Russia:  Legal Environment and IT

    Intellectual property, like many other facets of the legal environment in Russia today, has failed miserably over the past few years to guarantee the rule of law in this emerging market.  Russia not only lacks the contemporary laws protecting individuals and companies form copyright theft, trademark violation and other abuses of such intellectual property rights, but also usually lacks the will to enforce the currently existing laws.

    Much can be cited to show a severe lack of understanding of the necessary societal and legal framework for such laws in the Post Soviet countries.  Until 1992, all trademarks were owned by the state and many producers had the right to use them, so no one really cared about ownership rights.  This pervasive attitude is making it very difficult for foreign companies to do business in Russia, and those who do find the courts are ill equipped to handle the amount of cases pending on intellectual property violations.   It has been proposed, from about 1/3 of the companies who were willing to disclose such facts, that IPR violations cost them between 5 and 50 million a year in lost revenue (PR Newswire, 2000).  One projection even claims 15 billion in aggregate lost revenue over the course of 1995 for all companies in Russia.
One of the hardest hit industries is Software.   Piracy is so rampant in Russia that many consider the Russian Federation a “one copy country” referring to the mass illegal copying of software to supply total demand for the product.  SIIA projections place Russia as one of the most egregious violators of software piracy in the world with a 92% piracy rate as of 1998.  On occasion even the Russian government itself purchased one copy to distribute to all its agencies and then allowed it to proliferate into society.   Without better enforcement and awareness of intellectual property as a whole, Russia is severely limiting its ability to attract FDI and new business into its boarders.  Many who have tried to do business have been forced to leave due to the lack of legal enforcement.

    All is not lost yet, however.  Slow but measurable progress has been seen recently.  Since 1997 the Russian government has been revising and updating its laws on IP to cover incomplete and inadequate existing laws.  The legal establishment has begun to understand the needs of these rights for their nascent economy both for domestic and foreign entities.   The Russian state is a signatory to several international agreements, for instance, The Paris Convention, Berne Convention, Geneva Convention and Universal Copyright Convention of 1994 that require compliance to international standards of IPR law and enforcement.    This summer the most aggressive push to upgrade the IP laws in Russia was undertaken by Rospatent, the Russian Agency for Patents and Trademarks.  There is currently a package of new IP laws in the Duma that will be necessary for the Russian Federation to adhere to the terms for WTO membership.  The international environment is mandating such change as part of any new treaties with Russia.   There also seems to be renewed commitment by the Putin administration on these topics.  Hopefully, Russia can also come into the fold of international Alternative Dispute Resolution (ADR's) for further ensuring a proper and fair playing field for citizens and business alike.

    Obviously, Russia must take these steps seriously as their potential in the near and distant future may well hang on the transparent and well established laws they create for IP in Russia.  Of course, whether or not they enforce these laws is another question altogether.

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