Intellectual property in Russia: joy or scepticism?

On September 21, 2006, the Russian Parliament approved in the first reading a new draft law on intellectual property. Following the approval, First Deputy Prime Minister Dmitry Medvedev said the draft meets international requirements set for Russia and is aimed at Russia's accession to the WTO.

Those actions should be greeted with relief by many organisations, particularly in the US, which have been concerned over the years with what they viewed as flagrant violation of intellectual property rights in Russia. For instance, in her May 2005 testimony to the US Congress, Victoria Espinel, the principal U.S. trade negotiator on intellectual property rights (IPR) protection, testified that "the level of copyright piracy in Russia has increased dramatically, and the adverse effects on American owners of copyrights are compounded by the fact that Russia has become a major exporter of pirated material." The topic was deemed important enough to be discussed during recent summit meetings between President Bush and Russian President Vladimir Putin.

The new Russian legislation on IP can be seen as a response to the US concerns and a step in the right direction.

Yet, those familiar with the Russian approach to Intellectual property and more generally to commercial property law may be forgiven for not getting over-enthusiastic and taking a "show-me" attitude.

The problem is not only the extent of what the USTR called "rampant piracy and counterfeiting," but also the ability to enforce the law by the Russian judicial system, which is not known either for its effectiveness or impartiality (that is putting it gently).

A more fundamental challenge is for Russia to overcome its secular tradition of the lack of respect for commercial property. We see the effects of this tradition in the energy field, where the notion of property appears as a variable geometry proposition, as a function of economic and political power criteria.

In the intellectual property realm, legacy is heavy and cumbersome. Under Soviet regime, copyrights were not recognised and Western patents were routinely copied. It looks like some of those practices have survived the fall of Communism. Several cases for trademark infringement launched by such well-known brands as Kodak or Philip Morris are slowly making their way through Russian courts.

In order to make their case stronger, proponents of stronger IPR protection in Russia, such as the Coalition for Intellectual Property Rights (CIPR), argue that the Russian government loses billions of rubles in uncollected revenues from counterfeit products evading taxes and duties. This is a good point but it requires a reform of Russia's fiscal enforcement: a big task in its own right.

An argument can also be made that better IPR protection and understanding would also help the Russian high-tech industry, whose potential remains underexploited. The recent nomination of a Fields medal to a Russian mathematician - and his much-publicized refusal to accept - highlights the high quality of Russian academia. In the absence of a proper IPR infrastructure, this quality will largely remain confined to learned publications and conferences rather than lead to science-based business development.