Situation With IP Rights In Russia Continues To Deteriorate

The situation with IP rights in Russia is steadily deteriorating, which is mainly due to the recently imposed restrictions for foreign biopharmaceutical companies to participate in public procurement procedures in Russia, the encouragement of parallel imports, as well as the increased consumption of pirated software, according to recent statements of the Russian Ministry of Industry and Trade and local analysts in the field of IP protection.

The most complex situation with the protection of IP rights in Russia is currently observed in the country’s pharmaceutical sector. Several weeks ago, the Russian government officially approved the production of certain categories of drugs, in particular anti-HIV drugs, bypassing patents of their rightholders, which sparked fierce criticism and concerns from producers.

The decision has the form of a federal law that will officially come into force on 1 July of the current year, and will provide the power to the national government to establish the procedure for issuing permits for the production of a drug and its use within the territory of Russia without the consent of the patent holder.

The new state initiative has already received a support of the Russian Parliament (State Duma). A spokesman of Duma press service said there is a need to introduce a mechanism for compulsory licensing of drugs, which are not produced in Russia, in the case of absence of effective mechanisms to ensure citizens’ access to them.

In addition to this, the government has also introduced preferences to local drug makers over global majors during state tenders for public procurement of drugs in Russia.

In accordance with the new rules, state purchases of imported drugs have been limited, if there is participation of at least two local drugmakers in the tenders.

The situation is aggravated by the fact that Nazimbio, Russian leading producer of immunobiological products, which is controlled by state corporation Rostec, was selected as a sole supplier of its drugs for public needs during the period 2015-2017.

In the meantime, according to some sources close to the Russian Ministry of Industry and Trade, the unauthorised use of patents of global drugmakers is just the beginning, while the same scheme may soon be applied to other categories of products and goods.

As part of this, the Russian Federal Anti-Monopoly Service (FAS) has already started the design of amendments to the Russian Civil Code that will create conditions for the use of patents without the consent of the right holder in Russia.

In the case of parallel imports, it is planned that it could be legalised in Russia by autumn of this year.

According to Andrei Kashevarov, deputy head of the FAS, it is planned that at the initial stage the Russian government will legalise parallel imports for drugs, medical equipment and auto parts, with the possibility of a significant expansion of this range during the next several years.

At the same time, according to opponents, the introduction of these measures will result in the influx of goods of poor quality to the Russian market and the decision of many transnational companies to leave Russia.

Finally, the situation with piracy in Russia remains also complex, as despite attempts of the state to solve the problem in recent years, the current level remains high. This is reflected by the latest data provided by the Russian Ministry of Internal Affairs which shows the level of piracy in the Russian software industry is currently estimated at 64 percent compared to 62 percent in 2013. That means that 64 percent of software presented in the Russian market are pirated products.

At the same time, according to Denis Manturov of the Ministry of Industry and Trade, who is responsible for IP industry development in the Russian government, despite the existing problems, some improvements in the field of IP protection have already been taken. Among them was the tightening of responsibility for the violation of IP rights as well as centralization of the existing system of state management of IP rights in Russia, which also took place through the expansion of powers of the Russian Federal Agency for Intellectual Property, Patents and Trademarks (Rospatent).