An extract from The Intellectual Property and Antitrust Review, 5th Edition

Licensing and antitrust

i Anticompetitive restraints

As mentioned above, the prohibitions of the Competition Law are not supposed to apply to the actions and agreements relating to providing, granting or disposing of IP rights (including trademarks and patents). An undertaking granting exclusive rights to use its IP is entitled to control and impose restrictions on the licensee.

The parties enjoy certain discretion when drafting licence agreements as the Civil Code provisions as to their contents are rather broad. Clearly, the licence agreements that cover IP issues only will benefit from this exemption; nonetheless, in many situations it is rather challenging to establish whether the immunity is available and can be relied on by the companies involved. By way of illustration, agreements on the exercise of IP rights may contain extensive requirements for the products to be distributed in a particular manner and in this way give rise to competition concerns. The prevailing position supported by the FAS is that the IP exemption does not apply to the conduct and arrangements concerning the circulation of goods manufactured with the use of IP rights; the antitrust regulations will apply in full.

It is noteworthy that duly formalised franchise agreements do not fall under the antitrust prohibitions (for vertical agreements) and are considered admissible (notwithstanding the market share held by the parties to such agreements). Although, pursuant to the Civil Code, they may contain a range of restrictive clauses, including non-compete obligations, it is still possible that the FAS will seek to invalidate such clauses if it comes to the conclusion that competition is affected (taking into consideration the market situation and the parties' position).

ii Refusals to license

Formally, there are no restrictions on the right holder's 'monopoly'; as mentioned above, the concept of abuse of dominance is not supposed to apply to the exercise of IP rights because of the exemption provided by Article 10(4) of the Competition Law. Nonetheless, the competition authority pays particular attention to the matter and wishes to address the problems associated with unsubstantiated refusal to license.

Generally, under the Civil Code, compulsory licensing based on a court decision is available in relation to inventions, utility models, industrial designs and selection inventions. Still, it is rarely used and for the time being is not envisaged being used to address antitrust concerns. The right holders (patent owners) can be forced by a court decision to grant a compulsory licence if the IP is not used for a specific period or a different right holder cannot use its IP without infringing the rights in question. The applicable licensing terms are determined by the court. However, the law does not elaborate on how such terms shall be defined, apart from the requirement that they are non-exclusive and that the licence fee shall not be lower than fees payable in comparable circumstances.

This is, however, a civil remedy that is not immediately connected with infringements of the Competition Law. FAS officials state that in the absence of legislative mechanisms, such licences have never been granted with a view to improving or restoring competition in the market. The competition authority is willing to change this situation (particularly, in respect of the pharmaceutical market) and has drafted a set of controversial amendments in this respect. Again, it is unclear if (and to what extent) this proposal is going to be enacted.

iii Unfair and discriminatory licensing

The antitrust implications of unfair pricing or royalty terms have been considered to a limited extent, also in light of the IP exemptions.

iv Patent pooling

Russian legislation does not deal directly with the creation of patent pools; at present the Competition Law does not cover matters concerning patent pooling. In many situations such arrangements may contain provisions that go beyond the scope of licensing (e.g., pricing policies).

Consequently, they will be assessed in terms of compliance with the general requirements of the Competition Law as to anticompetitive agreements and, for this reason, should not create anticompetitive restraints. Taking into account the recent practice of the competition authority and the initiative to expand the scope of antitrust regulations to include IP arrangements, further developments can be expected.

In situations where a 'quasi-pooling' project is structured as a joint venture or a series of deals with assets or shares, the merger control rules may need to be considered.

v Software licensing

As suggested, for example, by the Google case, the FAS has not elaborated any specific approach applicable to software licensing; the general Competition Law prohibitions and exemptions apply.

vi Trademark licensing

The FAS exercises the same approach as outlined above to the trademark licensing. One of the key priorities of the FAS in relation to trademarks is the problem of parallel imports as the Russian legislation remains controversial. The authority has always viewed parallel imports as an efficient way of removing possible restrictions of competition and has already tried to implement the relevant principles into its practice; for instance, even in 2017, it issued warnings to right holders (manufacturers of automotive parts and medical devices) that did not allow importation or ignored the request of a parallel importer. More importantly, the decision of the Constitutional Court on parallel imports has a direct impact on the FAS's analysis and review of right holders' conduct.