Unofficial summarized translation

Coalition for Intellectual Property Rights which is apartnership of leading multinational companies, business associations, professionalgroups, international/local agencies and institutions, is determined to addressthe intellectual property issue which has become an acute problem inRussia.  A joint meeting of the RussianTrademarks and Patent Agency, State Customs Committee, Ministry of InternalAffairs, Ministry of Anti-Trust Policy, State Duma, Russian Commerce andIndustry Chamber and leading multinational corporations estimated for the firsttime budget arrears caused by this problem and outlined what needs to be doneto do away with the evil.

It appears that local counterfeit industry has an extensiveproduct coverage offering a whole variety of sham washing powder, coffee, tea,pharmaceuticals, CDs, shampoos and other goods.  Fraudulent businessmen add value to their products by usinginternationally recognized trademarks and brands.  135 chief executive officials of major multinational companiesbelieve that counterfeited goods account for approximately 10% of all productssupplied to local markets. Counterfeiting is detrimental for the image of internationalbrandholders and poses health hazards to the consumers, but most importantly,it hits the budget which loses over a billion of dollars of uncollectedrevenues on an annual basis. Counterfeit industry does not bring in any revenues for the governmentin the form of customs duties, taxes and other levies provided bylegislation.

Counterfeiting has essentially become a large-scale andprofitable operation for both employers and employees.  In some instances counterfeit businesseshave a multi-profile focus, as in the case of Moscow Region bootleggeroperation discovered in mid December which dealt with beverages andshampoos.

Counterfeited pharmaceuticals do a lot more damage thanother sham goods as they may pose serious health threats.  The situation is aggravated by the fact thatlocal pharmacies now look for cost-efficient business solutions which meansthey prefer to buy cheaper stock from wholesalers.

International Coalition for Intellectual Property Rights conductedan opinion survey of leading international brandholders doing business inRussia.  Respondents assume that themajor challenge which hinders successful business operations is inadequateprotection of intellectual property rights. Noteworthy too, one third of the respondents believe that their annuallosses [resulting from inadequate enforcement of IPR] amount to 5 - 50 milliondollars.  Surveyed companies highlyregarded efforts taken by the Russian Ministry of Internal Affairs and RussianTrademarks and Patent Agency; however, they assume that efficiency of IPRinitiatives can be improved by establishing a closer interaction between theaforementioned authorities and Anti-Trust Ministry, Ministry of Justice,courts, State Customs Committee, Prosecutor’s Office and subnational lawenforcement authorities.  Respondentsindicated that the following actions are a priority to improve protection andenforcement of intellectual property rights: reforming laws and regulations, establishing civil responsibility,penalties and criminal responsibility for IPR non-compliers.  However, the top priority issue as perceivedby the survey respondents is to combat corruption and educate governmentofficials about negative effects of inadequate intellectual property protection.

Companies that have long presence in Russia believe thatinfringement of brandholder rights, apart from contributing to budgetaryarrears, will damage the country’s international reputation, hamper WTOmembership initiatives and pose life and health hazards to the consumers.

Intellectual property protection is a lengthy andlabor-consuming process.  The Russiangovernment made its first step on the way to improving the IPR situation byapproving in mid December a draft law on amendments and addenda to the RFCriminal Code and RSFSR Code of Criminal Procedure.  It is anticipated that these amendments and addenda will helpcombat intellectual property pirating in all areas including trademarkinfringement.

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