As a natural consequence of the sanctions imposed by ‘unfriendly nations’ following the Russian invasion of Ukraine, Russia suspended the intellectual property rights of Western companies present within the nation. Meanwhile, Ukraine has adopted measures to suspend some laws related to IP terms and deadlines to protect the individual interests of its citizens during such trying times.
Let’s take a look at the events that led to such a situation, their effects on the Intellectual Property Rights (IPR) in both nations and their implications for IP owners.
A Brief History of What Led to This Situation
After the annexation of Crimea by Russia in 2014, there has been ongoing international conflict between Russia and Ukraine. Relations between both countries reached their breaking point on 24th February 2022, when Russia started its invasion of Ukraine.
To put pressure on the Russian economy, several nations like the USA, Canada, Australia, the UK and the European Union imposed wide-ranging sanctions on Russia. So, as a retaliatory measure, Russia announced the suspension of all IP rights belonging to organisations which are based in the so-called ‘unfriendly’ nations.
Meanwhile, Ukraine, with itw severely damaged infrastructure and overburdened healthcare system had to suspend IP protection and acquisition rights for certain items which are subject to copyright, trademarks, industrial designs, geographical designs, integrated circuits layouts, utility models, plant varieties and inventions.
Counter Sanctions Imposed by Russia
To oppose the economic and non-economic sanctions levied on Russia, it decided to impose several counter-sanctions. Some of them are as follows:
● Suspension of IP Rights
In response to Western nations ceasing operations in Russia, the country decided to seize all assets belonging to Western companies. It started with the suspension of IPR and approval by the parliamentary committee to nationalise such factories.
● Granting Permission for Patent Infringement
A decree was issued by Russian Government allowing patent infringement, without any risk of liability for damages. This was permissible for all Russian entities, as long as the patents belonged to organisations that had an association with the 'unfriendly nations’.
Reports also suggest that Russia is planning to abolish administrative and criminal liability for using pirated software. It also includes the legalisation of copyright-protected works like films, video games, etc.
However, the suspension of IP rights does not apply to Russian businesses. They are only applicable to organisations belonging to nations which supported the sanctions against Russia.
● Rebranding Stores of Foreign Companies
Since February 2022 several multinational corporations withdrew their operations from Russia . To deal with this situation, the authorities permitted the rebranding of the products of such companies and even facilitated the sale of their retail units.
A glaring example in this regard is the case of McDonald's. Its stores were bought by Alexander Govor, a Russian businessman when the multinational fast-food chain decided to cease operations in Russia. Its products are being imitated and sold to Russian customers under new names. For instance, McDonald's 'Happy Meal' was renamed as 'Kids Combo' and 'Coke' as 'TochkaCola’.
Starbucks is another brand which has been rebranded to Stars Coffee. This multinational coffeehouse's offerings like coffee, desserts, pasta, pastries, etc., will be available in these shops without its permission. Just like Starbucks, the attendants write customers' names on cups using thermal printers. In both cases, these parties are using logos which are quite similar to the original franchises.
● Allowing Parallel Imports
Western economic sanctions prevented Russia from importing several items from other nations. Thus, on 5th March 2022, Russian authorities decided to consider suspending the IP rights for such goods. These included branded items, patented products, computer software, etc.
On 29th March 2022, the authorities issued Decree-law no. 506. It allows parallel imports of goods into Russia via non-authorised distributors and avoids the use of official distribution channels. However, it is only applicable to a list of goods specified by the Ministry of Industry and Trade. It usually contains goods from companies which have left Russia. Some foreign businesses have even removed their names from this list by stating fair reasons.
Status of IP Laws in Ukraine
After the Russian invasion, Ukraine’s Parliament passed several laws to protect the individual interest of its citizens and prioritise high-profile cases over civil lawsuits. IP rights remained suspended in Ukraine during the initial months of the conflict. Here are some of the IP-related laws introduced by Ukraine:
- On Protection of Persons' Interests in Intellectual Property During the Martial Law
This law came into effect on 13th April 2022 and suspended all terms for the protection and acquisition of IP rights. This was applicable to all patent holders, including local and foreign organisations that run operations in Ukraine.
- Ban on Russian Propaganda and use of Russian military symbols
The Ukrainian Parliament passed this law on 22nd May 2022 which came into efect on 12 June 2022 to prohibit any propaganda related to Russia. This also involves the latter's attack on the country, including the use of Russian military symbols which resemble the Latin letters "V" and "Z", without any legal context. Instead, the law advises the use of Cyrillic letters like “Ф", "В”, "С” or “З".
- On Amendments to Certain Laws of Ukraine in Support of the National Music Product
This law made effective from 19th June 2022, restricts public performances, demonstrations, displays, videograms, etc., made by people who were Russian citizens after 1991. However, there are exclusions for former Russian citizens, who have or had (at the time of death) a Ukrainian citizenship.
From May 2022 onwards, normal court proceedings including IP matters could take place in Ukraine. From then, the IP system of Ukraine would gradually recover providing online assistance to all stakeholders with a few exceptions.
Can IP Rights Still Be Protected in These Countries?
Despite the ongoing war and suspension of intellectual property rights in both Russia and Ukraine, IP rights can still be protected in these two countries. In Russia, the enforcement of IP rights still continues to an extent.
Moreover, payments for this can be made to the Russian Patent Office via non-sanctioned banks. As per reports, there was a 5% increase in trademark applications between January-July 2022, in comparison to the previous year. A majority of these applications were from local businessmen for trademarks of those foreign companies which have left Russia.
Rospatent (Russia's Patent Office) refuses any bad faith applications. But, foreign companies whose trademarks are in use by third parties should try to remain vigilant and oppose such applications. In case they had not previously registered their IP rights in Russia, the third parties can succeed in filing their applications.
Local parties may also try to dispute the IP rights of foreign organisations belonging to the ‘unfriendly nations’. As such foreign companies that have a physical presence in Russia can better protect their IP rights. Russian courts have said that it does not exclude the possibility of such companies enforcing their intellectual property rights in Russia.
Several high-profile cases have upheld the IP rights of Western companies after they filed an appeal. This includes the Pegga Pig ruling in favour of Hasbro in 2021 and the reinstation of rights to Coca-Cola for the Fanta trademark.
Coming to Ukraine, the suspension/restoration of intellectual property deadlines is permissible within 90 days after the end of Martial Law. Moreover, authorised personnel can submit applications, objections, responses, petitions, etc. without any fees, within this stipulated time period.
In November 2022, Ukraine established a new National Office for Intellectual Property and Innovation (UANIPIO) to provide stable support for IP-related matters during wartime.
Conclusion
The question of the hour is the ramifications in case the war stops and nations lift their sanctions against Russia. Legal experts ponder over what will happen to patented inventions that are already in use. They also think of the implications in case any of the IP rights owners decide to file a case. Furthermore, many Asian goods are replacing US and European products in the Russian market, increasing the patent filings by such entities.
Defending IP rights in Russia is still an uphill battle. As time passes and Russia continues to wreck the international IPR system, it can be very challenging for foreign companies to work in Russia. The situation is quite unpredictable and can change for the better or worse.