Russia - NEWS UPDATE - Patenting in Russian Federation

In connection with the economic sanctions recently imposed by the international community on Russia, there is presently an ongoing debate among IP specialists whether the US sanctions may be construed to have a prohibiting effect on patenting in Russia.

On the one hand, the Russian Patent Office is not a sanctioned entity under the raft of penalties levied by the international community on Russia. Also, there is no per se prohibition on filing for patents through the Russian Patent Office. On the other hand, however, payments of official fees to the Russian Patent Office can be carried out through the Central Bank of the Russian Federation only, and this bank is specifically targeted with sanctions by the US. In particular, the US sanctions stipulated by Directive 4 under Executive Order 14024 of the Treasury Department of February 28, 2022 may indeed be construed to encompass payments of official fees for IP rights to the Patent Office through the Central Bank. Regarding this matter, General License No. 13 of March 2, 2022 provides a transition period until June 24, 2022 12:01 a.m. EDT, to wind down certain activities which have been sanctioned, which includes the payment of official fees for IP rights.

While the above-mentioned sanctions of Directive 4 pertain to “United States persons” and thus do not apply directly to German- or EU-based companies, it is possible that the US might also impose secondary sanctions. As a result, from the US perspective, the US sanctions in question could be considered to apply to companies worldwide, regardless of whether there is a potential US connection or not. European companies are therefore well advised to carry out a risk assessment with regard to the US sanctions.

(cf. also:  Impact of sanctions on patenting in Russian Federation)

Consequently, if an IP right holder, independently of its actual place of registration, wants to comply with the US sanctions and is of the opinion that, after said date of June 23, 2022, the payment of official fees to the Russian Patent Office could indeed be deemed to represent a violation of sanctions, the following seems to be advisable.

Forming a Russian Patent Strategy

A “wait and see” approach could have the potential to result in a loss of patent rights as well as possible liability for knowingly or unknowingly engaging in activities that could be construed being prohibited under the US sanctions. Anyone engaged in patent activities in Russia thus would be advised to undertake a portfolio review and utilize the time remaining under the General License to form a plan that ensures compliance with the current sanctions. In this portfolio review, at least the following aspects should be taken into account:

• Proceeding with Grant of Presently Allowed Applications – For Applicants that have received a Notice of Allowance with a due date after expiration of the General License, one may consider early payment of the fees. This should only be done, however, to the extent that it is possible to confirm that payment will be processed prior to the expiration of the General License on June 24, 2022.
• Putting the Prosecution in “Standby Mode” – Not paying office fees to the RU Patent Office means that due dates will be missed and, as a rule, the corresponding applications or patents become considered withdrawn. If any patent application in Russia is considered withdrawn due to a missed deadline, however, the Russian patent legislation allows in many cases a reinstatement of such an application within a 12 months period. In case of a granted patent for which the annuities have not been paid, the patent could be reinstated even within a 3 years term. If this is the case, however, it should be borne in mind that third party rights to continue use of an IP right could potentially arise in the interim period during which said IP right is not in force.
• Annuities on Granted Patents – Any patent annuity paid to the Russian Patent Office after the General License expires could be assumed to be in violation of the above-mentioned US sanctions.  Patent holders that engage a patent annuity service should contact their provider to confirm that they have a plan in place for compliance with the sanctions. Some annuity services have, in fact, already announced that they will no longer make payments to the Russian Patent Office until further notice. Presumably, for Russian patents with annuities due in 2022, early payment could be made in the hope that normalcy will ensure prior to the next deadline in 2023. In the alternative, a patent owner should confirm that any Russian patents are under a “do not pay” order with their annuity provider to avoid an unintentional, automated payment in violation of the sanctions.
• Early Filing of Applications – If a new patent application in Russia is planned, which is usually the national phase entry of a PCT application, one may consider early filing prior to the expiration of the General License. This could be done in the hope that a deadline for payment of future fees to the Russian Patent Office does not arise before the time that sanctions are lifted.
• Patent Protection Through Eurasian Filings – Russia is one of several countries where patent protection can be secured based on a Eurasian patent granted by the Eurasian Patent Office. The banks utilized for processing financial transactions for the EA Patent Office are not included in the U.S. sanctions. Experience shows that, in practice, a Eurasian patent granted by the EA Patent Office has the same value in national enforcement proceedings in an EA contracting state like a corresponding national patent. As such, direct filing or national stage entry with the EA Patent Office provides an alternate pathway for obtaining patent protection in Russia, which actually provides various advantages over national filings.
• Using Russia as an International Search Authority – The Russian Patent Office is one of the patent offices available for use as the ISA in a PCT application, and the Russian Patent Office may be preferred because of the relatively low cost relative to other ISA options. Search fees paid to the World Intellectual Proper Organization (WIPO) are forwarded to the RU Patent Office when chosen as the ISA, and it is not possible to ensure that such fees paid to WIPO will be forwarded to the RU Patent Office before the expiration of the General License deadline. Consequently, it is recommended to not use the RU Patent Office as the ISA in any PCT application from now until sanctions are lifted.

(cf. also:  Impact of Russian counter-activities on IP sector)

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.