Putin’s Puppets Pick on Peppa Pig: Intellectual property rights are collateral damage in the economic war between Russia and the nations supporting Ukraine

Jessica Sanderson, Partner at The Volkov Law Group, joins us for an interesting posting on the impact of Russia sanctions on intellectual property. Jessica can be reached at [email protected].

As we’ve reported elsewhere in our blog, the U.S., EU, and other nations recently have enacted significant economic sanctions against Russian individuals and entities in response to Russia’s invasion of Ukraine. Russia is striking back, and intellectual property (“IP”) rights are fair game in this economic war. As a result, it will soon be practically impossible for U.S., EU and other foreign nationals to protect their IP rights in Russia.

Sanctions Against Russia: On March 1, 2022, the European Patent Office stopped all cooperation with Russia’s agency in charge of IP, the Federal Service for Intellectual Property (commonly known as “Rospatent”), as well as the Republic of Belarus National Center of Intellectual Property, and the Euroasian Patent Organization (“EPO”). SeeStanding together for peace in Europe.” Based in Moscow, the EPO provides IP services to countries including Belarus and Russia.

Shortly thereafter, United States Patent and Trademark Office (“USPTO”) followed suit. USPTO terminated engagement with those same three IP bodies. In addition, effective March 11, 2022, the USPTO will no longer grant requests to participate in the Global Patent Prosecution Highway (“GPPH”) when such requests are based on work performed by Rospatent. Under the GPPH, patent applicants can request and receive expedited processing from a second, participating patent office based on a prior, final ruling from another participating patent office. Dozens of nations participate in this program, including the U.S., EU, UK, and China. Russia’s exclusion from this program means that future applications based on Rospatent rulings will not be eligible to receive fast track examination. USPTO also applied this exclusion retroactively: In “pending cases in which, prior to March 11, 2022, the USPTO granted special status under the GPPH to applications based on work performed by Rospatent, the USPTO will remove that status and return those applications to the regular processing and examination queue.”

Rospatent itself is not subject to specific sanctions, but it will soon be virtually impossible to send money to Rospatent without violating U.S. and other nations’ sanctions laws. This is because Rospatent accepts application, registration, and maintenance payments through the Central Bank of the Russian Federation. The U.S., EU, UK, Switzerland, Japan, and other nations have imposed sanctions against the Central Bank. Under OFAC General License 13, U.S. persons are only authorized to make payments to Rospatent through the Central Bank through 12:01 a.m. eastern daylight time on June 24, 2022. As with all other sanctions, IP owners should not attempt to circumvent these restrictions by asking a third party, such as a Russian IP law firm or third-party IP management service provider in a Russian “friendly” country, to pay Rosneft through the Central Bank on their behalf, as such conduct could expose the IP holder to liability for committing an indirect sanctions violation or for “facilitation,” “evasion,” or “causing” a sanction violation.

If IP holders cannot pay required maintenance fees in Russia, they may lose their rights. And even if IP holders could make payments to Rosneft, as discussed immediately below, given Russia’s retaliatory measures, it may not make a difference.

Russia Strikes Back: In response to international sanctions, Russia is now essentially encouraging IP theft in Russia. On March 6, 2022, Russia issued a Decree that sets the compensation for patent infringement as “0%” if a patent holder is a citizen of, or registered in, an “unfriendly country,” which includes the U.S., most of Europe, Japan, and Australia. Shortly before the issuance of that Decree, on March 3, 2022, a Russian judge ruled that a Russian entrepreneur could use Hasbro’s “Peppa Pig” trademark without permission or punishment due to “unfriendly” actions of the United States and Britain. Between the Decree and the Peppa Pig ruling, even valid and otherwise enforceable copyright and trademark rights in Russia are at risk. Several news outlets have reported that trademark applications have already been filed in Russia seeking to copy famous brands like McDonald’s and Starbucks. Indeed, we wouldn’t be surprised if Putin started affirmatively incentivizing Russian businesses to steal IP rights from entities in “unfriendly” countries.

Not surprisingly, companies are facing important questions on protecting Russian IP rights.  As an initial matter, those wishing to pay Rosneft maintenance fees should ensure that they do so no later than COB June 23, 2022. We suggest carefully monitoring and documenting otherwise infringing activity in the hope that remedies will be available when we return to some sense of normalcy. We also recommend carefully monitoring countries accepting Russian imports to determine whether it is possible to enforce IP rights in those countries. Some have suggested assignment of IP rights to a representative in a “friendly” country that can still enforce IP rights in Russia, but we suggest extreme caution before doing so, since the U.S. and other countries could view such conduct as intentional sanctions evasion subject to prosecution.

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