Basic Political Developments

Proprietary Thinking

When Russian President Dmitry Medvedev meets head to head with G8 leaders in Deauville on Thursday, he will have a lot to offer in terms of how to protect intellectual property rights. In a symbolic move on the eve of his visit, the Russian leader ordered immediate reorganization of two largely inefficient federal agencies – the Russian Agency for Patents and Trademarks (Rospatent) and the Federal Agency on Intellectual Property Protection (FAPRID). "I would like to inform you that today I have signed a decree to set up a new Federal Service for Intellectual Property,” Medvedev told a government meeting on Tuesday.

President Medvedev's Economic aide Arkady Dvorkovich said on Wednesday that the Russian delegation to the G8 summit will be armed with concrete proposals on new approaches to intellectual property protection. “When speaking about protecting intellectual property rights we should think about how these rights should be adjusted in the future in order to balance clearly the interests of the rights holders and consumers of services,” Itar-Tass reported Dvorkovich as saying. "We must work together to develop new approaches to intellectual property rights on the Internet, so that the interests and rights of the content providers and users are balanced."

Russia also has its own ideas of how to maintain a balance between freedom and responsibility when posting materials on the Internet, which it hopes to share with other G8 leaders, Dvorkovich said. "It is necessary to stimulate the types of business models and rules of using Internet content that fully correspond to the legislation on intellectual property and, at the same time, make the opportunities of using content less costly to the users," said Dvorkovich. President Medvedev has called in the past for drafting new global conventions on intellectual property, saying that the existing ones fail to regulate developing technologies. The Russian leader said both the Universal Copyright Convention and the Berne Convention for the Protection of Literary and Artistic Works have failed to catch up with the demands of modern technologies.

But given the fragile status of his presidency at home, observers say president Medvedev may also be pushing hard for a successful outcome to the intellectual property rights debate in order to bolster his position ahead of the 2012 presidential elections. From a Russian perspective, any major events in which either Medvedev or Vladimir Putin are involved are assessed in the context of the March 2012 succession, Chris Weafer, the chief strategist at UralSib in Moscow, said in a note on Thursday. “It is clear that Prime Minister Putin has regained the momentum in recent months, so Medvedev’s supporters will hope for a successful G8,” Weafer said. “The president may push for a more direct commitment to support Russia’s WTO entry bid in 2011, progress in the missile shield talks and recognition of Russia’s position in the Mid East conflict.”

A good track record in intellectual property protection has always been a key condition for Russia’s admission to the World Trade Organization. Russia, the largest economy still outside the global trading bloc, has been trying to join the WTO for 17 years and has often been accused of copyright violations, especially by the United States. Russia has complained that it is being held to a higher standard on intellectual property rights enforcement in the WTO talks than earlier entrants, such as China. However, experts say that the situation with intellectual property rights enforcement in the country remains murky at best.

Part of the reasons for the slow progress on the issue is that unlike Western nations Russia is not a case law country, experts say. “Russian judges rely on the Civil Codes rather than following legal precedents in deciding intellectual property infringement cases,” Eugene Arievich, a partner at law firm Baker & McKenzie, said by telephone Thursday. “This means that there is no unified approach to the application of intellectual property laws in the country. We see this happening in court cases relating to trademarks and patent rights. Different judges interpret the same law differently.” There are numerous examples when different judges hand over legally diverse decisions on practically analogous cases, Arievich said. “For these reasons, many foreign companies find it extremely difficult to understand where they stand in the legal landscape of intellectual property rights,” he said.

Last month, president Medvedev instructed his administration to consider establishing a special court for intellectual property rights in Russia. "Maybe we should consider creating a special court for intellectual property rights within the Russian system of arbitration courts and place the court in Skolkovo," Medvedev said at a joint meeting of the Commission on Modernization and the Board of Trustees of the Skolkovo high-tech hub. However, even such a move, which is backed by the judges of the country’s Higher Arbitration Court, can hardly improve the situation with intellectual property rights in Russia, experts say.

“It is necessary to expedite action on the creation of intellectual property rights courts,” Arievich said. “However, there are concerns in professional circles about the level of competence of judges that will work in such courts. In order to judge intellectual property rights cases, it is not enough for a judge to have a legal training. Judges must be well-honed in the area of intellectual property rights. Unfortunately, there are just a handful of judges of such caliber in Russia today.” One way of resolving the issue is to encourage more active participation of Higher Arbitration courts, whose decisions are binding on lower instance courts, in deciding thorny intellectual property rights cases, Arievich said. Court decisions regarding intellectual property infringement should always be published and widely circulated, he added.

For 14 consecutive years, Russia has remained on the black list of countries where intellectual property rights are not sufficiently respected, Gazeta.ru reported on Thursday. In March, the United States Trade Representative (USTR) blacklisted two leading Russian sites which it said may merit further investigation for possible intellectual property rights (IPR) infringements. The Sites, Vkontakte.ru and Rutracker.ru, are said to facilitate copyright infringement by permitting users access to illegally copied materials. Along with the Petryvka market in Kiev, Ukraine, Moscow’s Savyolovsky market also reportedly makes “pirated goods widely and openly available,” USTR said in a report. “These notorious markets not only hurt American workers and businesses, but are threats to entrepreneurs and industries around the world,” Ron Kirk, a United States Trade Representative, said.

Curbing such threats is the greatest challenge before the newly-created Federal Service for Intellectual Property, legal experts said. "The Agency also has to do more to facilitate trademark and patent registration procedures than its predecessors have done,” Samir Rahman, an expert at the IPPRO Patent Law Firm, said. “Registering new inventions now takes years, not months. Russia has surely made giant strides in recent years to promote creativity and innovation and facilitate the development of commercially promising discoveries, but loopholes still exist in the country's intellectual property protection laws."