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; and
- filing 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