­ply for the re­gis­tra­tion of a trade­mark, but this does not mean that any mark will be re­gistered. In fact, Rospat­ent has con­sist­ently denied re­gis­ter­ing des­ig­na­tions even dis­tantly re­sem­bling re­gistered trade­marks.Moreover, on 1 April 2022, as the is­sue be­came highly pub­li­cised, Rospat­ent re­leased its po­s­i­tion* re­gard­ing trade­marks sim­il­ar to well-known for­eign brands, not­ing that a pre­vi­ously re­gistered identic­al or sim­il­ar trade­mark known in Rus­sia pre­vents the re­gis­tra­tion of the trade­mark in ques­tion.Will the rights of for­eign com­pan­ies be pro­tec­ted be­fore Rus­si­an courts?The dis­cus­sion about the in­ab­il­ity of for­eign com­pan­ies to de­fend their rights be­fore Rus­si­an courts began with the “Peppa Pig” case*.On 3 March 2022, the Com­mer­cial Court of the Kirov Re­gion dis­missed the law­suit of a UK com­pany for the trade­mark in­fringe­ment of the Peppa Pig char­ac­ters, call­ing the very fact of go­ing to court an ab­use of rights, be­cause the com­pany is re­gistered in a state that has im­posed sanc­tions against Rus­sia.The case has been strongly cri­ti­cised by the Rus­si­an busi­ness com­munity. The de­cision is not cur­rently in force and is be­ing re­viewed by the court of ap­peal.In oth­er words, as of today, no judg­ments in Rus­sia have been fi­nal­ised that would deny a for­eign com­pany pro­tec­tion of its rights on the grounds that it is re­gistered in an “Un­friendly State”.Moreover, later judg­ments rais­ing the is­sue of the “un­friendly” ori­gin of com­pan­ies have not fol­lowed this ap­proach. The courts reasoned that the ori­gin of an en­tity does not in it­self in­dic­ate an ab­use of rights by that en­tity. This reas­on­ing has been re­flec­ted in the fol­low­ing judg­ments:•  De­cision* of the Com­mer­cial Court of the Chelyab­insk Re­gion dated 29 March 2022 in case No. A76-42835/2021;•  De­cision* of the Com­mer­cial Court of Mo­scow dated 31 March 2022 in case No. A40-162262/2020;•  De­cision* of the Fifth Com­mer­cial Court of Ap­peal dated 1 April 2022 in case No. A51-20464/2021;•  De­cision* of the Com­mer­cial Court of the Krasnodar Ter­rit­ory dated 4 April 2022 in case No. A32-4335/2022;•  De­cision* of the Com­mer­cial Court of the Re­pub­lic of Al­tai dated 4 April 2022 in case No. A02-31/2022;•  De­cision* of the Com­mer­cial Court of the Re­pub­lic of Ud­mur­tia dated 8 April 2022 in case No. A71-16168/2021.Con­clu­sion­Due to re­cent events, Rus­si­an in­tel­lec­tu­al prop­erty law has un­der­gone changes, but these al­ter­a­tions have not un­der­mined the pro­tec­tion of in­tel­lec­tu­al prop­erty rights for for­eign com­pan­ies. Mean­while, many fea­tures of the new laws have been taken out of con­text and mis­rep­res­en­ted.In es­sence, all counter-sanc­tions taken by the Gov­ern­ment are primar­ily eco­nom­ic in nature, aimed at sup­port­ing the eco­nomy (e.g. lim­it­ing the with­draw­al of cur­rency) and de­liv­er­ing prop­er coun­ter­meas­ures (e.g. re­stric­tions on flights or trans­port). Meas­ures in the area of in­tel­lec­tu­al prop­erty are pin­pointed and aimed at pro­tect­ing spe­cif­ic in­terests as is the case with Com­puls­ory Li­cens­ing, which was only used in the past in cases of vi­tally needed drugs.Thus, in­tel­lec­tu­al prop­erty is still pro­tec­ted by law and leg­al prac­tices, both for Rus­si­an and for­eign com­pan­ies.* In Rus­si­an