10: Double Data Vs Vkontakte Dispute Came To An End

Here is a brief summary of the dispute: Double Data developed a number of apps to collect publicly available information on users of the VKontakte social network in a form suitable for further use, e.g. for assessing financial credibility of potential borrowers. VKontakte was not happy about this and sued Double Data for infringement of exclusive rights to the database.

The case proceedings took six years and two rounds: after the IP Court reversed the lower court decisions, the case was tried once again before the first instance court and the court of appeal. In the end, the parties decided to sign a settlement agreement where they waived all claims against each other.

Since the case ended in an amicable settlement, the courts did not have an opportunity to form a final judgment, but the case proceedings on their own enriched the court practice and generated many discussions and academic papers.

9: Russian Central Bank and Ministry of Finance debating about cryptocurrency regulation 

Restrictive measures and complicated international currency transfers have given rise to a growing interest in cryptocurrency in Russia. However, the state authorities have not developed a unified approach to crypto and related operations yet. On one hand, in summer of 2022, Russian laws on digital financial assets were amended to include bans on payments with crypto. On the other hand, a draft law regarding crypto mining was introduced to the State Duma, and the Ministry of Finance of the Russian Federation is working on a draft law on digital currencies which will include provisions regulating the cryptomarket.

One cannot help but notice the contradictions between the Central Bank and the Ministry of Finance: The Central Bank is very cautious and conservative about crypto and this approach slows down the creation of the legal framework for regulating cryptocurrencies. The Ministry of Finance, on the contrary, sees the potential for cryptocurrencies. The state authorities did, however, manage to arrive at a compromise: as part of an experimental legal regime, the Central Bank and market participants will test how crypto can be used for international settlements. We are looking forward to the results of the experiment and further legislative initiatives.

8: Neural networks boom

This year will also be remembered for dramatic development of neural networks – they have become smarter, more effective and more useful. For example, Cosmopolitan introduced a magazine cover created by a neural network, STS TV channel wants to make a TV show based on a scenario written by a neural network, and the National Technology Initiative project announced an experiment planned for 2023 with schoolchildren’s essays to be checked with the use of neural networks.

Neural networks are a big hit right now, but it is unclear who should hold exclusive rights to the objects created by a neural network. Can they be treated as intellectual property and, for example, be sold? Who will be liable for a neural network using someone else’s intellectual property? It is unlikely that lawmakers will give us answers to these questions any time soon.

7: Protection of “unfriendly” rightholders

Although many foreign companies have ceased doing business in Russia, they still have an opportunity to protect their intellectual property rights on Russian territory. Among the notable disputes, we would like to highlight one between Coca-Cola and Beverages from Chernogolovka. The latter has been using the Fantola trademark since 2019 as a means of individualization, but Coca-Cola believes that the registered trademark is illegal because it is confusingly similar to the Fanta trademark.

Coca-Cola tried to challenge the registration, but Rospatent dismissed the objection. However, the Intellectual Rights Court sided with the company. It reversed Rospatent’s decision and ordered to reconsider Coca-Cola’s objections, which is a good sign showing that the rights of “unfriendly” rightholders can be protected.

6: The Peppa Pig case

In March of 2022, public attention was drawn to a seemingly ordinary dispute: a British company, Entertainment One UK Limited, the owner of trademarks in form of characters of the Peppa Pig cartoon, demanded that an individual entrepreneur stop selling counterfeit goods and pay compensation. The court dismissed the claim referring to abuse of rights by the British company due to the fact that the United Kingdom is an “unfriendly” state having imposed sanctions against Russia.

The court’s legal position was a surprise because a foreign rightholder cannot in any way influence the imposition of restrictive measures. Nevertheless, common sense and justice have prevailed: the court of appeal reversed the court decision and held the individual entrepreneur liable, and the Intellectual Rights Court confirmed the legality of the appeal decision, which allowed foreign rightholders to continue to successfully defend their rights in courts.

5: Personal data leakage and changes in the Personal Data Law

This year has been, unfortunately, marked by a large number of personal data leakage cases. There is now personal data of users of Yandex Food, CDEK, Vkusvill and others on the Internet. The absence of adequate liability for such leakage (for example, in 2022 Yandex was fined RUB 60,000 twice) has lead to development of the draft law on stricter liability and turnover-based fines.

We should also note that this year substantial changes were made to the Personal Data Law, which impose more obligations on personal data operators, including obliging them in case of leakages to interact with the Federal Service for Supervision of Communications, Information Technology and Mass Media (Roskomnadzor) and the State System for Detecting, Preventing and Liquidating Consequences of Computer Attacks. To learn more about changes in personal data laws, see our review.

4: Opportunity for individuals to register trademarks

In the last several years, there has been active discussion regarding the possibility to provide individuals the opportunity to hold title to trademarks. This was largely due to the fact of the self-employed legal status coming about, where such people are engaged in practically the same activity as individual entrepreneurs, but until recently were unable to register trademarks.

This has now been fixed, and starting from June 23, 2023, all individuals, even if not registered as an individual entrepreneur or self-employed, can hold exclusive rights to trademarks, i.e. they can apply for registration of new trademarks in their name and acquire rights to trademarks that are already registered.

Rospatent representatives have forecast that this change will lead to a 30% increase in the number of applications being filed, and we will be interested in seeing whether this forecast will come true and whether the so-called patent trolls will become more active after these changes.

3: Measures in response to actions of “unfriendly” title holders

We should also note the legislative measures adopted due to certain title holders from “unfriendly” states terminating their activity in Russia. This includes, for example, the Decree of the Russian Government establishing 0% compensation for use of patents without consent from “unfriendly” patent holders, Decree of the Government and Order of the Ministry of Trade allowing parallel import of certain categories of goods, Decree of the Russian President on the procedure for paying royalty to “unfriendly” title holders, as well as other acts.

It is difficult at this point to assess how effective all these tools will be; however, according to the Russian Customs Service, the volume of parallel import of goods into Russia has already surpassed USD 20 billion, and the permit for such import has been extended until the end of 2023.

2: The Anton Mamichev case in the Russian Constitutional Court

One of the most important court acts of 2022 is probably Ruling No.25-П of the Russian Constitutional Court dated June 16, 2022, brought on by the claim from Anton Mamichev. The case itself started with a dispute regarding a work made for hire, and ended up being a dispute on the legality of using open source software and on the right to copyright of the author of software that was created using such open source software.

In this decision, the Constitutional Court gave a description of many important points that concern the rearrangement of works and, most importantly, indicated that denial of copyright protection for a compound work, given the potential threat of violation of rights of the authors of the works used in creating the compound work, but without claims being laid by such authors, is an excessive measure.

To read our comments in detail on this case, visit the EG Online site.

1: Rebrandings

According to Rospatent, in the first 10 months of 2022 the number of applications filed for registration of trademarks as compared to all of 2021, has grown by 13.5%. For the large part, this is tied to foreign companies leaving the Russian market, since the companies that are staying cannot use the trademarks of their foreign “parents” and are forced to work under new names.

In any case, some rebrandings are not without incident, as some Russian businessmen have made fruitless attempts to register the same trademarks as the “unfriendly” title holders, and others, for example, the new owners of McDonald’s in Russia, ended up in an unpleasant situation with the use of designations confusingly similar to those of other companies.

We are talking about the similarity of designations “Vkusno i tochka” (Tasty and that’s all) and the trademark Eda i tochka (Food and that’s all) held by a restaurant chain in Vladivostok. We talked about this in detail earlier and should note that the parties were able to come to settlement, since now the words “Vkusno i tochka” are registered as a trademark held by the former Russian McDonald’s company.

The rating is purely subjective and is based on the personal opinions of CLS associates.

This review has been prepared by Antonina Shishanova and Viktor Kaluzhsky, lawyers of the Intellectual Property practice at Capital Legal Services.