As reported by the National Law Review, The European Patent Office severed ties with Russia on March 1, and shortly thereafter the United States Patent and Trademark Office (USPTO) confirmed that it had “terminated engagement” with officials from Russia’s agency in charge of intellectual property, the Federal Service for Intellectual Property (Rospatent), and with the Eurasian Patent Organization.
In response, on March 7, 2022, Russia issued Decree No. 299, according to which intellectual property rights should not be paid to patent holders from "unfriendly countries," which include, among others, all the 27 members of the European Union. Additionally, Prime Minister Mikhail Mishustin has authorised retailers to import products from abroad without the trademark owner's permission in order to ensure certain goods could continue to be shipped to Russia. Although there has not been a similar decree to Russia's Decree 299 in terms of copyright and trademark law, it is likely that due to big companies' withdrawal from the country, the government could authorise local manufacturers to take over the production and the use of the trademark, in order to face the shortage of goods.
The increase in parallel imports makes trademark prosecution and maintenance more important than ever in Russia, but international companies fear that national Russian Courts may further complicate the process for western brand owners. In order to assess the actual risk of trademark squatting during the ongoing absence of western brands from the Russian market, it is worth examining how national Courts are currently dealing with an increase in trademark applications targeted at non-native brands.
In March 2022, Peppa Pig’s trademark owner, the film producer Entertainment One UK Ltd, sued a Russian entrepreneur for trademark infringement, as he created his own version of the trademark (See Entertainment One UK Limited v. Ivan Vladimirovich Kozhevnikov, Arbitration Court of Kirov, Case No. A28-11930/2021.) Russian Court dismissed a trademark infringement action further consideration for the sole reason that the claimant is based in the UK. The Court further authorised the free use of the trademark character of Peppa Pig, the popular cartoon series. This decision was then appealed, and on 21 June 2022, the Appeal Court issued a decision overturning the decision of the Kirov Court in Russia. The Appeal Court stated that in accordance with the Berne Agreement and the Madrid Convention, equal protection of the intellectual property of foreign organisations, including those registered in the UK, must be guaranteed in the Russian Federation.
McDonald's closed its Russian restaurants in March and said in mid-May that it had decided to leave the country altogether, marking the end of closer ties between Moscow and the West with the opening of the first McDonald's in January 1990. In May, the company announced that it was selling its restaurants in Russia to one of its local licensees, Alexander Govor, who operated 25 McDonald's restaurants in Siberia. Under the agreement, McDonald's said it would retain its trademark in Russia. It also has the option to buy back its restaurants within 15 years. In June, the new Russian fast-food chain Vkusno & tochka, so-called Russia's successor of McDonald's, opened its first 15 restaurants in Moscow. In January 2023, Vkusno & tochka applied to have its trademarks registered in neighbouring Kazakhstan following the U.S. company's exit from its market.
Like many other brands, Coca-Cola finalized their exit from the Russian market in August 2022, creating an opportunity for domestic imitations to step in. Russia's Ochakovo is a well-known local brand, producing domestic Russian drinks closely resembling Coca-Cola, Fanta and Sprite, both manufacturing, distributing and selling them on a national basis as recently as March. The firm isn't the only company to try and capitalize on Coca-Cola's step back from the Russian market. In April, a beverages company based in Russia's Far East, the Slavda Group, launched Grink Cola to try to fill the shortage of branded soda drinks. A month later, in the northern Russian region of Komi, the Syktyvkarpivo factory launched another line of soft drinks called Komi Cola.
Despite the surge of such copycat products, trademark experts believe that emerging brands trying to register or use close copies of foreign trademarks will likely fail. On June 2, 2022, the IP Court considered the case as a cassation instance and upheld the claim of Russia's consumer protection agency that the designation "FANT" and its label were confusingly similar to the trademark and original label "FANTA", and the designation was used concerning the same type of product (a carbonated orange soft drink).
The Russian intellectual property system operates in full conformity with the rules of substantive and procedural law as laid down by part IV of the Russian Civil Code that relates to IP rights. Therefore, despite the ongoing uncertainty about the IP rights of foreign companies in Russia, insofar as trademarks are concerned, all legal mechanisms for the protection and enforcement of rights established by Russian law remain fully in force. Brand owners should not be too concerned about unfair, politically motivated, or biased treatment of their IP rights by the official Russian IP bodies. However, in order to ensure effective trademark protection, brands are encouraged to continuously monitor and enforce their rights against potential infringement attempts. If you require any help with trademark monitoring or would simply like to receive professional advice on trademark protection, don’t hesitate to schedule a free consultation with us.