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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

Author

Anton Bankovskiy
Anton Bankovskiy
Partner
Head of Intellectual Property
Moscow

Co-authored by Shermet Kurbanov, Paralegal in Intellectual Property.