MEMORANDUM

This memorandum provides an up-to-date report on continuing efforts by the RF Government, the State Duma, CIPR, and the professional and business community at large to bring Russia's IP legislation into compliance with the TRIPS agreement and other international standards and to strengthen enforcement and anti-counterfeiting provisions that meet CIPR "Minimum Enforcement Criteria."

Background

As you know, last summer the RF Government submitted to the State Duma a package of proposed legislative amendments to Russia's IP laws, including amendments to the Patent Law and the Law on Trademarks, Service Marks and Appellations of Origin of Goods. This action by the Government brought to a conclusion more than two-years of work by various governmental institutions to finalize proposed legislation that, in particular, should eliminate certain obstacles for Russia's accession to the World Trade Organization. Rospatent was the main author and coordinator of this process. The Government amendments were adopted by the State Duma on the First Reading on 21 December 2001, including key provisions to protect famous trademarks and to provide for criminal prosecution of "bad faith registration."

The RF Government and Rospatent efforts were paralleled by an initiative undertaken by a group of State Duma deputies headed by Petr Shelisch, that developed a separate set of IP amendments - a Draft Federal Law "On Amendments and Modifications to Legislative Acts of the Russian Federation to Prevent Counterfeit Products from Penetrating the Market". The objective of these amendments is to define counterfeiting, substantially increase criminal and other penalties for IP violations, and to make provision for physical destruction of seized trademark counterfeits not claimed by the legitimate trademark owner.

In addition, the RF Ministry of Health last Fall, with support from the Association of International Pharmaceutical Manufacturers (AIPM), prepared a set of amendments to the Law On Medicine to strengthen provisions related to the fight against counterfeit drugs. These amendments have not yet been introduced to the State Duma, but by agreement with AIPM enjoy the support of CIPR. More important, the State Customs Committee, a key CIPR ally, has included a strong definition of counterfeiting in its comprehensive amendments to the State Customs Code, which is with the Second Reading now pending. CIPR is actively supporting this important addition to the amendment.

CIPR is actively involved with Rospatent, RF Government and State Duma Deputies regarding the developments of the IP amendments. CIPR initiated two working meetings between executive and legislative bodies in order to coordinate efforts and develop a unified position regarding the pending legislative initiatives. Participants in one of the working meetings included representatives of Rospatent, Ministry of Internal Affairs, Ministry of Health, Antimonopoly Ministry, State Customs Committee, the State Duma and CIPR. In the second, which occurred in January 2002 and held in conjunction with CIPR EPC meetings in Moscow, the same Russian officials were also joined by PTO Directors, parliamentarians and customs representatives from Latvia, Kazakhstan, Ukraine, Georgia, Kyrgyzstan, Tajikistan and Belarus.

At the two CIPR-organized working meetings, an agreement was reached to coordinate actions for lobbying amendments developed by the Government and the deputies in RF State Duma.

However, the RF Government's official response to the Shelisch amendments that were delivered to the entire Duma was very negative (the English translation of the document is attached). The RF Government's response, signed by then-Deputy Prime Minister Klebanov, dismissed the State Duma deputies' initiative to include into the Trademark Law the agreed counterfeiting definition as well as the proposed provisions for physical destruction of counterfeit goods.

CIPR publicly questioned the Government's position during the joint WIPO/Rospatent/CIPR sponsored National Workshop, which was held in early February 2002 and attended by some 75 RF government officials. As a result Shelisch's group proposed new set of amendments to the Trademark Law, which was adopted after the First Reading.

Current Status

In February 2002, Mr. Klebanov, who had previously supervised IP issues, was released from his Deputy Prime Minister's position. According to the existing procedure, Prime Minister Kasianov has temporarily acquired Mr. Klebanov's supervisory responsibilities until the new Deputy Prime Minister is appointed. As of today, this position remains vacant.

CIPR continues to work with Rospatent, the State Duma and interested private sector groups on a daily basis, to develop and to finalize language of the proposed Duma amendments to the Trademark Law. At present, CIPR participates in activities of the special ad hoc working group headed by Chairman of the State Duma Committee on Economic Policy and Business. In addition to the State Duma officials, other participants in the special ad hoc working group include representatives of Rospatent, CIPR, legal experts and BPG, as represented by Unilever.

The group held several sessions in March and April 2002. The Participants managed to review a number of amendments to the Trademark Law, and to address issues relating to Domain names, company names and a definition of counterfeit. Although some progress was achieved in closing gaps between the positions of various interested parties, the negotiating process is very complicated. We value the State Duma initiative to organize this process for amending Russia's existing IP legislation and achieve a workable compromise with Rospatent and the Government. At the same time, it is likely that due to different opinions and numerous issues that have yet to be resolved, the adoption of the proposed amendments to various IP laws and, the Trademark Law in particular, will not be finalized before the end of the Spring State Duma session at the earliest.

CIPR will continue its efforts to lobby both the governmental agencies and the State Duma to ensure that IP owners' views are taken into consideration in a serious manner. Our goal is to lobby the State Duma to adopt a counterfeit definition as an integral part of the Trademark Law, to amend the government proposed provision on appellations of origin, to incorporate provisions for physical destruction of counterfeit goods, and to increase penalties for counterfeiters, including the seizure of assets.

We anticipate the possibility of having to activate a CIPR "grassroots" lobbying campaign - including letters to various officials by CIPR Corporate and Associate Members - as well as media activities. We would also like to know, which of CIPR's member companies are in a position to volunteer professional lobbying resources to work with CIPR to take full advantage of this unique window of opportunity for domestic and international IP owners.

Please be in contact directly with Peter ( ) and Alexander ( ) with your comments, suggestions and an indication of your willingness to support our efforts. Our contact telephone in Moscow is (7095) 745-8700.

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