Ukraine: Intellectual Property as a War Weapon

The conflict in Ukraine on 24 February prompted a number of European measures in many fields, including intellectual property. The Russian government responded by taking initiatives in this area as well. What are these measures and their consequences?

Measures taken by the EUIPO and the EPO

The European offices reacted with a speed that deserves to be highlighted. On 1^er March, the European Patent Office (EPO) made its voice heard from Munich. A few days later, it was the turn of the European Union Intellectual Property Office (EUIPO) from Alicante in two salvos on 8 and 9 March. The EUIPO strongly condemned the conflict as “unprovoked and unjustified aggression” and called for the immediate withdrawal of Russian armed forces so that the “integrity, sovereignty and independence” of Ukraine could be restored. This is a very unusual position for a body generally considered to be more administrative than political.

Freeze on international cooperation

On 1^er March 2022, the EPO announced the immediate freezing of its cooperation activities with the national patent offices of the Russian Federation and Belarus and with the Eurasian Patent Organisation, established in Moscow and grouping certain countries of the former Soviet Union.

On 9 March, the EUIPO announced that it was discontinuing all cooperation with the Russian Intellectual Property Office (also known as “Rospatent”) and the Eurasian Patent Organisation.

These measures do not have practical consequences for businesses but they are important from a diplomatic point of view.

Extension of time for proceedings for parties established in Ukraine

a) Before the EPO

On 3 March 2022, the EPO published a notice to remind users of certain rules that may help Ukrainian companies based in areas directly or indirectly affected by military activities.

According to Rule 134(5) of the European Patent Convention “a party concerned may produce evidence that on any of the ten days preceding the day of expiry of a period, the delivery or transmission of mail was dislocated due to an exceptional occurrence such as…war….”

The EPO also recalled Rule 82c(1) and Article 26bis(3) of the PCT, which allow for the extension of time limits in similar circumstances.

b) Before the EUIPO

By a decision of March 8, 2022, the Executive Director of the EUIPO extended the time limits expiring between February 24, 2022 and March 31, 2022 to April 1, 2022 for parties having their residence or registered office in Ukraine.

This deadline was subsequently extended twice. Now, all deadlines expiring between 2 June 2022 and 1^er September 2022 are extended until 2 September 2022.

Respect for the internationally recognised borders of Ukraine in the registers

The EUIPO also indicated that it would ensure that the addresses provided by parties are consistent with the internationally recognised borders of Ukraine.

In practice, if an applicant from Crimea for example indicates that they are domiciled in Russia, the Office reserves the right to rectify the address since the annexation of Crimea in 2014 has not been recognised by the European Union. The same will apply if a new part of Ukraine is annexed.

Responsive measures by the Russian government

The Russian government reacted with two measures: the authorisation of parallel imports and the abolition of compensation to rights holders established in so-called “unfriendly” countries.

Parallel imports made legal

In common parlance, we often speak of “the” Apple brand, for example. In the legal reality, companies hold essentially national portfolios of rights, which allows them to partition markets and adapt their prices to average incomes of local consumers. As a result, some actors are tempted to buy products in countries where they are cheaper in order to resell them elsewhere at a higher price. These practices are known as “parallel imports” and IP rights holders can normally enforce their rights against parallel importers.

After a number of Western companies decided to withdraw from the Russian market, the Russian government reacted by making parallel imports legal with Decree No. 506 amending Articles 1359 and 1487 of the Russian Civil Code.

According to the new wording of Article 1359 (6), it shall not be considered an infringement “to import into the territory of the Russian Federation, use, offer for sale, sell, otherwise introduce into civil commerce or store for such purposes a product protected by a patent or an industrial design… if such product has previously been placed on the market by the owner of the patent or design or by another person with or without the authorisation of the owner of the patent or design, provided that such introduction into commerce has been lawfully carried out, irrespective of whether the placing on the market has taken place in Russia.”

Finally, this decree provide that for certain products (or groups of products) the use of a trademark, patent or design is lawful if the products are marketed outside the Russian territory by the right holder (or with their consent).

On 6 May the Russian government published the list of affected product categories in Order 1532. These include everyday consumer products such as cutlery, cell phones, cars from major manufacturers, games consoles and materials and parts used in industry.

The abolition of compensation to patent and design owners established in “unfriendly” countries

Article 1360 of the Russian Civil Code allows the government to authorize the use of an invention or industrial design without the consent of the owner of the patent or design, provided that the government notifies the owner as soon as possible and pays a “proportionate compensation” in certain exceptional circumstances, namely, in case of absolute necessity related to the defence and security of the State, protection of life and health of citizens.

This is a “compulsory licence” mechanism that exists in most countries and recently became a hot topic in relation to COVID vaccines. It normally requires the owner to be compensated.

According to this article, the method for determining the amount of compensation must be approved by the government. On 6 March, in response to Western sanctions, the Russian government issued Decree No. 299 specifying that when the right holder is “linked” to an “unfriendly” foreign state, compensation is equal to zero.

To date, all EU member states are considered “unfriendly,” as well as Canada, the United Kingdom, the United States, Switzerland, Taiwan and, of course, Ukraine.

The Russian Federation is a party to the 1883 Paris Convention for the Protection of Industrial Property, which requires each signatory to ensure the protection of the intellectual property rights of nationals of the other countries. This is known as the mutual recognition principle. Countries considered “unfriendly” are also signatories to this Convention.

Conclusion

The actions taken by the EPO, EUIPO, and Russia regarding intellectual property rights as a result of the conflict in Ukraine are unprecedented. While the intentions of the parties may be evident, the ultimate consequences remain uncertain at this time. Without doubt, though, these actions will affect the rights of IP owners around the world.