As we wrote earlier on 15 February 2024 Presidential Decree No. 1221 came into force (“Decree”), according to which the Government of the Russian Federation was instructed to form a sub-commission on the use of inventions, utility models and industrial designs (“Sub-Commission”).
On 4 April 2024 the Resolution of the Government of the Russian Federation dated 27 March 2024 No. 380 “On the Sub-commission on the Use of Inventions, Utility Models and Industrial Designs to Ensure Economic Security of the Russian Federation under the Government Commission on Economic Development and Integration” (the “Resolution”) came into force. The Resolution approved the Regulations on the Sub-Commission on the Utilization of Patent Rights Objects (“Regulations”), as well as the rules for preparation by the Sub-Commission of decisions on the uses of such objects with payment of commensurate reimbursement to their right holders (“Rules”).
The Sub-Commission is chaired by the Minister of Economic Development of the Russian Federation. The Sub-Commission consists of one representative each from the Ministry of Economic Development, the Ministry of Industry and Trade, FAS and Rospatent. The Sub-Commission may also invite to its meetings representatives of specialized ministries and departments, whose area of responsibility includes the industry where the invention, utility model or industrial design is to be used without the consent of the patentee.
Decisions of the Sub-Commission shall be made by a simple majority of votes.
The main purpose of the Sub-Commission shall be:
- consideration of applications for the use of patent rights objects without the consent of the patentees and with payment of commensurate reimbursement to them;
- preparation of decisions on the use of such results of intellectual activity.
As stated in the Resolution, applications for the use of objects are accepted only from Russian legal entities in whose authorized capital the share of direct or indirect participation of the Russian Federation, its constituent entities, municipalities and (or) citizens exceeds 75%.
Such an application is submitted by an interested party to the Ministry of Economic Development after a preliminary request to the right holder of the object with a request to grant a license and in case the right holder refuses or fails to respond to the request within 30 days.
If the requirements are met, the submitted documents are forwarded to the Ministry of Industry and Trade, Rospatent, FAS, and the relevant ministry or agency. The stated bodies consider the documents and prepare conclusions on the possibility of using the objects of patent rights without the consent of the right holder, on the basis of which the Ministry of Economic Development prepares the final conclusion to be sent to the Sub-Commission with the attachment of the draft decision of the Government of the Russian Federation, if more than half of the conclusions contain a proposal to make a decision on the possibility of granting a compulsory license.
Based on the materials submitted by the Ministry of Economic Development, the Sub-Commission prepares a decision on granting a compulsory license.
If less than half of the conclusions stated that it is possible for the Sub-Commission to make a decision on the use of the results of intellectual activity, the Ministry of Economic Development informs the authorities that submitted the conclusions, members of the Sub-Commission and the applicant about the impossibility of considering the request and granting a compulsory license.
If a decision is made to grant a compulsory license, the right holder of such object will be notified as soon as possible and will receive commensurate reimbursement for the use of its intellectual property. At the same time, patentees from “unfriendly” countries will receive reimbursement to a special “O” bank account.
The Resolution also amends the methodology2 for determining the amount of reimbursement for right holders from “unfriendly” countries, which as for now amounts to 0.5% of the company's revenue from goods or services produced using the object of patent rights.
As noted by government officials involved in the work of the Sub-Commission, the adoption of the Resolution not only regulates the procedure for issuing compulsory licenses, but also creates a simple and clear mechanism to protect Russian manufacturers from the risks of supply interruption and license denials by foreign right holders.
Thus, we can expect that the practice of granting licenses for the use of patent rights objects under Article 1360 of the Civil Code of the Russian Federation will change in the near future. On the one hand, licenses for the use of inventions, utility models and industrial designs will be granted by the Government if the interests of national security, defense, life and health of citizens so require. On the other hand, decisions on granting licenses will also be made by the Sub-Commission, in cases when a foreign right holder is not ready to grant a license to use its intellectual property and the Russian market lacks technologies with similar characteristics.
1 Decree of the President of the Russian Federation No. 122 dated 15 February 2024 “On improvement of the decision-making procedure for the use of inventions, utility models and industrial designs to ensure economic security of the Russian Federation”.
2 Resolution of the Government of the Russian Federation No. 1767 dated 18 October 2021 “On Approval of the Methodology for Determining the Amount of Reimbursement to be Paid to the Patentee in the Event of Decision to Use an Invention, Utility Model or Industrial Design without its Consent and the Procedure for its Payment”