In most industrialized nations, the concept and body of intellectual property laws is well into its third century of development and testing. The Russian Federation, however, has created and implemented an entirely new body of intellectual property law since the collapse of the Soviet Union in 1992. As American and other western firms work with the Russian Federation as a supplier and customer, they must recognize that the new nation has abandoned a legal philosophy denying the existence of intellectual property in favor of intellectual property laws recognizing and favoring private development and ownership of such property. This paper examines the Russian intellectual property laws and points out adaptations that western nations should make when dealing with similar entities in the Russian Federation. The study assumes familiarity with Russian history, language, and geography. A caution to domestic firms is that they should retain experienced legal counsel to deal with negotiations and contracts with Russian business interests.
Twenty years ago, the Soviet Union, the nation many Americans thought of as, “The Evil Empire,” celebrated its seventieth anniversary as a Communist country. Three years later, the nation emerged from political discord and instability as the Russian Federation, a new, non-Communist nation that modeled its organization on that of the non-British-empire nations of Western Europe. Old habits and political institutions do not die overnight, however, the new nation began a process of adaptation that included the gradual replacement of one bureaucracy—that of the Communist-party apparatchiks—for another, based more or less on the professional civil-service class of the west. The process began slowly because of the persistence in the bureaucracy of the same people who had been there before the change, but it began.
On its face, the new Russian Federation appeared to outside interests to be a desirable market for goods and services. With an area of just over 17 million square kilometers and a population estimated to be approximately 150 million (just slightly more than its pre-World War II population of 140 million) in 1995, it had been, (www.columbiagazetteer.org/ public/Russian%20federation.html) for a number of years, substantially closed to trade with the west because the Ruble had been a “blocked currency” that did not exchange in the open market. Thus, trade with the Soviet Union, particularly by US interests, had been a barter arrangement of goods for goods. The Russians, beginning in 1974, provided American merchants with vodka and received in return American Pepsi-Cola (Ramirez, 1990). Thus, trade was stifled unless an explicit agreement of the worth of products could be stated in the worth of the other products for which those were to be exchanged. The risk of trade with Russia, however, beyond erring in the estimation of the value of the traded goods, was minimal.
The appearance of the Russian Federation, however, began to change things. Direct foreign investment by US and other outside interests became, despite the risk of political instability in the new nation, at least worth considering. The new laws, despite their defects, at least recognized the idea of intellectual property and made some attempt to sanction it along with the other property rights of individuals (including corporations).
At this time, trade with Russia is facilitated by the abandonment of currency blockage and a market for Russian currency outside Russia. The Ruble, at this writing, is quoted at R27.54 to the US dollar (http://exchange.yahoo.com/currency) In addition, the Russians seem to have become much more interested in enforcing the intellectual property laws, as evidenced by prosecutions such as those cited previously.
In short, the adaptive process of the last twenty years has made the Russian Federation a much less risky place for Russians and foreigners to seek to profit from their possession of intellectual property rights. The system isn't perfect, but then what legal system is. It is still, and will always be, the creature of the people who administer, interpret, and enforce the laws and regulations of which it is composed. When the political atmosphere, economic conditions, and the government itself are stable and positively oriented, risk to property rights is minimal. When any or all of these fall into question, the risk increases.
In sum, over the last twenty years, initially, laws were changed. Then people began to change to reflect the new philosophy embodied in those laws. Time passed. It was realized that further legislative change was required. The laws were amended. People changed a bit more. More time passed. The laws existed, but enforcement was spotty and still plagued by the persistence of old attitudes. People changed some more. It was realized that different laws were required. Time passed. The new laws went into effect. The question now is: “How much more change, both legislative and psychological, will have to take place before Russia can be said to have achieved its proclaimed goal of being a major free-market power in the twenty-first century?” The answer to the question cannot be known at this time.
The year 2008 drew to a close with the Russian Federation and the United States of America still on speaking terms and Eastern and Western Europe now comfortable with the idea of living on one continent. We can only hope that it will remain that way and, hopefully, continue to improve.
