Executive summary: the IP situation in Russia and Ukraine

7.2.2023

Over the past 12 months Papula-Nevinpat has received many questions on managing IP rights in Russia and Ukraine. Our expert on these countries, Trademark Lawyer Riikka Palmos, provided some of the answers in a recent webinar. This is a roundup of what she said.

Following Russia’s invasion of Ukraine on 24 February 2022, sanctions and counter-sanctions initially led to chaos in the IP field.

Although IP protection in Russia has never been under sanctions, the exclusive rights related to IP became subject to politics and pressure. There were even rumors that all the IP rights of foreign owners in Russia would be nationalized.

Palmos says the situation is now much calmer:

“There was a lot of misleading and incorrect information in the media. From a purely legislative point of view, the situation is not that alarming,” she says.

Respect for and protection of intellectual-property rights in Russia has historically been very high. Effective enforcement tools exist through the police, customs surveillance, antimonopoly bodies, and IP courts. The country is a member of many international agreements and treaties, and a new protection mechanism has also been created through the Eurasian Trademark System.

“Russia’s IP courts have very professional knowledge on IP matters and provide sound legal decisions. Customs officers are also generally active and motivated in the fight against counterfeits,” says Palmos.

Restriction of exclusive IP rights

Today, as a countermeasure against sanctions imposed on Russia, there are provisions enabling the state – under specific circumstances – to restrict exclusive IP rights. These restrictions include the possibility to grant a compulsory license, without any compensation to a patent holder from a country deemed unfriendly to Russia.

“In accordance with the new legislation, any such restrictions must be well justified. For example, if the IP is needed for things that ensure the safety, health and well-being of Russian citizens. This usually means medicines, food and other vital commodities,” says Palmos.

When it comes to sanctions causing the non-fulfilment of civil obligations, amendments have been made to many laws. For example, being unable to pay license royalties will not be considered as a violation of an agreement.

Parallel imports allowed for certain goods

At the end of March 2022, a law was implemented in Russia to allow parallel imports of certain goods. This is a temporary measure valid through 2023, and up to the end of 2024 for pharmaceuticals.

Previously, parallel imports without the consent of a rights holder were prohibited under Russian law, and the goods were considered as counterfeits. In the current situation, parallel imports guarantee the shipment of certain goods into Russia.

“Local retailers and distributors support the legalization of parallel importing, which applies only to specific goods from specific companies – mostly those leaving or that have left Russia. Updated lists of these goods and companies are regularly published by Russia’s Ministry of Industry and Trade,” says Palmos.

Some 200 brands were recently removed from the lists, either because they have resumed their operations in Russia, or because substitute products are again available on the Russian market. This shows that allowing parallel imports is only a temporary measure.

Can IP rights still be protected in Russia and Ukraine?

 “In Russia, the short answer to this question is yes,” says Palmos. “For the most part, it’s business as usual when it comes to protecting IP. Rospatent and the Eurasian Patent Office are operating as normal, including prosecutions, annuities and renewals.”

“There are however problems with postage services to and from Russia. This can be challenging, as the patent office still requires original documents for some IP matters. Companies have also faced problems with paying fees, although these can still be paid through non-sanctioned banks,” she says.

The patent office in Ukraine has also remained open, with filing and prosecution taking place as normal. Patent courts have resumed operation after closing for a while.

Martial law is currently in force in Ukraine. This allows the suspension or restoration all IP deadlines within 90 days from the date of repeal of martial law. What this means in practice is that renewal dates can be missed without a penalty being applied later.

The situation with trademarks

The judicial system in Russia is still working properly and IP rights holders can trust the court system. There are no changes in Rospatent’s practices and decisions. The head of the organization recently stated that: “the legal protection of trademarks of foreign companies is in the interest of Russian consumers” and “neither foreign companies in Russia nor Russian companies abroad have faced any politicized decisions.”

Rospatent has published its filing numbers for the period January to August 2022. For trademarks, the filings of foreign applicants decreased by 16%, while Russian applications increased by 14%.

“Unfortunately, some Russian companies and individuals are trying to take advantage of the current situation. Immediately after the war started Rospatent received hundreds of applications by local businesses for trademarks owned by foreign holders, or that are confusingly similar to these trademarks,” says Palmos.

Adidas, Coca-Cola, Instagram and Mercedes-Benz are all among the trademarks that local applicants tried to register. Rospatent reacted by announcing that it will publish all applications filed. This does not mean that the applications will necessarily be registered, but it does mean that examination of any prior rights will take place.

“Papula-Nevinpat started monitoring these bad-faith applications to see what would happen. I’m very happy to say that none of them went further. Either official fees were never paid, office actions were issued, or the application was simply abandoned,” says Palmos.

“Although Rospatent will probably refuse all bad-faith applications, rights holders should still be aware and should actively oppose applications when necessary. It’s worthwhile to start considering alternative strategies for safeguarding rights, including proper licensing arrangements or the re-filing of existing rights,” she says.

What does the future hold?

“The trustworthiness of the Russian judicial system is at stake. Everyone is asking if foreign companies get can get fair IP decisions. These are very justified questions,” says Palmos.

“At the moment the IP situation in Russia is relatively good. I’ve noticed that as long as products are available, then things remain calm,” she says. “New products and brands from Asia are taking over on the Russian market, and these need a functioning IPR system too.”

Defending rights after withdrawal from the market may be complicated, especially as time passes and the rights are not used as stipulated by legislation. From Russia’s point of view there is no state of war, and therefore force majeure provisions are not applicable in the country. Withdrawal from the market is not accepted as a valid reason for non-use of a trademark.

“Current IP laws and regulations in Russia provide different ways to suspend proceedings and applications, as well as to delay or restore payments. This is useful if a foreign applicant or company is still considering whether to proceed with IP protection in Russia. It’s possible to have a time-out to think about your position,” says Palmos.

With many foreign companies not using their trademarks properly in Russia – as they have either left the country or scaled down operations there – it will be interesting to see how the IP court will react to non-use arguments based on use not being possible due to circumstances. Voluntarily withdrawal from the market may not be deemed sufficient reason for non-use.

However, reasons for non-use that are beyond the control of the trademark owner may be taken into consideration by the IP court as part of any possible cancellation action due to non-use. Currently, no such cases have been considered by Russia’s IP court.

“One option to safeguard trademarks rights is to re-file the trademark application,” says Palmos. “However, this may be considered as fraud, especially if the application is filed during a dispute or can be otherwise clearly considered an abuse of the trademark rights. That said, it is not forbidden to re-file an application for a slightly modified trademark, an updated logo, or for new goods or services. This is something trademark rights holders could consider in these circumstances.”

“Of course, if the rights holder has exited the Russian market and has announced this publicly, the good faith of the applicant may not be convincing. In such cases there is also the possibility of licensing the trademark rights to a third party.”

“It seems unlikely that Russia is planning the wreck the intellectual property rights system, as it’s one of the cornerstones of business operations for local companies too – not just foreign ones,” concludes Palmos.

You can watch the recording of the webinar here.

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