Intellectual Property.

a. Copyrights.

The RF Law On Copyright and Neighboring Rightsof 9 July 1993 No. 5351-1 (as amended) (“The Copyright Law”) extends copyright protection to works of literature, art, and science, as well as to computer software and databases (which are also covered by the law On Legal Protection of Computer Programs and Databases No. 3523-1 of 23 September 1992 (as amended by the Federal Law No. 177-FZ of 24.12.2002).

The law defines two categories of exclusive rights: economic, which are protected for a lifetime of an author plus seventy years thereafter (unless the author died before 1955), and moral (non-economic) rights, some of which are protected perpetually. Upon expiration of economic rights, the work becomes public domain and may be freely used by anyone provided that the right of authorship, right to authors name and the right to integrity are respected.

Originally, all the moral and economic rights are vested in the author, i.e., the person, which has personally created the work. Works made for hire are an exception; economic rights in such works are vested in the employer.

Russian copyright law recognizes the following moral rights of the author: the right to be recognized as the author of a work (the right of “attribution” or “authorship”); the right to authors name - the right to use or to permit the use of the work under the authentic name of the author, pseudonym (alias) or without any name (anonymously); the right to defend their work against distortion, mutilation, and other derogatory treatment that may harm his or her honour and dignity (the right of “integrity” or “protection of the author’s reputation”); the right of promulgation (the right of an author to disclose his work to public or to abstain from doing this). The right of promulgation includes the right of withdrawal (i.e. a possibility to reverse the earlier decision to disclose the work to public).

Copyright owners have exclusive rights to use or permit the use of the work in any manner and form, including reproduction (copying), distribution, and modification of the work. The copyright owner also has the exclusive right to rent out or permit rental copies of a work and other economic rights provided for in Clause 2 Art. 16 of the Copyright Law.

Authors of works of visual art (paintings, sculptures, etc.) have the right to receive a fixed percentage of price in case of subsequent resale of their works. The Copyright Law provides for fair use exceptions to exclusive economic rights and also situations in which use of copyrighted works is permitted without authors’ consent and without the payment of royalties.

Economic rights may be transferred (assigned) by an author or a copyright owner to third parties, partially or completely, for a limited term or for the entire period of their existence, in territories agreed upon the parties. Moral rights cannot be transferred or abandoned by the author. The contract for transfer of economic rights is called “author’s contract.” The Copyright Law requires the authors’ contract to be in writing (with the exception of contracts for use of the work in periodicals), otherwise it is void. The contract should normally specify scope of rights to be assigned, territory and period of time during which the transfer is effective, and compensation to the author. Default terms of contract supplied by the Copyright Law stipulate that unless the contract expressly provides otherwise, the transferred rights are deemed non-exclusive, territory is limited to the territory of the Russian Federation and the author has an option to terminate contract upon expiration of 5 years. Authors’ liability for non-performance or improper performance of the obligation to create a work under an assignment is limited to compensation of real damages.

The Copyright Law also gives the protection to the certain exclusive rights of performers, recording organizations, and broadcasting or cable TV organizations (neighboring rights).

Recent amendments to the Copyright Law prohibit unauthorized removal of features that limit of the use of works or objects of neighboring rights imposed by technical means of copyright protection. It is also prohibited to tamper with the information about copyright and neighboring rights on the copies of the protected works (i.e. information identifying the work the name of its author and copyrights owner or the terms of their use).

Copyright infringement, i.e., violation of moral and/or economic rights, entails criminal, administrative, and civil law liability. In addition to regular remedies, the Copyright Law introduced a special remedy for copyright infringement in the form of compensation in the range of 10 thousands to 5 million rubles or double price of the infringing copies or rights infringed, instead of compensating losses. A copyright owner is not required to prove his losses in order to recover the compensation. Equipment and counterfeit copies of products are subject to seizure and confiscation.

Optional registration of computer programs and databases with the national patent authority is available. Such registration, however, is not a condition for legal protection.

Copyright protection extends only to works authored by Russian nationals, works of foreign authors which were for the first time published in the Russian Federation, and unpublished works of foreign authors physically located in the Russian Federation. Other works may be protected under the terms of international agreements. The Russian Federation is a party to 1953 Universal Copyright Convention and Berne Convention for the Protection of Literary & Artistic Works (as revised in 1971). These agreements provide copyright protection for works of nationals of any member states and to works first published in any member states of conventions. In 2002 the Russian Federation became a party to the Rome International Convention for the Protection of Performers, Producers, of Phonograms and Broadcasting Organizations. This Convention grants national level of protection to neighboring rights of the performers, producers of phonograms and broadcasting organizations from the member states.

b. Patents.

Matters related to patents are governed by the Patent Law of the Russian Federation No. 3517-1 of 23 September 1992 (as amended by the Federal Law No. 178-FZ of 24.12.2002) and instructions regarding filing and processing patent applications which are issued by the national patent authority.

Products (devices, substances, microorganism strains, plant or animal cell cultures) and methods may be patented as inventions. Patents for inventions are not issued in case the principal claim is made in respect of:

• discoveries, scientific theories and mathematical methods;

• solutions concerning only the outer appearance of items, and those aimed at satisfying aesthetic requirements;

• rules and methods of games, mental and commercial activities;

• computer software;

• solutions relating to presentation of information.

Some developments may not be patented as inventions in any circumstances. They are:

• layouts of integrated microcircuits;

• plant varieties and animal breeds; or

• solutions contradicting to the public interest, principles of humanity and public morals.

Devices may also be patented as utility models with the exception for:

• solutions concerning only the outer appearance of items, and those aimed at satisfying aesthetic requirements

• layouts of integrated microcircuits;

• solutions contradicting to the public interest, principles of humanity and public morals.

Patents for industrial designs are issued for artistic-constructive solutions (design) of outer appearance of hand- and factory-made products.

Patents for inventions are effective for 20 years from the date of filing the application. Patents for utility models are effective for initial term 5 years which may be extended by 3 years. Industrial designs are protected for an initial period of 10 years which may be extended by 5 years. An employer has an option to obtain patents to inventions, utility models and industrial designs which were developed by employees in its name. However, the rights to register a patent are automatically transferred to the employees – authors upon expiration of 4 months after the employer was notified by authors about the invention unless within this term the employer files the patent application, assigns the rights to apply for patent to third parties or notifies the author that the invention shall be kept confidential (i.e. constitutes a commercial secret).

Patent owners have exclusive rights to manufacture, use, import, offer for sale, sell or otherwise put into circulation, or store with these purpose products containing the patented invention, utility model or industrial design, or products manufactured using the method protected by the patent.

To receive a patent, one has to file an application with the national patent authority. Foreign applicants must be represented before the national patent authority by qualified patent attorneys. Examination of applications for inventions and industrial designs is carried out in two steps. First step is the formal examination, during which the completeness of application documents and compliance with formal requirements are examined. Summary of the application is published upon expiration of eighteen months from the filing date. The second step is examination on merits upon the request of an applicant or of a third person. If results of examination are positive, a patent is issued. If the request to carry out examination on merits is not filed within three years period upon completion of the formal examination , the application is deemed to be revoked. In case an invention is developed in Russia, the patent application for an invention or a utility model may be filed in another country not earlier than six months from the date of filing in Russia unless the applicant within this period was notified by the national patent agency that its application contains the state secret (Art. 35 of the Russian Patent Law). This limitation doesn’t apply in case the application is filed under the Patent Cooperation Treaty of 1970 or the Eurasian Patent Convention of 1994 with the Russian patent authority and Russia is one of the countries for which the patent is sought.

Examination of patents for utility models is carried out in one step.

Exclusive or non-exclusive right to use a patent may be assigned or granted by the owner (assignor/licensor) to another party (assignee/licensee). Registration of patent assignment and license agreements with the national patent authority is required. Unregistered agreements are deemed void. The Rules for Registration of Agreements on Transfer of the Exclusive Rights in Invention, Utility Model, Industrial Design, Trademark, Servicemark, Registered Layouts of Integrated Microcircuits or the Right to Use Them, and on Transfer of Exclusive Rights in Software or Database in full or partially were endorsed by the Russian Agency for Patents and Trademarks on 29 April 2003.

The Patent Law provides for compulsory licenses which may be awarded by the court in case (1) a patent owner fails to use patented invention for 4 years or utility model for 3 years; (2) another patent owner can not exercise its patent rights in invention without violation of patent rights of the patent owner in another invention or utility model. A patent owner may put on file with the national patent authority an offer to grant a right to use an object of industrial property to any person (open license).

Russia has acceded to the Patent Cooperation Treaty and the International Convention for the Protection of Industrial Property as revised in Stockholm (Paris Convention 1883). Russia is also a member of Eurasian patent convention, which was concluded between CIS countries and provides for a single “Eurasian patent” effective in member countries.

c. Trademarks.

Legal entities and individual entrepreneurs may register words in block letters, images, signs, and other objects as trademarks. The Law of the Russian Federation No. 3521-1 of 23 September 1992 on Trademarks, Service marks and Names of Places of Origin (as amended by the Federal Law No. 176-FZ of 24.12.2002) grants to a trademark owner an exclusive right to use trademark for a period of 10 years which may be extended without limitations by 10-year increments.

There are a number of grounds for refusing registration of a particular designation as a trademark. Some elements may not be registered, unless they acquired distinctive character as a result of process of their use, but may be included in the trademark as unprotected elements. These are (1) widespread designations of goods, (2) generally accepted symbols and terms, (3) generic designations of the kind, quality, quantity, features, functionality and value of goods as well as of the place, time and method of their manufacture or sale, (4) indications of goods configurations predetermined exclusively or mainly by the functionality of goods.

Some elements may not be registered in any circumstances. Such elements are (1) state symbols, flags, emblems, seal, marks, etc.; (2) official names and images of cultural or natural places of national and international importance; (3) designations misleading consumers in respect of goods and their manufacturers; (4) designations contrary to public interests and morals.

Another ground for refusal to register a designation as a trademark is its identity or confusing similarity to the (1) places of origin, protected by the law; (2) the industrial designs and compliance marks registered earlier; (3) firm names in respect of similar goods; (4) the works of science, literature and art or parts thereof (names, characters, quotations, etc.) created earlier and known in Russia without the consent of the copyright owner; (5) surnames, names, pseudonyms (derivatives thereof), portraits and facsimiles of persons known for the date of application without the consent of such persons or successors thereof.

Designations identical with the trademarks registered (or pending for registration) in Russia or recognized as well-known in Russia may not be registered as trademarks. Designations not identical but confusingly similar to such trademarks may be registered only from consent of the original trademark owner.

Well-known trademarks are protected without registration. Trademarks may be recognized as well-known in Russia under the request of a legal entity or an individual, provided that such designations by the date of application became well-known in Russia among consumers with reference to respective goods as a result of their intensive use. In case a registered trademark is recognized as a well-known its protection extends to the goods or services non-similar to those for which the trademark was originally registered. The protection in respect of non-similar good and services is granted under the condition that the use of the well-known trademark by another person will be associated by consumers with the owner of the well-known trademark.

It is possible to register a collective mark belonging to an association of persons (legal entities and/or individuals) provided that activities of such association comply with the laws of the country where such association was founded. A collective trademark shall apply to the products which are manufactured or marketed by the members of the association and are characterized by uniform quality. Each member of such association is entitled to use the trademark. However the rights in a collective mark may not be assigned or licensed to the third parties.

Trademark registration may be appealed by any concerned person even after the certificate of title to the trademark is issued.

Trademark’s ownership may be assigned by the owner to another person under an assignment agreement. The right to use a trademark may be granted by a trademark owner (licensor) to another party (licensee) on the basis of a license agreement. The agreement must provide for the obligation of the licensee to produce goods of equal or better quality than those of the licensor. Registration of assignments and license agreements with the national patent authority is required. Without registration such agreements are deemed void.

Registration of places of origin gives the exclusive right to use it for labeling their products to all manufacturers located in this place. For the place of origin to be eligible for protection, the quality of products originating a place of origin (a country, locality, geographic object) must be exclusively or primarily determined by the natural conditions and/or by human resources, which are characteristic of this place.

Foreign applicants must be represented before the national patent authority by patent attorneys who are admitted with the national patent agency.

Russia is a member of 1891 Madrid Agreement concerning the International Registration of Marks (as revised at Stockholm in 1967), of 1973 Trademarks Registration Treaty (TRT) and of 1994 WIPO Treaty on Trademarks Laws.

d. Trade Secrets and Other Intellectual Property Institutes.

Commercial secrets (trade secrets) are protected in accordance with Article 139 of the RF Civil Code and the law On Commercial Secret № 98-ФЗ of 29.07.2004. Information is recognized as a commercial secret provided that: (1) it has actual or potential commercial value from not being known to third parties, (2) it is not legally available to public and (3) the owner established a regime of confidentiality in respect of such information and takes appropriate measures to keep it confidential. To set up a regime of confidentiality with regard to some information an owner has to undertake the following measures: (1) to draft a list of confidential information and familiarize its employees with this list; (2) to limit access to confidential information and establish the order of use and control of use of this information; (3) to resister persons who have access to confidential information; 4) to sign appropriate agreements with everybody who obtain an access to such information; (5) to mark copies of confidential information with a stamp “Commercial secret” with identification of the name and place of residence of the owner (Art. 10 of the law On Commercial Secret). Facts and information which may not be a commercial secret may also be specified by other federal laws (for instance, the law on Securities Market of 22 April 1996 No. 39-FZ).

Authors (or other owners) of layouts of integrated microcircuits have an exclusive right to use of the layout for 10 years after the date of first commercial use or registration thereof (the law of the Russian Federation On Legal Protection Of Integrated Microcircuits of 23 September 1992 No. 3526-1 (as amended by the Federal Law of 09.07.2002 No. 82-FZ). The registration of microcircuits with the national patent authority is optional.

Commercial organizations have exclusive rights to their registered trade names (Art. 54 of the RF Civil Code). The right to use trade name may be granted to other companies only by contract of commercial concession (franchize), which is subject to mandatory registration with the companies registrar.

The law On Selection Achievements of 6 August 1993 No. 5605-1 provides for patents for new breeds of cattle and new plant varieties. Patents give the owner an exclusive right to use the selection achievement for 30 years and 35 years (for certain tree and grape cultures).