07-06-2024 12:38
by Willi Fast

Russia - New restrictions concerning IP rights for companies from "unfriendly states"

In addition to the measures provided for in Presidential Decree No.29 of 28 February 2022 "On the application of special economic measures in connection with unfriendly actions of the USA and associated foreign states and international organizations", the President of the Russian Federation issued Decree No.430 on 20 May 2024, which introduces a de facto ban on the sale of certain categories of IP rights by foreigners without the consent of the Russian Government Commission for the Control over Foreign Investments.

This decree introduces a temporary procedure both for the execution of transactions for the acquisition of intellectual property rights between certain holders of such IP rights and certain acquirers, as well as for the fulfillment of the monetary obligations arising from such transactions.

For the purposes of the Decree, acquirers shall mean the Russian Federation, constituent entities of the Russian Federation, municipalities and Russian residents.

On the side of the IP right holders, entities subject to the ban are persons and legal entities from so-called "unfriendly" foreign states (the USA, the EU member states and all other states that have imposed sanctions against Russia), as well as "persons under the control of such foreign persons".

The decree stipulates that the approval of the above-mentioned Government Commission is required for the following actions:
a) for the conclusion of transactions concerning the acquisition of exclusive rights to intellectual property or to means of individualization;
b) for the execution of these transactions;
c) for actions to ensure the fulfillment of financial obligations arising from these transactions.

In other words, the Decree stipulates that the alienation of exclusive intellectual property rights such as trademarks, invention patents, utility models, industrial designs, plant varieties and animal breeds, etc. requires the approval of the Government Commission.

This authorization may, if necessary, be subject to the following conditions by the Government Commission:
a) the condition that payments of remuneration and other payments (including penalties and other financial sanctions) in connection with the respective acquisition must be made by transfer to a special ruble account of type "O" to be opened at an authorized bank;
b) other terms and conditions.

Considering the fact that the list of conditions that can be included in such approval by the Government Commission is open-ended and the purchase price must be paid in rubles into a so-called O-account at an authorized bank (while funds can be transferred from this O-account to a settlement account, for example at a foreign bank, only with the approval of the Government Commission), the Government Commission may apparently significantly interfere with the possibilities of selling intellectual property rights of Western companies in Russia.

The above-mentioned ban does not apply to the acquisition of Intellectual Property rights
- of works of science, literature and art,
- in the results of the performing arts (performances),
- on audio recordings;
- to broadcasting on radio or cable;
- for transactions in which the acquirer's liabilities do not exceed 15 million Russian Rubles (approx. EUR 150,000).

Disclaimer: This Alert has been prepared and published for informational purposes only and does not constitute legal advice and should not be construed as such. For more information, please read the firm's full disclaimer

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