Russia Permits Uncompensated Use of Certain Patents and Future of Russian Patents

• Citation: Vol. 47 No. 2
• Publication year: 2022
• Author: D. Benjamin Borson
• topic: Business of Law,Patent law,Intellectual Property,Real Estate

RUSSIA PERMITS UNCOMPENSATED USE OF CERTAIN PATENTS AND FUTURE OF RUSSIAN PATENTS

D. Benjamin Borson
Borson Law Group P.C.

[[ ... Culled From 2022 Patent Docs and National Law Review ]] Relayed by D. Benjamin Borson, Chair IP Section Legislation Interest Group.

INTRODUCTION

With the invasion of Ukraine by the Russian Federation army, and the defense of that action by the Ukranians, the US and other nations have imposed economic sanctions against Russia and its leaders. Recently, Russia announced that imposition of such sanctions constituted a "declaration of war" against Russia.

Although it is not known whether the economic sanctions are being effective (other than seizing of yachts, tying up funds in "western" banks, and other sanctions), the Russian Federation announced that it has instituted some responses with potential implications to patent owners and practitioners. Most of the information below is being reproduced from posts of Patent Docs.

RUSSIAN RESOLUTION: RUSSIA ADOPTS ZERO COMPENSATION TO PATENT OWNERS FROM UNFRIENDLY COUNTRIES :: March 10, 2022 By Denis Khabarov, Margarita Divina and Maxim Kalinin.

[A machine translation of the order is below.]

The Russian Government has adopted a decree¹ which will allow local companies and individuals to use inventions, utility models and industrial designs held by owners from "unfriendly countries" without their consent and without paying any compensation.

The decree relies on the provisions in the Russian Civil Code which give the government the right, in case of extreme necessity associated with supporting the defense and safety of the state, the protection of citizens' life and health, to allow the use of inventions, utility models or industrial designs without a patent owner's consent at short notice and for "proportional" compensation. The decree envisages compensation in the

[Page 12]

amount of 0% of the revenue of the person using a patent, payable to patent owners connected with foreign countries which perform unfriendly actions in relation to Russian legal entities and individuals, including:

» patent owners having citizenship of such countries,
» patent owners having such countries as a place of registration, a principal place of business activities or a principal place of receiving revenues.

The current list of "unfriendly countries" as of today consists of 48 states.²

Comments by Patent Doc authors:

We believe this new regulation would allow persons who will be granted by the Russian Government the right to use certain patents of third parties without the owners' consent, not to pay any compensation for the use of the respective invention, utility model or industrial design to patent owners from "unfriendly" countries.

It is likely that this measure will apply to patented developments, devices and technologies that disappear from the Russian market or will be in short supply.

In a Resolution issued on March 6, 2022, the Russian Federation introduced an amendment to the methodology for determining the amount of compensation to be paid to certain patent holders for the use of an invention, utility model, or industrial design without the patent owner's consent. In particular, for patent holders who are "associated with foreign states" that commit "unfriendly actions" in relation to Russian legal persons and individuals, the amount of compensation to be awarded to the patent holder for the unauthorized use an invention, utility model, or industrial design shall be "0 percent of the actual proceeds" derived from the production and sale of goods or performance of work and provision of services related to the use of the invention, utility model, or industrial design. The Resolution, which took effect as of the date of its publication, specifies that patent holders will be considered to be associated with foreign states for the purposes of the Resolution when the patent holders have citizenship of such states or their place of registration, primary business activities, or primary profit-making activities are located in such states.

A list of states that Russia has deemed to have committed "unfriendly actions" in relation to Russian legal persons and individuals is set forth in an Order that was issued by the Russian Federation on March 5, 2022. In particular, the Order indicates that the following foreign states and territories committed unfriendly actions: Australia, Albania, Andorra, Great Britain—including the island of Jersey and the territories of Anguilla, British Virgin Islands, and Gibraltar, Member States of the European Union, Iceland, Canada, Liechtenstein, Micronesia, Monaco, New Zealand, Norway, The Republic of Korea, San Marino, North Macedonia, Singapore, United States of America, Taiwan (China), Ukraine Montenegro, Switzerland, and Japan.

Hat tip to fellow MBHB partner Aaron Gin for alerting us to the Resolution and Order and for obtaining machine translations of the documents, and to the Baker McKenzie Sanctions & Export Controls Update blog for reporting on the Resolution and Order (see Denis Khabarov, Margarita Divina, and Maxim Kalinin, "Russia Adopts Zero Compensation to Patent Owners from Unfriendly Countries," Sanctions & Export Controls Update, March 10, 2022).

In response to the Russian order to cease paying any funds for infringing a patent, some countries are instituting their own orders.

[Page 13]

GEORGIAN AND ESTONIAN PATENT OFFICES JOIN OTHER IP OFFICES IN EXPRESSING SUPPORT FOR UKRAINE

From Patent Docs:

Over the past two weeks, the Ukrainian Institute of Intellectual Property (Ukrpatent) has been posting letters of support that it received from other European IP offices. Among the offices from which Ukrpatent has received such letters are the European Patent Office (EPO), the Patent Office of the Republic of Poland, the Industrial Property Office of the Slovak Republic, the Austrian Patent Office, the Finnish Patent and Registration Office (PRH), the State Patent Bureau of the Republic of Lithuania, and the European Union Intellectual Property Office (EUIPO).

On Friday, the Ukranian patent office (Ukrpatent) posted a letter of support that it received from the Estonian Patent Office (Patendiamet). In the letter, Director General Margus Viher begins by "express[ing] our strong solidarity with the Ukrainian people and particularly with our colleagues and their families in the Ukrainian Intellectual Property Institute," and declaring that "[w]e stand together with the international community in support of Ukraine and its people." Stating that "[d]uring the past weeks, we have witnessed Ukraine and its people being subject to Russian Federation's unprovoked, unjustified and illegal military aggression against your nation, causing loss of life and suffering," the Director General notes that the Estonian Patent Office "is prepared to contribute in support of Ukraine in IP area on EU and international level." The letter concludes that "[w]e sincerely hope that these unjustified military actions by Russia, grossly violating not only international law but the principles of humanity

itself, that are unimaginable in our times, will be stopped," noting that the Estonian Patent Office "align[s] our positions with EU in demanding that Russia immediately ceases its military actions, unconditionally withdraws all forces and military equipment from the entire territory of Ukraine and fully respects Ukraine's territorial integrity, sovereignty and independence within its internationally recognised borders," and closing with the message: "C?aBa YKpaïHi!" (Glory to Ukraine!).

Ukrpatent also posted a letter of support that it received...