IPR Remains a Key Issue in Russia’s Accession into the WTO		Volume 12, Number 68
		By Tom Thomson, Senior President of the Coalition for Intellectual Property Rights and Senior Vice President and Managing Director of The PBN Company		View this issue in PDF www.amcham.ru

Russia's top WTO negotiator, Maksim Medvedkov, recently conceded that agreement on all outstanding issues for Russia's entry into the WTO would not be reached until at least the end of the first quarter 2006. One major outstanding issue preventing WTO entry is the lack of progress on resolving issues related to protecting intellectual property rights (IPR).

Despite positive developments by Russia to bring its IP legislation on copyrights, trademarks and patents into compliance with WTO and Trade-Related Aspects of Intellectual Property Rights (TRIPS) requirements, there are still significant legislative deficiencies and insufficient enforcement practices. One specific legislative deficiency is that the geographic indication (GI) provisions of Russia's intellectual property law violates the TRIPS Agreement and must be amended to provide for "first in time, first in right protection, which means that if there is a high probability of confusion between a previously registered trademark and an application for a GI, the GI application must be refused and its use can be blocked by the trademark owner. The U.S. brewer Anheuser-Busch has sought to protect its world-renowned trademark against a state-owned Czech brewery, Budejovicky Budvar, over the "Budweiser," or "Bud" name. The Czech company began using the name Budweiser and registered it as a GI, although Anheuser-Busch had registered the trademark prior to this. According to international standards, Anheuser-Busch's trademark should be enforced.

Better regulatory controls, such as formal opposition procedures, to deter trademark pirates from filing bad faith registrations – which major trademark owners such as Starbucks, Intel and many others have been battling against – are needed. Improvement is also needed in effective law enforcement against pirates and product counterfeiters of pharmaceuticals and other consumer goods openly operating in the marketplace. According to the Federal Service for Consumer Rights Protection, in 2004, between 30 to 40 percent of the goods available in Russia were estimated to be counterfeit or false products, with sales of $2.89 - 3.61 billion, and lost tax revenues as high as $1.8 billion. Many international and Russian experts feel the estimated losses in business profits and government revenues are substantially higher.

In response to high counterfeit rates and legislative gaps, the U.S. Trade Representative has kept Russia on its Special 301 Priority Watch List for 2005 and is planning an Out-of-Cycle review in early 2006. In its Special 301 Report, the USTR noted that "ineffective enforcement of [Russian] laws, in particular, copyright and trademark laws, remain a serious concern" resulting in "substantial losses to U.S. industry annually."

Protecting IPR, however, has received renewed focus by the Russian government this year. In verbal vows, President Vladimir Putin has promised to further protect IPR, and during a recent trip to Washington, DC, Minister of Economic Development and Trade German Gref stated that new legislation to strengthen IP regulation and enforcement can also be expected in the near future.

In other progress, the State Duma Committee on Civil, Arbitrary and Procedural Legislation approved recommendations from a parliamentary hearing for IP legislation, enforcement measures and public education on counterfeit products in January 2005, which were sent to the Presidential Administration and other relevant governmental bodies. Under the leadership of State Duma Deputy Pyotr Shelisch, these recommendations were developed by the Coalition for Intellectual Property Rights (CIPR), along with other IP, consumer and business associations and rightsholders, which are now advocating for their enactment.

There is further progress behind the scenes. The Russian government has created a working group to draft by the end of the year Part IV of the Civil Code, which will incorporate critical provisions on industrial property and copyright laws. Amendments to Article 180 of the Criminal Code are being considered by the State Duma to remove the requirement to prove a counterfeiter is a repeat offender and sets a minimum value for the financial damages suffered by the trademark owner in order to get a conviction in court.

The Federal Customs Service dropped its objection to an "ex officio" amendment after years of opposition – when adopted, this change will empower customs officials to act on their own to stop the release of goods if they believe intellectual property rights are being violated. Additionally, legislative action is expected to codify the destruction of the means of production of counterfeit goods and to add stronger penalties for counterfeiters, including prison time.

Russian authorities have increased their activities against IPR violators this year. Boris Simonov, head of Federal Service for Intellectual Property, Patents and Trademarks, recently announced that over 1,000 IP lawsuits have been filed this year, and more than 300 convictions of IP-related violations. The declaration by Russia's largest CD manufacturer that it would no longer produce pirated discs is also a positive step, although illegal discs still represent an estimated over 70 percent of the marketplace.

As discussions between the United States and Russia to resolve outstanding IP issues continue into 2006, much work in Russia needs to be done. Unless key IPR issues are resolved, such as legislation to protect licensed optical disks, the U.S. has stated it will withhold support for Russia's admission into the WTO. For IP rights holders, whether foreign or Russian, the urgency has never been greater to address issues covered by the TRIPS Agreement and those that are not, such as applications of law and regulations, with Russian and US authorities.

James Kirk, an intern at The PBN Company, contributed to this article.