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Security, Protection and Use of Intellectual Property within Eurasian Integration: System Approach

Security, Protection and Use of Intellectual Property within Eurasian Integration: System Approach

7/16/2014

Samat Aliyev, Deputy Director of the Business Development Department of the Eurasian Economic Commission, D.E., professor, academician of the Russian Academy of Natural Sciences 

Elena Izmailova, Deputy Chief of Intellectual Property Protection Section of the Business Development Department of the Eurasian Economic Commission, Ph.D. in Economics

Security, Protection and Use of Intellectual Property within Eurasian Integration: System Approach

At the moment, we are at the door of a new round of Eurasian integration development – creation of a Eurasian Economic Union, whose launch is planned to occur on January 1, 2015.

Over the last decade, our countries - Belarus, Kazakhstan and Russia - have been actively developing mutually acceptable patterns of global integration that would provide creation of an environment for a stable and efficient development of the CU and SES Member-States' economies, raising competitiveness and living standards of our nations.

The CU and SES functioning is based on the principle of providing freedom for the traffic of goods, services, capital and labor across the borders of the CU and SES Member-States.

As part of the CU and SES formation, the Eurasian Economic Commission (hereinafter - Commission) served an important supranational platform for practical dialog between state agencies and the business community of the CU and SES Member-States, staying a single standing regulatory authority.

The principal goal of the Commission's activity is to improve and harmonize regulatory legal base and law enforcement practice in order to create favorable economic environment in the CU and SES territory, as well as to develop proposals in the area of economic integration within the CU and SES.

The Commission consists of the Commission Council and Commission Board. The Commission Council comprises representatives from the CU and SES Member-States at the level of first deputy heads of governments of our countries.

The Board comprises representatives of high level state authorities, each one of whom is empowered in a certain area:

- major trends of integration and macroeconomics (Tatiana Valovaya);

 - matters of technical regulation (Valery Koreshkov);

 - trade (Andrey Slepnev);

 - energy and infrastructure (Daniyal Akhmetov);

 - industry and agriculture (Sergey Sidorsky);

- competition and antimonopoly regulation (Nurlan Aldabergenov);

 - customs cooperation (Vladimir Goshin);

 - economics and financial policy (Timur Suleymenov).

The Commission is operated by the Commission's department.

The competence of the Member of the Board – Minister in charge of Economy and Financial Policy, includes the matters of business development, security and protection of the rights of intellectual property, labor migration, tax and budget policy, as well as development of financial markets. 

The area of security and protection of intellectual property is one of the principal spheres in the Eurasian integration process. The Commission faces important tasks in this area:

 - raise investment attractiveness of the CU and SES Member-States by creating favorable innovation environment;

 - unify legislation in this area

- form a civilized market of intellectual property in the CU and SES territory

 - develop integration processes within the CU and SES.

 Within the Commission, the matters of security and protection of the rights to intellectual property are incumbent upon the Business Development Department, in particular, on:

 - Division for legal protection of intellectual property rights;

 - Intellectual property rights protection division 

 The Department operates in the following areas:

 - development of draft international agreements in the area of protection of rights to intellectual property

 - monitoring and control over the progress of implementation by the CU and SES Member-States of the Agreement on Single Regulatory Principles in the Area of Protection of Rights to Intellectual Property of the CU Member-States

- organizing international cooperation;

- conduction of research work in the area of protection of intellectual property rights, etc.

The Commission Board may by its decision create consultative bodies under the Commission Board comprising authorized representatives of state agencies of the CU and SES Member-States. Independent experts may also be included.

By the Commission Board's decision dated September 25, 2012, a Consultative Committee for Intellectual Property was created under the Commission Board (hereinafter - Consultative Committee).

The Consultative Committee's principal goals are to develop proposals for the Commission Board regarding the issues of protection of intellectual property rights, as well as hold consultations with representatives of the CU and SES Member-States in this field.

The Consultative Committee comprises authorized representatives of state agencies and business community of the CU and SES Member-States. Currently, the Consultative Committee comprises 20 members who represent the following state agencies and organizations:

From the Republic of Belarus:

 - State Committee on Science and Technology

- National Center of Intellectual Property.

From the Republic of Kazakhstan:

 - Ministry of Justice;

 - Committee on Intellectual Property Rights.

 From the Russian Federation:

 - Ministry of Culture;

 - Ministry of Industry and Trade,

as well as the Ministry of Economic Development, law enforcement agencies, customs services of the CU and SES Member-States.

The business community within the Consultative Committee is represented by the Association for Protection of Brand Names and Trademarks "BelBrand," National Chamber of Entrepreneurs of the Republic of Kazakhstan, non-profit partnership "The Association of Branded Goods Manufacturers in Russia RusBrand."

Since its creation, the Consultative Committee has held three sessions that resulted in developing proposals to the Commission Board in the area of intellectual property rights protection, in particular - development of international contracts and agreements in elaboration of the CU and SES legal base.

The Consultative Committee sessions have considered and made decisions in certain problematic issues:

 - on subject composition of SES trade mark rights holders

 - on the mechanism of duty payments for SES trade mark registration

 - on registration SES products places of origin

- on performing the obligations the Russian Federation assumed before the WTO regarding free-lance (expanded) management of exclusive propriety rights on a collective basis

- on approval of the draft Contract on Coordination of Actions Regarding Protection of Rights to Intellectual Property

 - on considering the issue of applying the regional principle of exhaustion of rights to a trade mark in the CU and SES territory;

 - on the draft Regulation for the Single Customs Register of Intellectual Property Objects of CU Member-States and Other Issues.

The legal basis for formation and activity of the CU and SES are international agreements and decisions of CU and SES authorities concluded and made in view of the interests and legislations of the Member-States and in accordance with established regulations and principles of international law.

Adoption of international agreements by the SES Member-States regarding intellectual property rights protection exercises a significant influence on international and mutual trade.

The basic agreements regarding intellectual property rights protection that are currently in effect have been developed, in particular, in view of the provisions of the WTO Agreement on Trade-Related Aspects of Intellectual Property rights (TRIPS) as well as other international agreements in the specified area.

The agreements forming the CU and SES legal basis in the area of intellectual property rights protection are as follows:

 - Agreement on Single Regulatory Principles in the Area of Intellectual Property Rights Protection dated December 9, 2010

- Agreement on Single Customs Register of Intellectual Property Objects of the CU Member-States dated May 21, 2010.

Article 13 of the Agreement on Single Regulatory Principles in the Area of Intellectual Property Rights Protection dated December 9, 2010 (hereinafter - Agreement) in the territories of the CU and SES Member-States stipulates the regional principle of exhaustion of exclusive rights to a trade mark, under which the use of such trade mark in regard to the goods that have been lawfully introduced for civil commercialization in the territory of the Parties' states directly by the right holder or other persons with its sanction shall not be deemed violation of the exclusive right to such trade mark.

The Republic of Belarus has brought its national legislation in the area of trade mark protection in compliance with the specified regulation of the international agreement.

On January 12, 2012, in Kazakhstan, amendments were made to Article 19 of the Law of the Republic of Kazakhstan "On Trade Marks, Service Marks and Names of Products Places of Origin," under which a national principle of exhaustion of right shall be established in the territory of the Republic of Kazakhstan: no use by other persons of the trade mark regarding the goods that have been lawfully introduced for civil commercialization in the territory of the Republic of Kazakhstan directly by the right holder or with its sanction shall be deemed violation of the exclusive right to such trade mark.

Legislation of the Russian Federation (Article 1487 of the Civil Code of the Russian Federation) retains the regulations of the national principle of trade mark right exhaustion: the use of a trade mark by other persons regarding the goods introduce for civil commercialization in the territory of the Russian Federation directly by the right holder or at its sanction shall be deemed violation of an exclusive right to such trade mark.

Thus, in the territories of the Republic of Kazakhstan and Russian Federation the national principle of exhaustion of exclusive right to a trade mark is applied, which contradicts Article 13 of the Agreement.

Yet, taking into account the priority of international law over national law in the Republic of Kazakhstan and the Russian Federation, the issue of free traffic of goods marked with a trade mark that has a single right holder in all the territories of the CU and SES Member-States may be deemed settled.

However, in practice, it often happens that identical trademarks have different right holders in the CU and SES Member-States (in particular, this situation pertains the so called 'soviet' trademarks usually having national right holders in each CU and SES Member-State), or a trade mark is not subject to protection in all the CU and SES Member-States.

In situations like that, introduction for civil commercialization of the goods marked with a trade mark that is not protected in the territory of a CU and SES Member-State, or production or import of goods from third countries with the national right holder's sanction, is lawful.

Conflicting situations occur when such goods are carried across into the territories of other CU and SES Member-States, whose right holders believe that these goods are counterfeit and take measures to protect their exclusive rights. Yet here, law enforcement practice varies considerably: from legitimizing of such supplies to bringing such persons to civil, administrative or criminal responsibility.

There have been ongoing bitter disputes about changing the regional principle of exhaustion of exclusive rights to a trade mark (hereinafter - regional principle) in the CU and SES territory, ever since the Agreement was signed. It is a complicated issue that touches upon a wide range of persons concerned having weighty argument both 'pro' and 'con' the currently existing regional principle: right holders, manufacturers, investors, consumers, importers, vendors, fiscal, supervisory, antimonopoly authorities, etc.

Looking at the customs registers of intellectual property objects, one can tell that such apprehensions are yet of quite a speculative nature. At the moment, customs registers raise administrative barriers to 'parallel' and unauthorized import of predominantly consumer goods intended for sale through outlet chains.

This problem needs to be looked at in its totality. On the one hand, the countries' markets feature a price dispersion, equipment may be purchased from the traders not related to a right holder or manufacturer at lower prices. On the other hand, the facts revealed by supervisory and law enforcement agencies show that in practice, we often witness quite common phenomena such as purchase of equipment (medical, industrial etc.) through intermediate parties at much higher prices than those offered by the manufacturer. Another generic example is purchasing from a 'parallel' importer an equipment that is non-certified or adapted for the Russian equipment market, or purchasing without installation, warranty or after-service, without staff training. As a result, money is spent, and the equipment is not operated.

In general, the problem of intellectual property right exhaustion is significantly wider and has more facets. Removing barriers may have a positive effect on the development of small business in the area of import of goods and lead to lower prices in the domestic market. Yet, the 'flip side of the coin' should also be taken into account.

Closing the market from the import unauthorized by the right holder, one can get investment attractiveness for the right holders to create jobs and place production of known brand products in the CU and SES territory. This is recognized by both the ministries in charge of industry development and the representatives of competitive agencies.

'Parallel import' is a key source of goods for the markets, kiosks and Internet-stores, which are critical from the perspective of counterfeiting and violating sanitary, trade, tax laws, as well as the law on protection of consumer rights. And it is really hard to fully collect inland revenue from such outlets.

According to international practices, predominance of the 'parallel' import results in reduction of domestic production and job cuts.

The products of known brands supplied by the right holder are at high price levels and, in general, do not compete with domestic manufacturers who target the mass consumer. Cheaper products of 'parallel' dealers due to their lower customs value, including the goods with expiring shelf life, of a lower quality caused by improper storage conditions (e.g. food products, pharmaceuticals etc), no costs for advertising (parasitizing costly ad campaigns held by the right holders), reducing costs for clinical tests, certification, considerably decrease the demand for the goods produced in the domestic market.

According to customs authorities (whose share in forming budget revenue side still equals almost a half), the regional principle of trade mark right exclusive right exhaustion makes it possible to simplify administration of the process of customs supervision over authorized importers and, as a consequence, not only efficiently reveal counterfeit products, but also collect the payments in full, since there are no 'fly-by-night companies' among authorized importers who have a long-standing history in the national markets and good customs, tax and credit history and reputation. Simplified supervision forms can be applied to such companies. If numerous tiny one-day companies come in their place and try to minimize taxes and payments in whatever way possible - lawful or unlawful, it will inevitably result in budget losses.

No one should forget about consumers. Cheap products from 'parallel' importers may pose a risk to buy counterfeit, low-quality, expired products, or products with not warranty servicing by the manufacturer's service centers, products not intended for the domestic markets (e.g. telephones with functions that do not operate in the local frequency range; vehicles not adapted for local weather conditions or domestic standards, etc.)

At the moment, antimonopoly authorities propose to discuss possible options of dealing with a transition period of 'parallel' import legalization with deletions in certain sectors and/or brands. The parties concerned may find a compromise mutually acceptable solution for this problem.

However, the research conducted recently is not comprehensive and does not answer definitely and argumentatively, which principle of trade mark exclusive right exhaustion would be more beneficial for the CU and SES Member-States.

These processes need to be thoroughly analyzed in view of international experience, law enforcement and judicial practice of all CU and SES Member-States.

In 2013-2014, as part of preparation to creation of the Eurasian Economic Union, the Commission worked on codification of international agreements that constitute a legal base for the CU and SES, in particular, in the area of protection of intellectual property rights.

Within the framework of codification, a draft Chapter 18 on "Intellectual Property" of the Treaty on the Eurasian Economic Union (hereinafter - Union Treaty) was developed, as well as Addendum 23 "Protocol on Protection of Intellectual Property Rights" thereto.

Pursuant to the specified Chapter, the CU and SES Member-States shall cooperate in the area of protection of intellectual property rights.

The key goals of that cooperation are as follows:

 - harmonize the legislation of the Member-States in the area of protection of intellectual property rights

 - protect the interests of right holders of the Member-States' intellectual property objects.

Cooperation areas of the highest priority are established in the following:

 - support of science and innovation development

 - improvement of commercialization mechanisms and use of intellectual property objects

 - providing of favorable conditions for holders of copyright and allied rights of the Member-States

- keeping a system of registration of the Union's trade marks and service marks and the names of places of origin of the Union's products

- protection of rights to intellectual property objects, including in the Internet

 - efficient customs protection of rights to intellectual property objects, in particular by keeping a single customs register of the Member-States' intellectual property objects

 - coordination of measures for prevention and suppression of turnover of counterfeit products.

Addendum 23 "Protocol on Protection of Intellectual Property Rights" to the Union Agreement regulates relations of the Member-States in the area of:

- copyright and allied rights

 - rights to trade marks and service marks

 - patent law

 - rights to the Union's trade marks and the Union's service marks

 - right to geographic indications

 - rights to names of products places of origin

- rights to the Union's names of products places of origin

 - selection achievement

 - integrated circuit topology

 - production know-hows

 - law enforcement measures regarding protection of rights to intellectual property.

Addendum 23 to the Union Agreement contains regulations for signing of the following international agreements in the area of protection of intellectual property rights:

- Agreement on Trade Marks, Service Marks and Names of Products Places of Origin in the Union Member-States' Territory

 - Agreement of Actions Regarding Protection of Rights to Intellectual Property

- Agreement on Single Procedure for Management of Copyrights and Allied Rights on a Collective Basis.

The Commission, jointly with the Parties, has developed a draft Agreement on Agreement on Trade Marks, Service Marks and Names of Products Places of Origin in the Customs Union and Single Economic Member-States' Territories (hereinafter - draft Agreement).

Such draft Agreement was developed due to many reasons, in particular because at the moment, the trade marks in the CU and SES Member-States are registered according to the national and Madrid procedures. For a trade mark to be protected by law in the three CU and SES Member-States simultaneously according to the national procedure, the applicant needs to apply to three patent offices and pay nine duties.

Besides, legal protection cannot be obtained in the three countries simultaneously since applications are treated within different periods of time. Moreover, any applicant will have to take into account the differences in national laws. If he applies through patent counsels, he will have to pay for the services of the three patent counsels.

Therefore, obtaining legal protection of a trademark in the three countries simultaneously is a complicated and expensive procedure.

While approving the draft Treaty, the Commission held consultations with representatives of business community and non-government organizations, and a number of events where the current edition of the draft Treaty was discussed.

The draft Treaty regulates relations that arise as result of registration, legal protection and use of trade marks, service marks and names of products places of origin of the CU and SES Member-States.

The draft Treaty provides for:

 - introduction of the concept "Union Trade Mark"

 - trade mark registration procedure and providing of legal protection to the names of products places of origin in the territories of the Parties' states

 - introduction of a single register of the Union's trade marks and service marks and single register of the names of the places of origin of the Union's products

 - application procedure for the Union's trade mark, and also in electronic form

- issue of a single protection document for the Union's trade mark.

Draft Guidelines are developed as part of the draft Treaty, which contain rules that specify:

 - application procedure for the Union's trade marks and names of products places of origin

 - procedure of pendency of applications for the Union's trade marks and applications for registration of the names of products places of origin

 - procedures of registration of the Union's trade marks and names of products places of origin

- procedure for keeping a Single Register of the Union's Trade Marks and Single Register of the Union's NPPO.

Moreover, the draft Guidelines to the Treaty contains typical document forms stipulated by the draft Treaty.

Nine draft regulations of information interaction have also been developed, which regulate interaction between national patent offices between one another, and between national patent offices and the Commission as part of registration processes, legal protection and use of the Union's trade mark and Union's NPPO.

The basic distinctions between the draft Treaty and national registrations are as follows:

- principle of providing simultaneous legal protection to trade marks in the territories of the Parties' states

 - one application to any of the patent offices and issue of a single protection document

 - a possibility to monitor the registration of trade marks by national patent offices in order to protect exclusive rights of manufacturers and counteraction to abuse of rights

- applicant's interaction with only one agency ('Single Window' principle).

Attractiveness of the Union's trade mark registration increases due to the following benefits:

 - streamlined procedures of the Union's trade mark registration will allow entrepreneurs to faster introduce goods and services for civil commercialization in the territory of the Customs Union and Single Economic Space marked with the Union's registered trade mark lawfully and with no additional risks

 - cutting the cost of the registration procedure as compared to the total cost of the registration procedures in each national patent office, which saves businesses' funds

- cutting the amount of works related to running expert examinations by national patent offices.

The draft Treaty was approved on the intrastate level in the CU and SES Member-States, and further approved by the Commission Board Decision No. 51 dated March 19, 2013, Commission Board Decision No. 30 dated May 16, 2013. Now some intergovernmental procedures shall be taken to accept and adopt it.

 The Commission, jointly with the Parties, has developed a draft n Coordination of Actions Regarding Protection of Rights to Intellectual Property (hereinafter - draft Agreement), which stipulates forming a system of protection of rights to intellectual property objects in the Customs Union and Single Economic Space by coordinating actions in:

- developing recommendations for coordination of authorized bodies' actions aimed at improvement of activities in prevention, detection and suppression of violation of rights to intellectual property objects

 - efficient suppression of turnover of counterfeit products in the territories of the Parties' states

 - taking measures for counteraction to violation of intellectual property rights, including through the Internet

 - harmonization and improvement of legislation in the area of protection of intellectual property rights.

The draft Agreement has been approved by the Commission Board Decision No. 241 dated October 29, 2013 and forwarded to the Parties for intrastate approval.

Adoption of the Treaty will allow the authorized bodies of the Parties to develop uniform rules for business and exchange law enforcement experience in the area of prevention, detection and suppression of violation of right to intellectual property objects.

The draft Agreement on Single Procedure for Management of Copyrights and Allied Rights on a Collective Basis (hereinafter - draft Agreement) has been developed by the Commission jointly with the Parties, based on the necessity to create a single system for protection and exercising of copyrights and allied rights.

The draft Agreement provides for a single procedure for management of copyrights and allied rights on a collective basis in the Parties' states in cases when practical exercising of copyrights and allied rights on a case-by-case basis by rights holders is impeded or when the legislation of the Parties' states allows for the use of such objects without the sanction of right holders, yet with paying of remuneration.

In the course of approving the draft Agreement, the Commission conducted the following activities:

 - detailed article-by-article discussion of the draft Agreement at meetings with representatives of authorized bodies of the Parties' States and business organizations

 - consideration and approval during the sessions of the Expert Group for Copyrights at the Consultative Committee for Intellectual Property

 - consideration and approval during the sessions of the Consultative Committee at the Commission Board where a number of issues have been settled.

 The draft Agreement was approved by the Commission Board Decision No. 261 dated November 12, 2013 and forwarded to the Parties for intrastate approval.

 The draft Agreement establishes a number of fundamental novelties:

 1) unification of key provisions of the Parties' legislation in the area of copyrights and allied rights

 2) establishing of a single procedure for collection, distribution and payout of remuneration to the right holder for reproduction of the works for personal goals without sanction of the right holder 

 3) for the purposes of providing transparency of activity of organizations on collective managing of proprietary copyrights (OCMPC) by the draft Agreement:

 - regulates accountability regarding OCMPC members and right holders

 - introduces public accountability and mandatory auditing of the mechanism of collection, distribution and payout of remuneration

 - establishes specific threshold values for OCMPC in the matters of distribution and payout of remuneration.

The draft Agreement also provides for determining in the national legislation of the Parties' states of legal regulation in the following issues of collective management:

 - OCMPC's liability for exceeding the established limits of deductions from remuneration collected

 - legal regulation of storage of unpaid monies by OCMPC

 - forwarding of unclaimed remuneration 

when limitation period expire to distributed remuneration of the current year or to social, humanitarian or cultural purposes to the benefit of the authors or other right holders

 - creation and legal status of special OCMPC funds.

Determination of the collection size for remuneration payout as well as lists of equipment and tangible media used for reproduction is in the competence of the Commission Council.

Therefore, the draft Agreement provides for settlement of many 'blind spots' in the area of collective management of copyrights and allied rights.

In the process of formation of a single market of intellectual property within the CU and SES territory one should not forget about the necessity to create efficient mechanisms for protection of intellectual property rights 

In view of the absence of customs borders between the Republic of Belarus, the Republic of Kazakhstan and the Russian Federation, national and foreign right holders are keenly interested in having single customs protection of the single commodity market of the CU and SES against the inflow of counterfeit products from third countries.

The central customs authorities of the CU and SES Member-States keep national registers of intellectual property objects.

However, the current difference in filling of  national customs registers (in Kazakhstan, there are 350 intellectual property objects (hereinafter - IPO), in Belarus - 209 IPO, in Russia - 3150 IPO) creates a possibility for the goods containing intellectual property objects to easily get into the territory of one of the CU and SES Member-States, wherein they are not protected by customs authorities and, in view of absence of internal customs borders, be further distributed in the territory of the CU and SES Member-States. By all means, this significantly reduces efficiency of the national customs registers.

Therefore, there is an objective necessity in registration of intellectual property objects in the Single Customs Register, which would allow us to protect intellectual property rights simultaneously in the entire CU and SES territory, namely exercise customs clearance of the goods containing intellectual property objects included in the Single Customs Register during their crossing of the outer perimeter of the customs border.

To solve this problem, in elaboration of the Agreement on the Customs Code of the Customs Union dated November 27, 2009, the CU Member-States signed an Agreement on a Single Customs Register of Intellectual Property Objects of the Customs Union Member-States dated May 21, 2010 (hereinafter - Agreement).

Those documents stipulate the process of keeping the Single Customs Register, which includes reviewing of applications, registration of intellectual property objects, maintenance of the Single Customs Register and permanent interaction of the body authorized to keep the Register with right holders, state authorities of the CU and SES Member-States and other organizations, agencies. Keeping of the Single Customs Register provides for involvement of experts competent in both protection of intellectual property rights and customs affairs.

Currently, the Federal Customs Service serves as the body authorized to keep the Single Customs Register.

However, the Single Customs Register does not contain any registered intellectual property objects. No applications for inclusion of intellectual property objects into the Single Customs Register are accepted into the Federal Customs Service of Russia.

This is caused by both imperfections of the mechanism of registration of intellectual property objects stipulated in the Regulation for Keeping the Single Customs Register, in particular, of the procedure for handling applications and making decisions, and by lack of technical and personnel support for the function of keeping the Register.

Therefore, for the purposes of efficient protection, right holders have to submit three applications for inclusion of intellectual property objects into national customs registers, which entails both temporal and financial costs.

Representatives of business communities of the CU and SES Member-States keep sending requests to implement practical operation of the Single Customs Register.

In 2013, the Commission developed a draft Protocol on Amendments to the Agreement (hereinafter - draft Protocol).

The draft Protocol provides for:

 - authorizing the Commission to keep the Single Customs Register

 - establishing a procedure for interaction between the Commission and central customs authorities of the CU and SES Member-States

 - establishing competency for approval by the Commission Board of the Regulation for Keeping the Single Customs Register

 - increasing the number of agreement types that provide for fulfillment of the obligation of property damage compensation

 - establishing a procedure of bringing the information from the Single Customs Register to persons concerned.

The draft Protocol was approved by the Commission Board Decision No. 114 dated May 14, 2013 and forwarded to the Parties for intrastate approval.

The Commission continues to prepare the necessary regulatory legal base for keeping the Single Customs Register. Based on the analysis of the experience of customs register functioning in the Parties' states, the experience of the European Union, we have developed a draft Regulation for Keeping of the Single Customs Register, which provides a detailed description of the procedures for registration of intellectual property objects, algorithms of interaction between officials and requires the use of advanced information technologies.

Striving to unify and harmonize the CU and SES legislation, the Member-States face some difficulties, in particular, in the area of intellectual property rights protection, which impede the free movement of goods 

Today, in the CU and SES territory there is a problem of using so called 'soviet' and other (identical and confusingly similar) trademarks.

Just several decades ago, all CU and SES Member-States were part of a single state. And today, the so called 'soviet' trademarks are registered in our countries to different right holders. This problem is especially relevant to the confectionery sector. Candies under such trademarks as "Krasnaya Shapochka," "Lastochka," "Teatralnaya," "Mishka Kosolapiy," "Belochka" and many others are still popular. People in the entire territory of the CU and SES Member-States still know and love them.

To find the most acceptable solution to the problem of using the 'soviet' trade marks in the CU and SES territory, criteria need to be developed that would allow to categorize a trade mark as the 'soviet' one.

According to the Chamber of Commerce and Industry of Belarus, only those trade marks can be categorized as trademarks of the former Soviet Union which were registered as names of unified recipes published in summarized guides of the Ministry of Food Industry of the USSR.

The Union of Food Enterprises of Kazakhstan also judges by the principle of presence of products in the nomenclature of commodities produced in the USSR before 1992.

Association of Legal Entities "Association of Confectioners of Kazakhstan" believes that only those trademarks can be categorized as  trademarks of the former Soviet Union that were registered as the names of unified recipes published in summarized guides of the Ministry of Food Industry of the Soviet Union.

According to the Chamber of Commerce and Industry of the Russian Federation, trade marks which, to some degree, can be categorized as 'soviet' are used in product marking in the following industrial sectors: production of confectionery, alcohol and beer and non-alcohol products, meat and dairy products, pharmaceuticals, dietary supplements. There are 1,500 actively used trade marks in the territory of the Russian Federation. According to the Federal Service for Intellectual Property, at the moment in the Russian Federation, around 3,000 trademarks that were registered in the Soviet Union, and currently belong to the Russian Party, are legally protected.

Yet, we should not forget that in the times of the Soviet Union, around 100,000 trade marks were registered for the names of both national and foreign right holders. The trademarks mentioned above included the ones, which were registered for their further use in marking of consumer products.

Moreover, we should keep in mind that back in Soviet times a trade mark was registered for one 'parent' enterprise, though several manufacturing enterprises could use a certain trade mark when marking production.

According to the analysis conducted, only those marks can be categorized as 'soviet' trademarks which were developed before 1992, were intended for marking of the products listed in commodity nomenclature of the Soviet Union, were manufactured under quality standards of the Soviet Union and met the criteria of popularity, high degree of commercialization and frequency of use among relevant consumers, in regard to the products marked in the CU and SES territory, being of distinctive character, as well as the marks registered as trade marks before January 1, 1992, in the State Patent Agency of the USSR in the name of national right holders.

There are several most acceptable solutions for the problem of using the so called 'soviet' and identical trade marks by the manufacturers of the CU and SES Member-States:

 - regulation by business negotiations between the parties concerned, by way of registering a collective mark

 - introduction of the prior use right (if a business entity started using a mark and it became popular before the date of priority of the trade mark, such use may not be considered as violation of exclusive rights in a trade mark)

- introduction of compulsory licenses (to formalize in legislation a provision that would oblige the owner of a 'soviet' trade mark to provide a non-exclusive royalty-free license to the producer who manufactured such marked products before January 1, 1992, provided that the manufactured products' quality would not be lower than that of the products of the trade mark owner and would meet the established standards). Otherwise, such license agreement should be terminated in the manner established by civil law.

Another problem is differences in requirements to registration of trade marks (e.g. one Party's patent office may register as a trade mark the mark "Chyornyi Russkiy" (black Russian), and another Party's patent office may refuse to register such mark as a trade mark because that would contradict public interest, violate the principles of humaneness and morals), which would cause additional cost for the CU and SES manufacturers related to protection of intellectual property objects in the territory of the CU and SES Member-States. Signing the Agreement on Trade Marks, Service Marks and Names of Products Places of Origin in the territory of the CU and SES Member-States and Guidelines thereto are to resolve this problem and minimize financial and temporal costs of a business in registration of an SES trade mark in the entire territory of the CU and SES, as well as remove superfluous administrative barriers.

The third problem consists in the differences in filling of the national customs registers mentioned above.

Registration of intellectual property objects in the Single Customs Register, which would provide for efficient protection of intellectual property objects in movement of goods across the CU and SES customs border would help to  solve this problem.

All of the above suggests that a complex approach has to be applied not only to unification and harmonization of legislation in the area of protection of intellectual property rights, but also to the search for solutions of the problems the business entities of the CU and SES Member-States have to deal with today.

At the same time, we should not forget about the global market of intellectual property and the significance of the CU and SES Member-States in international trade in products and goods containing intellectual property objects.

Today, the global market of intellectual property is rather monopolized. Countries with high incomes get most of the profit from royalties and license fees. The share of the CU and SES Member-States' presence in this market is insignificant.

Over the last two decades, apart from mostly raw material sectors such as gas and oil production, metallurgy and some others, the economies of the CU and SES have hardly formed any major and widely known (also abroad) national commercial company that produce science-intensive products or provide high-tech services.

The Russian Federation, hosting 5 percent of global research works, receives 0.27 percent of income from royalties and license fees with  0.33 percent of share in high-tech export. R&D expenses in the CU and SES Member-States amount to: 0.64 percent of the GDP in the Republic of Belarus, 0.23 percent of the GDP in the Republic of Kazakhstan, 1.16 percent of the GDP in the Russian Federation. And this is when the worldwide R&D expenses amount to 2.9 of the GDP on average.

At the moment, the regulatory legal base of the CU and SES is no stimulating the CU and SES Member-States competitiveness, nor is it focused on research, development and manufacture of high-tech products.

Besides, it is really advisable to think about the  development of technological clusters as the most efficient platforms for development of high-tech industries and intellectual property commercialization.

Yet some measures have to be taken - legal, economic, organizational - that would help to  commercialize intellectual property, support the use of domestically obtained patents, improve the use of technologies and form a single efficient market of intellectual property, as well as boost competitiveness of products manufactured in the CU and SES Member-States. That would allow to increase their share in the global incomes from royalties and license fees and strengthen positions in the global market of intellectual property.

In 2013, within the frameworks of the Commission's research on "Protection of Intellectual Property Rights in the Customs Union and Single Economic Space. Development Concept," a concept for development of protection of intellectual property rights in the CU and SES was developed (research advisor - Yuri Yakovets, Doctor of Economics, academician of the Russian Academy of Natural Sciences) aimed at creation of a single unified system for protection of intellectual property rights as one of the prerequisites for operation of the Eurasian Economic Union, which largely affects development of innovations and competitiveness of the CU and SES Member-States' economies.

The concept for development of protection of intellectual property rights in the CU and SES determines vectors for development of innovation and increasing competitiveness of the CU and SES Member-States' economies, formulates proposals for the formation of a single system for protection of IP within the CU and SES, coordinates the policy and law enforcement practice in the area of copyright and allied rights, formulates proposals for facilitation of commercialization and use of results of intellectual activity.

The concept provides for step-by-step:

 1) creation of a unified system of protection of intellectual property rights (including a supranational institution for protection and use of intellectual property rights)

2) creation of supranational judicial authorities and a supranational system of pre-trial settlements

 3) development of single mechanisms for stimulation of innovative activity and high-tech productions within the Eurasian Economic Union.

According to the developers of the Concept, this would make it possible to enhance investment attractiveness of the innovative activities conducted within the CU and SES, simplify administrative procedures related to legal protection of intellectual property objects, stimulate creation and commercialization of intellectual property objects, improve efficiency of organizing activities of business entities acting as holders and users of rights to intellectual property objects.

In elaboration of the Concept, the Commission has scheduled a research regarding development of a Strategy for Creation of a Single System for Protection of Intellectual Property within the CU and SES that would be aimed at the implementation of practical measures for formation of an attractive investment climate in the territory of the CU and SES Member-States, formation of a civilized market of intellectual property within the CU and SES, creation of a system of efficient measures for counteraction of the distribution of counterfeit products.

The Commission, therefore, has become the center for studying of the best international practices and development of proposals to form a harmonized legislation of the CU and SES Member-States in the area of protection of intellectual property rights.

As part of its activities, the Commission permanently analyzes international laws and experience of foreign countries and integration associations in the area of protection of intellectual property rights. Besides, it interacts with international organizations that have vast experience in the area.

Thus, the Commission has secured cooperation with the World Intellectual Property Organization (WIPO). In April 2013, Member of the Board – Minister in charge of Economy and Financial Policy Timur Suleymenov had a meeting with WIPO Director General Francis Gurry, where they discussed prospects for cooperation between the Commission and WIPO.

At the moment, the WIPO considers conferring the Commission the status of a WIPO observer and signing a memorandum on understanding between the two organizations. The Commission reached an agreement on development of cooperation with the Eurasian Patent Organization (EPO).

Cooperation with the Office for Harmonization in the Internal Market (OHIM). In October 2013, Commission representatives held a working meeting with OHIM representatives where the prospects for cooperation between the Commission and OHIM regarding exchange of experience were discussed. During the meeting, the participants exchanged experiences in the development of efficient procedures for trade mark registration.

Thus, the activities the Commission conducts today are aimed at the development of integration processes within the framework of creation of the Eurasian Economic Union.

Formation of a civilized market of intellectual property in the territory of the Eurasian Economic Union does not only depend on signing the international treaty, but also on current practices and the initiative of the interested parties including the initiative on the part of the business community.

For that matter, the Commission's efforts are not only aimed at unification and harmonization of legislation in the area of protection of intellectual property rights, but also at analyzing law enforcement practice and, therefore, development of recommendations regarding further integration and provision of the most favorable environment for the entities of the market of intellectual property in the territory of the Eurasian Economic Union.