New law to bring changes to Part IV of Civil Code

On March 12 2014 the Russian president signed Federal Law No 35-FZ “On introducing changes to Part I, II and IV of the Russian Civil Code”, which will bring changes to the legal framework of IP rights in Russia. This report briefly outlines some of the main changes introduced by the law, in particular those relating to trademarks, geographical names and industrial designs. The changes will enter into force on October 1 2014.

The Russian lawmakers substantiated the need for the proposed changes in an explanatory note to the draft of Law No 35-FZ. The main goal was to harmonise the Russian IP rights legal framework with international standards and, in particular, EU standards.

First, the new law significantly reduces the administrative barriers for the disposal of registered IP rights under agreement. Currently, if a trademark holder wishes to dispose of, pledge or allow the use of its trademark under licence to a third party by agreement, such agreement will be valid only if it is registered with the Russian Federal Service for Intellectual Property (Rospatent). The registration procedure may take two months or more.

The new law shifts from the ‘registration of the agreement’ system to a ‘notification’ system. Thus, the law stipulates that, in order for such disposal, pledge or granting of IP rights to become effective, the IP rights holder (or the counterparty) must notify Rospatent by filing either:

• a notification of the conclusion of the agreement;
• an extract from the agreement notarised by a Russian notary; or
• the agreement itself.

With respect to assignment agreements, the notification must contain the following information:

• the type of the agreement;
• information about the parties; and
• the subject matter of the agreement, with an indication of the requisite number of registration certificates.

The notification of an agreement granting the right to use IP rights (eg, licence agreements) must contain, in addition to the above-mentioned information (ie, the type, parties and subject matter):

• the term of the agreement;
• the territory for which the right to use the IP rights is granted;
• the methods of use of the IP rights, or the goods and services with respect to which a right to use IP rights has been granted; and
• the permit to conclude a sub-licence agreement.

The notification of a pledge of IP rights must contain, in addition to the type, parties and subject matter:

• the term of the pledge; and
• any limitation to the rights of the pledger to use or dispose of the IP rights.

This will be regulated by an updated version of Articles 1232-1235 of the Civil Code of the Russian Federation. It is also anticipated that, by October 2014, Rospatent will update its internal rules specifying the forms of the notifications and other issues. Currently, the registration of such agreements is regulated by Order No 321 of the Ministry of Education and Science, dated October 29 2008.

Second, with regard to trademark licence agreements, in addition to the previous requirement to indicate the subject matter of the agreement and the methods of use of the IP rights pursuant to Article 1235(6) of the Civil Code, it will be necessary to provide a list of goods for which the right to use the trademark is granted, pursuant to Article 1489(1.1) of the Civil Code.

Third, Article 1234(3.1) of the Civil Code expressly prohibits the conclusion of gratuitous assignment of exclusive rights agreements between commercial entities. This removes the ambiguity with regard to this issue which previously existed. In addition, according to the new Article 1235(5.1) of the Civil Code, it will also be prohibited to conclude exclusive licence agreements granting the right to use IP rights without remuneration between commercial entities worldwide and for the entire term of the exclusive right.

Fourth, from October 1 2014 Rospatent will be entitled to supervise the characteristics of a particular product in relation to which a geographical name was registered. Such authority is given to Rospatent under Article 1522(5)(5) of the Civil Code. This is a new function for Rospatent, and it is anticipated that the latter will issue internal rules on the application of such supervision measures.

Fifth, the new law provides that, if a trademark and industrial design are identical or confusingly similar, priority shall be given to the IP right in relation to which the exclusive rights arose first (by way of conventional or exhibition priority). This will be regulated by an updated version of Article 1252(6) of the Civil Code.

Finally, according to the new Article 1231.1 of the Civil Code, industrial designs will no longer be granted legal protection if they include, reproduce or simulate official symbols, names and distinctive marks or parts thereof. Previously, this rule applied only to trademarks. The above-mentioned article sets forth a list of such official symbols, names and distinctive marks:

• state symbols and signs (eg, flags, emblems, orders and banknotes);
• abbreviations or full names of international and intergovernmental organisations, their flags, emblems, symbols and other marks; and
• official controls, guarantees or hallmarks, seals, awards and other insignia.

It will be possible to incorporate the above signs into an industrial design as an unprotected element subject to consent of the respective state body, or international or intergovernmental organisation.

Sergey Treshchev, Anna Grozovskaya and Alexey Pashinskiy, Squire Sanders Moscow LLC, Moscow