In the latest example of the escalation of tensions between Russia and the West, Russian Prime Minister Mikhail Mishustin last week issued a decree that owners of Russian patents from countries that Russia considers to be unfriendly are no longer entitled to any compensation for compulsory licensing of their patents. In particular, the decree (translated from Russian) states:
“With respect to patent holders associated with foreign states who commit unfriendly actions against Russian legal entities and individuals (including if such patent holders have the citizenship of these states, the place of their registration, the place of preferential conduct of their economic activities or the place of preferential extraction of profits from their activities are these states), the amount of compensation is 0 percent of the actual revenue of the person who has exercised the right to use an invention, utility model or industrial design without the consent of the patent holder, from the production and sale of goods, performance of works and provision of services for the production, performance and provision of which the corresponding invention, utility model or industrial design is used.” (underlining added)
As a result, owners of Russian patents from the affected countries, including the United States, Canada, the United Kingdom, Japan, and the European Union, should not expect to be able to enforce their patent rights in Russia in the near term. However, at this point, the affected countries have not made reciprocal changes to their patent laws aimed at Russian patent owners, and thus, parties in these affected countries should continue to operate as though Russian patent owners can fully enforce their rights in the affected countries.
How should affected foreigners respond?
Though compulsory licensing payments are uncertain at best right now, owners of Russian patents from the affected countries are advised to document commercial activity that would normally be entitled to compensation. Once commerce resumes between Russia and the affected countries, foreign owners of Russian patents should have documentation readily available to demonstrate such commercial activity in the hope that Russia authorizes retroactive compulsory licensing payments.
Moreover, patent applicants should give careful consideration as to whether it is worth the uncertainty, and potentially lost expense, to pursue patent rights in Russia. Given these risks, patentees may want to consider filing patent applications in other jurisdictions near Russia and/or jurisdictions where Russians may continue to do business during sanctions, such as China, India, and countries in the Middle East. This filing strategy may provide some protection against patented products manufactured in, but then exported from, Russia.
Patent applicants may want to consider assigning ownership of their Russian patents to a trusted agent who is not from an affected country. This may allow prosecution of pending Russian patent applications or enforcement of granted patents by this agent.
Non-Russian patent applicants should also prepare for the possibility that any patent applications pending in Russia will not be granted as patents, and instead be permanently abandoned. It is effectively not possible at this time for attorneys in the United States to exchange documents or payments, on behalf of their clients, in any manner sufficient to permit normal patent prosecution practice inside Russia by non-Russian patent applicants.
Until normal international relationships resume, patent applicants globally should take note of the actions affecting their Russian patent rights and plan accordingly.