New Arrivals and High Hopes – Intellectual Property in Russia

(IPRinfo 1/2008)

Ekaterina Mironova
Senior Assosiate, Hannes Snellman LLC

The acceptance of Part IV of the Civil Code of the Russian Federation completed the codification of Russian Civil Law – a process that lasted for ten years.

The new law contains a number of new statutes. For example, it distinctly defines provisions on trade secrets (know-how), company names, and brands, which are now included as the protected results of intellectual activities.

Part IV of the Civil Code, which came in force on 1 January 2008, codifies the provisions regarding intellectual property in the Russian Federation. As a result, a number of separate laws governing particular forms of intellectual property rights (IPR) became obsolete when this new legislation was passed.

A new object of intellectual property – a trade secret
Any information (industrial, technical, economic, organizational, etc.) which has actual or potential value to third parties by virtue of the fact that it is not available to third parties, information to which third parties do not have legal free access to, information which is instituted by its owner as a commercial secret is understood as trade secrets (know-how).

The right to know-how is not subject to registration. As in many other countries, the exclusive right to a trade secret remains in force only if that information remains undisclosed. Any entity which in good faith possesses know-how exclusive from others also gains the individual rights to this trade secret. If the secret becomes common-knowledge, then the exclusive rights to this secret cease for all holders of this right.

A right holder has the possibility to officially sell useful information by concluding an agreement to alienate the exclusive rights to a trade secret to another entity. Any owner of an exclusive right to know-how (including the case that the right has been acquired through an agreement) may present the right to the use of that secret to any other entity by concluding a licence agreement. All individuals who have disclosed or utilized trade secrets illegally are liable to pay damages to the holder of the trade secret(s).

The protection of company names has improved
One of the main new statutes in Part IV is the newly established method of how to exercise the exclusive rights to a company name. A company name is a privilege for commercial organizations only. It is defined in their constitutional documents and included in the Unified State Register of Legal Entities of the Russian Federation (“USRLE”) upon their state registration.

The alienation of the exclusive rights to a company name is not allowed. This means that there is a prohibition against commercial organizations giving their company names to other entities. This new statute should be treated as a particularity of the national legislation of the Russian Federation on intellectual property as international law allows for alienating the rights to a company name.

However, there is a legal possibility of transferring a company name to outside organizations: a company name and/or its individual elements may be used by the owner of a brand, a trademark and/or service mark in the relevant brand, trademark and/or service mark.

These new regulations significantly expanded the possibilities of protecting the rights to company names. Any right holder may require that other entities discontinue using its company name, if it is identical with that of the right holder or similar enough to cause confusion with regard to the types of activities which are similar to those of the right holder.

In addition, a right holder also has the right to demand compensation for losses incurred as a result of the violation. This right, however, is only available to a right holder if its company name was registered in the USRLE earlier than the company name of the entity in violation.

If different means of individualization (company name, trade mark, service mark, and/or brand) are identical or similar enough to cause confusion and as a result may cause confusion for consumers and/or parties in contracts, then priority is given to that means of individualization which was given the exclusive rights earlier.

If similar designations are discovered, the owner of a company name which has earlier precedence has the right to demand:
– that the registration of a trade mark (or service mark) with later precedence be recognized as invalid;
– that the use by a different company name and/or brand be partially or completely prohibited.

A new object of intellectual property – a brand
A new object of intellectual rights has entered into economic circles – brands. Brands serve as objects of property rights for the individualization of trade, industry, and other enterprises. A brand does not require state registration, nor does it not need to be included in constitutional documents or in the USRLE.

If a company name is an attribute of an exclusive commercial organization, then individual businessmen and non-commercial structures (institutes, funds, etc.) may also use brands, but only with regard to their permitted commercial activities. The right to a brand can be protected in the same way as the right to a company name or a trademark. The exclusive rights to a brand end when its owner fails to use it continuously for one year.

New arrivals and ruling with a heavy hand

For the first time in Russian civil legislation, a regulation has been included on the possibility of liquidating a legal entity with a court decision (made on the basis of a demand by a prosecutor) if the legal entity repeatedly or significantly violates the exclusive rights to the results of intellectual activities. This provision serves as a deterrent to those trading and/or selling pirated goods.

Part IV introduced a new legal institution in intellectual property: the right of a producer of a database. The producer of a database which was created using significant financial, material, organizational, and or other expenses (as a general rule, a database that qualifies for this protection should contain no less than 10 000 entries) owns the exclusive right to use the materials in the database and to decide about its use in any form and in any way. This right was directed at defending the financial investments by the producer which were used to create the database.

As databases sometimes contain elements which are not protectable by copyright, it was decided that the producers of such databases have the right to protect their databases in general from unauthorized use (i.e. obtaining the information in these databases) without the permission of their producers. Therefore, the databases described above are now protected not only as a result of their original composition but also as a result of financial investments made.

Disadvantages in the new legislation
While considering the undoubtedly numerous advantages of the new law, one must also pay attention to its disadvantages. In particular, in Part IV, regulations devoted to the legal regulation of domain names are not concluded. The new law does not recognize domain names as a protectable result of intellectual activities.

Part IV only establishes that identifications cannot be registered as trade marks if they are identical with domain names the right to which has arisen before the priority date of the trade mark being registered. It would seem that this omission in the legal regulation of the status and overturn in domain names will be fixed over time.

Consistent practice needed
Based on the information above, it can be concluded that Russian legislation in the IP sphere has come a long way. The range of intellectual property has become wider and liabilities for violations of IP rights are becoming more tangible. However, only a consistent practice of applying these provisions will confirm the effectiveness of the new legislation.
Nevertheless, it is safe to say that Russia has taken a significant step towards joining the WTO.

Part IV of the Civil Code of the Russian Federation was published in “Rossiyskaya gazeta N 289, 22 December 2006. It entered into force on 1 January 2008. In May 2009, the text can no longer be found on the web site of Rospatent. It can however be found (in Russian only) e.g. on the web site of the company Consultant Plus, which maintains and develops a data bank system of legal data.