WTR reports…
- Russian government plans to cancel liability for parallel imports
- Move could, in essence, suspend trademark rights of some foreign brands
- Legal expert claims it could spur “copies of famous brands flourishing”
The Russian Ministry of Economic Development has announced that it is considering “lifting restrictions on the use of intellectual property contained in certain goods” that cannot be imported due to sanctions or that are no longer being sold in Russia due to brand boycotts. The move could lead to “copies of famous brands flourishing unchecked within Russia”, one legal expert tells WTR.
The invasion of Ukraine by Russian forces has been ongoing for nearly two weeks. While governments around the world are enacting economic sanctions in an effort to pressure Russian President Vladamir Putin to end the military campaign, many of the world’s biggest brands are also taking steps to restrict access to their products and services in Russia. For example, Apple has announced that it has ceased all product sales in Russia until further notice, while tech rival Samsung has suspended shipments to the country citing “geopolitical developments”. Nike has halted website sales in Russia, and Harley-Davidson has suspended all business and shipments of its bikes to the country. Fashion retail companies such as H&M, Mango and Canada Goose have also suspended most sales and trading in Russia, while furniture retailer IKEA has paused its Russian operations and ceased both exports and imports.
With economic pressure growing (the Russian stock market has now been closed for over a week), it appears that the Russian government is seeking to mitigate against the impact of the sanctions and brand boycotts. In a newly released document, entitled ‘Priority Action Plan for Ensuring the Development of the Russian Economy in the Conditions of External Sanctions Pressure’ (translated by TorrentFreak), the Ministry of Economic Development has outlined a plan to lift restrictions on the use of intellectual property owned by foreign brands. The move has been described by local media as a possible ”temporary measure” while the import of certain goods to Russia is restricted.
Section 6.8.3 of the document describes plans for the “cancellation of liability for the parallel import of products”, as well as “to exclude such actions from the list of types of infringement of exclusive rights to a trademark”. The action is described as a “federal law” under the purview of Rospatent and has a proposed implementation date of 28 March 2022, The purported ‘result’ would be Russia’s ability “to import goods sold in foreign jurisdictions… without the consent of the copyright holder”.
Another measure being proposed is that software piracy ceases to be illegal in some cases. This follows boycotts from various major software brands, including Oracle, Sony, Microsoft and EA.
According to a ministry spokesperson, “the possibility of lifting restrictions on the use of intellectual property contained in certain goods, the supply of which to Russia is limited, is being considered”. If implemented, it would “smooth out the impact on the market of supply chain breaks, as well as the shortage of goods and services that have arisen due to the new sanctions of Western countries”. What goods (or groups of goods) the law would cover is due to be decided by the Russian government in the days and weeks ahead.
The proposed move could have a significant impact on trademark owners and, according to one IP expert (who preferred not to be named), would be relatively unprecedented. The decision could see “copies of famous brands flourishing unchecked within Russia”, they say. While exportation of those items “would be unlikely (especially with sanctions in place)”, it also “remains to be seen if the authorities would want to see Western brands still in use within Russia”.
The move could also have a significant impact on the ability of brands to recover their market presence, should they look to re-enter the Russian market in the future. “Ultimately, Russia is a key market for many Western brands (eg, the sixth largest market and 4% of revenue for H&M, and 9% of revenue for Zara owner Inditex). They are already losing that revenue by suspending their commercial activity in Russia. Without IP rights, Western brands will find it harder to go back into Russia should things change in the future.”
A key question is whether there is anything that foreign rights holders can do in terms of the suspension of trademark rights to allow third-party imports of branded goods. Probably not, our expert says, adding: “Russian courts are unlikely to provide assistance, and Russia will simply ignore any international legal action. Sanctions, and public sentiment, will make potential licensing solutions unpalatable.”
If reciprocal action was to be considered (eg, Russian-owned trademarks being suspended in a similar way), it would prove “one-sided”, the expert says. “Although Russia has a high profile internationally in many areas, it is surprisingly weak on the IP front. Given the size of the Russian economy, Russian companies have a tiny foreign IP footprint outside Russia’s circle of former Soviet states; for example, Russian applicants own fewer active US trademarks than owners from Argentina or New Zealand, and around the same number of EU trademarks as owners from Liechtenstein.”
For now, foreign companies will have to wait to see whether the threat of Russia suspending their trademark and patent rights comes to pass. If the measure moves forward, it would put an increasing strain the relationship between Rospatent and other IP offices in a week when the USPTO has confirmed that it will no longer engage with the Russian IP agency. While ending the conflict in Ukraine is rightly the priority of governments and brands, IP owners should be aware of the proposals and consider the possible repercussions.
