March 14, 2006
By Olga P. Barannikova

An Intellectual Property Rights Headache

In the past few months, Russian and international political circles have been focusing on Russia's presidency of the Group of Eight and its agenda for the summit in St. Petersburg in July. One of the biggest ironies is that while presiding over the body of the world's most economically and politically advanced democracies, Russia is still not a member of the World Trade Organization.

In Russia, the WTO accession topic is hot and is fueled by the successes of Ukraine, which has just reached an agreement with the United States that speeds the way to WTO membership. Russia's continuing violations of intellectual property rights, especially in counterfeited products and pirated goods, and seeming lack of enthusiasm for bringing its legal and enforcement system into compliance with international intellectual property rights standards are still major barriers to joining the WTO. They have kept Russia on the U.S. government's IPR priority watch list for several years.

In fairness, Russia has made efforts to improve laws and enforcement to fight counterfeited DVDs, CDs, fake consumer goods and other infringements of intellectual property. It is no longer common practice to see fake goods being sold, inadvertently or not, on every street corner and in every kiosk and store. Yet this has not put an end to Russia's long history of violations of intellectual property rights and non-compliance with international legal standards.

And there is potential for an even gloomier picture if the State Duma adopts a proposed Part Four of the Civil Code. The reaction of legal experts and the business community to the draft Part Four has been sharp. For one thing, the draft appeared like a bolt out of the blue. None of the organizations that had been working on this issue with the government had seen the draft or even known of its preparation until it appeared in late February.

At a meeting last Thursday of a government commission on intellectual property rights, First Deputy Prime Minister Dmitry Medvedev announced that the commission was ready to recommend that the Duma adopt Part Four of the Civil Code.

But in a sign of possible division within the government over the draft, the commission's written decision noted that it needed to be sent back to a working group within the presidential administration for revisions. The working group, which drafted the legislation, was given only two weeks to make the revisions.

If the legislation as currently written is adopted, the law would annul all special laws designed to protect trademarks, patents and copyrights. Those of us at the Coalition for Intellectual Property Rights who have studied the document have found several errors and problematic provisions. For example, the new Civil Code would not include detailed definitions of terminology, which is something that industry experts and government officials have worked very hard to include in intellectual property rights legislation. Imagine a leading international company trying to explain to a local court in Bryansk what a domain name is when the judge has never used the Internet.

Excluding precise legal definitions could potentially create significant problems for the courts in deciding intellectual property issues and undermine the judicial system's ability to protect those who are battling counterfeiters. Without clear definitions of terminology, it would be more difficult for judges to rule. This could reverse the strides made by the judiciary in mastering intellectual property law and handling the complex cases brought to the bench.

This radical change to intellectual property legislation has the potential to jam up the courts and the Federal Service for Intellectual Property, Patents and Trademarks, the former Rospatent. In the past, minor changes to legislation have often immediately led to months of delays. With such a fundamental change to the legislation, the courts could be brought to a standstill, allowing counterfeiters to work without fear of legal consequences.

The legislation would have both a macroeconomic and a microeconomic impact on Russia. The potential losers would be Russian businesses, which rely on a predictable intellectual property rights regime to develop and expand, as well as consumers, whose trust in the quality and safety of brands would be further eroded. Russia could forfeit revenues in the form of taxes and customs fees paid by registered owners of intellectual property and face diminished foreign investment. Lastly, Russia's admission into the world's most important trade alliance could be delayed indefinitely.

Russia, as the chair of the G8, is expected to set an example to all democracies in the world. This means making issues that will have an impact on its business community and consumers, such as intellectual property laws, subject to public discussion and consideration.

It is now time for the government, business community, registered owners of intellectual property and consumers to make sure that this important legislation is not allowed to simply slip through the cracks and be adopted without proper investigation and debate. The stakes for Russia's future are too high.

Olga P. Barannikova is the Russia representative of the Coalition for Intellectual Property Rights, an international association focused on legislative reforms, educational initiatives and public awareness building on intellectual property issues.