May - June 2003

Pulling Fish From the Pond

by Peter B. Necarsulmer

Ne govori GOP, poka ne pereprygnesh! is a Russian proverb, which warns against claiming victory before the job is done. Don’t count your chickens before they hatch is the American equivalent. This adage applies to the striking progress recently achieved in building a legal regime in Russia that complies with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), an essential stepping-stone in the country’s long road to WTO accession.

Scores of recently adopted amendments to the Customs Code, patent law and the underlying law on trademarks, service marks and appellations of origin of goods, are leaps forward in the legal protection of IPR.

“Atta boys!” are in order for the government, Duma, law enforcement, consumer and business leaders that have worked diligently to overcome bureaucratic inertia, criminal interests and the Soviet legacy of exclusive state ownership of all property rights. Dr. Alexander Korchagin, general director of the Russian Agency for Patents and Trademarks (Rospatent), deserves special recognition for his leadership in both Moscow and Geneva, home to the WTO and the World Intellectual Property Organization.

More Hurdles Remain

Unfortunately, there are many outstanding legislative hurdles to overcome and some are daunting. Perhaps the biggest are those relating to protecting rightful owners of software, CDs, DVDs and other copyrights. Here, Russia is still far from complying with international standards. Essential amendments have stalled in the State Duma, although copyright owners, Rospatent, a special Duma working group and the recently created RF government commission to counteract intellectual property violations, the Kasyanov Commission, are trying to clear the road ahead.

The new trademark law does not establish the key TRIPS principle (Article 16) of “first in time, first in right,” to protect owners of prior registered trademarks from cancellations based on a competitor’s subsequent appellation of origin registration. An ex officio provision, provided for in Article 58 of TRIPS, allowing customs officials to seize counterfeit goods without having to receive an official request of the rights holder, is not part of the new Customs Code and must be added as an amendment. Ex officio seizures account for 50% of all interdicted counterfeits in the European Union and last year amounted to 100 million items valued at more than 2 billion euros.

“First in time, first in right” and ex officio customs procedures are priority legislative objectives in 2003, as are increased criminal penalties and civil remedies for IPR violators. The new trademark law also needs amending to require the physical destruction of equipment and materials used in the production of counterfeits. Last year’s amendments only require physical destruction of seized counterfeit goods.

Informed IP advocates generally concur that the outlook is promising for TRIPS compliance by the end of 2004. Never before has there been such a high level of recognition by the presidential administration and other decision makers that, without additional IP reforms, Russia’s entry into the WTO will be delayed.

Other factors are driving support by politicians for IP reform, especially during the current election cycle. A CIPR survey of 2,000 consumers demonstrates that counterfeiting is both a growing reality and grassroots concern: 90% of Moscow shoppers report encountering fake food, beverages, medicines and other products in the past year. IPR advocacy is fast becoming good politics.

Enforcing Rights

While TRIPS compliance will enhance Russia’s WTO bid, at the end of the day IP rights are only realized through effective enforcement. The political will needed to get proper IP protections on the books is also critical to ensuring that police, customs officials and judges use the laws and their powers to stop infringers, counterfeiters and pirates. Regulators and judges must apply these laws according to international practice and precedent, rather than the technical and narrow fashion too often employed.

IP owners, for their part, need to take advantage of the protections already available under Russian law. That means registering their trademarks and patents. It means working with customs and law enforcement to investigate, seize, claim and destroy counterfeit products. It also means using the unfair competition laws to stop trademark rip-off artists and extortionists.

Unfortunately, all too often brand holders don’t take advantage of the laws already in place to protect their valuable brands, copyrights and other intellectual property rights. Many IP owners prefer to ignore potential or real problems until they become a costly crisis. Worst of all, some rights holders believe that successfully protecting and enforcing IPR is simply a matter of getting Russia to meet the WTO’s minimum standards embodied in TRIPS.

In this regard, another Russian proverb comes to mind. Bez truda ne vylovish i rybku iz pruda. You have to work hard to pull fish from the pond.