Russia’s latest response to Western Sanctions – an affront to Intellectual Property protection?

EU, UK

One of Russia’s responses to the mounting Western sanctions for its invasion of Ukraine has been to undermine the protection afforded to Western intellectual property rights.

On 5th March 2022, the Russian government issued a decree proclaiming that Russian companies are no longer obliged to compensate owners of patents, utility models, and industrial designs from “unfriendly countries”, being those western states who have issued sanctions against Russia, including the United Kingdom, the US, and the EU. While the only intellectual property right that it explicitly mentions is patents, Russian courts have already used the decree to undermine copyright and trade mark rights, and it has inspired a flurry of unauthorised trade mark applications for western brands in Russia. The possible implications of this, and potential remedies available to western intellectual property rights holders, are discussed below.

The attack on intellectual property

The 5th March decree means that Russian entities can use western patented inventions or fashion designs without having to seek the consent of, or pay, the rights holders. In addition, rights holders cannot enforce their rights against Russian infringers. This essentially legalizes intellectual piracy in a country which was already on the US government’s “priority watch list” of countries who do not sufficiently protect US intellectual property.

Russian officials in the Ministry of Economic Development of Russia have also hinted that other types of western intellectual property rights, such as software and trade marks, will no longer be protected. This could allow Russians to appropriate and exploit – without permission and for free – western brands such as McDonald’s. Local entrepreneurs have leapt at the opportunity to jump in the grave of western brands’ success in Russia, for which there is clearly still a demand; a McDonald’s resale market has popped up on Russian eBay following the chain’s closure in the nation, with whole meals selling for around $100.

In retaliation, both the EUIPO and the US Patent and Trademark Office (“USTPO”) have halted all cooperation actions with the Russian Intellectual Property Office, Rospatent. The USTPO also announced that it will no longer grant requests to participate in the Global Patent Prosecution Highway when such requests are based on work performed by Rospatent as an Office of Earlier Examination.

Peppa Pig: how did she get into this?

The attitude imbued by the sanctions is also being reflected in the Russian courts. The Arbitration Court of the Kirov Region has recently dismissed a trade mark infringement action concerning Peppa Pig trade marks, relying solely on sanctions brought by the Western countries against Russia.

The case was brought against a Russian entrepreneur who reportedly distributed his own drawings of Peppa Pig. Entertainment One UK Ltd, Peppa's owner, relied on international registrations No IR 1212958 depicting a black and white drawing of Peppa and No IR 1224441 for a word mark ‘PEPPA PIG’, among others. The Court did not examine the matter on the merits. Instead, it referred to “restrictive (political and economic) measures imposed against the Russian Federation, legal entities and individuals and senior officials” by the “Western countries, including, Great Britain”. These circumstances, of course, were not brought by the defendant, but taken into account on the Court’s own motion as they are “a common knowledge”.

Taking into account the sanctions and the fact that Entertainment One is a UK company, the Court found that its case constituted an abuse of rights. In doing so, the Court relied on a general equitable provision of the Russian Civil Code, providing that civil rights are not to be exercised in bad faith, with the intention of causing harm to another person, nor to circumvent the law.

Trade mark squatting

Opportunists are clearly capitalising on the situation, as Rospatent has been on the receiving end of a growing number of trade mark applications for the names and logos of famous western brands – from Nespresso, Starbucks, Instagram and McDonald’s, to luxury brands including Christian Dior, and Givenchy.

These applications would normally fall within the realm of trade mark squatting, and/or bad faith trade mark filings, and be barred from registration. However, Rospatent may opt not to block these applications due to the Kremlin’s newly proclaimed position on western intellectual property rights. Additionally, it is significant that some of these trade marks are similar, but not identical to well-known western brands, such as “Instarus” and “Rosgram” (as a substitute for Instagram) and McDuck’s (the Russian colloquial name for McDonald’s), as these subtle changes could avoid objection from Rospatent should it continue to observe trade mark rules in the most flagrant instances of bad faith filings.

What should western intellectual property right holders do?

Russia has not yet been expelled from the World Trade Organization (“WTO”), and so there is potential that the countries themselves who are adversely impacted by Russia’s measures on intellectual property could bring Russia to a WTO court, on the basis that Russia has violated the international treaty (The TRIPS Agreement) which protects intellectual property assets at a global level. These countries could demand further sanctions on Russia, which would further hit Russian businesses who rely on brands and patented technology. However, should Russia be suspended from the WTO, as President Zelensky has asked the world to do, this would actually provide a buffer for Russia from global intellectual property challenges, as Russia would not be able to be brought before a court of an organization it is not part of.

On a more individual scale, it is unlikely that victims of trade mark squatting will be able to find relief in Russian national courts, as the trend shows that they are unlikely to provide assistance to western entities. However, western companies should closely monitor and file objections to any applications for trade marks that conflict with their own rights, as the absence of any objection will entitle Rospatent to rely on the excuse that the rights holder has left Russia and has no plans for its brand to re-enter the Russian market.

Article co-authored by Georgina Morris, Trainee Solicitor at CMS.