The Patent Litigation Law Review: Russia
Russia has only operated as an independent state, distinct from the former Soviet Union, since the early 1990s. Although a new patent law was enacted shortly after, it was not until 2008 that Russian patent law was fully modernised with the enactment of Part IV of the Civil Code.
During this period of transition, the patent office and the court system were also being established. On 3 July 2013, the Plenum of the Supreme Arbitration Court of the Russian Federation approved the commencement of the new Intellectual Property Court (the IP Court), located in Moscow. With the amendment of Federal Constitutional Law No. 4-FKZ of 6 December 2011, a new specialised court, the IP Court, was introduced into the Russian judicial system.
Over the past eight years since the IP Court was created, there have been noticeable improvements in the quality of decisions in the field of trademarks and domain names, where the Court seems to be most comfortable. Regarding patents, a large proportion of the infringement cases and appeals from the Chamber of Patent Disputes (the Patent Chamber) have been in the area of pharmaceuticals. In this regard, the IP Court has shown substantial deference to Patent Chamber decisions regarding validity. Most appeals from the Patent Chamber have been denied.
Accordingly, the Court has become comfortable in the sphere of trademarks; however, it is also clear that it does not yet have the same depth of experience it needs to refine the intricacies in patent law from what it currently is to what it should be.
In 2014, Part IV of the Civil Code was amended to introduce several new substantive improvements to the laws relating to patentability, infringement and compensation, as well as the scope of protection to be accorded to utility models.
In April 2019, the Plenum of the Supreme Court of Russia issued a detailed resolution concerning the use of Part IV of the Civil Code. Although there is no doctrine of stare decisis, resolutions are proclaimed from time to time by the Supreme Court that are intended to clarify procedural and substantive uncertainties relating to the application of its laws, in this case intellectual property. This resolution is comprehensive and touches upon most fields of intellectual property, including patents.
Alternative dispute resolution is seldom resorted to, and settlement is an infrequent outcome in patent cases in Russia because an action will quickly proceed to trial. Litigation costs are low because there is no discovery, no deposition process and few pre-trial motions. There is little testimony at trial, and awards of court costs, if any, are nominal. Moreover, the culture of alternative dispute resolution is not ingrained in the judicial or attorney psyche in Russia as it is in many other countries.
Types of patent
In Russia, patents cover three types of intellectual property: inventions, utility models and industrial designs. All three are subject to the relevant patentability requirements. The patent term for inventions is 20 years, with a possibility of up to five years' extension for pharmaceuticals, pesticides and agrochemicals; for utility models, as of 2015, it is 10 years; and for industrial designs it is now a first term of five years, which is renewable four times for a total of up to 25 years.
For inventions and industrial designs, national patents may be granted by the Russian Federal Service for Intellectual Property (ROSPATENT) or regional patents by the Eurasian Patent Office that are effective in Russia and seven other contracting states. For utility models, a patent may be granted by ROSPATENT only.
i Invention patents
An 'invention' is a technical solution, in any area, related to a product (including a device, substance, microorganism strain, and plant or animal cell culture) or method (process of affecting a material object using material means).2 An invention may be granted if it is new, involves an inventive step and is industrially applicable.
Patentable subject matter
The following are not patentable under Part IV of the Code:
- methods of cloning a human being;
- methods of modifying the genetic integrity of cells of the embryonic line of a human being;
- use of human embryos for industrial and commercial purposes; and
- other proposals that are contrary to public interest, principles of humanity, and morality.3
The following are not deemed to be inventions in and of themselves:
- scientific theories and mathematical methods;
- proposals concerning solely the outward appearance of manufactured articles and intended to satisfy aesthetic requirements;
- rules and methods of games and for intellectual or business activity;
- computer software; and
- ideas on presentation of information.4
This subject matter is not patentable if the patent application refers to the above subject matter, with nothing more added.
An invention is deemed to be new if it is not anticipated by prior art. Prior art includes any information that becomes generally accessible anywhere in the world before the priority date of the invention.
In assessing novelty, the state of the art also includes, under condition of earlier priority, all earlier filed applications in Russia by other applicants for inventions and utility models that ultimately have been or will be officially published, and inventions and utility models that have been patented in Russia.
Inventive step (non-obviousness)
An invention must involve an inventive step. For an invention to meet this test, it must not be obvious to a person skilled in the art. The state of the art includes any information published anywhere in the world and made available to the public before the priority date of the invention.
Six-month grace period
Disclosure of information relating to an invention by the inventor, applicant or other person having received this information directly or indirectly from them, who made information on the essence of the invention public, is not an event that precludes the recognition of the patentability of the invention if a patent application for the invention was filed in Russia or under the Patent Cooperation Treaty (PCT) within six months of the date of disclosure of the information. The burden of proof that the disclosure was permitted under the grace period falls to the applicant.
In this situation, the applicant cannot rely on the six months before the priority date but only the six months before the actual filing date. In the Eurasian Patent Office, the applicant can rely on a grace period that is six months before the priority date. The burden of proof is on the applicant, who must show the circumstances took place by virtue of which there was disclosure of information that does not prevent the recognition of the patentability of the invention.
Utility: industrially applicable
An invention is deemed to be 'industrially applicable' if it can be used in industry, agriculture, public health and other branches of the economy or social sphere. It is not a difficult test to satisfy.
Article 1350 of the Civil Code previously required three conditions for patentability of inventions: novelty, inventive step and industrial applicability. New amendments introduced in 2014 included a fourth requirement: sufficiency of disclosure. The new requirement is assessed by examiners in the course of substantive examination of applications.5
Insufficiency of disclosure is now a valid ground for both refusing an application and revoking an issued patent.6 'Sufficiency' means, as of the filing date, 'to disclose the essence of the claimed invention in the application documents in a manner sufficient for implementation of the invention by a person skilled in the art.'
Prior to this amendment, sufficiency of disclosure was a practical but not a statutory requirement, except to the extent that it had to be sufficient for 'realisation' of the invention.7 Sufficiency was assessed as a matter of practice, procedure and regulation under the legal requirement for 'industrial applicability'; however, the legal right to raise an objection of industrial applicability premised upon insufficiency of disclosure was often in doubt. To address this doubt, it was decided to formalise sufficiency as a separate requirement for patentability.
Regarding critical dates, although novelty and inventive step are determined as of the priority date, the assessment of sufficiency of disclosure is to be made on the basis of information contained in the specification as of the filing date (international filing date for PCT applications and the date of actual filing for applications filed directly with the Russian Patent Office).
A utility model is a technical solution relating to a device. A utility model may be granted if it is novel and industrially applicable. There is no inventive step requirement.
Protection for utility models was introduced in Russia under the Patent Law of 1992. The public interest objective in introducing utility models was to grant patents expeditiously without substantive examination to encourage development of small businesses and innovation in an emerging economy.
Unfortunately, although the regime delivered some benefits to the public interest, the system was manipulated for undesirable purposes. Utility model applications were often inappropriately used as a means for quickly obtaining a patent to use against others. Because there was no substantive examination, vexatious applicants would apply for patents for subject matter that was very likely already in the public domain. They would then try to assert those patents against bona fide business entities legitimately using the technology, (e.g., manufacturers of products or Russian distributors).
New revisions to the law were enacted in 2014. The new amendments seek, by various means, to curb those abuses:
- Prior art: until 2014, prior art for evaluation of the utility model's novelty was limited to published information about any means having the same intended use as the claimed model; however, the amended Article 1351 expanded the meaning of prior art so that it includes any information that became publicly available before the priority date of the utility model, regardless of the technical field to which it applies. Moreover, under the previous definition of prior art, only information available in Russia regarding use of the means having the same intended purpose was considered. This restriction has now been removed, such that prior art includes information that was publicly available anywhere in the world. Prior art now also includes earlier filed invention patents and design patents.
- Substantive examination: in addition to broadening the definition of prior art, there is now substantive examination of applications. Previously, the only form of examination was clerical in respect of filing formalities. Substantive examination is carried out to verify compliance with both the requirements of subject matter and patentability.9
- Literal infringement only: the scope of protection granted to a utility model is now more limited. Under the previous legislation, a utility model patent was deemed to be infringed if the article possessed features equivalent to the features included in the utility model claims. Under the amended Article 1358, infringement based on the 'doctrine of equivalents' with regard to utility models has been abolished.
These amendments are directed at positioning utility models where they were intended to be in terms of the public interest.
A utility model is deemed to be new if the sum of its essential features is not anticipated by the prior art. The state of the art includes any kind of information published anywhere in the world and made available to the public, before the priority date of the claimed utility model, concerning devices of similar function and in use in Russia or elsewhere.
The state of the art also includes, on condition of their earlier priority, all applications filed in Russia by other applicants for inventions and utility models that have been in due course officially published, inventions and utility models that have been patented in the Russian Federation.
Six-month grace period
Disclosure of information relating to a utility model by the author of the utility model, applicant or other person having received this information directly or indirectly from them, who made information on the essence of the utility model public, is not a circumstance precluding the recognition of the patentability of the utility model, if an application for the grant of a patent for the utility model was filed with ROSPATENT within six months of the date of disclosure of the information. The burden of proof that the disclosure was permitted under the grace period falls to the applicant.
A utility model is deemed to be industrially applicable if it can be used in industry, agriculture, public health, other branches of the economy or the social sphere. It is not a difficult test to satisfy.
Not utility models
Legal protection as utility models cannot be granted for proposals that solely concern the outward appearance of manufactured articles and that intend to satisfy aesthetic requirements, or for layout designs (topographies) of integrated circuits.10
A design qualifies as subject matter for a design patent if it is an artistically designed solution of an article, manufactured industrially or by artisans, that defines its outward appearance. An industrial design may be granted legal protection if its essential features are new and original.11
The essential features of an industrial design include any features determining the aesthetic or ergonomic characteristics of the outward appearance of the article, or both, including shape configuration, ornament and combination of colours.
In 2014, the requirement to express in writing the claims to the essential features was eliminated from the law; however, for classification purposes, the patent office continues to require the inclusion of a written description of the design for all nationally filed applications. Applications filed using the Hague System are not subject to this requirement.
An industrial design is deemed to be new if the aggregate of its significant features reflected on images of the article's appearance is not known from information generally available in the world before the priority date of the industrial design application.12
When determining the novelty of an industrial design, all pending priority applications for industrial designs filed in Russia by other persons that are ultimately granted will also be treated as prior art. If prior art is pending in Russia, it will not be cited against the other application, and the owner of the prior art will be required to file a subsequent revocation action in the Patent Chamber.
An industrial design is deemed original if its essential features are the result of the 'creative nature of the special aspects of the article'.13
Six-month grace period
Disclosure of information relating to an industrial design by its author, the applicant or other person having received this information directly or indirectly from those who made information on the essence of the industrial design public is not deemed to be a circumstance preventing the recognition of the patentability of the industrial design if an application for the grant of a patent for the industrial design is filed within six months of the date of disclosure of the information. The burden of proof that the proper circumstances have taken place falls to the applicant.
Not industrial designs
Legal protection as an industrial design is not available for solutions that are determined exclusively by the technical function of an article; solutions that relate to works of architecture (with the exception of minor architectural forms), industrial, hydro, technical and other stationary structures; or solutions that relate to objects of an unstable form, such as liquids, gases and dry substances.14
On 28 February 2018, Russia joined the Hague Agreement Concerning the International Registration of Industrial Designs of 2 July 1999.
Procedure in patent enforcement and invalidity actions
i Overview of the bifurcated system
In patent-related matters, there are two independent forums that merge at the appellate level in Russia.
Patent infringement actions are first commenced in the commercial courts. At the second level of appeal, the actions make their way to the IP Court. From there, cases move on to further appeal, with leave, to the Supreme Court as explained in more detail in Section III.ii.
Proceedings to revoke issued patents are first filed in the Patent Chamber, a quasi-judicial administrative body within ROSPATENT. The first appeal from a decision of the Chamber is heard by the IP Court. A further cassation appeal may be heard by the Presidium of the IP Court and from there on further appeal, with leave, to the Supreme Court.
Proceedings for infringement and for validity are independent. The overall process is commonly referred to as a bifurcated patent system.
Until 2014, the highest court of appeal, in intellectual property and commercial matters, was the Supreme Arbitration Court. In 2014, the Supreme Arbitration Court was liquidated, and all of its powers were vested into the newly reconstituted Supreme Court,15 which is located in Moscow. Decisions of the IP Court, which is part of the Arbitration Court system, are now supervised by a 30-judge Economic Collegium that is part of the redefined Supreme Court.
ii Practice and procedure in patent litigation
There are 85 commercial courts that hear patent litigation infringement actions in the first instance. The commercial courts of first instance are courts of general jurisdiction for all commercial matters. They are not IP-specialised courts. A single judge hears a patent infringement case in the first instance. There is no jury system.
Statistically, the majority (as much as 80 per cent) of patent-related disputes are tried in the Moscow City Commercial Court because qualified intellectual property professionals and the parties themselves are most often located in the region.
There are 21 commercial courts of appeal. Appeals in infringement cases from the first instance commercial court decision of the single judge are heard by three judges of the commercial courts of appeal. The panel of judges is empowered to review the record and render what it deems to be the correct decision in fact and in law.
There is then a second right of appeal to the IP Court.16 The appeal to the IP Court is a cassation appeal. On a cassation appeal, the presiding cassation court does not review the case de novo as the lower courts did. Its jurisdiction is confined to reviewing the lower court decision for legal correctness.
An additional appeal against the ruling of the IP Court, acting as a cassation court, may be heard by the Supreme Court, provided that leave to appeal is granted by three judges of the Supreme Court. The Supreme Court hears a case only if the case severely violates an applicant's rights because of the wrongful application or violation of a material or procedural law by a lower court. In practice, the Supreme Court hears a case only if a lower court ruling is inconsistent with or negatively affects the established court practice.
There can be both civil and criminal liability for patent infringement. The latter arises pursuant to Article 147 of the Criminal Code in instances in which the infringement has resulted in significant harm to the patentee or has been committed by a group in conspiracy or by an organised group. There are no customs or border measures available for patent infringement as there are in relation to counterfeiting of trademarks or copyright infringement.
Criminal charges are brought by the Investigative Committee of the Russian Federation. Possible criminal sanctions for patent infringement include up to five years of imprisonment. Although there have been no recent criminal cases involving patents, there are many each year in the copyright field, usually involving piracy, and some have resulted in imprisonment; therefore, it is statistically unlikely but not inconceivable that imprisonment might occur in a patent case.
Patent revocation proceedings are first initiated and tried in the Chamber for Patent Disputes, a quasi-judicial administrative body associated with ROSPATENT, which is headquartered in Moscow. Appeals from decisions of the Patent Chamber are heard in the IP Court. On an appeal of a patent revocation decision from the Patent Chamber, the IP Court is entitled to appoint an expert to review the case and provide an opinion regarding validity based on his or her own expertise, without regard to the Patent Chamber decision. The IP Court may then review the lower Patent Chamber decision in the context of the expert opinion it commissioned and decide on the proper outcome. That decision may be further reviewed for legal correctness by the Presidium of the IP Court, acting as a cassation court.
In addition to the above circumstances, the IP Court may also act as a court of first instance with competence over the following subject matter related to patents:
- cases contesting legislative acts of federal executive authorities that affect a claimant's rights and legitimate interests in relation to the protection of patents;
- cases to determine issues regarding the proper inventor and owner of a patent; and
- cases contesting non-normative legal acts, reviewing decisions and reviewing refusals to take action by ROSPATENT.
A defendant may not allege invalidity of a patent as a defence to an allegation of infringement in a court action and may not counterclaim in a court action or file a parallel court action to declare a patent invalid or not infringed. A challenge of invalidity by way of revocation proceedings must always first be raised in the Patent Chamber.
A lawyer or patent attorney duly empowered to represent a party under a properly executed power of attorney may represent a party in patent infringement proceedings. There are few exceptions that are pertinent to local Russian patentees. A non-lawyer general manager of a business that is a patentee may represent it in court, and an employee of a patentee may represent it if he or she is accompanied by a lawyer.
In revocation proceedings in the Chamber for Patent Disputes, the usual practice is that the representative is a Russian-registered patent attorney acting under a duly executed power of attorney. If the decision of the Patent Chamber (ROSPATENT) is appealed, only a registered patent attorney or a lawyer duly empowered to represent a party under a properly executed power of attorney may represent a party in patent revocation proceedings before the IP Court.
The evidential process
Pre-complaint discovery/fact gathering17
The plaintiff in an infringement action bears the burden of proving the allegations put forward in the statement of claim by way of admissible evidence. This evidence is almost entirely documentary in nature and should accompany the filing of a statement of claim or defence, as the case may be.
In practice, the concept of discovery of documents and witnesses is essentially not provided for, nor is it required or permitted. In view of this, the plaintiff's burden of proof is a very onerous one because the plaintiff must make out its case almost entirely from documents that it has assembled from various sources and in respect of which the defendant cannot be directly asked any questions. It is possible to use evidence from other court proceedings in which a final decision has been rendered, but it is within the discretion of the judge to accept it.
In June 2016, it became necessary for a prospective plaintiff to issue a demand letter at least 30 days before any action for infringement could be instituted. That obligation was slightly modified in 2017 such that a demand letter is only required when monetary compensation is being sought and not when, for example, only a preliminary or permanent injunction is sought.
It is thought that, at a minimum, the notice should provide:
- the name of the patentee and identification of the patent in question;
- the name of the accused infringer or infringers;
- a brief summary explaining the acts in question and how they constitute infringement;
- the relief to which the patentee believes it is entitled;
- a time limit for response by the recipient; and
- advice recommending settlement, failing which a court action will be instituted.
No discovery by deposition exists in Russia. There is no rule forcing parties to disclose all relevant documents or information other than what a party chooses to file to support or refute an allegation. The law provides a right to file a motion with the court requesting the other party to provide evidence and documents in instances in which it can be shown that the evidence is not available to the moving party; however, such requests are seldom granted.
In practice, there is no effective procedure to obtain documents, for example, to prove that a process is being carried out in a plant or to prove the extent of revenues a defendant has generated in connection with an infringing act. This affects the extent to which a patentee can reasonably predict the damages it might recover. As a result, damages awards are usually quite nominal and typically less than US$10,000.
Another noteworthy observation is that witnesses are not commonly called or required to testify in patent-related disputes, except for court-appointed experts who file reports and can be questioned thereon.
It is possible to obtain and use evidence from earlier court proceedings, in Russia or elsewhere, in which a final ruling has already been issued; however, it is within the Russian judge's discretion whether to accept it and, if accepted, what weight to give that evidence.
Evidence at trial
In infringement cases, trials at first instance are by judge alone, without a jury. The record before a judge will typically include:
- a copy of the patent;
- a certificate of good standing relating to the patentee;
- documents confirming the authority to sign the power of attorney in the name of the patentee;
- samples of the product alleged to infringe, along with any publicly available support materials, such as user manuals and published specifications;
- documentary proof regarding the availability of the product in Russia;
- any third-party documents that are officially obtainable and that tend to prove infringement; and
- an expert report of the plaintiff showing what the salient features of the impugned product are (and possibly a patent attorney's expert opinion showing that the product falls within the claims).
Recently the Commercial Court has applied an unreasonably strict approach to proving, as a preliminary formality, that the power of attorney vesting authority in local counsel to initiate the infringement action was duly authorised by the corporate plaintiff. Such proof begins with a requirement to show that the corporate representative who signed the power of attorney was authorised to sign it, had the further authority to instruct that the action be filed and had their personal identity verified. Those documents must usually be legalised or apostilled.
If the presiding judge is not satisfied with the material submitted, the court may reject the claim, with the right to refile it with additional proof of authority to initiate the action.
The use of experts
Experts play an important role in patent-related disputes in Russia because the courts in most cases place substantial weight upon the expert's report. Often, the parties attach preliminary expert opinions to the statement of claim or defence. Those expert opinions are considered as evidence submitted by a party.
In many cases, the court itself also appoints an expert. The parties may suggest the expert candidates to the court, as well as the technical questions to be resolved.
Parties to the action have a right to suggest experts or expert organisations to act as witnesses. Resort to an expert, sometimes referred to as a specialist, may also be made at the court's initiative. In either case, the experts should have competence in the technical field in question. Experts are usually patent examiners or university professors with backgrounds in science and engineering. They are not lawyers; the expert may not opine on the issue of law. The expert may be summoned and questioned at trial by both parties at the request of a party or on the court's own initiative.
A court may grant a preliminary injunction before the statement of claim is filed.19 The proceeding is ex parte. The law does not provide for any specific type of evidence to support a request for a preliminary injunction. If a preliminary injunction is granted, the statement of claim must be filed within 15 days of the injunction order. If no statement of claim is filed, the injunction is withdrawn.
Courts will grant such injunctions if it can be shown that it would be difficult or impossible to enforce a court ruling without the injunction or to prevent irreparable harm faced by the defendant;20 therefore, the submissions and evidence should meet this burden.
Although there is a right to request a preliminary injunction, this form of relief is very seldom granted in patent cases.
A patentee has the exclusive right to use an invention, utility model or industrial design by any means not prohibited by the law. The exclusive right to the use of an invention, utility model or industrial design includes, in particular, the following:
- importation into Russia, manufacture, exploitation, offer for sale, sale, other introduction into civil circulation or the storage for such purposes in Russia, of a product that incorporates the invention or utility model, or articles incorporating the industrial design;
- performance in Russia of the acts provided in point (a) in respect to a product obtained directly by a patented process. If the product obtained by the patented process is new, an identical product is considered as being derived from the patented process in the absence of proof of the contrary;
- performance of the acts provided in point (a) in respect of a device, the functioning use of which in accordance with its purpose automatically involves a patented process;
- performance of the acts provided in point (a) in respect of a product intended for use in accordance with the purposes specified in the claims, when the invention is directed to a use of a product for a specified purpose; and
- performance of a process in which the invention is used, in particular by the application of this process.21
Some acts do not constitute patent infringement,22 such as the use of foreign vehicles temporarily in Russia, experiments and emergency uses. National exhaustion of rights applies in respect of importation into Russia, use, offer for sale, selling, other introduction into civil circulation or storage for these purposes of a product, incorporating the invention or utility model or of a device incorporating the industrial design; therefore, parallel importation is, strictly speaking, a form of infringement, although the remedies can be quite soft.
Infringement under the doctrine of equivalents
Russian law recognises infringement based on the doctrine of equivalents. An invention is deemed to be used in a product or process if the product contains or the process involves each feature of the independent claim or a feature equivalent thereto that was previously known before the priority date.
The doctrine of equivalence applies only for inventions and not for utility models. The feature may only be deemed to be an equivalent one if it was known as such before the priority date of the asserted patent.
There is separate liability for each infringer along the supply chain, from the manufacturer, distributor and retailer to the end user; however, if the patent claims enumerate a number of elements in a product or a number of steps in a process, there is only infringement by the person or entity who deals with the end product or the results of the entire process.
There was, until 2014, no concept of joint tortfeasor infringement in situations in which one person carried out only one step in a process or produced only one of the claimed elements in a patented product, even if that person carried out that step or produced that element knowing that it would form part of a patented product or process. There was also no liability for indirect infringement.
Article 1252, the provision that sets out the various types of infringement, was supplemented in 2014 with the provision of joint and several liabilities of multiple parties, if one (common) infringement of right has been committed through their common actions.
How broadly this new provision will be interpreted is still unclear.
ii Invalidity and other defences
Non-infringement and invalidity
Non-infringement is a defence to infringement, but invalidity is not. Invalidity may be raised in separate and independent proceedings.
In Russia, the institution of parallel revocation proceedings is the most common response to being served with a patent infringement suit. According to Article 1398 of the Civil Code: '[I]ssued patents may be opposed by any party by filing an action with ROSPATENT in case they [patents] are not in compliance with patentability requirements set by this article.'
Patent revocation proceedings must first be initiated in the Patent Chamber and will proceed independently from any patent infringement action that may have been commenced in the commercial court. The burden of establishing invalidity of a patent or any claim in a patent falls on the party asserting invalidity.
Other statutory defences
In the infringement action, the defendant can:
- claim non-infringement by reason of the fact that the product or process does not fall within the scope of any of the asserted claims or that there is a licence;
- claim that its activities fall within the prior and continuing right to use exception;
- claim that the plaintiff does not have title to the patent or that national exhaustion of rights, abandonment, compulsory licence or limitation period apply; or
- procedurally speaking, question, in the early stages of the proceedings, the validity of the power of attorney under which the plaintiff's lawyer professes to have authority to bring the action.
There are no legal defences of laches, equitable estoppel or inequitable conduct; however, the defendant may try to raise an abuse of rights argument if, for example, obtaining a patent was not a bona fide act.23 This approach seldom succeeds.
Final remedies for infringement
i Forms of relief
A rights holder enjoys the exclusive right to a patent. Under Article 1229, a rights holder has the right to prohibit others from using that right. Any unauthorised use of the right is deemed to be unlawful. Protection of the exclusive right entitles the owner to request one or more of the following forms of relief in the courts.
- Recognition of rights: in effect a declaration, this remedy entitles the rights holder to recognition that the rights in question have been infringed by the defending party.
- Termination of the activities: the rights holder is entitled to claim injunctive relief, both interim and permanent, to enjoin the infringing activities or the threat of infringing activities. In cases of interim relief, the rights holder may be required to post security with the court.
- Compensation: the infringer may be obliged to pay compensation to the rights holder, either in the form of damages or alternative relief in the form of compensation for infringement, for example, an accounting of profits or a reasonable royalty. In that case, the rights holder does not need to prove actual damage and can turn to the court for compensation from the infringer for each case of unlawful use.24
- Reasonable compensation: as of 1 January 2015, a patentee in an infringement action relating to patents for inventions, utility models or designs can be entitled to claim, in the alternative to damages or profits, payment of reasonable compensation: (1) in the amount from 10,000 to 5 million roubles; or (2) twice the value of the right of use (market value of the lawful right to use a patented invention, utility model or industrial design). This provision gives the court the right to award damages at its discretion, without the requirement to prove the extent of damages suffered or profits obtained.
- Seizure: equipment and physical carriers associated with an infringement may be ordered to be removed from circulation and destroyed.
- Publication of decision: the rights holder may request publication of the decision declaring him or her to be the owner and the defendant the infringer.
- Bad faith: in cases in which the court recognises the infringement as having been in bad faith, protection may be available under anti-monopoly legislation as well as under Part IV of the Civil Code.
Under Article 1253, if a legal person – in other words, a corporation established under Russian law – repeatedly violates IP rights, including patent rights, the court may direct that the legal entity be dissolved. In the case of an individual, the court may direct that his or her activity as an individual entrepreneur be terminated. There is also a right to seek and recover attorney fees (albeit very nominal) and some expenses.25
In addition, the general statute of limitations is three years 'from the date a party has become aware or should have become aware of the infringement of its rights';26 therefore, no recovery of damages is available for any infringement committed more than three years prior to the filing of the statement of claim in an infringement action.27
Generally speaking, the purpose of damages is to put the patent owner in the economic position it would have been in had the infringement not occurred. Damages under Russian law are compensatory and not punitive in nature: the courts do not have authority to grant punitive damages except in the limited context of bad faith.
Compensation in the form of damages includes the expenses that the person whose right was violated has incurred, or must incur to reinstate the right that was violated, or the loss or harm to property (actual damage). Compensation also includes income not received that this person would have received under the usual conditions of civil commerce if his or her right had not been violated (lost profits). If the infringing party has gained any profits resulting from unauthorised use of a patent, the patentee may claim lost profits in the amount not less than the infringer's profits.28
Pre-judgment interest is not available in Russia. Post-judgment interest is not specifically provided for as a remedy available to a plaintiff under the Civil Code. To claim such relief, the plaintiff must reapply to the court for additional compensation based on a claim of further damage incurred by reason of non-payment of the original award.29 In practice, this is rarely obtained.
ii Attorneys' fees
To be eligible for an award of reasonable attorneys' fees, a party must provide the documents showing actual payment of the fees. The award of attorneys' fees is a discretionary determination by the court.
With increasing frequency, the court has been exercising its discretion more liberally. Although the average award might fall within the range of US$5,000 and US$10,000 for the successful party, there have been recent awards as high as US$14,000.30
iii Permanent injunction
The most valuable outcome for a plaintiff in a patent infringement action is the permanent injunction to which the patent holder is entitled under Article 1229 should infringement be found. Enforcement against the defendant is highly effective because a defendant would face possible criminal sanctions if the injunction were simply ignored. In cases involving private individuals, they could elude the authorities by moving away or leaving the country, as is the case in any country.
iv Criminal sanctions
Article 147 of the Criminal Code provides criminal sanctions for patent infringement that resulted in significant harm to the patentee or that has been committed by a group in conspiracy or by an organised group. The sanctions include a fine up to US$10,000, compulsory labour for up to five years, or imprisonment.
Other types of patent proceedings
Compulsory licences (CLs) are available to applicants if they can demonstrate either that the patentee is not practising the invention in Russia or that the owner of a second patent cannot practise the second invention without infringing an earlier patent. This is often referred to as a compulsory licence for a second dependent invention.
In 2019, the first compulsory licence for a dependent invention was granted in Russia31 in the field of pharmaceuticals. The first instance court, by its decision of 8 February 2019, later upheld by all upper courts, obliged the patentee to give a non-exclusive CL to the owner of the dependent patent (a generic company). The court set out the CL terms and conditions according to which the licensee under the CL could use the invention in any volume, including by manufacture, use, offer for sale, sale and storage for such purposes of medicines that include the invention as an active ingredient. The royalty rate was set as 10 per cent of the net profit from the sale of the original product, excluding VAT and the manufacturer's direct expenses (e.g., expenses for the purchase of raw materials). The royalty is to be paid annually not later than 31 January of the year following the year where the invention had been used.
The court decided that the dependent invention represented an important technical achievement and had considerable economic significance over the earlier invention. In particular, it decided that the example provided in the dependent patent showing that the crystal form of the product appears in rabbits' bloodstreams 12 minutes earlier than the earlier compound patent and that the polymorphism phenomenon as such (i.e., the substance's ability to take various forms and crystalline modifications) represented an important technical achievement. The court recognised the considerable economic significance of the dependant patent over the earlier patent by reason of its cheaper price.
However, after several rounds of related parallel invalidation proceedings, the dependent invention patent was revoked owing to lack of novelty and inventive step. As there is no longer a dependent invention patent, this means that the CL will be cancelled by the court based on this new turn of events.
Despite this outcome, there is still considerable doubt within the legal community in respect of the correctness of the decision to grant the CL in the first place. Despite this particular situation, the concern in the profession is that CLs for dependent inventions will be relatively easy to obtain in future cases.
See Section III for a detailed discussion of the routes of appeal.
i Patent infringement
Patent infringement actions are first commenced in the commercial court. Appeals in infringement cases from the first instance commercial court decision of the single judge are heard by three judges of the commercial courts of appeal. The panel of judges is empowered to review the record and render what it deems to be the correct decision in fact and in law.
There is then a second right of appeal to the IP Court. The appeal to the IP Court is a cassation appeal. In a cassation appeal, the presiding cassation court does not review the case de novo as the lower courts would have done. Its jurisdiction is confined to reviewing the lower court decision for legal correctness.
An additional appeal against the ruling of the IP Court, acting as a cassation court, may be heard by the Supreme Court, provided that leave to appeal is granted by three judges of the Supreme Court. In practice, the Supreme Court hears a case only if a lower court ruling is inconsistent with or negatively affects the established court practice.
ii Patent revocation
Patent revocation proceedings are first initiated and tried in the Chamber for Patent Disputes, a quasi-judicial administrative body associated with ROSPATENT. Appeals from decisions of the Patent Chamber are heard in the IP Court.
On an appeal of a patent revocation decision from the Patent Chamber, the IP Court is entitled to appoint an expert to review the case and provide an opinion regarding validity based on his or her own expertise, without regard to the Patent Chamber decision. The IP Court may then review the lower Patent Chamber decision in the context of the expert opinion it commissioned and decide on the proper outcome. That decision may be further reviewed for legal correctness by the Presidium of the IP Court, acting as a cassation court.
The year in review
On 31 December 2020, the government, under Decree No. 3718-p, granted the first compulsory licence in Russia on the grounds of protection of public interests. It allowed a Russian generic company to use three Eurasian patents, owned by the same patentee, within one year. According to the Decree, the purpose of the licence is to secure adequate supply to Russian patients of medicine containing the active ingredient remdesivir. The amount of the licence fee was not specified.
The patentee appealed the Decree to the Supreme Court of Russia, which acts as a court of first instance in the case of review of the government's judicial acts.32 The patentee argued, among other things, that the compulsory licence prevents it from selecting for itself the entities it wishes to authorise to use the inventions, to control the quality of the products produced under a licence and to set the limit for production and the licence fee.
The Supreme Court dismissed the appeal, making reference to international treaties (e.g., Article 31 of the Agreement on Trade-Related Aspects of Intellectual Property Rights), the Russian Constitution and the decisions of the Constitutional Court. Essentially, the Supreme Court stated that the patentee's exclusive right can be limited to ensure the health and well-being of Russian citizens, but it did not explain why this conclusion was necessary in this particular case.
At this point in time, it is difficult to know when and on what basis public interest will be found to justify the grant of a licence.
In 2019, the Supreme Court released the comprehensive Resolution No. 10 of 23 April 2019 concerning the use of Part IV of the Civil Code.32 This is a comprehensive document that touches upon many forms of intellectual property, including patents. For patents, it deals with employee remuneration and the right of inspection; however, it does not affect any fundamental patent principles or procedures.
1 David Aylen is managing partner and Vladislav Ugryumov is a partner at Gowling WLG Russia. The authors would like to thank Alexander Dovgalyuk, an associate at the Gowling WLG Moscow office, for his help and contribution to this chapter.
2 Civil Code, Article 1350.
3 Civil Code, Article 1349.
4 Civil Code, Article 1350.
5 Civil Code, Article 1386.
6 Civil Code, Article 1398.
7 Civil Code, Article 1375(2).
8 Civil Code, Article 1351.
9 Civil Code, Article 1390.
10 Civil Code, Article 1351, Section 5.
11 Civil Code, Article 1352.
12 Civil Code, Article 1352, Section 2.
13 Civil Code, Article 1352, Section 3.
14 Civil Code, Article 1352, Section 5.
15 Federal Constitutional Law No. 3–FKZ, 5 Feb 2014, 'On the Russian Supreme Court,' Article 25.5.
17 Commercial Court Procedural Code (CCPC), Article 65.
18 CCPC, Article 66.
19 CCPC, Article 99.
20 CCPC, Article 90.
21 Civil Code, Article 1358, Section 2.
22 Civil Code, Article 1359.
23 Civil Code, Article 10.
24 CCPC, Article 1252, Sections 1(3) and 3.
25 CCPC, Article 110.
26 Civil Code, Articles 196 and 200.
27 Civil Code, Article 199.
28 Civil Code, Article 15.
29 CCPC, Article 183.
30 Court Case No. 40-84028/2016.
31 Court Case No. 40-166505/17-15-1481.
32 See, in particular, Paragraphs 12 to 128 providing guidelines on invention protection under Part IV of the Civil Code and Paragraphs 59 to 72 providing guidelines on how to assess damages or compensation that can be awarded under Part IV of the Civil Code.