New counter-sanctions against intellectual property

For the last two years, the main IP counter-sanctions document has been Presidential Decree No. 322 of 27 May 2022 (“Decree No. 322”). Decree No. 322 states that the only way to make payments to rights holders from “unfriendly” countries for the use of their intellectual property is to transfer funds to a type “O” ruble account in one of the authorized Russian banks (unless the transaction qualifies as an exception).

Thus, Decree No. 322 covers payments related to the use of IP (mostly under license agreements); and there had previously been no legal restrictions on IP assignment. Previously, these assignments could be completed in the ordinary way.

Decree No. 430 expands the scope of restrictive measures and provides temporary restrictions on transactions involving the acquisition (assignment) of exclusive rights between Russian assignees and rights holders from “unfriendly” countries, as well as the fulfillment and/or enforcement of monetary obligations under such transactions.

The reviewed transactions will be subject to authorization by the Government's Foreign Investment Control Commission (the “Commission”).

The Commission's authorization may include:

• a requirement that remuneration and other payments under the above-mentioned transactions be made through a type “O” account in an authorized Russian bank (from which the foreign rights holder may withdraw funds with the approval of the Commission) and
• other requirements for the above-mentioned transactions (at this time it is unclear what “other requirements” are being considered).

In the initial draft of Decree No. 430, the above procedure was to apply only to transactions involving intellectual property in the pharmaceutical field. It follows from the final version of Decree No. 430 that the restrictions will apply to transactions involving the assignment of IP assets regardless of the industry of use, with the exception of: 

• works of science, literature and art, performances, phonograms, broadcasts of cable or broadcasting organizations; and
• transactions with an amount of remuneration up to RUB 15,000,000 or its currency equivalent.

Decree No. 430 applies retroactively, i.e. it shall apply to all outstanding monetary obligations at the date of its entry into force (20 May 2024). Such obligations must be fulfilled by transferring funds to a type “O” account opened in the name of the rights holder.

We expect that, as a result of Decree No. 430 adoption, the procedure for assignment of IP assets such as trademarks, inventions, utility models, industrial designs and other assets not covered by the exception from “unfriendly” rights holders will be significantly changed. This fact needs to be considered while planning and structuring transactions involving IP assignment. In many ways, the measures introduced resemble the procedure that was approved by Decree No. 322 and for which a certain practice has already taken shape.

The B1 team has extensive experience in advising Russian and international clients on both obtaining governmental approvals and drafting and enforcing IP assignment agreements. We are ready to provide support on various issues related to restrictive measures, including preparation of memorandums and the submission of applications for Commission authorization.

• Dmitry Semenov, Director, Legal Services
• Polina Bychenok, Associate, Legal Services