In the domestic arena, the Russian government should grant exclusive jurisdiction over intellectual property rights issues to the existent system of arbitration courts, implement training programs for members of the judiciary and for law enforcement officials, and establish a consulting body that would serve as a forum for relevant public, private and international organizations to provide input on the development of intellectual property rights in Russia. In the international arena Russia must assure prompt and comprehensive notification to the World Trade Organization of recent developments in Russian intellectual property rights legislation and support the demands of other acceding countries for more time for complying with WTO rules on intellectual property rights.

Introduction

Intellectual property rights (IPR) will continue to be a major issue of concern for WTO Members, in particular the United States and the European Union, during the process of Russian accession. Though improvements have been made in the laws on the books, the most serious challenge rests with the enforcement of intellectual property rights. Russian legal provisions on enforcement of IPR’s do not precisely fit into the framework of the Agreement on the Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement).

This analysis will address the problem primarily from the legal point of view with references to the economic and political fields. It is necessary to stress that the accession of the Russian Federation to the WTO is a political issue to a great extent. However, minimum standards in the legal and economic realm are a necessary prerequisite for accession. The timeframe for the IPR suggestions starts immediately and runs until 2002.[1]

Domestic Procedures

The process of reforming Russian IPR regulations is marked by the following tendencies:

The above list is by no means exhaustive. It represents merely an attempt to generalize the most significant tendencies. The first option is the most efficient to follow. It requires subtle understanding on the part of Russian officials of global IPR standards and practices and reasonable responsiveness to the expectations of foreign governmental and private partners. The main problem with this option is the lack of experience of Russian lawmakers in the field of international standards. Another obstacle is the weak and tense relations between the executive branch, which is in charge of WTO accession negotiations, and legislative bodies, which are called on to makes changes in Russian legislation. Western companies with a commercial presence in the Russian Federation are limited in their ability to exert influence on their respective governments, which are expected to consider a variety of difficulties in the trade negotiations on a bilateral and multilateral level.

In light of the inefficiency of the above avenue the next available resort is the influence of international organizations and trading partners. The latter have serious bargaining advantage in negotiations with the Russian Federation since the Russian Federation itself is trying to accede as a full member of the world trading community and joining the WTO is the most important step to this end.

Of the above avenues, the first is the most cost-effective, however at this stage it appears extremely tough to follow because of the outlined constraints. The Russian Federation should acquire enough power and bargaining advantage to use it. The second and particularly the third avenue are at present the most efficient. They synthesize the interests of both the Russian Government and Russian companies and their respective foreign trading partners and international institutions. Therefore the following analysis deals primarily with the obligations connected with accession to the international commercial organizations with particular emphasis on the WTO.

Previous IPR Negotiations

The Russian Federation has been going through a difficult accession process. About half of the questions, which WTO Members posed to the Russian Government during the accession process were related to IPR[2]. Not surprisingly, international players are concerned with the establishment of transparent and clear rules of the game. Another reason is the desire of WTO Members to limit the involvement of Russian businesses in actions that might involve violation of IPR. The ongoing battle over the ownership of the trademark name “Smirnov” is a case in point. A deputy Chief Executive at Diageo, the British consumer goods conglomerate, recently told the Financial Times that “Smirnoff should be protected if Russia wants to join the World Trade Organization[3].” In addition, certain aspects of the privatization process[4], are concerned with IPR.

In the first “questions and replies” communication[5], Russian Federation denied significant conflict between Russian legislation and the TRIPS Agreement, adding, however, the necessity for further examination.[6] Following detailed communication about IPR protection in the Russian Federation[7] the WTO requested clarification[8] of certain terms. This showed that the normative interpretation of legal IPR standards and enforcement measures is going to be a primary issue in the Russian accession negotiations. This issue from the negotiation perspective is very time-consuming, and the bargaining advantage rests with the WTO because of its vast experience in working with the TRIPS provisions. In last communication[9] regarding IPR, particular emphasis was placed on the questions of enforcement.

Summing up the previous stage of communications, we note that the Russian Government made an identification and thorough analysis of the main problems.[10] Now in the face of the resumed negotiation process it is crucial to present a thorough, step-by-step plan for implementing changes in Russian regulations which will lay the ground for forthcoming negotiations.

We suggest that with regard to all communications concerning IPR in the future, the Government of Russian Federation refer to the consulting services provided by LETO Consulting.

Issues on the Negotiating Table

The purpose of this part is to show what are the main challenges which will confront the Russian negotiating team at the WTO accessions talks on the IPR issues, their respective roles and identification of the main problems. Structurally it is appropriate to divide this part into substantive and procedural issues.

Substantive issues

The TRIPS Agreement codifies international intellectual property rights standards that are prerequisites to accession to the World Trade Organization. At this stage of the accession process the most critical specific issues within the TRIPS Agreement for the Russian Federation are:

Other broad areas[11] may be either considered within other broad issues of accession or they will play a more important role only after the accession process is completed.

Procedural issues

It is crucially important for the Russian Federation to assure prompt and comprehensive notification of recent developments in Russian legislation. This will ensure the credibility of the Russian Federation as a partner. To this end, the respective body within the governmental agency should bear responsibility for the negotiation process with the WTO. Notification is one of the most important instruments afforded to the states within WTO structure to allow for the member states to protect their intrinsic trade-related interests.

Enforcement of IPR

Preliminary analysis of Russian legislation[12] suggests that the Russian Federation legal code does provide reasonable protection for IPR. The main problem then is implementation and enforcement of existing regulations.

Enforcement of the IPR is covered in Part 3 of the TRIPS agreement. Courts must have the right, under certain conditions, to order the disposal or destruction of pirated or counterfeit goods. Willful trademark counterfeiting or copyright piracy on a commercial scale must be punished as criminal offenses. Russian customs official must offer assistance to intellectual property rights owners to prevent imports of counterfeit and pirated goods.

The Russian Agency for Patents and Trademarks (Rospatent) recently submitted a package of new intellectual property laws to the government of the Russian Federation[13] This is the most positive recent development. Also, the intellectual property rights protection regime in Russia has recently been strengthened by the fact that Rospatent has been given the authority to regulate copyrights, and that new regulations on well-known trademarks entered into effect in June.[14]. They address some very important concerns, however the enforcement of intellectual property laws remains inadequate[15]. Serious problems constitute the arbitrary nature of administrative relief and the very high cost of obtaining patents and trademarks, partially due to the "two-tier" registration system that discriminates against foreign holders of intellectual property. Establishment of a Higher Patent Chamber and the introduction of an independent appellate process are suggested remedies for the current level of inadequate protection in civil court. In this respect the penalties and sanctions for industrial property, copyright and trademark infringements may be increased in the Criminal Code and border control on pirated goods should be improved.

Another problem is the enforcement orders of the judiciary. At present, the Russian Federation has no means to ensure enforcement of IPR in every district court. The ideal solution would be the establishment of a special type of court[16]. However, this policy does not seem reasonable in the short or even medium-term. Therefore it appears appropriate to grant exclusive jurisdiction to over IPR issues to the existent distinctive system of arbitration courts. This will help to monitor and check the decisions on IPR and will contribute to the elaboration of consistent judicial practice as well as strengthen the judicial protection of IPR. In order to develop unitary enforcement practice, the Russian Federation Supreme Court and the Russian Federation Arbitration Court should consider concentrating the review of disputes pertaining to trademarks and patents in a limited number of courts.

It is crucial to train judges in international legal standards and practice with regard to IPR. The Government of the Russian Federation should implement training programs for members of the judiciary and for law enforcement officials. Comprehensive training on intellectual property rights legislation and regulation should be provided to all judicial bodies with jurisdiction over IPR disputes.

It might be helpful for the Government of the Russian Federation to establish a consulting body that would serve as an effective forum for dialogue with relevant public, private and international organizations to provide constructive input to the development of IPR in Russia. Engaging both foreign companies investing in the Russian economy and domestic companies investing abroad will aid in assessing the position of the Russian Federation on the international plane. An Embassy Working Group, representing 25 foreign embassies, Russian government officials, leading IPR organizations, and international and Russian legal and public policy experts formed to advocate for IPR reform in Russia[17] may serve as a basis for such dialogue with the Russian government. However in it present status as an ad hoc group in Moscow, its influence is limited.