Smolensk, Russia
by Carolina San Martin, Moscow Regional Office

The idea of private property, be it material or intellectual, is new for Russia. Because the concept of intellectual property did not exist during the Soviet era, there was no need for legislation to defend it and no need for regulations concerning its use. Now that businesses have the right to produce and freely trade goods and services, Russian firms are trying to navigate through the murky waters of new laws with limited access to information.

A recent issue of AmCham News, the journal of the American Chamber of Commerce in Russia, notes that both "international and domestic companies doing business in Russia have been affected by the failure of the Russian Government to protect intellectual property." Although intellectual property rights (IPR) legislation has been passed in Russia, much work remains in terms of enforcement of this legislation and education of the public on its rights. There is a shortage of qualified experts on the issue, and, especially in Russia's regions, businesses have nowhere to turn for sound advice on intellectual property rights matters.

Irina Zorina and the Regional Agency for the Protection of Intellectual Property Rights (RAZIS) in Smolensk are working to change that. Established in 1997 with a grant from the Eurasia Foundation, RAZIS started by providing seminars and consultations for heads of local businesses on various IPR issues such as patent law, contractual relations, and taxation of intangible assets. This early support from the Foundation helped RAZIS develop contacts and generate a demand for its services. Although the Eurasia Foundation grant ended a year ago, RAZIS, which is run by Zorina, continues to serve the local business community by providing firms with current information on IPR legislation, assisting firms in registering patents and trademarks, and giving its clients legal advice when IPR disputes occur. In its two years of operation, RAZIS has helped clients complete 24 trademark registrations, 36 patents, 28 copyright registrations, and dozens of other types of registration. With agency assistance, several patent owners have signed license agreements with local firms that violated intellectual property rights laws. As a result, these patent owners have avoided taking the firms to court.

Raisa Shvetsova of Novaya Tekhnologia, a Smolensk-based firm that produces nonalcoholic beverages, came to RAZIS seeking advice regarding an intellectual property rights dispute with one of its employees. The employee, who had created a new production mechanism, claimed that the firm was violating intellectual property rights legislation and owed him compensation. With the agency's help, Novaya Tekhnologia was able to prove that its employee's invention was the result of a commissioned service, and the copyright laws therefore belong to the firm, not the employee. An agreement was needed, however, in order to use the employee's invention in production. RAZIS helped the two parties draft a renewable, three-year, mutually beneficial contract through which the employee would receive a percentage of the profit the firm makes from the resulting product. Shvetsova confirmed that without this agreement, Novaya Tekhnologia would have to pay at least six times more in order to license the invention for production, obtain the right to sell it to a third party, and pay the related taxes. As a result of RAZIS' assistance, the firm is saving approximately 335,000 rubles each month (about $14,500 at the current exchange rate) – $522,000 over the three-year period of the contract – and the employee is receiving compensation for his invention.

Despite Russia's post-crisis inflation and the consequent increase in prices for her services, clients continue to turn to Zorina and her agency for help. Small businesses throughout the region are eager to educate their staff on IPR issues. Zorina receives daily requests to repeat - on a paid basis - the seminar series conducted for free during the grant period. RAZIS, the only agency of its kind in the region, also plans to continue the professional training aspects of its work by starting a new column dedicated to IPR issues in the monthly journal, Delovaya Smolenshina (Business in the Smolensk Region, see illustration above). In the coming year, Zorina plans to introduce the Internet as a vehicle for conducting consultations, increasing access to information on intellectual property rights issues. "RAZIS has helped the development of small business in Smolensk mainly through education," comments Zorina. As the experience of RAZIS' clients shows, businesses are gaining knowledge of IPR issues and there is already a noticeable change in business practice.

March 2, 1999

This document (c) 2001, The Eurasia Foundation.
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