written on 11.02.2014

Why Russia is now at the forefront of Innovation Protection

TAGS: Russia,

Igor Nevzorov and Anna Prokurnova from EY Russia & CIS offer their perspective on the new innovation protection laws introduced in Russia, how this step towards westernized law enforcement will affect the day-to-day life in Russia, and why Russia might be the new destination for innovators starting new projects

After two decades of being perceived as the successor to the soviet Union, with its rather formalistic style of using legal mechanisms to regulate the day-to-day life of the country, today’s Russia is taking a huge step toward adopting western principles and ideas of law enforcement and protection of innovation. This step, small as it may seem from the perspective of the millennial history of Russian legislation, is a giant leap for all Russian innovators who wish to have their ideas and investments properly protected. The significant improvement in innovation protection stems from simultaneous acceptance into the law and court practice of several new legal concepts, which, until recently, were unfamiliar to Russian lawyers. The most important developments include (i) codification and general reform of the Russian intellectual property protection law due to the accession of Russia to the world trade organization (2008-2012); (ii) incorporation into the Russian civil code of a special obligation for all commercial companies, innovators and other market participants to act in good faith (spring 2013); (iii) establishment of a special intellectual property protection court with specific focus on and jurisdiction over IP protection, so all innovators can now benefit from uniform case law and more clarity in all intellectual property issues (summer 2013); (iv) enactment of a new “anti-piracy” law intended to stop infringement of copyright and related rights on the Internet while allowing IP owners to get an immediate injunction against Internet infringers (summer 2013); and (v) modernization of confidentiality and personal data law to conform to European legal standards (2012-2013, with some aspects still awaiting enactment).

Today’s Russia is taking a huge step toward adopting western principles and ideas of law enforcement and protection of innovation. 

Russia has developed new case law principles intended to intensify protection of investments, including recent legal positions of the supreme arbitration court and other high courts regarding (i) correct calculation of damages for infringement, (ii) ways to counter unfair business practices in using third party intellectual property and (iii) protection of valuable information from unauthorized disclosure. Based on recent business practice, we can say that the Russian authorities seem to support such cutting edge legal mechanisms to commercialize and protect IP rights as: (i) protecting non-standard trademarks (applies not only to 3D marks, but also to color and flavor marks), (ii) obtaining state registration of IP license agreements without submitting the agreement to the state authorities (e.g., based on extracts from the agreement) and (iii) using the unfair competition concept to stop bad practices, even if the intellectual property is not properly protected.

Another measure available to companies to protect their investments in innovation is the new data exclusivity provision recently incorporated into the Pharmacon law. The new law, adopted in the wake of Russia’s accession to the WTO, says that no one (under penalty of civil and criminal prosecution) is allowed to make any commercial use of any data relating to the development and trial of Pharmacon within a certain period of time without prior consent of the initial owner of the data. While intended to westernize the Russian law, the data exclusivity concept in Russia is somewhat different from similar concepts in western jurisdictions where information about the results of clinical trials, especially those concerning the safety and effectiveness of a drug, is generally publicly available. In contrast, in Russia such data is covered by data exclusivity. However, despite the somewhat straightforward language of the Russian law, this is no doubt a positive development, showing that Russia is ready to apply international standards, in particular, in the pharmaceuticals industry.

It is now up to innovators to decide whether to choose Russia as their home jurisdiction when starting new projects

Russia is home to Skolkovo, a huge innovation center offering special legal and tax treatment to its R&D residents, including a range of tax benefits. Skolkovo residents are eligible for relief from Russian corporate profits tax, value added tax, assets tax and some other taxes. In addition, they enjoy reduced social contribution rates. Some of the new initiatives in Russia appear to offer greater protection for innovations than many foreign countries, and it is now up to innovators to decide whether to choose Russia as their home jurisdiction when starting new projects.

To read more articles and interviews from Russia, and to download PharmaBoardroom’s latest report on the country, click here.


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