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Russian business outlined all its complaints in one “book”

In Russia it was established institute of ombudsman presenting and protecting interests of Russian business. For certain industry of business there is special representative of ombudsman, who summarizes all complaints stated by business and puts them on paper. Each year ombudsman makes report to Russian president and proposes the ways to resolve problems outlined in book of complaints.

This year was no exception. What relates to intellectual property, it was outlined only four systematic problems. First problem concerns collective management of rights, to be more precisely non-contractual collective management – state accreditation for public performance. It was mentioned that many violations of current Russian law and violation of rights of entrepreneurs, both right holders and users, have been revealed in business activity of Russian accredited CMOs.

Accredited CMOs have demonstrated inefficiency and high risk of corruption in non-contractual model of collective rights management. In practice CMOs distribute not all royalties collected from users. In 2015 Russian Union of Right holders has received 2.2 billion roubles and distributed among right holders only 1.5 billion roubles. All-Russian organisation of intellectual property in 2015 has received 1 billion Russian roubles but distributed only 785 million Russian roubles. Russian authors’ society in 2015 has received 4.5 billion Russian roubles and distributed only 3.6 billion Russian roubles.

Distribution of royalties among right holders remains nontransparent. For example, Russian authors’ society has distributed among right holders only 10% of collected royalties in accordance with reports provided by users, the rest of the royalties has been distributed under so called “rating system”. Only 1 billion roubles have been distributed among 50 individual entrepreneurs, who were not prominent or noticed in music business.

Elimination of non-contractual collective rights management in Russia was one of conditions to enter World Trade Organisation. Russia is now a member of WTO, but non-contractual collective rights management, state accreditation, is still in force. Recommended resolution of such problem is amendments to Russian civil code eliminating non-contractual collective rights management or in other words eliminating state accreditation for public performance.

The second problem is widespread practice of disproportional civil and public liability of businessman for infringement of intellectual property, including those cases where culpability is absent. Right holders prefer to promptly initiate administrative and criminal proceedings instead of civil or commercial proceedings. As a result during last years the quantity of criminal cases raised drastically (articles 146 and 180 of Russian criminal code and article 7.12 of Russian administrative code). But the situation with intellectual rights did not get better.

It was recommended together with relevant authorities and business community to work over the issue of elimination of criminal liability, provided in part 2 of article 146 of Russian criminal code, in cases where there is no public danger in corpus delicti (“purpose to distribute”).

The third problem is delays with registration of intellectual property objects (patents etc.) in Rospatent. These delays cause unreasonable time and financial expenditures of businessman.

The fourth problem is absence of unified administrative and court practice on cases with businessman. The recommended resolution is the decree of Russian high court providing guide principles for court practice. This should provide qualification of fair use for trademarks for informational purposes, qualification of fair use for photos by way of citation in internet. It should also provide for courts uniformity and predictability of reasons to apply preliminary measures in copyright infringement cases in order to secure claimant’s interests and requirements and also secure evidences.