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John B.
Farmer

 

Lawrence E. Laubscher, Jr.

 

Ian D. Titley

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Intellectual Property is a Casualty in the New War

Wednesday, March 23rd, 2022

Sadly, we now have a ground war in Europe and a new Cold War with Russia. Less publicized is the war Russia has effectively declared on Western intellectual property in response to Western sanctions and supplying of arms to Ukraine.

Attacking the intellectual property rights of your enemy isn’t new to warfare. The United States once did the same thing.

The U.S. enacted the Trading with the Enemy Act in 1917, shortly after it entered World War I. That resulted in the President creating the Office of the Alien Property Custodian, which was charged to “assume control and dispose of enemy-owned property in the United States.”

The custodian seized the U.S. assets of Bayer, a German company, and auctioned them in 1918 on the steps of a Bayer factory in New York. Among the assets auctioned was Bayer’s U.S. trademark on the drug name “Aspirin.” Aspirin was not yet a generic term for acetylsalicylic acid, the chemical name for the drug.

This U.S. confiscation and auctioning of Bayer’s Aspirin trademark delivered little value. In 1921, a federal court held the term “Aspirin” had become a generic name in the U.S. due to widespread use by third parties for the name of the same drug. When a trademark becomes a generic name for a good or service, the trademark dies.

Turning to the present, on March 7, 2022, the Russian government legalized the theft of patent rights owned by its adversaries. Russia did so to pressure foreign businesses to oppose the imposition of economic sanctions on it.

Specifically, the Russian prime minister issued a decree that immunized Russian companies from liability for infringing on patents owned by nationals of certain countries and by companies who have their principal place of business in such countries. The targeted countries include the United States, the United Kingdom, the 27 countries in the European Union, Canada, Japan, South Korea, and Australia.

A patent is an intellectual property right to an invention, such as a new device or method of doing something. Patents are issued by individual countries. Many Western countries own Russian patents.

Russia’s attack on Western intellectual property likely will go further. Russia is threatening to disregard trademarks and copyrights owned by enemy countries. That would allow businesses in Russia to use the names and logos of Western companies.

Trademark-registration applications already have been filed in Russia to claim ownership of imitations of famous Western business logos, such as McDonald’s, Starbucks, and Instagram. A Russian restaurant chain has already adopted a logo highly similar to the McDonald’s golden arches.

Russia also has threatened to seize the assets (including trademarks) of foreign businesses that cease operation in the country. These assets would be transferred to the newly created Russian businesses.

Russian disregard for Western intellectual property rights isn’t new. Because of rampant intellectual property piracy in Russia, it has been on the priority watch list of the Office of the United States Trade Representative since 2019.

Russia’s moves could affect the operations of companies even here in the United States. Within Russia, Russian companies could produce with impunity products that bear the trademarks of Western companies. These counterfeit products might make their way to the United States through intermediary countries. Businesses will have to work with customs officials to try to keep them out.

Russia likely will suspend copyright protection for companies from targeted countries. That would legalize piracy of Western music and entertainment, which might make songs, movies, and series available for free on the Internet, which would hurt the finances of Western entertainment companies. This also would enable the production of pirated software.

On the flip side, the West is taking fairly weak action against Russian intellectual property rights. The U.S. Patent and Trademark Office terminated its relationship with Russia’s agency in charge of intellectual property (commonly known as Rospatent) and with the intellectual property office of Russia’s ally Belarus and with the Eurasian Patent Organization. The European Patent Office did the same thing. Because of this, it will take longer and be harder for people and companies from Russia and Belarus to get patents in the U.S. and Europe.

The West has not retaliated by suspending enforcement of Russian intellectual property rights in Western countries. But perhaps banking and other economic sanctions and travel restrictions will make it difficult or impossible for Russians to do so.

None of this intellectual-property damage compares to the terrible and unjust suffering of the Ukrainian people. But this new war could send the West into recession, and the destruction of intellectual property in our tech-focused world could make that recession much worse.

Written on March 23, 2022

by John B. Farmer

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