On May 27, 2022 the President of Russia signed a Decree requiring that payments to certain categories of IP owners should be made in rubles via a special account to be opened with a bank included on the list authorized by the RF Government. The Decree has taken effect.
Who is subject to the Decree?
The Decree extends to foreign IP owners connected with hostile countries, as well as foreign (other than from hostile countries) and Russian IP owners who after February 23, 2022 terminated, suspended or substantially limited their production in Russia, banned any use of their intellectual property in Russia and made public statements against the Russian Federation actions outside the country or supported the anti-Russia sanctions or distributed compromising information relating to the RF Armed Forces.
So, Russian companies and individuals who are IP owners may also be subject to the new Presidential Decree if they take any of the above-mentioned steps.
What payments will have to be made in rubles?
The following types of payments to the above-mentioned categories of IP owners will have to be made in rubles:
How to open a special account and use it to make payments?
Payments will have to be made by transfer to a special account of the IP owner. Such account can be opened on request of the user of IP rights (such as licensee or franchisee) or the infringer of IP rights (who is required to make a payment by a court order) with an authorized bank included on the list which will be approved by the RF Government shortly. Neither personal presence nor consent of the IP owner is required for opening such special account. If a special account has already been opened in the name of the IP owner, the bank will provide the account details to the IP rights user or infringer.
The authorized bank will notify the IP owner about opening of a special account in its name, using its contact information available in public IP registers (such as the National Register of Trademarks and Inventions details. The user of IP rights should ask for the IP owner's consent to make payment to a special account. However, the lack of the IP owner's consent will not be an obstacle for the user of IP rights to continue using the relevant IP rights on the same terms. The user of IP rights may choose either to make payments without the IP owner's consent or to suspend payments pending the grant of such consent.
What will happen to money received on a special account?
The IP owner will only be able to manage any funds received on its special account with an authorized bank after obtainment of a relevant authorization of the RF Government Commission on Foreign Investment Control.
Are there any exemptions from the Decree?
The Decree does not apply to:
a) agreements under which the IP owner grants use rights to intellectual property and/or means of identification required for:
b) small payments, up to RUB 100 thousand or an equivalent in a foreign currency each, made by a resident individual in connection with his use of intellectual property and/or means of identification for his personal, family needs or other non-business purposes, unless such use is aimed at gaining profit or income;
c) IP owners connected with hostile countries, who properly perform their obligations under agreements.
The list of exemptions is broad enough, especially its last paragraph. So, one may suppose that in practice the Decree will be applied on a rather limited basis. That said, disputes about interpretation of provisions of the Decree seem to be inevitable.
Until June 6 the RF Government is to determine which federal authority will be empowered to provide official explanations on application of the Decree. Upon receipt of explanations it will be possible to make more accurate conclusions on how the Decree will work.