Patents and Peppa Pig: What is happening to intellectual property rights in Russia?

On 6 March 2022, the Russian government issued Decree No. 299, enabling certain Russian individuals and businesses to use patents, utility models and industrial designs without obtaining the prior permission of the owner.  The new decree, which suspended the usual licensing rules (where use of a patent, model or design without the owner’s consent may constitute infringement), was introduced as a response to economic sanctions imposed on Russia by various countries.   

The legal basis for the new decree is Article 1360 of the Russian Civil Code, which allows the Russian government in situations of extreme urgency to use patents without permission or a requirement to pay royalties in full, provided that it is deemed necessary for national security and to protect the life and health of Russian citizens.   

Under the new legislation, the Russian government can permit local businesses and individuals to use and sell patented technology and products without the owner’s consent in exchange for the owner receiving “proportional” economic compensation, provided that they are from a country that the Russian government does not deem to be carrying out “unfriendly” activities towards it.

On 5 March 2022, the Russian government published a list of 48 “unfriendly countries”, which included the UK, EU member states, the US, Canada, Ukraine, Australia, New Zealand, Japan, Singapore and Taiwan.  It is unclear how frequently this list is being revised, but we expect [it] to grow if further countries introduce sanctions against Russia. 

If the intellectual property right holder is connected with an “unfriendly country”, the legislation states that the proportion of compensation they are entitled to is a flat rate of 0%, meaning that their rights can be freely infringed.  Connection to an “unfriendly country” includes individuals having citizenship and companies having a place of registration, principal place of business or principal place of receiving revenue in one of the countries.

It is currently unclear how long these new rules will apply, although it is reasonable to expect that they will last for the duration of the economic sanctions.

While the new legislation does not mention trade marks, a recent decision by a Russian commercial court regarding Ivan Vladimirovich Kozhevnikov’s use of two Peppa Pig trade marks provides an indication of the Russian courts’ attitude towards trade mark rights held by owners from “unfriendly countries”.

Kozhevnikov, a Russian entrepreneur, copied the word “PEPPA PIG” and a drawing of “Daddy Pig” both of which are valid trade marks in Russia and owned by Entertainment One UK Limited.

In September 2021, Entertainment One UK Ltd sued Kozhevnikov for trade mark infringement and requested around £400 in compensation.  In March 2022, the Russian court dismissed the claim on the basis that a UK company seeking compensation for trade mark infringement amounted to an “abuse of rights” under Article 10 of the Russian Civil Code in light of the UK’s sanctions regime against Russia – Judge Andrei Slavinsky explicitly stated that the “unfriendly actions of the United States of America and affiliated foreign countries” had influenced his decision.  The claimant was denied any compensation, although it will be able to appeal the decision.

The UK Intellectual Property Office (the UKIPO), the EU Intellectual Property Office (the EUIPO) and the World Intellectual Property Organisation have all condemned the war with Ukraine and advocated for peace.  Shortly before the legislation was introduced, the UKIPO released a statement reiterating that the UK’s economic sanctions against Russia included intellectual property and offering Ukrainian customers increased flexibility in respect of requests for extensions of time, reinstatements and restorations.  On 9 March 2022, after the decree was passed, the EUIPO announced that it had terminated all cooperation with Rospatent, the Russian Federal Service for Intellectual Property and the Eurasian Patent Organisation. 

The Ukrainian Intellectual Property Office published a statement on 22 March 2022 confirming that its trade mark department is still active and receiving trade mark applications. 

What lies ahead?

It is important for businesses with a significant presence in Russia to stay up to date with changes to intellectual property rights in the region, as it is possible that further restrictions may be introduced. 

It would also be advisable for those businesses to bolster enforcement of their intellectual property rights in countries bordering Russia, as these countries may be conduits for the distribution of counterfeit products produced in Russia to the EU.   

In the meantime, the UK government’s export support team is assisting businesses with questions or concerns about trading with Ukraine, Russia or Belarus and can be contacted using their online service at https://www.get-help-selling-goods-services-abroad.service.gov.uk/russia-ukraine-enquiry/russia-ukraine-enquiry or on 0300 303 8955.

For more information please contact Nick White, a Partner in the Intellectual Property Litigation department, at Nick.White@crsblaw.com.