The Ministry of Industry and Trade continues to fight for “unfriendly” intellectual property

The Ministry of Industry and Trade has not abandoned the idea of ​​limiting the rights of foreign investors from “unfriendly” countries to dispose of their intellectual property, including local Russian brands, patents and technologies. Following the draft presidential decree on a special procedure for regulating transactions with them, yesterday the ministry published a draft government resolution supplementing the powers of the White House Commission on Foreign Investment with the right to determine such a special procedure.

The draft government resolution published yesterday by the Ministry of Industry and Trade on regulation.gov.ru amends the current White House Resolution No. 295 of March 6, 2022, which describes the powers of the government commission on foreign investment to regulate the “exit” of foreign companies from the Russian Federation. The draft supplements the powers of the commission by regulating “a special procedure for the commission to issue permits to carry out… transactions involving the alienation or pledge of the exclusive right to the result of intellectual activity or a means of individualization.” The preparation of the draft decree is due to the completion of public discussion of the draft decree requiring the approval of transactions with intellectual property of foreigners, and its submission to the government. It is assumed that the decree, if the draft decree and it itself are signed, will take effect immediately after publication “due to the need for prompt decision-making by the commission on the above transactions.”

The draft amendments to the presidential decree “On additional temporary economic measures to ensure the financial stability of the Russian Federation” (see “Kommersant” dated December 11, 2023) were also prepared by the Ministry of Industry and Trade – it extended a special procedure for approving transactions for the sale of shares of foreign companies from “ unfriendly” countries leaving the Russian market, and on intellectual property rights. Experts then explained the preparation of the document by the fact that a significant part of local Russian brands is controlled by foreign companies and this creates risks of their transfer, including to neighboring countries, and expected that the need to approve transactions would lead to a reduction in their number, but would simplify the transfer of rights to Russian companies in a number cases. The ministry then explained the extension of the special regime for approving transactions to intellectual property by the need to “minimize the risk of unfair law enforcement practice.” The current version of Vladimir Putin’s decree No. 81 dated March 1, 2022 requires the approval of the Foreign Investment Commission only for the sale of shares, stocks and real estate of departing foreign companies from “unfriendly” jurisdictions, and, according to experts, the absence of restrictions on the sale of IP allowed them to compensate for losses from the sale of other assets to Russian buyers or sell the rights to produce controlled brands to competitors.

We note, however, that the Russian authorities still demonstrate caution in matters of regulating the circulation and use of intellectual property owned by foreign owners. Thus, First Deputy Prime Minister Andrei Belousov, answering a question from Kommersant about the possibilities of circumventing intellectual property protection (see Kommersant on December 30, 2023), said that “too radical actions” in this area “in many cases they turn against us,” weakening export opportunities and reducing investor confidence in research and development.

Oleg Sapozhkov