Western companies with trademark rights in Russia are feeling the ripple effects of the Ukrainian conflict. In response to the economic sanctions and boycotts imposed by the U.S. and other Western countries, Russia has threatened to suspend the intellectual property rights of companies that have ceased operations in Russia. Additionally, there has recently been an increase in bad faith trademark filings for various brands across a wide range of industries from Chanel to Audi. Moreover, it appears that Russian courts may allow the infringement and misappropriation of trademarks owned by Western companies in light of a recent decision involving the character Peppa Pig, where the court cited sanctions as a basis for refusing to recognize the Western-based company’s intellectual property rights in the popular cartoon character.
Even those businesses with longstanding ties within Russia don’t appear to be safe. Certain companies closing locations in the country in response to the conflict in Ukraine are finding that third parties are filing trademark applications for blatant replicas of their brands. Even more disturbing is that should the Russian government decide to remove trademark protections for Western companies altogether, then a third party could step in and offer goods and services under identical marks. Depending upon how things play out in Russia, Western brand owners are in serious danger of losing their intellectual property investments in the country. Exacerbating the problem for these brands is that finding local counsel willing to assist them may be extremely difficult. Fear for personal safety and the threat of retribution may encourage many trademark attorneys in Russia to steer clear of matters involving companies from “unfriendly” countries.
While most brand owners may consider these moves ruthless, Russia’s tactics are not novel as seizing intellectual property during wartime is not a new phenomenon. During World Wars I and II, the U.S. government and its allies seized intellectual property from companies associated with countries like Germany. For example, Bayer, the German company, lost its rights to aspirin as a result of the Treaty of Versailles in 1919. Therefore, it should not be terribly surprising that Russia would consider the actions discussed above as tools in its arsenal during this recent conflict.
Only time will tell what the landscape may be like in Russia for those brands willing to return in the future. In the meantime, Western-based companies should anticipate an increase in counterfeits and/or grey market goods originating in Russia and should trademark registrations issue in Russia in connection with bad faith filings, then the world may also see an increase in the subsequent registration of domain names and the creation of websites and social media accounts based upon those national rights. There is a lot of uncertainty, but it seems that many Western brands are taking the position that their responsibility to be good corporate citizens outweighs the potential loss associated with having their intellectual property rights diminished or even evaporated in Russia. Unfortunately, it is unclear what the repercussions may be in the long run for both brand owners and the Russian economy, but for now it seems like a “no-win” situation for all involved.