Russia’s Seizure of Intellectual Property Rights & What it Means For Business

Tarter Krinsky & Drogin LLP

For many years, the U.S. Trade Representative has published a Special 301 Priority Watch List of countries that do not adequately protect intellectual property rights. Even though Russia has been on that list for the last few years, the U.S. Patent and Trademark Office continued its cooperation with Russian intellectual property officials until March 4, 2022. Thereafter, on March 6, 2022, Russia announced that Russian companies do not owe compensation for their use of Russian patents, utility models, or industrial designs owned by companies from “unfriendly” nations such as Australia, EU member states, Japan, South Korea, Singapore, Ukraine, the U.S., and the UK. In short, this decree legalizes patent and industrial design infringement in Russia.

Will trademarks be next? It’s quite possible. Russian companies are now applying to register trademarks that are confusingly similar to famous worldwide trademarks. Take for example the McDonald’s logo, with the words that say, “Uncle Vanya’s.” The premises that McDonald’s vacated could be converted to “Uncle Vanya’s” locations. As Starbucks, Ikea, Nike, LVMH, Adidas, Coca-Cola, and others have closed stores or suspended operations, their IP rights may be in jeopardy as well.

A copyright and trademark lawsuit involving the British animated series Peppa Pig was recently dismissed, and the Court cited the “unfriendly” actions of the U.S. and affiliated nations when issuing the decision.

A bill has been drafted by the Russian government for it to seize intellectual property rights of companies from the “unfriendly” nations. The targeted companies are those with over 100 employees or a valuation of over $9.1 million in which individuals from the targeted nations own 25% or more of the company. The bill’s language includes intellectual property rights owned by and licensed to the foreign company – for instance, from a U.S. parent to a Russian subsidiary. Licenses that were revoked after February 24 could be reinstated. Additional provisions would permit the Russian government to and take over the targeted companies for 3 months, controlling all assets and liabilities, and then transfer the assets, including IP rights, to a newly created company. An auction would be established to sell shares in the new company. The foreign owner could petition the courts to nullify the transfer before the takeover but only if the owner submits that it intends to continue operating in Russia.

While it may no longer be possible to protect the IP of owners from “unfriendly nations” inside of Russia, using IP to limit the flow of goods into Russia is a possible strategy. Applying to register trademarks in the EU and any other border nations and in their Customs offices may serve that purpose. Now, it is more important than ever to use a watch service to see if another company is applying to register trademarks or is using them unlawfully in commerce. It’s also critical to monitor the use of IP owners’ brands and copyrighted or patented works to prevent exports from Russia of infringing works into other nations and to monitor imports into Russia of infringing works. Businesses should consider consulting their counsel regarding paying patent maintenance fees under those circumstances as well as the use of watch services.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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