Unofficial translation

Representatives of major international companies referred toinadequate protection of intellectual property rights as the main challengehampering successful business operations in Russia.  52% of the respondents to the survey conducted by the Coalitionfor Intellectual Property Rights jointly with American Chamber of Commerce inRussia and European Business Club in the Russian Federation rated it as a mostimportant issue.  The survey covered 50major international companies operating in Russia, including Cadbury, Gillette, Kodak, Microsoft, Nestle.

“Violation of intellectual property rights costs federalbudget millions of dollars in uncollected revenues from counterfeit productsevading taxes and duties”, said Peter Necarsulmer, President of theCoalition.  “The overall loss includingforegone profits of the companies and IPR protection costs is estimated at $1billion as a minimum”.

8% of the respondents estimated annual losses resulting frominadequate IPR protection and enforcement in Russia at over $50 million, 10% -from $5 to $50 million, 8% - from $1 to $5 million, 26% - less than $1million.  The situation is particularlybad if we look at trademark protection and counterfeiting.  Only 8% of the respondents said that theirproducts are not counterfeited.

Counterfeiting popular brands is not the only source ofprofits for unprincipled businessmen. For example, one Russian company had Metrinchtrademark registered not long before the international company producingauthentic Metrinch products appearedon the Russian market.  Russiansrequested the genuine trademark holder to pay for using a “Russian”trademark.  However, during courthearings rights of the authentic trademark holder were restored.  Importantly, such instances are not  few in number.  Speculators often visit international exhibitions to find outwhat international companies which think of tapping local markets plan to do,and have their trademarks registered. Valentina Orlova, Division Head with the Federal Institute forIndustrial Property, comments that “surprised trademark holders sometimes prefer to pay off assuming thatlitigation process would cost them more in nerves and money”.

Roundtable discussion participants and respondents agreedthat action should be taken to improve and enforce laws and regulations in thiscountry and enhance IPR qualifications of judges, customs and law enforcementofficials.  In addition, the generalpublic, politicians and companies themselves should pay more attention to theproblem which becomes increasingly important for the Russian business.