Protecting intellectual property (IP) is a tricky business, even in developed countries with an established rule of law. It gets even more problematic when the company tries to protect its IP in a country that favors thieves and discriminates against foreign companies from “unfriendly countries.”
In early March 2022, the Russian government adopted Decree #299, effectively removing any protection of IP for companies related to the countries deemed by the Russian government as “unfriendly,” a.k.a those that imposed sanctions or any other kinds of restrictions in response to the war Russia wages on Ukraine. Later this year, Russia also published a wide list of products made by international companies that were allowed for “parallel” imports. “Parallel” means that anyone can import the product from another country and sell it in Russia for profits without the intellectual property owner’s permission, thus violating the owner’s IP rights.
Russian and international media often report about “parallel” imports as a way to compensate for the losses of the Russian market in light of the massive corporate departure from the country, as if Russia was in desperate need of the product that was gone because certain companies left Russia. Some companies might even decide to stay in the country just so their IP would not be stolen. But the truth is staying in the country, and continuing business at a full or limited scale will not help it to protect its IP in Russia.
When staying in Russia brings zero protection
With the list of the brands allowed for “parallel” imports, Kremlin legalized IP rights violations for at least ten companies still operating in Russia.
Fujifilm. The Japanese company continues business as usual in Russia, providing digital photo printing, film and photo printing services, industrial products, optical devices, and graphic systems. However, the latest list of products allowed for “parallel” import in Russia includes Fujifilm in the categories of goods for video and photo making, goods from paper and cardboard, equipment and mechanical devices, and electrical devices.
Nvidia. The company stopped shipments of hardware products to Russia but still works in the country via the R&D office. And while the company continues to pay taxes to the Russian budget, its products in categories of games and tools for video and sound reproduction were allowed for “parallel” import by third parties.
Philips. The company from the Netherlands continues online sales in Russia despite six months of the war. And yet, its products are now allowed for parallel import in categories of electric equipment and its parts, goods from plastic, rubber, stone, plaster, cement, glass, black metal, copper, aluminum, lead, zinc, other metals, mechanical parts.
Yamaha music. Another Japanese company is still operating and advertising in the country. The company explicitly stated that it works as usual in Russia and sells equipment. Nevertheless, the Russian government approved that equipment for “parallel import.”
Makita. The company known for construction tools is still working with dealers in Russia to sell its products. Again, though, it doesn’t matter because the equipment company is up for “parallel” import.
Apple. American tech giant stopped shipments of gadgets to Russia but didn’t exactly cut off its ties with the country. Apple Music, Apple TV+, iTunes Store, and App Store still work in Russia. Now they will be available for Russians on smartphones and tablets imported with Apple’s IP rights violation thanks to “parallel import.”
Hilti. The company from Liechtenstein specializes in products for construction. The company has stayed in Russia and operates with certain limitations. Still, it didn’t help - the Kremlin listed the brand as one of the allowed for “parallel” import in categories of goods from black metal, instruments and tools from metals.
Gorenje. Slovenian home appliances maker still operates in Russia as usual, though now the company’s goods can also be imported under the “parallel” imports list.
Continental. This is a stand-out case. In March the company stopped production on its plant in the Kaluga region in Russia but resumed operation a month later, explaining it with fears for the safety of employees. Now the company supplies tires to Russian customers and pays taxes to the Russian budget, while its IP rights are also violated thanks to “parallel” imports.
Panasonic. The company operates in Russia with limitations but still provides services to local customers and keeps business open, continuing its marketing activities and investing in channels for communication with Russian customers. Though now, sound recording and reproducing equipment, as well as optical, photographic, and cinematographic equipment made by the company can be imported to Russia without Panasonic approval via “parallel” imports.
This list serves one purpose – to debunk the idea that staying in Russia provides any kind of protection for a company’s IP.
Flexible IP laws: Russian style
The problem with IP protection in Russia goes far beyond the “parallel” import situation. More so, it is about how easily Russia is ready to change its laws, making the legal field utterly different from what investors signed up for when they entered the Russian market. Operating in Russia, a company signs up for a highly unpredictable business environment.
Moreover, a wronged company from an “unfriendly” country in today’s Russia most likely won’t see the court protecting its rights.
For example, Coca-Cola is currently in fights against grey-market goods (“parallel” imported) and Russian knockoffs of its fruit-infused Fanta line (Fantola, made by Russian Chernogolovka company), according to Reuters. But, so far, Coca-Cola has largely failed to have a Russian judge take its side in cases against grey-market sodas imported from the United States.
In March 2022, a Russian court allowed copyright infringement of Peppa Pig – a children’s TV show originally made by U.K. company Entertainment One. A court has ruled that Russian businesses can use the cartoon character’s trademarks without punishment.
Harley-Davidson, Canon, Elektra Entertainment Group, and KEM Finance might also lose their trademarks as Russian start-up Morgan Secret tries to win their trademarks over in court. However, this case is now primarily on hold as Morgan Secret didn’t provide all the necessary documents to the court.
There is also a case of Lithuanian surimi giant Viciunai. The company lost a court battle aimed at protecting its Russian brand name Sovetskij. Now it can be used by Russian fish processing companies.
Meanwhile, Russians are on a hunt for well-known foreign brands. According to Reuters, Moscow entrepreneurs Alexander Gershtein and Vadim Ryabchenko applied for around 20 trademarks, including Coca-Cola, Adidas, Mercedes Benz, and P&G’s Pampers diaper brand. In his comments, Gershtein states that nothing is wrong with that.
As Russian media RBC reported in late March 2022, local entrepreneurs made more than 50 claims to Rospatent to get the right to use popular brand names or names similar to them. Another Russian news outlet Kommersant later found more than 100 similar claims just from one city of Ekaterinburg.
Both media and Rospatent state that identical or similar to already registered foreign trademark claims will not be satisfied. However, judges in Russian courts may think differently.
Unfair trademark court rulings, together with the “parallel” import Decree, make the future of IP protection in Russia (and the actual possibility of IP protection) look unpromising, which international businesses should consider.
According to the Russian Deputy Prime Minister and Minister of industry and trade Denis Manturov, “parallel” imports into Russia totaled $6 billion between May and July 2022. If anything, this shows just how high the level of theft tolerance is in Russia. Whatever it needs, the Kremlin is eager to allow stealing officially.
Working on the Russian market today is like playing flipped Russian roulette with the gun’s magazine almost fully loaded and only one bullet taken out. It is a 5/6 chance to shoot yourself and a 1/6 chance to see your rights protected. There is no point in this kind of game. Just put the gun down, gather your belonging and leave the country of thieves for good.