“It’s likely that Russian businesses will capitalize on the opportunity for IP infringement and piracy and continue to violate patent holder rights even if global tensions deescalate.”
Russian businesses now hold the key to pilfering, producing and profiting from western technologies. As of Monday, March 7, the Russian government has legalized intellectual property (IP) theft. With this move, businesses in Russia can now violate IP rights, as they no longer need to compensate patent holders from “unfriendly countries.” The list of “unfriendly countries” includes the United States, Canada, Australia, Switzerland, Norway, Iceland, the United Kingdom, Japan, South Korea, New Zealand, Singapore, Taiwan and all 27 European Union (EU) member countries.
Russia has faced growing isolation from the Western world following President Vladmir Putin’s invasion of Ukraine. The United States, EU member countries and others recently initiated sanctions against Russia and have enacted crippling trade limitations. Currently, Russia is sufficiently meeting its supply and demand needs for agriculture, energy and natural resources. However, Russia’s isolation and growing lack of skilled producers have led to a stark decrease in technological production and innovation.
The Russian Decree
Unsurprisingly, Prime Minister Mikhail Mishustin of Russia signed a decree establishing significant changes in the compensation structure for businesses that use or create inventions without the inventor’s consent. Patent holders in the “unfriendly countries” will now receive 0% of the profits from the production, sale and use of their inventions by Russian entities.
Patent infringment can have disastrous effects on western businesses and inventors, as Russian businesses can now replicate inventions and use copyrighted materials without consequences. The enabling disclosure requirement of patent law requires that patent holders explain their inventions in sufficient detail so that someone skilled in the art can make and use the invention. This essentially means that Russian firms can access publicly available patent databases and practice the patents to boost struggling technological production.
Although the Kremlin has not yet issued legislation regarding free piracy of copyrighted works and trademark infringement, it is only a matter of time before it does. In fact, authorities from Russia’s Ministry of Economic Development have suggested lifting protections on trademark laws in recent weeks. 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. This would lead to wasted western business efforts, as the proposed measures would mitigate the current supply chain breaks entirely. The exploitation of American brand names is inherently undemocratic and counter to the United States’ ideals.
The consequences of IP piracy and theft on western businesses and western economies might not be felt right away, as Russia can’t increase technological production in the short run, but the effects will become apparent over time. It’s likely that Russian businesses will capitalize on the opportunity for IP infringement and piracy and continue to violate patent holder rights even if global tensions deescalate.
Due to a lack of skilled workforce and technological innovators, the transition to technological innovation will not be easy for Russia. Thus, Russian businesses will most likely pay external contractors and skilled persons from Eastern European and Asian countries to bridge this gap. These countries have a large surplus of educated professionals that are either not adequately paid or underemployed. Thus, there is a large financial incentive for them to move to Russia to properly utilize their skills and have improved quality of life.
This migration of skilled workforce to Russia will depend on the United States’ immigration policy, which currently limits the number of skilled workers from foreign countries under the H1B visa category to 65,000. Interestingly, on February 28, 2022, the United States Citizenship and Immigration Services released this statement, “USCIS has received a sufficient number of petitions needed to reach the congressionally mandated 65,000 H-1B visa” for fiscal year 2022. Most skilled people from Eastern Europe and Asia would prefer to migrate to the United States, but if they cannot, they will continue to migrate to places like Canada, which has a streamlined immigration policy for skilled migrants, and, ultimately, Russia.
With Russia free to act without condemnation or punishment, establishing a Russian “Silicon Valley” with technological innovation that matches that of the west is a real threat. Due to ongoing tensions between Russia and western countries, including the United States, Russia will do everything in its power to cripple our businesses and economy. Reports have indicated Russia will use the legalization of IP piracy to offer entertainment, music, and other private works to the public free of cost. Since consumers generally seize opportunities for free access to such works, Russia could nab a large market share from U.S. businesses and appear charitable by distributing movies and music for free.
World’s Biggest Thief
As tensions between the west and Russia rise and new decrees are signed into action every day, it will be interesting to see how Russian businesses use this opportunity for legalized IP infringement and piracy, and how U.S. businesses respond. One thing is certain: Russia has once again violated international rights and will continue to do so if their businesses follow down this path. Russia will soon be the world leader in IP theft too.
Ishaan Jain also contributed to this article.
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