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E-COMMERCE IN RUSSIA
Introduction
The number of internet users in Russia is growing 150% annually, and in 2002 more than nine million people have access to the internet. Various sources estimate that about USD 250 million will be spent in 2002 in commerce on the internet in Russia.
Russian authorities recognize the urgent need for appropriate e-commerce regulation, and a number of efforts are underway with respect to both the internet and e-commerce.
Regulatory framework
In Russia many e-commerce relationships and procedures, such as purchase and sale contracts, are regulated by the Civil Code. Other relevant legislation includes the Laws on Electronic Digital Signatures, on Trademarks, on Exchange Control, on Banks, on Telecommunication, on Mass Media and the Law on Advertising. Under Russian civil law anything which is not expressly prohibited is permitted. This principal is important to the development of e-commerce in the absence of specific e-commerce legislation.
Existing regulations address some aspects of e-commerce. From a business perspective the following areas are important:
Electronic digital signatures
The Russian Law on Electronic Digital Signatures was adopted at the beginning of 2002. The law creates the basis for legal regulation of the conditions and principles governing the use of electronic digital signatures in Russia. It establishes that if the applicable provisions of the Law on EDS are complied with, an electronic digital signature in an electronic document is the equivalent in legal terms of a hand-written signature on a paper document.
The Law on EDS applies to relations which have arisen through civil-law transactions as well as in certain other instances envisaged by legislation, but it does not apply to relations arising with the use of other analogues of handwritten signatures, such as faxed signatures. It defines an electronic digital signature (EDS) as an element of an electronic document, the objective of which is to protect the electronic document from forgery.
Although its adoption represents an important step in the development of the country's legislation on electronic commerce and internet regulation, the Law on EDS appears to be limited to electronic signature technology based upon encrypting information with open/closed pair of keys. It does not recognize other technologies for creating an electronic signature , such as biometrical technologies: fingertip identification, DNA mapping or voice recognition. In the future, these discrepancies between Russian and US/EU e-commerce legislation may create difficulties for Russia integration into world e-business relations.
INTELLECTUAL PROPERTY
Trademarks
Trademark issues are particularly relevant to domain names and cybersqatting disputes, but also arise in relation to logos or word combinations used in the design and content of a website. Trademarks are regulated by the Law on Trademarks (1992). In order to be protected in Russia, a trademark's must be registered with the Russian Patent Office.
Domain Names
The Telecom Ministry is a state authority which controls and co-ordinates the issues of domain name registration in the .ru zone of internet. Domain names are registered on a first-come-first-serve basis. However, the recent amendments to the Law on Trademarks establish that unauthorised use of a trademark on internet, including the use of a trademark as a part of a domain name, constitutes a violation of the exclusive rights of the trademark owner.
Cybersquatting
Cybersquatting is a major issue in Russia. In the past year Quelle and Kodak initiated high profile lawsuits over the .ru zone use of their domain names by other parties. The future of cybersquatting in Russia will be determined by the effectiveness of Russian legislation and court practice. Existing legislation, except for recently adopted amendments to the Law on Trademarks, does not specifically address cybersquatting, which means that Russian courts must apply available laws by analogy in order to resolve cybersquatting disputes.
Court Practice
Russian court practice has tended to protect the names of very well-known companies. Famous names have won court protection based on Russian trademark registration of the disputed domain name. Prior use of a name does not constitute a valid legal defense.
Copyright
Copyright is an important issue for any company with a presence on the internet. Copying and reproducing website content is easy to do and difficult to prevent.
Illegal copying, reproduction, and distribution of copyrighted works from the internet presents an immediate challenge to legislators worldwide. Copyright claims are not yet as popular in Russia as they are in Western jurisdictions, although in one publicized copyright case last year a Russian bank was penalized for using a forged copy of Microsoft software.
Copyright Protection
Copyright is currently regulated by:
- the Law On Copyright and Neighboring Rights (1993, as amended in 1995); and
- the Law On Protection of Rights in Software and Databases (1992)
Copyright is particularly relevant to the following three aspects of internet business:
- Website design and content - Copyright may extend to text, its compilation, graphic objects such as banners, logos and design elements, as well as overall website design.
- Software - In Russia the status of protection of software is similar to that of copyrights.
- Databases - Databases, as compilations of material, may also be subject to copyright.
Copyright in Russia generally relates to the creation of protected material and does not require registration, although discretionary registration is available for software and databases.
ONLINE MEDIA
Mass Media
It is not yet clear whether businesses publishing periodicals or offering news coverage on the internet are regarded as mass media and therefore regulated by the Law on Mass Media (1991, as amended in 2002). This law defines mass media as: "printed periodicals, radio, television, video, cinema programs, and other forms of periodical distribution of mass information." Article 24 of the Law On Mass Media extends to electronic mass media. The current position of the Ministry of the Russian Federation for the Press, Television-Radio Broadcasting and Mass Media is that a web site is a mass media body for which voluntary registration is provided.
Teletext, Videotext, TV and Radio
Radio and television programmes distributed via the internet fall under Article 24 of the Law on Mass Media: “the rules for radio and television programmes apply to periodical distribution of mass information via teletext, videotext systems and other telecommunication networks.”
However, these provisions on mass media are currently enforced sporadically at best.
Law on Advertising
The Law on Advertising may be interpreted as applicable to the internet; it regulates both advertising activity and mass media. Moreover, the recent cases considered and decided upon by the Russian Anti-monopoly Ministry in connection with the breaches of the Russian advertising legislation have shown that the Antimonopoly Ministry has a tendency to consider a web site as a form of mass media when looking at the restriction applied to advertising of certain goods in mass media.
Taxation
Taxation of business conducted on the internet is a matter of active debate, intensified by the rapid development of e-commerce and the particular intricacy of related tax issues. Russian tax legislation does not specifically regulate taxation of internet transactions, therefore e-commerce transactions should arguably be regulated by general tax legislation.
Latest legislative initiatives
Improved regulation of e-commerce is on the Russian Government legislative agenda, but the legislative process takes time. Russia faces the additional challenge of building a legal framework for e-commerce nearly from scratch. Some of the fundamental laws in the sphere of e-commerce have been adopted; others exist in draft form only.
Federal Laws
Two laws are currently on the legislative agenda of the Russian Parliament and Government:
On Electronic Commerce
In order for E-commerce to develop, its participants must be able to protect their rights and interests. One of the principal laws currently being considered is the federal law “On Electronic Commerce”. This law is designed to regulate legal relationships during conduct of e-transactions and exchange of e-documents.
On Electronic Document
This law defines an electronic document and provides for regulation of the use of electronic documents. It establishes requirements for an electronic document being considered as a legal evidence in court proceedings.
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