What's Happening in Russia—should Ip Rightsholders Be Concerned?

• Citation: Vol. 47 No. 2
• Publication year: 2022
• Author: Annikki Hämäläinen
• topic: Trademark,Intellectual Property

WHAT'S HAPPENING IN RUSSIA—SHOULD IP RIGHTSHOLDERS BE CONCERNED?

AUTHORS

Annikki Hämäläinen
Papula-Nevinpat

Riikka Palmos
Papula-Nevinpat

While the recent events in Russia and Ukraine have shocked the world, they have also raised many questions and uncertainties about intellectual property (IP) rights—especially trademarks. Protection of and respect for intellectual property rights (IPR) in Russia has historically been high. The legislation and the practices of the Russian IP Court have been modernized, and Russia has made great efforts in order to develop the IPR field.

Although the protection of intellectual property rights has not been defined as a sanctionable activity, the exclusive rights related to IP have unfortunately become a means of politicking and pressure. Some of the recent decisions and new enactments discussed below that enable the state—under specific circumstances—to restrict exclusive IP rights have stirred public debate. However, from a purely legislative point of view, the situation is not that alarming.

RESTRICTION OF EXCLUSIVE RIGHTS IS POSSIBLE

The above-mentioned decisions and enactments relate to the amount of compensation to be paid in cases of compulsory licensing by the Russian government. They also relate to the possibility for the government to order non-compliance with certain provisions of intellectual property laws under certain circumstances. There are, however, limitations as to the possibilities the government has in order to ignore compliance with these provisions.

According to the new legislation, all restrictions must be justifiable based on compelling circumstances, such as to ensure the safety, health, and wellbeing of Russian citizens. In practice this could mean, for example, ensuring the availability of medicines, food, and other vital commodities, which would include allowing grey market imports.

[Page 22]

The possibility for compulsory licensing was originally introduced into Russian legislation in 2021 on a health-related basis as a measure for controlling the COVID pandemic. But the current amendment—which enables refusal to pay compensation in the event of compulsory licensing to patent holders from "unfriendly states"—is a clear countermeasure against the sanctions imposed on Russia.¹

Compulsory licensing by governments is not as such an unusual restriction of exclusive rights. For example, such compulsory licensing is also enabled in Finnish patent legislation for a reasonable compensation. What makes the current restriction in Russia unusual is the possibility to deny any compensation to the holder of the IP rights.

POSSIBILITY TO NATIONALIZE IP RIGHTS?

The nationalization of intellectual property rights owned by companies leaving Russia or discontinuing their operations in Russia has also recently provoked concern. According to public sources of information,² nationalization under certain conditions has been discussed. Under such plans, nationalization could concern foreign companies with more than 100 employees or with a value exceeding one billion rubles (USD 9.1 million), and with an ownership of at least 25% by individuals from "unfriendly states."

Any seized IP rights would be taken under the control of a specifically defined governmental body. This body could then use the IP rights owned by, as well as licensed to, the foreign company. According to other potential plans reported on by public sources, the government could resurrect all possible IP licenses that were withdrawn after the attack on Ukraine on 24 February. There is also a...