Seeking to end the human suffering caused by Russia’s invasion of Ukraine, the United States and many other nations have imposed strict economic sanctions on Russia. For the same reason, many private companies—including Apple, Coca-Cola, Goldman Sachs, Ikea, McDonald’s, Microsoft, Porsche, and Toyota—have left or sharply downsized their business operations in Russia. [1]

Reacting to this economic pressure, Russia is threatening the intellectual property rights of businesses associated with the sanctioning countries. For example, on March 6, 2022, the Kremlin issued a decree that essentially grants a no-cost license to steal patents held by owners in “unfriendly” countries, including the United States and the United Kingdom. [2] While the decree only mentions patents explicitly, Russian courts have already used it to undermine copyright and trademark rights.

The beloved British children’s television character Peppa Pig is perhaps the most surprising target of Russia’s attack on intellectual property rights. Peppa Pig is produced by Entertainment One, located in the United Kingdom. In 2019, American toy giant Hasbro acquired Entertainment One in a massive $3.8 billion deal. [3]

Last January, Entertainment One sued Ivan Kozhevnikov, a Russian national, for the modest sum of 40,000 rubles (then about $550). The suit, filed at the lowest level court for civil disputes, accused Mr. Kozhevnikov of infringing the Peppa Pig trademark and other intellectual property. On March 2, 2022, Judge Andrei Slavinsky threw out the case, citing American and British sanctions against Russia as justification for refusing to recognize Entertainment One’s intellectual property rights. [4]

Less than two weeks after Judge Slavinsky’s order, trademark copycats began efforts to hijack famous American brands in Russia. Starbucks and McDonald’s were some of the first targets, but this is likely only the beginning. One of the shady trademark applications recently filed in Russia includes a blatant copy of the world-famous McDonald’s logo over the Cyrillic text “Uncle Vanya.” [5]

The “Uncle Vanya” trademark application—a reference to the Anton Chekov play by the same name—was filed after a prominent Russian lawmaker reportedly declared that McDonald’s restaurants in Russia should be replaced by a chain of indigenous “Uncle Vanya” establishments. [6]

U.S. sanctions effectively prohibit American companies from applying for patent or trademark protection in Russia after June 23, 2022. The sanctions prohibit transactions with the Central Bank of the Russian Federation, the bank that processes fees payable to Rospatent, the Russian intellectual property office. [7] After June 23, these companies may have no choice but to abandon their Russian intellectual property registrations. Further, given recent developments, it is unclear if these registrations would receive any meaningful protection in Russia. We are aware, for instance, of reports that Russian officials have recently canceled raids that would have targeted counterfeit merchandise.

State-sponsored interference with intellectual property rights in Russia is only the tip of the iceberg. According to news sources, Russian President Vladimir Putin is backing a plan to allow the Russian government to seize control of any foreign-owned company in Russia that is closed “unreasonably.” [8] Russia has also stated that it may confiscate assets left behind by foreign companies. [9]

American and foreign companies who decide to stay in Russia will likely face significant pressure to comply with Kremlin mandates, especially in the technology sector. Already, Russian censors have reportedly blocked or limited access to major social media platforms, including Facebook and Twitter, over disagreements about their fact-checking efforts. [10] Indeed, Russia began exerting pressure on American technology companies before invading Ukraine. For example, the Washington Post reported that Russian agents threatened to arrest a top Google executive in Moscow if Google refused to pull an anti-Putin app from the Google Play Store. [11] These threats are significant because the internet may be one of the few remaining means of reaching Russian consumers without forgoing all intellectual property protection.

The long-term consequences of Russia’s dismantling of intellectual property rights are unknown, but it will likely discourage foreign investment in the Russian economy for years to come. Today, American and foreign intellectual property in Russia is vulnerable to theft that is authorized if not directly perpetrated by the Russian government. Until this changes, global companies should be wary of exposing their intellectual property to the Russian market.

 [1] See CNN, Russia says it could seize assets Western companies leave behind (Mar. 10, 2022), https://edition.cnn.com/2022/03/10/business/russia-nationalization-western-companies/index.html.

[2] Washington Post, Russia says its businesses can steal patents from anyone in “unfriendly” countries (Mar. 9, 2022), https://www.washingtonpost.com/business/2022/03/09/russia-allows-patent-theft/.

[3] CNBC, Hasbro looks to Entertainment One to turn the toymaker into a media contender (Feb. 25. 2021), https://www.cnbc.com/2021/02/25/hasbro-looks-to-entertainment-one-to-turn-it-into-a-media-contender.html.

[4] See Case No. А28-11930/2021 in the Arbitration Court of the Kirov Region.

[5] See Младоолігархат (@Oh_89), Twitter (Mar. 16, 2022 7:00 AM), https://twitter.com/Oh_89/status/1504050027240595459.

[6] The Independent, Russian fast-food chain backed by parliament to replace McDonald’s reveals near-identical branding (Mar. 17, 2022), https://www.independent.co.uk/news/world/europe/mcdonalds-russia-fast-food-trademark-b2037987.html.

[7] See U.S. Department of the Treasury, Office of Foreign Assets Control, General License No. 13: Authorizing Certain Administrative Transactions Prohibited by Directive 4 under Executive Order 14024 (Mar. 2, 2022), https://home.treasury.gov/system/files/126/russia_gl13.pdf.

[8] CNN, Russia says it could seize assets Western companies leave behind (Mar. 10, 2022), https://edition.cnn.com/2022/03/10/business/russia-nationalization-western-companies/index.html.

[9] Id.

[10] Wall Street Journal, Google Suspends Advertising in Russia (Mar. 4, 2022), https://www.wsj.com/livecoverage/russia-ukraine-latest-news-2022-03-04/card/google-suspends-advertising-in-russia-XLw3w5jFYG40erXNDDBl.

[11] Washington Post, Putin’s prewar moves against U.S. tech giants laid groundwork for crackdown on free expression (Mar. 12, 2022), https://www.washingtonpost.com/world/2022/03/12/russia-putin-google-apple-navalny/.

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