IP owners from “unfriendly” states may soon be deprived of their rights

On 19 June 2024, a bill was introduced to the Russian State Duma to revoke intellectual property (IP) rights held by owners from so-called “unfriendly” states.

The bill proposes the following changes to the Russian Civil Code (CC): 

• Amend Article 1225 of the CC to state that IP is protected by law, except for IP held by owners from “unfriendly” states.
• Amend Article 1231 of the CC to include a paragraph stating that IP rights held by owners from “unfriendly” states are invalid in Russia. 
• The bill provides the option to restore IP rights of the original owners if the Russian Government decides to remove their country of origin from the list of the “unfriendly” states. Such restoration will take place no sooner than three years following the above Russian Government’s decision on the removal.

We expect that the bill, if adopted as it stands, will be a game-changer for the IP market in Russia, as it sets new rules for circulation of products containing IP held by owners from “unfriendly” states and for transactions involving such IP. These rights will essentially cease to be valid and protected, opening up opportunities for supply of counterfeit goods or other infringements on famous brands in Russia. 

The new limitation will also considerably complicate ongoing operations of the companies that still operate on the Russian market under licenses from foreign IP owners (that will become invalid). This will also likely affect corporate restructuring arrangements where a Russian business owns IP through a special purpose vehicle based in a foreign “unfriendly” jurisdiction (e.g., Cyprus).

The B1 team will be pleased to advise you on all aspects of managing intellectual property rights, including in light of the new restrictions.