Draft law amending Civil Code to impact IP regulations

A draft law amending Russia’s Civil Code passed the first reading in April 2012 and has since been substantially revised ahead of the second reading, expected to take place soon.

The main IP-related amendments concern:

1. the protection of IP rights on the Internet;
2. the patent and trademark registration process; and
3. the transfer of IP rights.

With regard to the protection of IP rights on the Internet, according to the draft law, an 'information intermediary' (ie, an entity transmitting the content directly or providing an opportunity to place the content online, such as an internet service provider), may be liable for the violation of IP rights.

An intermediary transmitting the information directly may escape liability if it:

• does not initiate the transmission and does not choose the recipient; and
• does not edit the content except for the technical changes necessary for the transmission.

An intermediary providing an opportunity to place the content online may escape liability if it:

• is not aware and should not be aware that the transmitted information violates IP rights; and
• has taken the necessary and sufficient measures to terminate the infringement upon the receipt of a written notice from the rights holder.

With regard to the patent and trademark registration process, under the draft law, trademarks similar or identical to registered trademarks cannot be registered. The Patent and Trademark Office (PTO) will continue to accept letters of consent, which might increase the chances of obtaining a registration, but are not binding on the PTO (ie, the PTO can still decide that the marks cannot co-exist).

A very important novelty is the introduction of an opposition procedure in Russia. Applications will be published and third parties may oppose them before a decision on the registration is made.

With regard to the transfer of IP rights, the proposed amendments aim to improve the procedure of mandatory registration. The assignment and licence agreements should be executed in writing and pass the mandatory registration. At the same time, the applicant will be required to provide the authorised body with certain information about the agreement, but will no longer need to disclose the full text of the agreement.

Another amendment relates to the payment terms. Free-of-charge agreements between two business entities are mostly forbidden, with a limited number of exceptions.

Additionally, once the IP rights are transferred, the licensor cannot use the same rights in the same territory and in the same way, unless it is foreseen by the agreement. The licensee should provide the licensor with reports proving the use of IP rights in compliance with the agreement, and, in case it is not mentioned in the agreement, report upon the licensor’s request.

Finally, if the payment terms are violated, the licensor can unilaterally terminate the agreement by sending an official notification. In case the licensee does not fulfil its financial obligations within 30 days, the agreement is terminated automatically.

Tetiana Shulga, PETOŠEVIĆ