The 20th Package of EU Sanctions: New Restrictions in Intellectual Property

On April 23, 2026, the EU Council adopted the 20th package of restrictive measures against Russia. The package includes sanctions measures not only in the energy, financial, trade and digital sectors, but also in the field of intellectual property rights (hereinafter "IP").

The EU sanctions regime for the first time introduced a separate mechanism to protect European rightholders from Russian countermeasures, including from the use of their IP rights and know-how in Russia without consent of the rightholder.

This review summarizes the IP-related provisions of the 20th package and describes the practical implications for European rightholders (hereinafter "EU Persons"), Russian companies and their counterparties in third countries.

WHAT HAS CHANGED?

A key change is set out in the new Article 5sa of Council Regulation No.833/2014 of July 31, 2014 (hereinafter "Regulation No.833/2014"); namely, there are sanctions related to the violation of IP rights of EU Persons in Russia.

The regulation prohibits EU Persons from making any transactions with Russian entities included in new Annex LVI, if such entities have used or are using protected results of intellectual activity (hereinafter "RIA") or know-how without consent of the rightholder. The basis for inclusion in Annex LVI is the illegal use of RIA belonging to:

• A Russian subsidiary controlled by an EU Person; and
• An EU Person itself, provided RIA are granted under a license to a Russian entity.

In other words, if an EU Person has RIA in Russia, which it has not licensed to anyone, then formally their illegal use does not give grounds for applying Article 5sa and including the violator in Annex LVI.

At the same time, one cannot rule out that in practice the relevant criteria will be interpreted broadly, based on the goals of the sanctions regime and not on the literal text of the norm. In other words, the existence of a formal gap in the wording of the article does not in itself guarantee that a Russian entity who illegally uses the IP rights of an EU Person will not be included in the sanctions list, including in situations that, under a strict reading of Article 5sa, do not fall under it.

It should also be taken into account that, according to the new rules, European rightholders must independently notify the competent authority of their state about cases of illegal use of their RIA, and it, in turn, is to inform the European Commission.

Thus, working with a Russian company that uses a technology of European origin does not automatically prohibit transactions; rather, the risk arises if there are factual grounds for including such an entity in Annex LVI and its subsequent inclusion in the list.

WHAT RUSSIAN MECHANISM GAVE RISE TO THE NEW EU MEASURE?

Article 5sa was the EU's response to Russian Presidential Decree No.122 of February 15, 2024 (hereinafter "Decree No.122"), which provides for the creation of a special sub-commission that decides on the use of inventions, utility models and industrial designs in order to ensure economic security of the Russian Federation without consent of rightholders, but with remuneration being paid.

For cases of such use, the Russian Government has developed a methodology for calculating compensation and the procedure for paying it ^[1]. In the current version, the amount of compensation is 0.5% of the actual revenue from the sale of goods (works, services) for the production of which the relevant RIA was used. If such use is related to unfriendly actions of foreign states, compensation is to be transferred to a special type O ruble account.

Some examples of the application of Decree No.122 are the Russian Government's orders that allowed a number of Russian manufacturers to use patents of the Danish company Novo Nordisk for semaglutide preparations (Ozempik) without consent of the patent holder. The legality of such use was confirmed by the Supreme Court of the Russian Federation with reference to Article 1360 of the Russian Civil Code.

This case also shows the ambiguity of the new EU measure. As we pointed out above, formally Article 5sa may not work in such a situation: Danish patents in Russia have not been licensed to anyone, which means that the grounds described above (the use of rights belonging to a Russian subsidiary of an EU Person or licensed to a Russian entity) do not directly arise.

It is important that Decree No.122 covers only objects of patent law: inventions, utility models and industrial designs. The wording of Article 5sa, however, is broader: it talks about IP rights in general and know-how. Therefore, increased attention in transactions related to the IP of EU Entities (or their Russian subsidiaries) may be given not only to objects of patent law, but also to technical documentation, process maps, drawings, source materials, databases and other information protected as know-how.

A separate issue is the use of trademarks. Although Decree No.122 is explicitly mentioned in Article 5sa of Regulation No.833/2014, the article also refers to "related or equivalent Russian legislation." We believe that this makes it possible to talk about extending the effect of Article 5sa to cases of other special measures. In particular, Decree No.506 of the Russian Government of March 29, 2022 legalized parallel import: for goods from the list of the Ministry of Industry and Trade, the provisions of Subclause 6 Article 1359 and Article 1487 of the Russian Civil Code do not apply; that is, trademarks are used without the consent of the rightholder. Finally, one should take into account Federal Law No.470-FZ of August 4, 2023 , which regulates the specifics of corporate relations in economically significant organizations, including the judicial procedure for suspending corporate rights of foreign holding companies and subjecting their assets, including intangible ones, i.e. IP objects, to direct possession.

Thus, one cannot rule out the possibility of expanded application of Article 5sa and that the sanctions list in Annex LVI could include Russian companies that use the RIA of EU Persons not only on the basis of Decree No.122, but also on the basis of other measures that allow the use of RIA without consent from rightholders.

WHO IS AFFECTED BY THE RESTRICTIONS?

The restrictions are primarily aimed at Russian individuals who use the RIA or know-how of EU Persons without their consent. However, the practical effect is broader and may affect their counterparties, associated supply, financing, service or licensing relationships:

• Russian manufacturers – if production is based on patents, drawings, recipes, engineering solutions or other technical information of EU Persons or uses them, and consent of the EU rightholder is absent or withdrawn.
• Companies that received assets of European companies that left the Russian Federation – if protected technologies, documentation, software solutions, databases or know-how of the former owner being an EU Person are actually used together with the assets.
• Importers, suppliers and service organizations – if they help produce, maintain, adapt or commercialize a product that uses disputed RIA or know-how.
• Russian subsidiaries of EU Persons – if their RIA or know-how is used by third parties in Russia without the consent of the EU rightholder.
• European counterparties – because once an entity is included in Annex LVI, they will be required to stop transactions, payments, deliveries, licensing, support and other forms of interaction, unless a special exception applies.

WHAT RISKS DO RUSSIAN BUSINESSES FACE?

The main risk is that a dispute about the use of RIA or know-how of European origin could transition from the category of a plain civil dispute to sanctions. Once an entity is included in Annex LVI, any transactions with it are generally prohibited for EU Persons. This includes payments, equipment deliveries, service contracts, insurance, licenses, access to software updates, warranty support and relationships with third-country counterparties.

HOW DO I PREPARE FOR THE NEW REQUIREMENTS?

We recommend that companies that use technologies, software, technical documentation, industrial solutions, trademarks or other RIA of European origin conduct an internal audit in advance. This is especially true if the relevant rights previously belonged to a European company, its Russian subsidiary or its licensee, which have left the Russian market:

• Conduct an audit of the RIA and technical materials: determine which patents, industrial designs, software, databases, drawings, specifications, process maps, recipes and know-how you use in the manufacture of goods or services.
• Check the source of rights: confirm consent from the rightholder, valid license, alienation agreement, delivery agreement with the right to use the documentation or any other legal basis.
• Separately check cases of use based on Russian special measures: use of objects of patent rights in the interests of national security (Article 1360 of the Russian Civil Code), on the basis of Decree No.122, court decisions or other acts that allow the use of protected objects without the consent of the EU rightholder.
• Collect evidence of the legitimate use of the RIA: contracts, licenses, acts of transfer of documentation, payment confirmations, correspondence and other documents confirming the existence of legal grounds for using the relevant RIA and know-how.
• Review contracts with foreign counterparties: check the representations that there is no violation of rights, sanctions clauses, grounds for suspension of execution (including the list of force majeure situations), the procedure for replacing a supplier and the consequences of a counterparty being included in the EU sanctions lists.
• Keep track of Annex LVI updates: although the list may still be empty at the moment, being included in it can lead to problems with making transactions that involve intellectual property of EU Persons.

WHAT DOES THIS MEAN IN PRACTICE?

Package 20 does not introduce a universal ban on the use of intellectual property of European origin in Russia. But it does create a new sanctions mechanism: a Russian entity who uses the RIA or know-how of an EU Person without consent of the rightholder, while relying on Russian special measures or judicial acts, may be subject to a ban on transactions with EU Persons.

The most sensitive situations are when a Russian company has continued to manufacture products of a former European rightholder, gained access to its technical documentation or actually uses its patent rights or production secrets without a valid consent. In such cases, the dispute ceases to merely be a matter of Russian judicial protection and may affect international settlements, deliveries, licensing relations and work with European counterparties.

We will closely monitor the first inclusions in Annex LVI and the practice of applying the new mechanism.

The team of the CLS Intellectual Property group is ready to provide support in the course of assessing sanctions risks related to using IP objects of European origin, verification of IP rights chains and preparation of contractual documentation.

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• ^[1] Decree No.1767 of the Russian Government dated October 18, 2021 (edition as per Decree No.380 of March 27, 2024). URL: https://normativ.kontur.ru/document?documentId=419749&moduleId=1