While the devastating humanitarian crisis resulting from Russia’s war on Ukraine continues to be front and center, grim economic consequences are also unfolding for some entities with respect to their Intellectual Property (IP). Russian President Vladimir Putin recently issued an executive order eliminating requirements to compensate the owner of infringed Russian IP if the owner is from a so-called “unfriendly” country. Russia has designated about a quarter of the world’s countries as “unfriendly,” including the United States. This means that U.S. entities holding patents in Russia would essentially lose their enforcement rights. Legally unenforceable patents have little (if any) value if anyone can freely infringe them without penalty. Thus, patent holders from an “unfriendly” country – who have likely spent considerable time and money pursuing and maintaining their Russian patents under the expectation of future profits – may instead be facing minimal return on their investment.
Moreover, U.S. entities that nevertheless wish to pursue or maintain Russian patents will be effectively prevented from doing so after June 23, 2022. Although the Russian patent office itself is not a sanctioned entity, the Central Bank of the Russian Federation is a sanctioned entity. This bank, which has been specifically targeted with sanctions by the U.S., is currently the only means by which the Russian patent office accepts payments. Sanctions imposed on the bank in late February are subject to a “wind-down” period that expires on June 24, 2022. This “wind-down” period allows payments to the Russian patent office processed before this deadline. Any subsequent transaction that is intended to, or does, evade or avoid sanctions may be subject to criminal prosecution.
The impending practical inability of U.S. entities to file patent applications in Russia is particularly problematic in view of the country’s patent law, which requires the first patent application for an invention conceived in Russia to be filed in Russia, regardless of inventor nationality. Applicants must wait six months after filing in Russia to obtain a foreign filing license. If an inventor living in Russia is found to be named on a foreign patent or patent application that was not first filed in Russia, that inventor could face criminal prosecution. Therefore, the hurdles to filing patent applications in Russia could put U.S. entities in a difficult position, not only in terms of patent law but on a much larger scale.
What does all this mean for U.S. owners of Russian patents or patent applications? Even if tensions between Russia and Ukraine were to suddenly deescalate and the volatile geopolitical situation were to stabilize, it is likely that Russia’s tarnished reputation on IP enforcement (which was already weak) will endure for some time. While some patentees may attempt to keep valuable IP alive for as long as possible, the diminished benefit of owning Russian IP may leave many little choice but to let their patent portfolios lapse. Instead, U.S. entities should consider shoring up patent protection in countries that are likely importers of infringing Russian products, such as China, India, and Middle Eastern countries.