The Kremlin’s Intellectual Property Cold War: Legalizing Patent Theft with Decree 299

Russia’s bold response to Western economic sanctions following its invasion of Ukraine now includes what amounts to legalizing patent theft against “unfriendly countries.” On March 5, 2022, the Kremlin issued Decree 299, which states that Russian companies and individuals can use inventions, utility models and industrial designs without owner permission or compensation, if the patent hails from a list of “unfriendly countries.”1 Specifically, the decree sets compensation for patent infringement at “0%” if the patent holder is a citizen of, is registered in, or has a primary place of business or profit in any of the 48 countries Russia previously designated as “unfriendly.”2 Unsurprisingly, the list includes the United States, Great Britain, European Union members, Australia, and other critics of Russia’s actions against Ukraine.

Russia’s alienating move comes after weeks of swift responses from the global intellectual property community after it invaded Ukraine. First, on March 1st, the European Patent Office (EPO) stopped all cooperation with the Russian patent office (Rospatent), the national IP office of Belarus, and the Moscow-based Euroasian Patent Organization (EAPO).3 Then, on March 4th, the U.S. Patent and Trademark Office (USPTO) followed by cutting its ties with the same offices.4 As an additional blow to Russia, on March 11th the USPTO ended its fast-track Global Patent Prosecution Highway (GPPH) relationship with the Rospatent, removing Russia from its list of participating countries and returning any GPHH applications based on Rospatent work back into the regular examination queue.5 As a contrast, patent agencies around the world, including the European Union, have rallied behind Ukraine, sending letters of support to the Ukrainian Institute of Intellectual Property (Ukrpatent).6

                The implications of the Kremlin’s Decree 299 are broad and will likely have lasting effects. By setting compensation at 0% in cases of patent infringement, the Russian government is openly allowing patent theft. This decision will likely deter patent holders and related stakeholders from conducting business in Russia. Decree 299 also has the potential to open a pandora’s box when it comes to the protection and enforcement of intellectual property rights in Russia. In fact, there have been rumblings that the Kremlin will soon follow with a similar decree on trademarks.7 Such a decree would be a legal nightmare for global brands like H&M, McDonald’s or Starbucks, who have all pulled their operations out of Russia in response to the country’s actions in Ukraine.8 If the Kremlin issues a decree on trademarks similar to Decree 299, Russian companies or individuals would be able to exploit brand name recognition without consequence. In an alarming preview of what can happen, on March 3rd a Russian district court used Western economic sanctions as its reasoning to rule that a man could use Hasbro Inc.’s “Peppa Pig” trademarks without permission or payment.9

Over the coming months, the effects of Decree 299 will become more apparent. Patent holders from “unfriendly countries” with valuable patent portfolios in Russia will have to keep an eye on infringers. Commentators have noted that patent holders will have to weigh whether to continue paying maintenance fees in hopes Russia will reverse the decree or make the difficult decision of abandoning them given the uncertainty of the situation.10 Seeing as the Kremlin has effectively carved out the patent infringement causes of action in Russia, patent holders will have to explore legal recourse in other countries and this will likely bring forth questions of jurisdiction in those countries. It will also be interesting to see if governments and agencies from “unfriendly countries” will respond to Decree 299 with similar actions invalidating or limiting the intellectual property rights of Russian patent holders. Nonetheless, many have observed that even if the Kremlin rescinds Decree 299, the instability and lack of trust in Russia’s willingness to uphold intellectual property rights can deter foreign investment in the country for years to come.11

By James A. Shimota and Adrian Gonzalez Cerrillo


Footnotes
1. Decree of the Government of the Russian Federation from March 6, 2022 No. 299 “On amendments to Paragraph 2 of the Methodology for determining the amount of compensation paid to the patent holder at the time of decision to use an invention, utility model, or industrial design without their consent, and the procedure for its payment”

2. Decree of the Government of the Russian Federation from March 6, 2022 No. 299 “On amendments to Paragraph 2 of the Methodology for determining the amount of compensation paid to the patent holder at the time of decision to use an invention, utility model, or industrial design without their consent, and the procedure for its payment”; Decree of the Government of the Russian Federation dated March 5, 2022 No. 430-r.

3. Standing Together for Peace in Europe, European Patent Office (March 1, 2022), https://www.epo.org/news-events/news/2022/20220301a.html; Dani Kass, European Patent Office Halts Work With Russia, Belarus, Law360.com (March 1, 2022), https://www.law360.com/articles/1469420/european-patent-office-halts-work-with-russia-belarus.

4. USPTO Statement on Engagement with Russia, the Eurasian Patent Organization, and Belarus, U.S. Patent and Trademark Office (March 10, 2022) https://www.uspto.gov/about-us/news-updates/uspto-statement-engagement-russia-and-eurasian-patent-organization; Jasmin Jackson, USPTO Cuts Ties With Russia Following Ukraine Attacks, Law360.com (March 4, 2022), https://www.law360.com/articles/1470840/uspto-cuts-ties-with-russia-following-ukraine-attacks.

5. USPTO Statement on Engagement with Russia, the Eurasian Patent Organization, and Belarus, U.S. Patent and Trademark Office (March 10, 2022) https://www.uspto.gov/about-us/news-updates/uspto-statement-engagement-russia-and-eurasian-patent-organization.

6. Dani Kass, 5 Russian, Ukrainian Patent Updates You May Have Missed, Law360.com (March 10, 2022), https://www.law360.com/articles/1472668.

7. Hannah Knowles & Zina Pozen, Russia Says Its Businesses Can Steal Patents From Anyone In ‘Unfriendly’ Countries, The Washington Post (March 9, 2022), https://www.washingtonpost.com/business/2022/03/09/russia-allows-patent-theft/.

8. Here Are Some of the Companies That Have Pledged to Stop Business in Russia, The New York Times (March 9, 2022), https://www.nytimes.com/article/russia-invasion-companies.html.

9. Dani Kass, Russia OKs Use Of Peppa Pig TM As Sanctions Retaliation, Law360.com (March 11, 2022), https://www.law360.com/articles/1473286?scroll=1&related=1.

10. See Kyle Jahner, Russian IP Animus Fuels Risk, Uncertainty as Firms Recalibrate, Bloomberg Law (March 21, 2022), https://news.bloomberglaw.com/ip-law/russian-ip-animus-fuels-risk-uncertainty-as-firms-recalibrate.

11. See id.

Copyright © 2022, K&L Gates LLP. All Rights Reserved.