Part IV improvement bill comes before State Duma

Russian Federation

On June 14 2007 the State Duma held the first reading of a bill purporting to give more protection to Russian producers of goods labelled with so-called 'Soviet brands'. The bill is thought to be the first step towards improving Part IV of the Civil Code, which has not yet come into effect.

Part IV has already generated much debate in the business and IP communities after the legislators announced that Part IV would cancel all Russian IP laws. Rather than removing the legal framework for IP rights, the purpose of Part IV was to incorporate all IP laws into a single and comprehensive statute. In total, Part IV will replace 54 legislative texts, including the 1964 Civil Code (although some provisions of the code remain in force).

Part IV, which will come into force on January 1 2008, will also bring significant changes. One of these changes concerns the use of Soviet-era trademarks. Under the Communist regime, some state enterprises were instructed to register trademarks in the Soviet Union and abroad. Other designations were used, but were not registered. When the market economy was introduced in Russia, trademarks that were registered were appropriated on a first come, first served basis, which was a cause of discontent for the parties that had been using the marks for decades but had failed to register the marks in their name. In the author's opinion, there can be no satisfactory way of settling this issue and the solution of reinstating the Soviet status of those marks seems the least unsatisfactory solution. Some analogy can be drawn here with the concept of prior use in patent law.

The legislators agreed to pass further laws to improve Part IV. The Duma now wishes to clarify the definition of 'producers' in the context of Soviet-era trademarks by differentiating between Russian and foreign producers. As currently worded, the law provides that such producers can take advantage of a royalty-free licence. However, the Duma now argues that this would enable nationals of former Soviet republics to benefit from the measure, thus defeating the purpose of giving an advantage to national Russian producers. (Another purpose for the provision is to protect consumers from low-quality products.)

Some amendments are expected to the new bill before it is heard for the second time in the Duma.

Vladimir Biriulin, Gorodissky & Partners, Moscow

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