Quiet Warfare: Russia, Ukraine, and the Rule of Intellectual Property

Written by Jamie Mahowald

Edited by Juliette Draper and Emilea McCutchan



Russia legalizes crime: so says a smattering of headlines that ran up the intellectual property grapevine in early March 2022. With the Western press condemning Russia’s assault on Ukraine with titles like “Russia Botched Its Invasion”[1], “Putin’s Defiance,” [2] and “Cities Pulverized, Thousands Dead” [3], the most jarring take on the matter may simply be that “Russia legalizes crime.”

A shadowy front of the war in Ukraine, one with far less gore but with immense intrigue, is playing out in the international courts of intellectual property. Early in March, the Kremlin, under the direction of President Vladimir Putin, published an “Unfriendly Countries List” of 48 nations. The list included NATO countries such as the United States, the United Kingdom, Japan, South Korea, as well as the entire European Union.[4] Russian Prime Minister Mikhail Mishustinthen signed a corollary changing the damages that Russians owe to foreign firms whose work they use without consent: before March, an American firm that proved willful infringement could sue a Russian defendant in international arbitration court for up to $150,000 depending on the severity, size, and scope of the steal.[5]

Now, they get nothing.[6]

The decree allows Russian firms to pay zero percent of proceeds and no damages to entities from “unfriendly countries,” effectively legalizing intellectual property theft, a prominent and costly form of white-collar crime.[7]

The U.S. Department of State responded by directing the U.S. Patent and Trademark Office (USPTO) to terminate engagement with Rospatent, Russia’s service for intellectual property, and with the equivalent patent office of Belarus.[8] After expressing firm solidarity with the Ukrainian people, the USPTO barred Russian grant requests from the US-controleld Global Patent Prosecution Highway (GPPH), a fast track that removes many of the obstacles that foreign entities must undergo when filing a patent. The USPTO then advised the Japanese patent office to do the same.[9]

Russia holds a unique role among the world’s intellectual property violators. Russia’s large consumer base, underdeveloped foundation of native innovation, and glut of technologically savvy workers backed by a government supportive of murky IP activity[10] create a perfect storm for IP crime. Soon after the dissolution of the Soviet Union, scholars were noting the pair of “large numbers of brilliant scientists and low salaries”[11] and its potential ramifications on the world stage. Threats to intellectual property have festered in the decades since, but no breach seems as bold or blatant as the flat legalization of piracy that occurred after the recent invasion of Ukraine.

Arguably, smoke signals from the Kremlin itself, which must have been considering long-term consequences of the decision to invade Ukraine, prophesied this outcome. The license to ignore inconvenient international laws (tariffs, air space requirements, and trade agreements, especially those sourced from the United States and the European Union) undergird the apparatus of decision making on an elementary level[12]. It follows that the IP issue fits nicely into that wider goal. With this in mind, the freedom to disregard international intellectual property law –– for the sake of strengthening its domestic oligarchic industries –– is one of Russia’s essential yet unreported foreign policy objectives, cemented by acts like the invasion of Ukraine.

I.

A century of weak IP requirements has given Russia “the dubious honor of being one of the world’s worst intellectual property offenders.”[13] For most of the nineteenth century, tsarist Russia operated under the guide of the 1812 Manifesto “On the privileges for different inventions and discoveries in the arts and crafts”[14], where the ballooning autocracy attempted to adopt the laws and customs of its neighbors in the West. Before then, the regime had issued only 76 “privileges,” a weaker, premodern analog to patents dating back to 1652; the new 1812 Manifesto granted Russian inventors protection to grow its industry in the model of the United Kingdom and France, and later of Germany and the United States.[15]

These privileges passed down many of their genes to modern patents. For instance, a hopeful inventor marketing their labor-saving, hand-cranked, compound-rotary washing machine on the storefronts of 1852 St. Petersburg apply their design to the Ministry of the Interior, submit an accurate and detailed description of their discovery (complete “with all the details, methods and manner of its use, with the relevant drawings and sketches”[16]), and receive a right to their work proportional in duration to the fee they paid. A dejected inventor could submit rejected requests to the Governing Senate, introducing a proto-appeals system to the domestic IP process. And if a rival creator could prove to a court that they had already introduced that very washing machine to the good people of St. Petersburg, the the Ministry of the Interior would void these privileges.[17]

Privileges “could also be granted for inventions or discoveries made in other states but not thoroughly described or introduced for production in Russia”[18] –– a provision posed to favor native Russian industry.

Absent the issues that necessitated the 1917 Bolshevik Revolution and the country’s pivot away from property rights (both physical and intellectual), it is not difficult to imagine that the trajectory launched by 1812 Manifesto would have landed Russia in a similar place to other nations with kindred 19th century IP traditions. It is also easy to get stuck in a Eurocentric whirlpool of IP regulation –– deeming Western European laws as “the ideal” to which all nations should strive –– especially considering the French influence on Russia’s constitutions.[19] But the swing gradually toward, and then sharply away, from the Western playbook that pushed much of the Russian ethos throughout the 19th and 20th century –– before other markets (chiefly China, Japan, and Eastern Europe) rose to global attention –– gives us no choice but to scrutinize the ways Russian IP law was built in relation to that of the West.

The 1917 Revolution, then, is the root of today’s confusion. Reversing a remarkably progressive 1911 Statute on copyright, the socialist leaders of the Soviet Union asserted that putting all inventions into the public domain would bolster national industry after the Russian Civil War’s destruction ended in 1922.[20] During the New Economic Policy (NEP) era from 1921 to 1928, Russia then waffled between allowing some free market privatization and granting the state total control of property. Joseph Stalin solidified this latter ideology as the Soviet Union’s modus operandi by the beginning of the 1930s with the “Regulations on inventions and technological improvements.”[21]

Stalinist Soviet legal doctrine spurned the term “intellectual property” altogether, criticizing that it was exploitative and bourgeois.[22] It divided the concept into “author’s rights” and “patents,” and the new ideology –– with its rejection of state protections for profit-seeking entities –– had no place for the latter. To void the need for any tsarist guidelines in the absence of clear socialist ones, however, the NEP recognized author’s rights in the 1925 Copyright Act, entitling authors to “exclusive” publication rights for twenty-five years after a work was published.[23] The 1928 Act augmented this duration to the life of the inventor plus the life of their heirs plus fifteen years, but the government reserved the right to purchase or otherwise nullify these rights whenever it chose.[24]

The 1928 Act also solidified how the Soviet government viewed author’s rights. To teach pupils about the history of Soviet IP law, a 1944 Russian textbook deemed it

characteristic [of “bourgeois society”] that, except for a small group of bourgeois authors, the author’s right is the property… not of the author, but of the publisher, of a big capitalist, an industrialist. By making use of “freedom” to conclude a contract with the publisher, the capitalist acquires for a few cents the monopoly right to use and distribute the production of another person––the author.[25]

But the Soviet author’s right is

completely different, sharply distinguishing it from the author’s right in capitalist countries. The Soviet author’s right has the objective of protecting to the maximum the personal and property interests of the author, coupled with the assurance of the widest distribution of the product of literature, science and the arts among the broad masses of the toilers.[26]

This is what “author’s rights” were to the Soviet ideology: not private rights in the Western sense (though authors did enjoy a modest “right to remuneration”[27]), but rather the right to benefit society as a whole. This definition happens to be much easier to abuse.

Soviet IP law stayed essentially constant through Stalin’s reign and World War II. But in 1961, the de-Stalinist eye of Nikita Krushchev took an internationalist approach to following global guidelines (which, again, were set to follow already existing Western practices). These policies, updated in 1964, ultimately fell short of international standards, but they provided significantly more private protection than did those of the Stalin era, harkening back even to some of the tsarist protections.[28]

During the period of détente, the easing of Cold War tensions between the U.S. and Soviet Union between 1967 and 1979, IP regulations remained static in the Union. Under the conservative watch of Leonid Brezhnev, Yuri Andropov, and Konstantin Chernenko, the 1980s in the Soviet Union were a time of conservatism and protectionism as the USSR struggled to respond to arms buildups in the United States and production booms in Japan.

Then the Soviet Union ended as it began: with a broad and ambitious social program designed to keep communism afloat for the time being. But this time, instead of NEP, Mikhail Gorbachev’s perestroika gave Soviet citizens certain freedoms in speech, press, and economic activity[29]. However, Gorbachev’s administration quickly found the NEP laws from which it drew inspiration too outdated to fit modern technology and the current Civil Code laws too harsh to fit the wants of perestroika.

Gorbachev’s administration and supportive assemblymen sponsored several amendments and revisions to the proposed system before the Fall of the Union in 1991, but the early Russian government under President Boris Yeltsin adopted many of these late Soviet laws anyway in an interesting moment of continuity.[Supra 13] The International Intellectual Property Alliance (IIPA) continued to call Russia’s IP regime “still deficient in a few key areas”[30], and confusion in already existing paperwork made defining who’s who in the patent world a bureaucratic nightmare. But the legislation passed shows that IP concerns were oddly rather high on Russians’ minds.

After fifteen years of the rise of Silicon Valley and fears around globalization plagued much of the Western periphery, the issue further ping-ponged through the Federal Assembly until 2006 when the earth-shattering yet dryly named Part IV of the Civil Code gave Russian IP law its fifth and (tentatively) final restructure.[31] Parts I-III, passed in the years between the USSR’s dissolution and 2006, covered either modest or vague IP issues that affected few businesses on the ground. Part IV was the Assembly’s first attempt at a fully modern Russian system created in modern Russia. Reception to Part IV has been lukewarm, with some scholars deeming it “not a complete failure”[32]. Others note that the legislation “does a good job in terminology unification and filling existing gaps”[33] but that it leaves many problems open and outright spawns new ones.

A dramatic shift in Russian IP law is the unification of the formerly divorced “author’s right” and “patent.” Taking strides to unify inconsistent nomenclature, the Code “recognizes not only economic, but also moral rights of the author which are the ‘result of intellectual activity.’”[34] But Russia being a country with a weak tradition in private property and a strong organized crime presence, in 2006, the circumstance on the ground was that “[t]he bulk of the current IP legislation was written from scratch less than fifteen years ago. It was repeatedly amended throughout the period. Now it will be abolished and replaced by the new legislation, constituting the new Fourth Part of the Civil Code.”[35] That’s a unique challenge for legislators with even the best possible intentions –– a system with an entirely made-up heritage in a haze of terra incognita.

II.

The most influential scholarship on Russian IP law –– what governs the opinions of lawyers at the International Criminal Court in the Hague and what shapes the guidelines of the IIPA –– is often written by émigrés from Russia into the West or by entirely Western authors. Though their research is valuable, it cannot read as a definitive probe into the minds of Russian policymakers, but rather as a legal treasure map with bits burnt and details scratched along the edges.

Much of this scholarship speculates why the Russian state does what it does, and more specifically why it has taken the odd policy positions regarding intellectual property that it has in the last decade and a half. For instance, Part IV of the Civil Code lacks any statement on fair competition, one of the facets (albeit a stereotypically capitalist one) that necessitates intellectual property regulation in the first place. A single inventor or small firm that cannot be certain it will have a recourse against an encroaching larger entity will acquiesce to forces greater than itself, a hit to market movement in the long run. The Russian Code instead delegates regulation of domestic competition to the older and weaker anti-monopoly legislation,[36] as though recognizing that playing too heavy a hand in oligopolies may end up harming national output.

Part IV is also remarkably market-oriented, even compared to the Western laws it wants to be compared to. Contrasted with the things the legislation does allow to become private intellectual property, this list is composed of items, current or otherwise, that are economically beneficial to have in the public domain: “Ideas, processes, discoveries, facts, programming languages, etc.” are not eligible for authorial protection, nor are “official documents, state symbols, folklore, and news.”[37] The author’s “exclusive right” to an item is far narrower than in comparable pieces of legislation, even those from Russia itself through perestroika and NEP; databases and public-domain material publications cannot classify as personal rights but rather as “neighboring rights”[38] with far weaker private immunity than a copyright can offer.

Rather than producing byzantine intellectual property laws out of purely private corruption or lack of strong tradition, the Federal Assembly seems to be charting a course toward higher economic efficiency via the Russian public domain at the expense of private enterprise.

The specter of Western influence also haunts Russian decision-making. Though brain drain –– the mass migration of educated and skilled workers from stagnant economies to countries with higher perceived opportunity –– has not plagued Russia as much as it has other former Soviet Countries, and though Russia has stabilized from its peak after the USSR’s fall, “[t]here is clearly a strong concentration of future scientists among the potential [e]migrants.”[39] And though the United States allowed Russia into the World Trade Organization (and even hailed this decision) in 2011 after reviewing the perceived strength of Part IV, the Putin administration remained skeptical of attempts to globalize Russian intellectual property.[40]

At any rate, the central government under Putin has been keen on moving Russia toward a new kind of autarky, especially considering that much of the state’s approval depends on a strong economy.[41] This shift extends to intellectual property: the state under this ideology has an incentive to direct Rospatent to craft its system such that large, Russian-based companies can maximize output using publicly available methods with minimal direction from foreign actors. If this plan sounds obvious, the key to the difference is the strength of the isolationism angle. A Russia that could defend itself from foreign IP lawsuits would be the same Russia that is insulated from major market recessions through a robust internal market of its own:

Insufficient legal protection for foreign rights holders in a certain country may be economically painful for the rights holders, not only because of losses incurred in that particular country, but also because of losses incurred in other countries due to the international distribution of materials and products bearing rights infringements.[42]

The policies the government is crafting on the intellectual property front exist to ensure that Russia is on the dominant side of this balance.

Other actions adjacent to their piracy declaration have indicated this goal. On April 6, 2022, the Russian finance ministry announced that it would be paying its $650 million in dollar-denominated debt fully in rubles.[43] The United States Treasury Department blocked access to American banks in fear of a default the day before, opening a possible line of attack that Russia had been forced into paying debts with its own sinking currency.[44] But the Kremlin had for months issued warnings to foreign banks –– even private ones –– that uncooperative lenders would be receiving debts in rubles.[45] Though the choice to switch currencies will eventually amount to a default on the debt,[46] the immediate consequence is that Russia is taking advantage of the devaluation of the ruble to pay less than it needs to.

We can deem the Russian state keenly aware of the decisions that would reduce its interdependence on the global economy –– Putin’s rhetoric on globalization seems to fit this narrative[47] –– and bolster its native industry. The Russian economy is generally centered around heavy industry, and their high-tech industry has not improved as much as their IP improvements under Part IV were prospected.[48] Not having to adhere to international intellectual property laws would offer Russia an alternative method to strengthen their high-tech industry in recognition that their current methods are not working.

Further, Russia has used the same rhetoric in its decision to invade Ukraine as it has in its IP suspension –– i.e., that the West and NATO are practicing undue hegemony. Legal scholar Raj S. Davé remarked that, “Legalization of trademark infringement and copyright piracy would allow Russia to operate and profit from Western businesses and services which have suspended operations in Russia due to the invasion of Ukraine.”[49] He added that allies in Eastern Europe and Asia will respond to this technological freedom by sending their brain-drained professionals to Russia, further improving their high-tech industry. Though a simple decision, this suspension has complex implications, almost all of which work to Russia’s immediate favor.


III.

The United States can take several steps to mitigate the mercantilist approach Russia is taking on international IP law. These fall into two categories: those that inflict so much pain on Russia that they have no choice but to acquiesce, and those that integrate the Russian economy so thoroughly into the global network that isolating would be shooting itself in the foot.

First, the H-1B visa: the current United States immigration policy limits the number of skilled workers to 65,000 per year under the H-1B program.[50] If the United States wanted to significantly expand this quota, it could target educated workers from Russian allies and poach the potential brain bank into which Russia is seeking to tap. While this would not stop the Russian project at any checkpoint until the last one, it would cut off the endeavor from its final intent –– to insulate Russia from any foreign IP suits.

A less manipulative — and more ironic — approach would be to furiously entangle Russian businesses with the global trade network. The Bush administration allowed Russia into the WTO in 2006, and the Organization is now the United States’s most powerful tool for achieving this end. Noting that the Russian state has little interest in intertwining itself with the global economy, the U.S. could further incentivize private Russian businesses to interact with the WTO with greater rewards than they would have received under lax Russian IP regulation. This does not mean that American businesses should sacrifice their own output or their interaction with allies for the sake of Russian happiness; instead, they should work to further exchange what Russia already has –– natural gas, underpaid tech workers, rare metals, and minerals –– for American high technology, benefitting both nations in the long run. The latter option would save millions of blameless Russian citizens from the painful effects of brain drain and economic sanctions.

Russia’s disregard of international IP law stems from more than indignation. If we can recognize it for what it is –– a powerfully calculated strategy wrought in centuries of murky tradition –– and not fall into the common trap of crying out in fury, we can more effectively address what Russia actually wants.


 

[1] Liz Sly, Nine Ways Russia Botched its Invasion of Ukraine, The Washington Post, April 8, 2022, https://www.washingtonpost.com/world/2022/04/08/how-russia-botched-ukraine-invasion/ (last visited 2022).

[2] Carole Landry, Putin's Defiance, The New York Times, April 12, 2022, https://www.nytimes.com/2022/04/12/briefing/russia-ukraine-war-putin-mariupol.html (last visited 2022).

[3] Julie Gerstein et al., As It Happened: Cities Pulverized and Thousands Dead in First 3 Weeks of Russia’s Invasion of Ukraine, Business Insider, March 16, 2022, https://www.businessinsider.com/live-updates-russia-ukraine-crisis-2022-2 (last visited 2022).

[4] Russian Government Approves List of Unfriendly Countries and Territories, TASS, March 7, 2022, https://tass.com/politics/1418197?utm_source=en.wikipedia.org&utm_medium=referral&utm_campaign=en.wikipedia.org&utm_referrer=en.wikipedia.org (last visited 2022).

[5] Gene Markin, What You and Your Business Need to Know About Copyright Law and Infringement, X The National Law Review (2020), https://www.natlawreview.com/article/what-you-and-your-business-need-to-know-about-copyright-law-and-infringement#:~:text=Statutory%20damages%20range%20from%20%24750,financial%20worth%20of%20the%20infringer (last visited 2022).

[6] Georgi Gotev, Russia Legalises Intellectual Property Piracy, Euractiv, March 8, 2022, https://www.euractiv.com/section/global-europe/news/russia-legalises-intellectual-property-piracy/ (last visited 2022).

[7] Id.

[8] USPTO Statement on Engagement with Russia, the Eurasian Patent Organization, and Belarus, United States Patent and Trademark Office (2022), https://www.uspto.gov/about-us/news-updates/uspto-statement-engagement-russia-and-eurasian-patent-organization (last visited 2022).

[9] Id.

[10] Leonid P. Malkov & Peter B. Maggs, Protecting Intellectual Property in Russia, 36 Research Technology Management15–16 (1993), https://www.jstor.org/stable/24129210?seq=1 (last visited 2022).

[11] id.

[12] Paul Kirby, Why Has Russia Invaded Ukraine and What Does Putin Want?, BBC, April 29, 2022, https://www.bbc.com/news/world-europe-56720589 (last visited 2022).

[13] Esprit Eugster, Evolution and Enforcement of Intellectual Property Law in Russia, 9 Washington University Global Studies Law Review 131 (2010), https://openscholarship.wustl.edu/cgi/viewcontent.cgi?article=1042&context=law_globalstudies (last visited 2022).

[14] The Manifesto “On Privileges for Various Inventions and Discoveries in Crafts and Arts”, the First Patent Law in Russia Was Signed, Boris Yeltsin Presidential Library (1812), https://www.prlib.ru/en/history/619346#:~:text=Russia%20was%20signed-,The%20Manifesto%20“On%20privileges%20for%20various%20inventions%20and%20discoveries%20in,law%20in%20Russia%20was%20signed&text=17%20(29)%20June%201812%20was,first%20patent%20law%20in%20Russia (last visited 2022).

[15] Id.

[16] Id.

[17] Id.

[18] Id.

[19] Julian Zegelman, Researching Intellectual Property Law In The Russian Federation LLRX (2005), https://www.llrx.com/2009/02/researching-intellectual-property-law-in-the-russian-federation/ (last visited 2022).

[20] Supra 13 p. 139

[21] Supra 19

[22] Supra 13 p. 138

[23] Bernie R. Burrus, The Soviet Law of Inventions and Copyright, 30 Fordham Law Review 714 (1962), https://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?referer=&httpsredir=1&article=1729&context=flr (last visited 2022).

[24] Id. p. 718.

[25] Id. p. 717

[26] Id. p. 717

[27] Id. p. 717

[28] Supra 13 p. 140

[29] Supra 19

[30] Id. p. 144, note 75

[31] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1314709

[32] Supra 13 p. 146

[33] Supra 31 p. 3

[34] Id. p. 10

[35] Id. p. 8

[36] Id. p. 10

[37] Id. p. 13

[38] Id. p. 13

[39] Natalia Latova & Vladimir Savinkov, The Influence of Academic Migration on the Intellectual Potential of Russia, 47 European Journal of Education 64–76 (2012), https://www.jstor.org/stable/41343411?seq=1 (last visited 2022).

[40] Russia's Accession to the World Trade Organization: Why Accession Benefits the U.S. Economy, United States Trade Representative, https://ustr.gov/sites/default/files/Factsheet%20on%20Why%20Accession%20Benefits%20the%20US%20Economy_0.pdf (last visited 2022).

[41] Daniel Treisman, Presidential Popularity in a Hybrid Regime: Russia under Yeltsin and Putin, American Journal of Political Science (2010), https://www.sscnet.ucla.edu/polisci/faculty/treisman/PAPERS_NEW/Pres%20pop%20final%20for%20website.pdf (last visited 2022).

[42] Supra 19

[43] Eshe Nelson & Lananh Nguyen, Russia Pays Dollar-Denominated Debt in Rubles, Risking Default, after U.S. Blocks Payment., The New York Times, 2022, https://www.nytimes.com/2022/04/06/business/russia-eurobonds-rubles.html (last visited 2022).

[44] Derek Saul, New Sanctions: U.S. Blocks Largest Russian Banks, Bans Investment In Russia, Forbes, April 6, 2022, https://www.forbes.com/sites/dereksaul/2022/04/06/new-sanctions-us-blocks-largest-russian-banks-bans-all-russian-investment/?sh=2ab0092621f4 (last visited 2022).

[45] Eshe Nelson et al., Dollars or Rubles? Russian Debt Payments Are Due, and Uncertain., The New York Times, March 15, 2022, https://www.nytimes.com/2022/03/15/business/russia-debt-bonds-default.html (last visited 2022).

[46] Supra 43

[47] Paul Krugman, Will Putin Kill the Global Economy?, The New York Times, March 31, 2022, https://www.nytimes.com/2022/03/31/opinion/putin-global-economy.html (last visited 2022).

[48] Russia's Darkening Tech Landscape, Brookings, March 10, 2022, https://www.brookings.edu/techstream/the-techstream-newsletter-russias-darkening-tech-landscape/ (last visited 2022).

[49] Raj Dave & Shaomeng Hou, What it Means that Russian Businesses Can Now Legally Steal Intellectual Property from ‘Unfriendly Countries,’ IPWatchdog, March 16, 2022, https://www.ipwatchdog.com/2022/03/16/russian-businesses-can-now-legally-steal-intellectual-property-unfriendly-countries/id=147528/ (last visited 2022).

[50] Id.


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