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. Last Updated: 07/27/2016

Brands Get Leg Up on Bootlegs

With pirated goods hawked on every other street corner -- a business with an estimated turnover of more than $1 billion a year -- Russia is a nightmare or paradise, depending on your point of view, for lawyers specializing in the defense of intellectual property rights and trademarks.


While violations of copyright and trademark protection laws are still the order of the day and success stories of Western firms taking bootleggers to task are few and far between, lawyers say the attitude of Russian authorities is slowly changing, and it is possible to take efficient action to defend a brand name.


At a legal briefing last week Eugene Arievich, a partner with the Moscow office of Baker & McKenzie, advised Western companies to "register first, think next," as regards their trademarks on the Russian market.


There are numerous examples of international brands failing to register in time and then facing an uphill battle to defend their rights on the Russian and other CIS markets, attorneys say.


Arievich cited the drawn-out battle over the right to use the brand name Smirnoff between the British Grand Metropolitan conglomerate, which uses the trademark internationally, and the Russian firm Pyotr Smirnov and Descendants in Moscow, as "a copybook example of the importance of timely registration."


Even companies that do not intend to market their brand in Russian immediately can register it.


Under the Russian law "On Trademarks, Service Marks and Appellations of Origin of Goods," passed in 1993, there is a five-year grace period for non-use.


The procedure for doing so is, however, far from simple. There are cases where the procedure has been drawn out for two years, one lawyer said.


However, even after lawfully registering a trademark, companies can face serious problems defending their rights in the face of the tidal wave of counterfeit goods pouring into the market.


"The problem is not so much the laws, because the civic code, the criminal code and the trademark law are in principle sufficient. The problem is that the courts work slowly and that decisions are not enforced," said one Russian lawyer, who asked not to be named.


The owners of trademarks can choose between several paths when taking legal recourse against violations of their rights. These include civil litigation, criminal litigation and instigating procedures under Russia's anti-monopoly legislation, said Marina Drel, an associate with Baker & McKenzie.


However, in the case of civil litigation and procedures under the anti-monopoly law, the collection of evidence and the burden of proof lies on the trademark owner.


"This is difficult," Drel said.


In the case of criminal litigation, it is the prosecutor's office or the state investigator's responsibility to collect evidence and prove the charges.


Early on, only a handful of foreign companies were able to take successful action against counterfeit goods.


One instance was the landmark victory of U.S. toy manufacturer Mattel, which in 1994 won substantial concessions from the Russian customs authorities on strict measures against imports of fake Barbie dolls.


Lately, however, there has been some positive developments in the positions of Russian officials and courts.


"The attitude of the authorities is slowly starting to change," said Arievich.


Most observers link this development to Russia's negotiations to join the World Trade Organization.


According to Western diplomatic sources, there is now -- in the run-up to a May working party meeting on Russian affiliation -- a real possibility of influencing Russian policies on the trademark issue.


While most lawyers say Russian laws pertaining to the protection of trademarks largely correspond to international standards, there is disagreement over whether additional legislation is needed in this field.


A third section of the Russian civil code now being prepared will address issues of copyright and trademark protection, lawyers said. But even if the intention is to protect property rights, fears linger that the net result could be the opposite.


"Two sets of legislation may create confusion and multiply loopholes," said the Russian lawyer, who asked not to be named.