The Legal 500

A series of changes has recently been introduced into the Russian Intellectual Property Law for the purpose of bringing it into line with international agreements – including the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the Berne Convention for the Protection of Literary and Artistic Works – and to fulfill the requirements for accession to the World Trade Organization (WTO).

The amendments concern a tightening of the licensing regulations for enterprises producing optical media, the free reproduction of phonograms and audiovisual works for personal purposes, the relationship between domain names and trademarks, and other issues. Below we give a brief outline of the key developments regarding the substantive changes that were made to the Fourth Part of the Russian Civil Code, to the Federal Law On Licensing Certain Types of Activities, and to the Procedure for the Collection and Distribution of Remuneration for Free Reproduction of Works for Personal Purposes, the latter of which was recently established by a Russian Government Resolution.

1. Amendments to the Federal Law On Licensing Certain Types of Activities (the "Law"), which will enter into force on December 6, 2010.

The Law tightens the licensing regulations for enterprises producing optical media containing protected copyright. Thus, according to the amendments made to clause 3 of Article 9 of the Law, juridical persons shall be denied a license for reproduction of audiovisual works, computer programs, databases and phonograms, on any kind of media, if such a license has previously been withdrawn.

Furthermore, Article 17.2 of the Law stipulates an additional requirement for receiving a license, namely that the equipment used for reproduction of audiovisual works, computer programs, databases and phonograms, on any kind of media, must be owned.

2. On October 19, 2010 Federal Law № 259-FZ dated 4 October, 2010 On the Introduction of Changes in the Fourth Part of the Civil Code of the Russian Federation came into force.

The following amendments have been made to Part IV of the Russian Civil Code:

• Restrictions of exclusive rights to the results of intellectual activities and means of individualization

The amendment to Article 1229 of the Civil Code of the Russian Federation specifies a substitution of the general provisions of paragraph 2, clause 5 of Article 1229 of the Civil Code - on provisions on restrictions of exclusive rights to the results of intellectual activities and means of individualization - by provisions duplicating certain restrictions of exclusive rights to scientific, literary and artistic works and related rights objects, to inventions, to industrial designs and to trademarks, established respectively by Articles 13, 17, 26 and 30 of TRIPS.

• Free reproduction of work for personal purposes

The changes made to Article 1273 of the Civil Code are directed at consolidation of regulation, stating that free reproduction is allowed only upon necessity. Besides, a reference to Article 1245 of the Civil Code included in a new clause 2 of Article 1273 of the Civil Code establishes a right to remuneration for authors, performers and phonogram recorders for the reproduction of phonograms and audiovisual works for personal purposes.

According to Article 1245 of the Civil Code such remuneration is to be collected and paid to right holders from the funds of the manufacturers and importers of equipment and tangible media used for playback of phonograms and audiovisual works.

The list of equipment and tangible media, rates, and the procedure for collection and distribution of the relevant remuneration have been established by Russian Government Resolution No. 829 of October 14, 2010 On Remuneration for Free Reproduction of Phonograms and Audiovisual Works for Personal Purposes (the "Resolution"), which came into force on October 26, 2010. The Resolution is valid until the Agreement of the Customs Union Members of the Eurasian Economic Community comes into effect.

According to the Resolution, the approved list of equipment and tangible media includes: computers, audio and video recording and playback equipment, radio receivers, telephones (including cellphones), recorders, video and DVD players, films, recording media and compact disks. The rate of the remuneration is 1% of the selling price/customs value of every unit of goods. To make a payment a manufacturer/importer should enter into an agreement with the accredited collective management society. On October 26, 2010 the Russian NGO the Russian Union of Rights Holders (RSP) was officially accredited as the collective management society, which will represent authors, performers, phonogram recorders and audiovisual works producers in the collection and distribution of remuneration for reproduction of phonograms and audiovisual works for personal purposes.

Under the general rule, the manufacturer should contribute funds quarterly no later than on the tenth day of the month after the reporting period. By the same time a report on sales of respective products should be submitted to the accredited organization. The amount of remuneration is calculated by manufacturers by multiplication of the defined rate on the selling price of a unit by the number of units sold during the reporting period. Remuneration from exportable equipment and tangible media, and from equipment and tangible media not intended for home use is not taken.

The importer should inform the accredited organization about imports of goods within ten working days from the day of their placement into the customs regime of goods placed on the internal market. The report on the importation of goods should contain descriptions of the goods and their quantity, the customs value, and the respective codes of the Harmonized Commodity Nomenclature for Foreign Economic Activities of the Customs Union.

The importer should provide the accredited organization also with documents confirming placement of goods into the customs regime of release for domestic consumption. The Federal Customs Service also provides the accredited organization with information on the corresponding importers and the commodity classification of the equipment and tangible media released for internal use. Within 20 working days the accredited organization should compare the information received from the importers with the report of the customs, and send to the importer information on the payable sum. Payment should be made within ten working days from the importer's receipt of such information.

The collected remuneration is to be distributed as follows: 40% - to the authors of audiovisual works and of works fixed in phonograms; 30% - to the performers; and 30% - to the manufacturers. The distribution of remuneration is to be performed in proportion to the actual use of phonograms and audiovisual works within the period stipulated by the charter of the accredited organization, but at least once a year.

• Technical means of copyright protection

From clause 3 of Article 1299 of the Civil Code, the words: "...except cases when, under the present Code, the use of a work is allowed without the consent of the author or other right holder" have been excluded. The changes are aimed at reinforcement of copyright protection, i.e., to eliminate the risk of relief of liability of manufacturers of technical aids intended to disable copyright protection.

• Compulsory license in relation to inventions containing semiconductor technology is possible only for non-commercial purposes

The changes have been made in Article 1362 of the Civil Code, bringing it into line with the requirements of Article 31 (c) of TRIPS regarding limitation of cases of compulsory licensing with regard to inventions containing semiconductor technology. Compulsory licensing regarding inventions containing semiconductor technology is permitted only in cases of non-commercial use of such inventions for state, social and other public purposes, or to correct an instance of breaking the Russian antimonopoly law.

• a prior domain name is not an obstacle to registration of an identical trademark

The changes made to paragraph 3, clause 3 of Article 1483, exclude the possibility of rejection of state registration of a trademark identical to a prior-registered domain name. Such a change was necessary as TRIPS does not qualify a domain name as an IP object - therefore no grounds exist for an IP object to oppose a trademark.

• Designations that allow to identify a good as coming from a certain geographical territory are equivalent to an appellation of origin

The changes made to Article 1516 of the Civil Code, bringing it into accordance with Article 22 of TRIPS, provide legal protection to designations that, though not containing the name of a geographical origin, nevertheless identify a product as coming from a given territory. This sort of protection is provided by such designations coming under the purview of the regulations on an appellation of origin, stipulated by the Fourth Part of the Civil Code.

The new developments to the Russian IP legislation are an important step towards correspondence to current international standards and treaties, and Russian IP legislation can now be deemed "WTO-ready."

 

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Eugene Arievich, Partner

Alisa Fomina, Associate

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