From Russia, with trademarks? Maintaining IP rights during wartime

After Russia launched its full-scale invasion of Ukraine in February 2022, many brands announced that they would leave the Russian market. But a few years on, the companies are still facing questions about how to handle their intellectual property strategy.

Who actually left?

Image from Pixabay.

If public announcements were to be believed, more than 1000 companies planned to leave Russia in 2022. Sanctions were certainly a factor, but many said that they would go beyond those legal requirements and completely exit the Russian market, which would increase the economic pressure to end the war. For example, McDonald's sold their business and the Russian-owned restaurants can no longer serve the McDonald's menu nor carry the McDonald’s name.

Last year, however, it became clear that many of the companies who announced their departure from Russia were struggling to follow through. Heineken reported that they were threatened with nationalisation if they suspended or closed their business, while others were engaged in slow negotiations to sell their businesses with a "buy back" clause to allow them to claim back their Russian assets in the future.

Who is maintaining their IP rights?

For the businesses who suspended their operations, one of the key challenges that brand owners are now facing is the requirement to use a trademark under Russian law. Article 1486 of the Civil Code of the Russian Federation states that:

Legal protection of a trademark may be terminated early in relation to all goods or part of the goods for the individualization of which the trademark is registered, due to non-use of the trademark continuously for three years.

Starbucks completely exited and no longer has a brand presence in Russia - its former locations were taken over by a brand using a similar logo that is owned by a Russian rapper (Timati) and a restaurateur (Anton Pinsky). This April, Pinsky brought a claim for early termination of Starbucks's trademark registrations due to non-use. Subsequently, Starbucks filed eight applications at the end of May to register signs including Starbucks and Starbucks Coffee in relation to goods and services like instant coffee, preparation of drinks and food, and administration of a loyalty program. Whilst it might look like a reaction to the non-use action, the company insists this is simply routine IP strategy.

They are not alone: both IKEA and Coca-Cola have continued to file trademark applications in Russia since suspending their business. A Coca-Cola spokesperson said that "Our filings in Russia are intended to maintain our trademark rights." It seems that some companies are keen to retain the prospect of returning to the Russian market with their brand protection intact.

But it is not just about new registrations. The technology and engineering company, Bosch, has completely exited the Russian market by suspending its sales and selling its Russian assets to a Turkish investment fund. However, Bosch continues to enforce its trademark rights by filing infringement claims against individuals and companies in Russia, including for the sale of counterfeit products.

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The upshot is that some companies are pursuing a trademark strategy of "stick to the status quo" so that their options are still open for a post-war return to the Russian market. Two years ago, the picture looked rather different, with many brand owners concerned about the Russian government's decree in March 2022, which stated that intellectual property rights held by companies in "unfriendly" countries would be free for Russian entities to use without the usual ramifications. At that time, Rospatent received a flurry of trademark applications including names such as Chanel, Givenchy, Christian Dior, and Giorgio Armani, etc, from applicants unrelated to the luxury fashion houses. The Russian courts soon clarified that foreign IP rightsholders would continue to enjoy equal protection.

While they might have ceased the operations for the time being, certain brand owners apparently still see their intellectual property rights in Russia as something worth fighting for.