Foreign trademarks and other intellectual property: Requires authorisation by the Government Commission
Background
From 20 May 2024, the acquisition of trademarks and other intellectual property from "unfriendly" rightsholders (i.e. including Russian companies with foreign participation) requires the approval of the Government Commission.
This applies to transactions exceeding 15 million roubles (Decree of the President of the Russian Federation No. 430). But not everything is so simple…
What kind of intellectual property?
The results of intellectual activity - intellectual property - include works, computer programs, inventions, trade names, trademarks, etc.
The Decree applies to all intellectual property with the exception of the following types of intellectual property:
- scientific, literary and artistic works, performances, phonograms, radio and television programs;
- intellectual property with a value of less than 15 million roubles.
Most likely, computer programs fall within the scope of the Decree (although they are protected as literary works under the Civil Code of the Russian Federation, they are not works of literature in terms of classification and are therefore unlikely to fall within the exceptions described above).
What types of transactions are meant?
The Decree refers to "transactions for the acquisition of exclusive rights to the results of intellectual activity". Most lawyers assume that these are only agreements on the sale of exclusive rights. We are not so optimistic: according to the law, the rightsholder can acquire the exclusive right to the results of intellectual activity both by sale and by granting a right of use (licence). advise you to be careful and take this into account.
In addition, the decree also applies to the execution of transactions (payments) and the enforcement of monetary liabilities arising from such transactions (e.g. a pledge agreement). The wording is so general that it can be interpreted very broadly.
What about contracts that have already been concluded?
They also fall within the scope of the Decree. Even in the case of contracts that have already been concluded, it is not possible to pay the remuneration directly to the rightsholder, even if the payment deadline is before the date of the Decree and there has already been a delay.
The money can only be transferred to a special "O" account opened in the name of the rightsholder. And, of course, the money in this account will remain frozen until the Decree is cancelled or the rights holder receives permission from the government commission to withdraw the money from this account.
It is assumed that a Russian company that has paid money into this account has duly fulfilled its obligations. However, the rightsholder is unlikely to be satisfied with this outcome: both its current performance of the contract and its future renewal could be jeopardised. Especially as it is unlikely that the jurisdiction in which he is registered will recognise a payment into the "O" account as proper.
This does not concern us because the threshold is 15 million roubles?
The decree states that it does not apply to transactions where the buyer's obligations do not exceed 15 million roubles (or the equivalent in another currency).
However, licence agreements usually involve periodic payments. It is not specified how the amount of obligations should be calculated in such a case (for a month, a year or several years). There is a risk that even relatively small contracts with a continuous term may fall within the scope of the Decree.
This doesn't affect us because we don't buy software from foreigners?
Unfortunately, the decree also applies to Russian companies with foreign shareholders from "unfriendly" countries. We need a thorough examination.
What to do, what to check?
Pay attention to the contracts with so-called "unfriendly" persons (which can also be Russian companies!), calculate the amounts and check whether the result of the intellectual activity is included in the list of the decree. It may be better to temporarily suspend payments or contracts until the audit is completed. Unfortunately, this may even result in the recovery of payments from your company to the budget revenues.