LEGAL PROTECTION OF INTELLECTUAL PROPERTY
Since the dissolution of the Soviet Union the Russian Federation has sought to address important issues surrounding intellectual property and its protection. In a number of areas these efforts have led to greater recognition of intellectual property rights and now provide for a greater degree of protection.
The standard of IP protection in Russia is not yet as sophisticated as in most western countries. However, the progress made thus far and the Russian government's growing appreciation for the value of IP is cause for optimism.
Intellectual Assets of a Company
A company investing or operating in Russia will want to ensure protection of the following IP assets:
- company and brand name
- trademarks and service marks
- creative works including software and databases
- inventions, industrial designs and useful models
- topologies of integrated microcircuits
- selection achievements
A company with an internet presence will also want to run a commercially secure online operation. This would mean obtaining and protecting at a minimum:
- a unique domain name
- website design and content
Protection of a Company's Intellectual Assets
Company and brand names are offered general protection in Russia. This protection is usually available in the form of a trademark or, in the case of company names, by incorporation. Russian law imposes certain limitations on the protection of trademarks, company names and brand names.
Once protection is granted, infringement of the rights to a company or brand name may lead to prosecution. Several options for prosecution are available. A company can make an unfair competition claim, a claim of breach of intellectual property, or a combination of both.
Creative work is offered general copyright protection in Russia. As with company and brand names, the availability and extent of protection varies. The most important factors affecting availability of protection are the author's nationality and the place of first publication. The nature of the relationship between the author and the company is also significant.
Protection of creative work can be complex. For example, if creative work has been developed by a company employee, issues of employment law as well as civil law may arise.
Inventions are also afforded protection under Russian law. One form of protection is provided by patents. However, a commercially important invention may lack the novelty or other relevant criteria for patent protection in which case alternatives need to be considered.
Employment law ramifications may also arise in the course of securing protection for an invention by a company.
Know-how - The applications of know-how in commercial practice range from protection of classified corporate information from unauthorized disclosure (including disclosure by company employees) to complex franchise arrangements. Know-how is a borderline area which should be considered from both intellectual property and general civil law perspectives.
E-commerce - IP issues are particularly relevant to e-commerce. Website content and design may be regarded as a matter of copyright. The software and databases of an internet business would need to be considered from the perspective of copyright and invention. Domain names bear substantial resemblance to trading and brand names and are therefore often subject to consideration as trademarks. It is worth noting that protection of domain names extends beyond trademark protection.
Cybersquatting is a substantial concern in the Russian market. The "first-come-first-served" approach to domain name availability in the .RU zone has resulted in an explosion of cybersquatting, which has caused substantial concern to brand name owners. Several high profile disputes, for example, over KODAK.RU, MOSFILM.RU and QUELLE.RU, have gone high up the ladder of Russian judicial hierarchy. It is anticipated that the recent amendments to the Law on Trademarks, which prohibit the use of a trademark as a part of a domain name, will reduce cybersquatting activity in Russia.
Additional Issues - Currency Exchange and Taxation
No overview of intellectual property related issues is complete without some mention of exchange control and tax ramifications. Russia has a sophisticated exchange control system with severe penalties for breaches. Exchange control ramifications arise when an intellectual property asset is the subject of cross-border trade. For example, know-how or a trademark is routinely licensed by an offshore parent to its Russia-based subsidiary or vice versa. The tax implications of transactions involving IP require careful consideration.
The legal framework for protection of intellectual property rights is somewhat fragmented. It is here that the most widely-known regulatory controversies have arisen. Russia began creating the fundamentals of intellectual property legislation in the early nineties. In September 1992 the Federal Law On Trade Marks, Service Marks and Names of Places of Origin of Goods; the Patent Law; and the Law on Legal Protection of Computer Software and Databases; the Law on Legal Protection of Topologies of Integrated Microcircuits were passed. This was followed by adoption of the Law on Author’s and Adjacent Rights in July 1993. These fundamental IP regulations are the basis for recognition and protection of IP in Russia.
Part 1 of the Russian Civil Code, which came into force on 1 January 1995, broadly addresses the principles of Russian intellectual property regulation. The passage of the fundamental intellectual property laws pre-dates the adoption of the Civil Code and these two sets of laws are currently undergoing a process of reconciliation.
As a result of its assumption of the liabilities and obligations of the USSR, the Russian Federation is deemed a signatory to a number of international treaties and conventions. These include the Paris Convention on Industrial Property, the Nice Agreement on Classification of Goods, the Budapest Treaty on Micro-organisms and the Patent Co-operation Treaty (Washington), the Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms (Geneva), the Madrid Agreement on the International Registration of Trade Marks. In 1997 Russia adhered to the Protocol Relating to the Madrid Agreement on the International Registration of Trade Marks.
Latest Legislative Initiatives
Further legislation on IP rights and their protection exists in draft form and is awaiting consideration by the Russian Parliament. Legislation to be considered includes draft Part 3 of the Civil Code, which addresses in detail civil and legal relations connected with intellectual property matters. The new draft Patent Law and Copyright Law, as well as the Law on Trademark, amended in December 2002, endeavor to align Russian patent and trade mark law more closely with WIPO and TRIPS standards.
In contrast to some other European jurisdictions, Russia has no law of precedent. Although previous rulings can provide useful guidance, a court need not adhere to prior decisions made by other courts of the same level. To date court practice has been protective of legitimate rights of intellectual property owners. However, pursuing court action is often time-consuming, and damages awarded may not compensate losses incurred through infringement and subsequent legal fees.
Although the level of IP protection in Russia does not yet match the sophistication of most European jurisdictions, fundamental IP rights are recognized in Russia. A substantial basic regulatory framework exists within which companies may attain protection of their intellectual property assets.
Awareness of IP rights is gradually increasing in the Russian Federation. As the profile of intellectual property rights in Russia rises, pressure to improve the existing framework of protection should prove increasingly effective. Recent developments indicate a positive change in attitudes towards intellectual property in Russia.