Russian intellectual property and e-commerce

Introduction

The main types of intellectual property that are recognized and protected by Russian law include:

• trademarks
• copyright (including computer programs) and neighbouring rights
• patents

Trademarks

Principal Legislation: Laws and Normative Acts

Trademarks are subject to the following principal legal acts:

• The Civil Code;
• The Law On Trademarks; and
• Regulations of the Patent Office.

Concept of a Trademark

According to the Law On Trademarks, a trademark is a designation that distinguishes the goods and services of one economic entity from those of another. A trademark may take the form of a design, a symbol or a three-dimensional object, or a combination of these, and may be any colour or combination of colours.

The Law On Trademarks provides a list of designations that may not be registered as trademarks. These include state flags and emblems, the names of state and international organizations, official marks such as hallmarks or stamps of approval, generally used designations of particular kinds of goods, and generally accepted symbols and terms.

The owner of a trademark has an exclusive right to use and dispose of the trademark and to prohibit its use by others. Any manufacture, use, import, offer for sale, sale or other putting into commercial turnover or storage with a purpose to put into commercial turnover of a trademark, goods marked with the trademark or a designation confusingly similar to the trademark in respect of similar goods without the owner's consent is a violation of the exclusive right of the trademark owner. Goods bearing trademarks, which violate the exclusive right of a trademark owner, will be considered counterfeit and may be seized and destroyed pursuant to a court decision.

Trademark Criteria

To be registered as a trademark, a designation should not lead to confusion on the part of the public or be contrary to the public interest or principles of humanism or morality.

Designations that are identical to or confusingly similar to registered trademarks, well-known trademarks, names of characters or quotations from literature, science or art, names, pseudonyms or portraits of famous people may not be registered as trademarks.

Protection of Trademarks

Registration of Trademarks

According to the Law On Trademarks, protection is granted on the basis of registration. A trademark may be registered only by a legal entity or an individual entrepreneur registered as such with the tax authorities.

Trademarks are registered with the Patent Office, which issues a trademark certificate. The legislation sets out the procedure, fees and requisite documents for registration. Applications by foreign entities/foreign individuals must be submitted only through trademark attorneys registered with the Patent Office.

Priority is given from the date an application for registration is made, or an earlier date if the application was first made under the Paris Convention in another member state or the goods were first exhibited in a member state. The priority date may also be established according to the date of international registration under an international treaty of the Russian Federation.

Registration is a time-consuming process, which may take from 18 to 24 months to complete. The Patent Office will make an entry in the State Register of Trademarks and issue a certificate of registration. Information concerning the trademark is also published in the official bulletin of the Patent Office.

Time Period and Conditions of Protection

A trademark certificate is valid for ten years from the date of application. This term may be extended for another ten years upon application by the trademark owner in the last year of the ten-year period. Extension is subject to a fee and is reflected in the State Register and the certificate.

The registered trademark must be used. The use of the trademark is its application on goods or packaging either by the owner or a licensee. Protection may be revoked if the trademark was registered in the name of a person who is not an individual entrepreneur or in breach of trademark criteria or was not used in the Russian Federation during the previous three years.

Troubleshooting

If the rights of a trademark owner are infringed, he may apply to the Chamber for Patent Disputes of the Patent Office or to an arbitrazhniy (commercial) court.

The registration of a trademark may be challenged by application to the Chamber for Patent Disputes of the Patent Office. If the trademark was registered, for example, in the name of an individual who is not an entrepreneur or the trademark is not used, the Chamber for Patent Disputes may consider the registration void.

Disputes regarding violation of rights of a trademark owner or relating to licensing or assignment agreements fall within the jurisdiction of state arbitrazhniy (commercial) courts.

Remedies available to the owner of a trademark include suing for damages and/or obtaining injunctions against the infringer requiring the infringer to delete the trademark from goods or to destroy a designation, or goods bearing a designation, which is confusingly similar to the trademark. Alternatively, instead of claiming for damages the owner of a trademark may claim for a fixed amount of compensation ranging from US $3,400 to US $170,000 (being correspondingly 1,000 times and 50,000 times the statutory minimum monthly wage, which on 1 January 2004 was 100 Rubles or US $3.4).

The owner of the trademark may also apply to the Ministry of Anti-Monopoly Policy with a request to delete a particular designation that is so confusingly similar to a registered trademark that competition would be affected and consumers confused.

Trademark owners may also apply to the police with a request to open a criminal case against an infringer. According to the Criminal Code of the Russian Federation, an individual who intentionally repeatedly and illegally uses a registered trademark may be fined up to US$ 6,800, fined an amount equal to his income for a period of up to eighteen months, or subjected to mandatory works for a period from 180 to 240 hours, or be sentenced to up to two years of hard labour.

Foreign companies may also request to the customs authorities to prevent the import of goods having a designation infringing the rights of a trademark owner.

Assignment, Licences, Need to Register

Trademarks may be assigned and the right to use the trademark may be licensed to a third party. Both an assignment agreement and a licence agreement must be made in writing and must be registered with the Patent Office. Failure to register renders these agreements void.

Copyright and Neighbouring Rights

Principal Legislation: Laws and Normative Acts

The principal laws governing copyright and neighbouring rights are:

• The Civil Code
• The Law On Copyright and Neighbouring Rights
• The Law On the Legal Protection of Computer Programs and Databases

Concept of Copyright

Copyright protection is granted to a work which is the product of creative activity and which is expressed in any material form. Copyright in the work is granted to its creator by the act of creation of the work. No registration or other formalities are required in order for the work to be protected. Such works include literary, dramatic, musical, choreographic and audio-visual works, sculptures, designs, photography and computer programs. Copyright protection does not apply to ideas, methods, concepts, principles, discoveries, facts, official documents, state symbols and information on events.

Rights of the Author Which May and May Not Be Assigned

The author is entitled to:

• be recognized as the author of the work
• protect his name as the author
• preserve the integrity of the work
• publish and use the work
• access the work (in respect of works of graphic art)

These rights are not transferable and rest with the author even if other exclusive rights, such as, for example, the right to reproduce, distribute, import, demonstrate, communicate, translate and redraft the work, are assigned to other people.

The author is entitled to receive remuneration from the use of his work by other people. There are very limited circumstances where the protected work may be used without permission of the copyright owner and without remuneration.

Concept of Neighbouring Rights

Neighbouring rights belong to performers, producers of phonograms, broadcasters and cablecasters.

According to the Law On Copyright, a performer is an actor, singer, musician, dancer or other person who performs the work in any way including a director of a film and a conductor.

The Law on Copyright does not provide for specific definitions of a producer of a phonogram, a broadcaster and a cablecaster.

Neighbouring rights are granted by the act of creation of the relevant object of neighbouring rights. No registration is required.

Copyright protection is granted by virtue of creation. No registration or other special procedure is required.

Time Period for Protection

As a general rule, copyright is valid during the lifetime of the author and for 50 years after his death. Some rights of the author, such as a right to be recognized as the author, are protected with no time limit.

Troubleshooting

According to reservations made by Russia on joining international conventions, protection under international treaties is granted for works first published after Russia joined those conventions.

With regard to copyright, the earliest date for granting protection to the works of foreign authors is 27 May 1973, when the Universal Convention on Copyright became effective for the Soviet Union. Any work first published before this date in any other member state of the convention was not protected in the Soviet Union and is not protected in Russia. In addition, works first published later but in a country that is not a member of the Universal Convention are not protected either.

In order to protect their rights, payment of copyright owners may apply to the courts, to arbitration and to the police. Remedies available to the owners include the recognition of their rights and compensation for damage. Counterfeit goods and equipment for the manufacture of counterfeit goods may be seized and destroyed in accordance with a court decision.

Upon filing an application to the court, copyright owners are also entitled to obtain an injunction to prevent counterfeiting activities of an infringer and to seize counterfeit goods and equipment for their manufacture.

An infringement of copyright also constitutes a criminal offence, which may be investigated by the police. Under the Russian Criminal Code (Criminal Code) an individual who intentionally infringes an author's intellectual property rights and purchases, stores and/or transports counterfeit works may be fined up to US $6,800, fined an amount equal to his income for a period of eighteen months, be subjected to mandatory works for a period from 180 to 240 hours, or be imprisoned for a period of up to two years. Plagiarism is also considered a criminal offence under the Criminal Code which stipulates that an individual who intentionally uses someone else's works may be fined up to US $6,800, fined an amount equal to his income for a period of eighteen months, be subjected to mandatory works for a period from 180 to 240 hours, or be sentenced to hard labour for a period from three to six months.

Infringers of an author's intellectual property rights, the intentional and illegal purchase, storage and transportation of counterfeit products with a value exceeding US $8,500 or infringement by a group of people or by an official are punishable with imprisonment of up to five years and a fine of up to US $17,000 or an amount equal to the infringer's income for a period of up to three years.

Patents

Principal Legislation: Laws and Normative Acts

The principal laws regulating patents are:

• The Civil Code
• The Patent Law
• The Regulations of the Patent Office

Concept of a Patent

A patent may be granted for:

• an invention
• a utility model
• an industrial design

A patent holder has exclusive rights to use an invention, utility model or industrial design, and to prohibit their use by others.

A patent holder may assign their rights or licence the patent by way of a licence agreement to third parties. Such assignment and licence agreements must be registered with the Patent Office and failure to register will render a licence agreement and assignment agreement invalid.

Patent Criteria

In order to qualify for protection by patent, an invention must be new, have an element of invention and be capable of industrial application. A utility model to qualify for the same must be new and be capable of industrial use. An industrial design, to be registered must be new and original.

Registration

Patents must be registered with the Patent Office. The registration and issuing of patents involves application, expert examination and publication of information about the patent. The Patent Office sets out the rules for application.

The priority date is the date of application for registration or an earlier date if the application was first made in the foreign country, which is member to the Paris Convention.

Time Period of Protection

Protection is granted for a period of 20 years for an invention, five years for a utility model and ten years for an industrial design. The protection period can be extended by the Patent Office upon application of a patent holder for up to five years for an invention industrial design and up to three years for a utility model.

Troubleshooting

If the rights of the patent holder are infringed he may apply to the Chamber for Patent Disputes of the Patent Office, to courts, or to arbitration.

The registration of a patent may be challenged by application to the Chamber for Patent Disputes of the Patent Office.

Disputes regarding violation of exclusive rights of the patent holder or relating to licensing and assignment agreements as well as the illegal use of the patent fall within the jurisdiction of courts of common jurisdiction if one of the parties is an individual, or the state arbitrazhniy courts if all parties are legal entities, or individual entrepreneur.

The Patent holder is entitled to injunctive relief, compensation for damages caused by illegal use of the patent. Infringement of a patent also constitutes a criminal offence within the jurisdiction of the police. Under the Russian Criminal Code an individual who intentionally and illegally uses or discloses (prior to official publication) a patented invention, a utility model or an industrial design may either have to pay a fine of up to US $6,800, a fine of an amount equal to his income for a period of up to eighteen months, or be subjected to mandatory works for a period from 180 to 240 hours, or be imprisoned for a period of up to two years.

Infringement by a group of people is punishable either by a fine of between US $3,400 and US $10,200, a fine of an amount equal to the infringer's income for a period of between one and two years, or be arrested for a period from four to six months, or with imprisonment for up to five years.

International Treaties: Russia as Legal Successor to the Soviet Union

Russia is a member of the World Organisation of Intellectual Property. As legal successor to the Soviet Union, Russia is also party to a number of international treaties including the Paris Convention for the Protection of Intellectual Property (1883), the Geneva Convention for the Protection of Phonograms (1971), the Madrid Agreement for the International Registration of Marks (1891), the Universal Copyright Convention (1952), and the Treaty on Patent Cooperation (1970). On 3 March 1995 Russia became a full member of the Berne Convention.

Russia is also party to a number of bilateral agreements on the protection of intellectual property – for example, with Austria, Bulgaria, Sweden and Slovakia. Bilateral agreements extend protection to works published both before and after the signature date. Finally, in 1993 Russia and other CIS countries signed the Agreement on Measures for Protection of Intellectual Property and the Agreement on Cooperation in the Sphere of Copyright Protection.

E-Commerce

Lack of Regulation

The legal regulation and enforcement of the Internet in Russia is an area that is only now starting to be developed and thus court practice remains undeveloped and somewhat contradictory. For example, registration of domain names is not regulated by any legal act of government or parliament, nor has the legal status of domain names been clearly defined by the courts.

Before 1 January 2005, the registration of domain names was carried out by the Russian Institute for the Development of Public Relations ("RosNIIROS"), a non-commercial entity. Starting on 1 January 2005, RosNIIROS transferred these to private registrars of domain names, which must be accredited with RosNIIROS. The domains which were registered with RosNIIROS before that date will be supported by RosNIIROS until the terms of registration of such domains expire. The renewal of registration in respect of domains registered before 1 January 2005 will be possible only with the private registrars accredited with RosNIIROS. RosNIIROS is currently responsible for the general coordination of the development of the Russian zone on the Internet. This authority was delegated to RosNIIROS by the International Network Information Centre ("InterNIC").

Squatting, Piracy, Domain Names and IP Rights

Registration of domain names is a low cost and simple procedure. Any person willing to register a domain name simply applies to any of the registrars and pays a registration fee. Maintenance of the registration was also subject to a nominal annual fee. This led to a rush of cyber-squatting activity, which was somewhat thwarted by the Resolution of the Presidium of the Supreme Arbitrazhny Court of the Russian Federation of 16 January 2001 No.1192/00, which was the first anti-cyber-squatting decision in the Russian Federation (and, remarkably, adopted by the highest judicial instance among Russian business ("arbitrazh") courts). This led to a number of other "anti-cyber-squatting" cases.

To register a domain name, an applicant must pay a registration fee of US $20 (VAT excluded) and an annual registration maintenance fee of US $15.

Domain names are divided into the categories of geographical and generic (for example, ac.ru, org.ru, net.ru), public (those that are not geographical or generic) and corporate (all other domain names).

Disputes in respect of domains within the ".ru" zone of the Internet may be submitted for resolution to either the state court (usually an arbitrazhny court, or, in case of the dispute between individuals, to the court of general jurisdiction), or to one of the commercial arbitration courts – the commercial arbitration court of the Russian Union of Internet Operators, or the commercial arbitration court of the Russian Association of Documentary Telecommunications.

Of growing concern is copyright protection on the Internet. Russian Law on Copyright provides that authors of literary and artistic works enjoy the exclusive right to authorise any interactive communication of their works in such a way that members of the public may access these works from a place and at a time individually chosen by them. This provision specifically relates to the "placement" of works on the Internet and to on-line communication of works. Similar protection is granted to owners of neighbouring rights. In addition to this, the Law on Copyright prohibits the unauthorised circumvention of technical measures designed for the protection of copyright or neighbouring rights, as well the unauthorised deletion or alteration of the right's management information.

Contracts via the Internet: Legislation on Electronic Signatures

The regulatory framework for e-commerce is only now emerging in Russia only the Law on Electronic Signatures has been adopted so far. A number of other drafts exist and some of them are presently at committee stage in the Russian parliament.

There are drafts of the Law On Electronic Commerce, the Law On Electronic Documents and the Law on Electronic Financial Services. There is even a proposed draft of a federal programme on e-commerce.

The first step in developing e-commerce was the adoption of the Law on Electronic Signatures, which came into force on 12 January 2002.

The Law On Electronic Signatures defines an electronic digital signature as a cryptographic symbol that depends on public key cryptography technology to decode it. The cryptography is the exclusive domain of the Federal Agency of Governmental Communication and Information (FAPSI), which allows additional state control over the electronic transactions.

A draft of the Law on Electronic Commerce was rejected by the Russian State Duma (the lower chamber of the Russian Parliament) on 23 April 2004.

At present there is no sub-regulation applicable to electronic contracts, which would recognize electronic transactions.

Taxation of Purchases Made Through the Internet

Purchases of goods transferable through the Internet are not taxed as a means for tracking such purchases and assessing taxes does not presently exist. If goods are bought through the Internet and then delivered to customer in a material form, they would be subject to all existing Russian taxes and customs duties.