Protection of intellectual property in Russia: 2010

19.05.2011

Chambers and Partners Europe

The overall situation

In 2010, one of the main economic trends saw an increase in business and investment activity in the Russian market as a whole. Following the acute phase of the crisis, the economy began to revive, striving to regain the previous dynamics and intense development.

The consequences of this trend have included a growing interest in use, turnover and protection of intellectual property. At the state policy level, the legislation on intellectual property has continued to improve, including by being brought in line with international standards and principles, this being in full accord with Russia’s intention to join the WTO.

Last year saw a broad discussion of the initiative to set up specialised courts in Russia to consider intellectual property cases. We believe this would promote more professional and faster resolution of intellectual property disputes. Currently, IP dispute cases often drag out because of a shortage of judges with sufficient knowledge of the specifics of IP turnover and protection, these sometimes relating to legal and sometimes technical or patent matters. As a result, protracted and often unnecessary expert research is arranged by the court, dragging out the proceedings. A specialised court would ensure that intellectual property disputes were heard by experienced judges, thereby improving the quality of judicial rulings.

Another interesting specific worth noting is the growing activity of the Federal Antimonopoly Service of Russia (FAS). Within the scope of applying article 14 of the Federal Law of the Russian Federation 'On Protection of Competition', concerning liability for unfair competition through unlawful use of intellectual property or connected with the misleading of consumers, the FAS is increasingly considering disputes associated with use of trade marks, copyrights and other intellectual property. The FAS has also been charged with exercising control over observance of the rules on competition in relation to the Olympic symbols in connection with the Winter Olympics to be held in Sochi and, in active exercise of its powers in this sphere, it is initiating cases relating to unlawful use of the Olympic symbols and imposing liability on companies, both large and small.

In response to this active position taken by the FAS, lawyers perceive an additional opportunity for protecting the rights of clients to trade marks, patents, copyrights to packaging designs and other elements of trade dress. Alongside the traditional protection methods, they are now proposing that clients apply to the FAS as a way of having violations halted by referring to unfair competition on the part of the offender.

Acute problems: Internet disputes and brand protection

Protection of intellectual property on the Internet remains one of the most acute problems of law and law-enforcement practice. The scale on which music, films, video-clips, books and articles are placed on the Web is growing by the year. The Internet has firmly taken the leading position among sources of rapidly available information. Consequently, last year is remembered for litigations over liability for Internet-site content, particularly for information posted on social networks (the dispute over placement of a film on the website 'Vkontakte') or on portals intended for downloading (the dispute over placement of information on the website zayсev.net). Within the scope of these litigations and other cases, important conclusions have been drawn concerning the liability of the hosting provider, administrator and user of an Internet site. So far, in practice it has been the person that actually posts the information on the Internet and is capable of controlling its content that has been held liable, even though the Internet space on which the given information is posted may be under the control of another person (hosting provider or administrator).

This approach makes it difficult to combat infringement of intellectual property rights on the Internet, since it is still hard to identify anonymous users, and big hosting providers or administrators of social networks remain almost outside the liability zone.

Another web phenomenon that remains the focus of attention is cybersquatting. Owners of well-known trade marks still have to battle against third parties using domain names similar to their trade marks. Violations can take the form of either trading in goods and services through sites with parasite names or trading in domain names themselves.

A positive trend has emerged in judicial practice of providing protection to owners of well-known trade marks who come up against cybersquatters. Claims by a producer of Swiss watches, a major film studio and other owners of trade marks have been satisfied. Still in process is an interesting judicial dispute about use in a domain name of the trade mark of world-renowned Champagne brand 'Mumm'. This dispute is specific in that the respondent did not place under the disputed domain name any information about goods and services similar to those of the right holder. The dispute is over use of the domain name for an 'empty' site. If the judge comes down on the side of the right holder, this will make it easier to combat cybersquatters and greatly increase the possibilities for owners of well-known brands to protect their goods, reputation and intellectual property.

Systemic changes

Active discussions have been going on for several years now about the need to change the legislation on the status and powers of organisations managing copyrights on a collective basis. Serious disputes have been triggered by the system for charging importers of information media on which copyrighted works might be placed. The legislation continues to grant accredited organisations extensive copyright management powers. In particular, the Russian Copyright Association has retained its position and competence. Last year, the RCA became more active in lodging claims regarding violation of copyrights and for payment of royalties. It has now started tracking use of copyrighted works not only in cinemas and at concerts, but also on shop floors, in public catering establishments and on leisure premises. As a result, big companies have completely unexpectedly caught the heat. The likelihood of this practice changing at all in the future is unsure.

Investment climate

Despite all these difficulties, the situation surrounding protection of intellectual property in Russia is generally improving. Intellectual property has been taken seriously for a long time now. One cannot get away with using it unlawfully, freely and with impunity in Russia. Judicial practice is growing, the legislation is becoming more complex and detailed, and a business culture continues to take shape of acquiring rights to intellectual property and obtaining permission from right holders to perform any operations with it.

At the same time, there is still the problem of mass issue and sale of counterfeit films and programmes, the problem of unlawful use of films and texts on the Internet – though these are global problems.

The IP legal services market

The demand for legal advice and handling of disputes on protection of intellectual property remains high and will increase. Of interest to the business community are organisation of intellectual property protection for big companies, systemic due diligence on the status of intellectual property, and minimisation of risks associated with IP in concluding contractor, agency, supply and other agreements. Handling of disputes with infringers of intellectual property rights in courts, the FAS and the Patent Dispute Chamber are naturally services that are still in demand.

The given segment of the legal services market is developing fast and, in our opinion, will continue to do so for some years to come. 

Contact details

For all issues related to publications, news and press releases, please contact:

Ksenia Soboleva

Head of PR and Communications

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