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How Russia laid groundwork for seizing IP rights before Ukraine invasion

Author(s): May Cheng

Mar 31, 2022

Among intellectual property (IP) lawyers, there is considerable buzz [PDF] over the recent trademark filings in the Russian Federation for obvious and deliberate knock-offs of the world famous and iconic McDonald’s golden arches design and IKEA brands. While not yet registered in Russia, their adoption and recognition would clearly flout many international treaties concerning intellectual property law to which the Russian Federation is a signatory.

Our collective moral outrage over this turn of events is misplaced, however, since Putin had already quietly signed a law back in December 2020, that allowed Russia’s national legislation to take precedence over international treaties. We can be forgiven for not focusing exclusively on this legislative change when it was bundled with so many other, more controversial constitutional amendments, such as banning same-sex marriage and enforcing “patriotic” education in Russian schools.

At the time of the constitutional groundwork being laid, back in December 2020, Human Rights Watch remarked that these reforms declaring the primacy of Russian law would serve to further isolate Russia. That statement turns out to be more prescient than we could have imagined in 2020.

It’s obvious to constitutional scholars that these amendments violate the Vienna Convention which prevents governments from enacting domestic legislation that circumvents international obligations, and this goes a step further than other constitutional amendments that the Russian Federation adopted in 2015 which also purported to allow Russia to ignore international human rights court rulings against it.

Previously, the Russian Federation agreed to conform to obligations under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) in order to join the World Trade Organization (WTO) in 2012, which includes broad recognition of intellectual property rights of all member states and proper systems for recognition and enforcement of intellectual property laws, including trademark, patent and copyright laws, among others.

It’s adoption of TRIPS and ascension in WTO that has allowed global brands to thrive and innovation to be protected around the world using intellectual property enforcement mechanisms that are relatively uniform across the globe. Obviously, many jurisdictions are known to have significant counterfeiting problems, but they at least have laws on the books that are aimed at addressing these issues, which have the effect of allowing international brands and innovators to have some confidence in entering their markets.

Every year, the Office of the United States Trade Representative issues a Special 301 Watch List of countries that have significant problems surrounding recognition and enforcement of intellectual property rights, in violation of WTO and TRIPS obligations. It may come as no surprise that the Priority Watch List in 2021 [PDF] already featured China, India, Russia, Saudi Arabia, Argentina and Ukraine, among others.

Russia is singled out for having a cumbersome system of IP enforcement and for being a huge market for counterfeit goods from China. The 2022 301 Watch List may need to adopt a new Top Priority Watch List specifically for the Russian Federation in light of recent events.

At this time, it is still possible to apply for an international trademark registration that would include an application for the Russian Federation. However, this option may soon be suspended in the wake of international sanctions against Russia, since it will no longer be possible to pay fees for maintenance of trademarks and patents in Russia. Those fees are payable to Rospatent, the Russian equivalent of the Canadian Intellectual Property Office, which deposits its fees with the Central Bank of the Russian Federation. Payments made to Rospatent would clearly be caught by international sanctions if no exceptions are created.

Furthermore, the Russian government published a decree on March 6, 2022, after its invasion of Ukraine was launched, that allows for the compulsory licensing, without payment of royalties, of all patents and industrial designs owned by “unfriendly” countries, which includes the United States, Canada, Japan and European Union countries, among others. This means that it’s open season in Russia on violating patents owned by western nations. Consequently, the United States Patent and Trademark Office, as well as the European Patent Office, announced that they would break relations with Rospatent and would not recognize applications in the Global Patent Prosecution Highway that originated from Rospatent.

It’s hard to imagine that the attack in Russia on intellectual property rights will not spread to trademarks and copyright. Russian politician Dmitry Ionin has already signalled that the country may unblock bit-torrent type services to allow Russians to use pirated software and view movies from unfriendly countries in violation of intellectual property infringement laws.

Among the trademark filings recently made in Russia, in addition to the knock-offs of the McDonald’s and IKEA Logos, applications have reportedly been filed for STARBUCKS, CHANEL, INSTAGRAM and others. It can be anticipated at this stage that Rospatent may allow registration of these knock-offs where the western owners are from “unfriendly” countries. 

There will soon be a parallel universe in Russia where knock-offs are the only game in town. The results of this split from the international treaties on global trade will make it impossible to reverse course in the future, and will shut Russia out of access to global innovation in addition to closing its doors to international brands. 

It’s alarming at how quickly the world order has changed so soon after Canada finally gained ascension to the Madrid Protocol, that paved the way for international trademark filings in June 2019. We are witnessing a splintering of international co-operation and a full-fledged reversal of globalization trends that existed pre-pandemic. Nevertheless, it is remarkable to observe the rapid rate at which sanctions are reshaping the global economy in a way that will likely punish and exclude Russia for decades to come, if not centuries. 

Even if the war in Ukraine ends in the coming months, which we hope and pray for, the effects of Putin’s laws in response to sanctions will be felt for many generations to come, since these will effectively prevent Russia from participating in global trade and shut out of technological advances.

This article was originally published in The Lawyer’s Daily, part of LexisNexis Canada.