A Russian decree cancels the application of patents in hostile countries

Yes, we will live, Uncle Vanya. Could Anton Chekhov ever have imagined that his literary work would be used to sell hamburgers? In March, a controversial application for an “Uncle Vanya” trademark in relation to “snack bars, cafes, cafeterias, restaurants, bar services, canteens, cooking and home delivery services”, incorporated McDonald’s golden arches red and yellow logo. . It was just one of many recent applications in Russia that caused serious problems among intellectual property lawyers.

Since Russia invaded Ukraine on February 24, the country has faced numerous financial, trade and travel sanctions. It was also snubbed by major IP partners. In a February 28 letter, a group of whistleblowers and staff representatives from the World Intellectual Property Organization (WIPO) called on the entity to publicly condemn Russia’s invasion of Ukraine and to quickly close its office in Russia. The European Patent Office severed its ties with Russia on March 1, and shortly thereafter the United States Patent and Trademark Office (USPTO) confirmed that it had “terminated engagement” with officials from Russia’s intellectual property agency, the Federal Intellectual Property Service. (Rospatent) and with the Eurasian Patent Organization.

In response, Russia has taken an aggressive stance in the area of ​​intellectual property where it once sought to engage peacefully with the world, an effort that began long before the collapse of the Union of Soviet Socialist Republics. When the USSR joined the Paris Convention in 1965, it made efforts to develop Soviet intellectual property. Yet in March, Russia issued Executive Order No. 299, which effectively nullifies the enforceability of Russian patents held by entities and individuals in “hostile” countries, including the United States, member states of the European Union, United Kingdom, Ukraine, Japan and South Korea. , Australia and New Zealand.

Russian Prime Minister Mikhail Mishustin has also given the go-ahead for branded goods to be imported without the brands’ permission, creating gray market headaches. As Boris Edidin, Deputy Chairman of the Commission for Legal Support of the Digital Economy of the Moscow Branch of the Russian Bar Association, clarified in a recent legal commentary published by the Moscow-based RBC Group: entrepreneurs have the opportunity to import good quality goods. – well-known brands, regardless of the presence or absence of an official representative on the Russian market.

Russia, like the EU, had traditionally taken a tougher stance than the US on parallel imports. Now, however, “both through ‘anti-crisis’ measures and cloak-and-dagger methods”, Russia is sure it is doing all it can to keep its planes flying and its factories going. walking, said Peter B. Maggs, research professor of law. at the University of Illinois at Urbana-Champaign and a recognized expert on Russian and Soviet law and intellectual property.

The increase in parallel imports makes the pursuit and maintenance of trademarks more important than ever in Russia, but this is not the only cause for concern. In March, as political tensions reached a crescendo, a Russian court refused to enforce the trademark rights of Peppa Pig, the famous British cartoon character, due to “hostile actions by the United States of America and affiliated foreign countries”. (See Case No. A28-11930/2021 in the Kirov Region Arbitration Court; an appeals court later overturned that decision, in a victory for the hog star.) The RBC Group reported in March that it had tracked more than 50 trademark applications. by Russian entrepreneurs and companies for the brands of famous foreign brands, many of them in the fashion and technology sector. While most trademark applications were explicit copies of existing marks, in other cases applicants simply imitated well-known marks and trade dress.

For example, a Russian entrepreneur from a design studio called Luxorta applied to register an IDEA trademark that imitates the style and yellow and blue colors of the famous Swedish brand IKEA. He told RBC that his business suffered after IKEA suspended operations in Russia and that he aspired to develop his own range of furniture and work with former IKEA suppliers. Other candidates interviewed by RBC said they hoped to resell the brands to foreign companies once those companies were back.

On April 1, Rospatent issued a press release stating that “in case an identical or similar mark has already been registered in the Russian Federation, this would be the reason for refusing such registration”. More recently, Rospatent chief Yury Zubov responded with frustration to media coverage of trademark issues in Russia, noting that intellectual property laws are unchanged and the “Uncle Vanya” burger brand has been taken down.

Professor Maggs agreed that those who attempt to register or use close copies of foreign brands in Russia are likely to fail. He cited a June 2 ruling from the Court of Intellectual Property Rights upholding lower court findings that the “FANT” trademark for an orange soft drink violated unfair competition laws because it was similar to the “FANTA” brand owned and licensed to third parties by Coca-Cola HBC Limited Liability Company. The Russian consumer protection agency initially brought the case.

The Court held that “confusion about two products may result not only in reduced sales of the FANTA drink and redistribution of consumer demand, but may also damage the commercial reputation of a third party, since the consumer , having been misled by the confusion between the two products, ultimately receives a different product with different quality, taste and other characteristics.

Furthermore, Professor Maggs said, “The Putin regime does and will promote Russian products as ‘just as good’ as foreign products. An example, obviously endorsed at high levels, is the adoption of an entirely different brand for the McDonald’s chain being sold,” he said, referring to the June 12 reopening of former McDonald’s restaurants in Moscow under the name “Vkusno & tochka” (“Tasty and that’s it”).

Brands should be wary of inadvertently jeopardizing their Russian brands by suspending local operations; a trademark can be canceled in Russia after three years of uninterrupted non-use. While Article 1486 of the Russian Civil Code states that “evidence presented by the right holder that the trademark was not used due to circumstances beyond his control [emphasis added] may be considered,” brands alleging infringement still may not be eligible for damages or injunctive relief because they technically aren’t losing sales while shutting down business in Russia.

Additionally, if a company has suspended sales to Russia to show solidarity with Ukraine but seeks to have sales to Russia ceased by others, it may be accused of violating the good faith requirement of the Article 10 of the Russian Civil Code, which states that the exercise of “rights with the aim of limiting competition as well as the abuse of a dominant position in a market are not permitted.

Russia remains a party to numerous intellectual property treaties, including the Paris Convention, the Agreement on Trade-Related Aspects of Intellectual Property Rights and the Hague Agreement. But as the Peppa Pig case illustrates, intellectual property court decisions are not immune to the political heat.

The question looming on the horizon is whether, if the current crisis escalates, the Russian government will outright remove the trademarks of hostile countries. It would not be the first time that a state has been denied intellectual property rights during political disputes. In the aftermath of World War I, for example, the US government argued for the “expropriation” of assets, including intellectual property, of German nationals, perceived as responsible for their government’s militarism1. And in the 1930s, the German patent office removed Jewish patent holders from its list as part of its notorious “Aryanization” process. However, since Russia is not officially at war with countries it has deemed “unfriendly”, these precedents are not directly relevant.

Brands that have suspended business operations in Russia should closely monitor their brand portfolios for any infringement and consider how they can prove use of each brand during an extended absence from the Russian market. In other words: keep your eyes on Uncle Vanya.


FOOTNOTES

1 Caglioti DL. Wartime Property Rights: Sequestration and Liquidation of Enemy Alien Assets in Western Europe in World War I. Journal of Modern European History. 2014;12(4):523-545. doi:10.17104/1611-8944_2014_4_523.

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