Special Report: Russia Modernises Its Intellectual Property Law 14/10/2014 by Daria Kim for Intellectual Property Watch 3 Comments Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window)As of 1 October, major amendments of the Civil Code of the Russian Federation (the RF Civil Code) came into force concluding the most recent and extensive legislative revision since Part I of the Code was adopted in 1994. Changes affected substantive and procedural norms including Part IV codifying provisions on intellectual property rights. This report takes stock of some of the introduced novelties. Policy-Setting and Legislative Background The amendment was initiated upon the presidential decree of July 18, 2008 No. 1108 “On the Improvement of the Civil Code of the Russian Federation” and within the framework of the Concept Note on the Development of the Civil Legislation of the Russian Federation of 2009 [in Russian] that defined main objectives and focus of the revision. The Concept Note’s preamble states: “Scientific and technological progress as well as increasing capacities of information and telecommunication networks necessitate continuous improvement of legislation on intellectual property rights.” The paper further stipulates that “the Russian civil legislation shall correspond to the contemporary level of technological development and encourage the development and broad application of new technologies as well as secure the protection of interests of right holders.” Insights into policy intent and legislative process are also provided in the Explanatory Note to the draft federal law “On Amendment of Part I, Part II, Part III and Part IV of the Civil Code of the Russian Federation and Separate Legislative Acts of the Russian Federation” [pdf in Russian]. According to the Explanatory Note, the review of the RF Civil Code intended to bring regulation of intellectual property rights in compliance with international standards, and “the content and scope of amendments evidence the substantial modernization of the RF Civil Code.” The draft proposal resulted from the collaboration of the Ministry of Justice of the Russian Federation, the Presidential Council for codification and improvement of the civil legislation, the Supreme Commercial (“Arbitrazh”) Court of the Russian Federation, General Prosecutor’s Office, the Bank of Russia, as well as foreign experts, in particular, from Austria, Germany and the Netherlands. It was also open for public consultation. The initial draft proposed over 2,000 amendments and was passed in first reading by the State Duma of the Federal Assembly of the Russian Federation on April 28, 2012 (the Draft Federal Law No. 47538-6). Afterwards, the proposal was divided into several sub-drafts that were reviewed and adopted separately. Altogether, the revision affected provisions across all fields of IP including provisions on procedural aspects of rights acquisition, management and enforcement as well as substantive norms determining the content and scope of rights and subject matter of protection. Regulation of IPRs in the Digital Environment Both, the Concept and the Explanatory Notes emphasised the importance of regulation of the use of intellectual property rights on the internet and other information and telecommunication networks. Internet Site as Subject Matter of Protection The amendment clarified legal status and protection of internet sites: Article 1260 (2) of the RF Civil Code now equates internet sites to the categories of works such as translations, other derivative works and collections. The law provides that author’s rights shall be protected in the selection and arrangement of the content of the website. It should be noted that, as a general rule, author’s rights in selection or arrangement of pre-existing material are protected as long as such selection and arrangement evidence creative effort (Article 1259 (2.2) of the RF Civil Code). Liability of Internet Service Providers Some novelties were introduced within the amendment initiative earlier to address the problem of copyright piracy and regulate the use of the content online (IPW, Developing Country Policy, 24 July 2013). According to the Explanatory Note, by introducing provisions on the liability of internet service providers, the legislator intended to strike the balance between providing an effective injunction instrument to right holders and protecting internet service providers against groundless infringement claims. Use of Commercial Designation on the Internet Some amendments concerned the use of means of individualisation of legal entities, goods and services on the internet. In particular, Article 1474 of the RF Civil Code states the use of a firm name on the internet shall be protected under exclusive rights of legal entities; Article 1539 (1) has the similar provision with regard to the protection of trade names. Earlier, analogous norms existed with regard to trademarks and geographical indications of origin. Substantive Rights and their Subject Matter Patentable subject matter Under the amended Article 1350 (1) of the RF Civil Code (“Patentability criteria”): “A technical solution in any field shall be protected as an invention, if it relates to a product (such as device, substance, strains of microorganism, cell cultures of animals and plants) or method (a process of manipulating a tangible object by tangible means), including the use of a product or method for a specific purpose. The invention shall be where it is new, involves an inventive step, and is industrially applicable” (the insertion italicized). Some commentators argued that the amended provision explicitly provides for patenting new uses of known substances. However, the amendment rather clarified the law than introduces a novelty, as new uses of known substances were patentable earlier (see Rospatent Guidelines for Substantive Examination [in Russian]). For instance, in 2010, according to a recent study by the Center of Pharmaeconomics Research, 30 use-type pharmaceutical patents were granted to Russian applicants and 74 to foreigners. Notably, the study found that, between 1985 and 2010, foreigners’ pharmaceutical secondary patents obtained in Russia have been outgrowing the share of patents for new active ingredients (see Table 2 of the study). Protection of know-how The amended Article 1465 (1) of the RF Civil Code clarifies the notion of know-how which is defined as “information of industrial, technical, economic or organizational nature regarding results of intellectual activity in the field of science and technology, as well as methods of professional activity.” Such information shall be protected if “it has actual or potential commercial value attributed to its confidentiality vis-à-vis to third parties, i.e., if third parties do not have free and legitimate access to such information and if the know-how owner takes reasonable measures to keep information confidential including by means of trade secret.” If compared to the previous version, protection of know-how is limited to information related to intellectual property only in the sphere of science and technology. Retransmission as a separate economic right Article 1270 (2) (8.1) of the RF Civil Code distinguishes retransmission of a work as a specific use, for which author’s exclusive economic right shall be protected. Retransmission is defined as “the reception and simultaneous communication by cable or broadcasting (including by a satellite) of a whole and unchanged radio- or television programme or its substantial part, when such programme is being communicated by an air or cable broadcasting organisation.” Earlier, the law recognised retransmission as a part of the exclusive right for transmission; however, it did not provide the definition. Limitations of author’s and related rights The RF Civil Code excludes temporary reproduction that constitutes “an inseparable and essential part of a technological process serving the sole purpose of the lawful use of the recording or the lawful communication of the work to the public” from the exclusive reproduction rights in works (Article 1270 (2) (1)); performances (Article 1317 2 (4)); phonograms (Article 1324 2 (5)); and broadcasts (Article 1330 2 (2)). In addition, the amendment excluded from these reproduction rights acts of temporary reproduction performed by an information intermediary and carried out between third parties in information and telecommunication networks if such reproduction does not have independent economic value. Limitation of rights of database makers The newly introduced Article 1335.1 of the RF Civil Code allows multiple extractions of material from a database and use thereof, if such materials constitute an insignificant part of a database, unless such actions contradict the normal exploitation of the database and unreasonably prejudice the legitimate interests of the database maker. Moreover, the lawful user of a disclosed database can extract and use materials from the database without the authorisation of the exclusive right holder (i) for the purposes for which such database was provided to the user, in any scope unless agreed otherwise under a contract; (ii) for personal, scientific, educational purposes in the amount justified by such purposes; (iii) for other purposes, in the amount that constitutes an insignificant part of the database. Amendments Affecting the Acquisition of Rights Substantive examination of utility models Upon the amendment, patent applications for utility models are subject to substantive examination. Earlier, patent applications for utility models were examined only as to the formal requirements. (Details regarding the search, substantive examination and patentability requirements for utility models are outlined in Article 1390 of the RF Civil Code and referenced provisions.) Registration of industrial designs In Russia, works of applied decorative art can be protected under copyright as well as patented as industrial design. In case of patent protection, industrial designs are subject to the state registration upon the examination of patentability requirements as defined in Article 1352 of the RF Civil Code. Prior to the amendment, applicants for patents for industrial designs were required to submit a list of the design’s essential features. This requirement was deleted upon the amendment; thus, the scope of protection is now determined solely by a design’s appearance, not by its verbal characterisation. According to the Explanatory Note, such change of registration requirements intended to bring the Russian law in sync with the legislation and practice in the EU, US, Japan, Australia. Furthermore, the Note stated that the requirement to provide a list of a design’s essential features makes the registration procedure cumbersome, “paves the way for forgery” and hinders Russia’s accession to the Hague Agreement Concerning the International Registration of Industrial Designs and the Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs. The amendment broadened the definition of patentable industrial designs. While, previously, protection was limited to design solutions that featured an artistic aspect, upon the amendment, any design pertaining to articles of manufacture or handicraft shall be protected (Article 1352 (1) of the RF Civil Code). However, such expansion of the definition is now offset by a more specific patentability criterion of originality. Upon the amendment, “an industrial design shall be deemed as original if its essential features are determined by the individual (creative) character of the product particularities; in particular, if from the information, disclosed anywhere in the world before the priority date of the industrial design applied for registration, no design solution is known for a similar product that would produce the same overall impression on the informed consumer” (Article 1352 (3) of the RF Civil Code). Furthermore, the amended conditions for design registration require the applicant to provide images of the product, and such images shall evidence essential features of the industrial design that determine its aesthetic particularities (not merely showing a detailed appearance of the product, as was required earlier). Excluded from the patentability shall be industrial designs that are likely to cause consumer confusion as to the producer, the origin of goods or the goods themselves for which the design at issue is used in packaging or label, if such goods are protected by earlier rights (Article 1352 (5) of the RF Civil Code). Conversion of applications for patents, industrial designs and utility models Upon the amendment of the RF Civil Code, a patent application for invention can be converted into an application for an industrial design. Such conversion is allowed prior to the publication of the application for the invention, but not later than the decision to grant the patent. Moreover, an application for utility model can be converted into an application for invention or industrial design, and an application for industrial design can be converted into an application for invention or utility model (for procedural details, see Article 1379). Prior to the amendment, the Civil Code provided only for the conversion of a patent application for invention into an application for utility model and vice versa. Amendments Aimed at Facilitating Management of Rights State registration of rights transfer Under the RF Civil Code, exclusive rights for certain types of intellectual property (e.g., patents for inventions, utility models, industrial designs, trademarks) are protected upon the state registration. Contracts for assignment, the pledge and licence of such IPRs are also subject to the mandatory state registration. Upon the amendment, the assignment, pledge or licence of rights can be registered on the basis of an application signed by the parties, but not the contract itself (Article 1232 of the RF Civil Code). Granting permission by public declaration According to Article 1233 (5) of the RF Civil Code, the right holder can grant the permission by means of public declaration to use his/her work of science, literature or an object of neighbouring rights arts free of charge but within a specified scope and period of time. (The provision comes into force as of January 1, 2015.) Such declaration shall be published on the official internet site of the federal authority in accordance with the procedures set out in a separate government regulation. Unless stated otherwise, the permission is presumed to be valid in the territory of the Russian Federation for five years. The permission cannot be granted by means of public declaration if an exclusive licence for the same subject matter of rights has been concluded earlier. In case a non-exclusive remunerable licence has been concluded earlier for the same scope of rights and the same subject matter, such licence shall be considered as terminated (the right holder shall pay damages to the licensee). During public consultations, the draft of this provision drew criticism. For instance, the joint position paper of the Guild of Producers of the Russian Federation, the Russian Anti-Piracy Organization for Protection of Rights in Audiovisual Works and the Mosfilm Cinema Concern pointed out that the draft proposal was “prejudice to economic interests of right holders” and “could be misused by swindlers”, especially without special sanctions and measures of protection against false declarations. As the Explanatory Note to the amendments states, in order to “prevent the misuse” of the provision, the declaration shall be published on the official website of the federal executive authority and, in case of registered computer programmes and databases, the records in the state registrar shall be changed correspondingly. Package licences for computer programmes and databases Licence contracts for the use of a database or a computer programme can be concluded in the form of contract of accession, i.e., by means of accepting the conditions stated on a copy or a packaging of such database/computer programme (Article 1286 (5) of the RF Civil Code). Upon commencing the use of a computer programme or a database, the user accedes to the stated licensing conditions. The requirement for licensing contracts to be concluded in the written contract form shall be deemed as fulfilled. Open licence Articles 1286.1 of the RF Civil Code and 1308 (2) of the RF Civil Code now provide that non-exclusive licences for the use of a work of science, literature and art can be concluded in the form of an open licence. The terms and conditions of an open licence shall be available to an unlimited number of people and placed in such a way that a licensee can to get acquainted with them before using the corresponding work or the subject matter of neighbouring rights. An open licence is presumed to be free of charge, valid during the term of protection of exclusive rights (in case of computer programmes and databases) or for five years (in case of other types of works), and in the territory of the whole world, unless stipulated otherwise under the licensing terms. The licensor can terminate the open licence unilaterally, in whole or in part, if the licensee grants to third parties the rights owned by the licensor in the licensed work (or grant the rights in the a derivative work that underlies the licensed work) on the conditions that are different from the initial open licence. Enforcement of Rights Liability for infringement of exclusive rights in an invention, utility model and industrial design In case of infringement of patent rights for inventions, utility models or industrial designs, the inventor or other right holder, apart from other measures of protection, can choose to claim compensation instead of damages (Article 1406.1 of the RF Civil Code, coming into force as of January 1, 2015). The amount of compensation can determined as either (1) within the range from 10,000 to 5 million Russian roubles determined at the court’s discretion taking into account the nature of infringement, or (2) twice the amount of the remuneration for the right to use an invention, utility model or industrial design based on the price that would be normally charged under comparable circumstances for the lawful use. Prior to the amendment, the RF Civil Code already contained analogous provisions vis-à-vis copyright (Article 1301), neighbouring rights (Article 1311), trademarks (Article 1515) and geographical indications (Article 1532). Liability for infringement in the absence of fault As a general rule, liability for IPR infringement applies in the presence of the infringer’s fault, and the infringer bears the burden of proof to evidence the absence of fault. However, if rights are allegedly violated in the course of entrepreneurial activity, liability shall apply irrespective of the infringer’s proven fault (Article 1250 (3) of the RF Civil Code). The person who is charged for the infringement in the absence of fault can file a recourse claim for the compensation of incurred damages (Article 1250 (4) of the RF Civil Code). The absence of fault does not exempt the infringer from the liability to stop the infringing activity. The applicable measures of protection include publication of a court decision regarding the infringement, confiscation and destruction of counterfeiting materials and other as provided under the law. Such measures shall be exercised at the infringer’s expense (1250 (5) of the RF Civil Code). Summary Apart from numerous clarifications of ambiguities and incongruities identified and rectified by the revision, the amendment of the RF Civil Code introduced substantive changes, some of which were covered by this review. While there are arguably any “revolutionary” novelties, the extensive work and comprehensive coverage of the revision initiative cannot be underestimated. Overall, the amendments evidence the legislator’s intent to modernise IP legislation, strengthen protection of IPRs, facilitate their use and management and bring the Russian IP law into conformity with international norms. To the best of this reporter’s knowledge, the legislative review had not been preceded by any studies on the impact of IPRs on the national economic and technological development, but, according to the above-mentioned policy papers, the changes of IP provisions intended to contribute to the attainment of the country’s broad developmental objectives. Daria Kim (M.A., LL.M.) is a research associate at the Faculty of Law at the Chinese University of Hong Kong. Her previous positions include: research fellow at the Max Planck Institute for Intellectual Property and Competition Law, and leading specialist of the Business development department at BDO International (St. Petersburg, Russia). She also collaborated on the European Union technical assistance and cross-border cooperation programs and research projects of the World Intellectual Property Organization. Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window) Related Daria Kim may be reached at firstname.lastname@example.org."Special Report: Russia Modernises Its Intellectual Property Law" by Intellectual Property Watch is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.