20142016 Changes, Trends and Problems in the Russian IP Sector

Date: 30 March 2016

I. Changes

IP in Russia is governed by the 4th Part of the Civil Code. In 2014 there was a set of amendments thereto highlighted below. Also, in 2016 the Arbitrazh Procedural Code was modified in order to introduce the mandatory pre-judicial procedures. Arbitrazh (commercial) courts are official judicial bodies where disputes related to commercial activities are adjudicated, not to be confused with arbitration (private) courts.

1) Utility Models

In 2014 the legal regime of utility models changed drastically:
equivalence of features does not apply anymore, thus, narrower protection;
substantial examination has been introduced, hence, harder to obtain protection.

In this regard registering utility models have become much less beneficial than before, as patenting inventions may now be considered as an alternative.

2) Industrial Designs

Simultaneously with the utility models the legal regime of industrial designs changed significantly. Now instead of particular features (claims), only the general similarity is considered when deciding on the use of design. In this sense designs went closer to trademarks from patents.

3) Official Oppositions

Before October 2014 the law had not provided for the possibility of filing a third persons opposition against a pending trademark application (although in practice such oppositions had been acceptable). Now the right to file the opposition is granted by the law to any person no serving of evidence of its legitimate interests is required.

4) Assignments and Licenses

As a portion of the 2014 amendments, the procedure for registration of assignments and licenses changed. Now the registration concerns not the agreement itself, but the transfer of rights. Due to this fact now it is possible to include assignment/license provisions into complex contracts, instead of concluding separate IP agreements.

5) Pre-Judicial Procedures

Starting from June 2016 prior to filing a lawsuit with any Russian Arbitrazh court the plaintiff is obliged to send a before-action claim to the defendant and wait for 30 days (provided a different term is not set forth by an agreement between them). If no voluntary settlement follows within the said timeframe, the claimant is then free to proceed with a suit. This does not apply to:

trademark non-use cancellation actions, and
recognition of the proprietors rights.

II. Trends

1) Reducing Compensation

In Russia when IP is concerned it is possible to claim compensation provided by the law instead of factual damages. The legislation provides for the courts right to reduce compensation based on its judgement. There is a general trend of courts reducing compensations for infringement claimed by plaintiffs. There is no statistical data available, but in our experience, the average size of compensation keeps decreasing.

2) Increasing Recovery of Court Expenses

There is an opposite tendency regarding court expenses awarded to the winner party. The courts used to substantially reduce the claimed legal fees with no explanation whatsoever. Now the trend is that the litigation expenses are usually recovered in full or in a major part. This allows for the more effective protection of rights which is good for proprietors.

3) Parallel Import

Parallel import is prohibited into the Russian Federation. National principle of exhaustion of rights is applied. That said, there is the strong lobby to make the grey import legal, or at least to soften the responsibility. The attention should be paid to the further developments in this regard.

4) Copyright Fees

From 2010 a body called RSP collects the so-called copyright fee from the importers of audio- and video equipment and storage media in the amount of 1% of the goods cost.

Now there is the law-makers discussion concerning the extension of the copyright fee to the internet somehow, apart from the above-mentioned goods. No specific details are available as of early 2016.

III. Problems

1) Timeframes for Trademark Registration

Currently, the official timeframe for a straightforward trademark registration in Russia is 18 months. So, the comprehensive preliminary check of a trademark (trademark search) is important in order not to lose much time just to get a refusal based on similarity.

2) Timeframes for Patent Nullification

Timeframes for patent nullification in the Chamber for Patent Disputes are basically not limited. In practice, the process may take up to several years. In this situation, the so-called patent trolls get advantage over good-faith market players. The risks may be reduced by carefully monitoring new patents in the field of ones business.

3) Court Enforcement Proceedings

Voluntary execution of the courts rulings is rare in Russia. Instead, debtors tend to resort to shifts in order to escape material responsibility. This should be taken into account when planning litigation actions, namely from the perspective of time, cost and judicial agents experience.

Author: Alexander Baranchikov, Lead Lawyer, RUPTO Attorney 1719

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