EU and UK Sanctions on Russia Introduce New IP Rights Restrictions for Rights Holders

Since February 2022, the European Union and the United Kingdom have implemented a series of sanctions targeting Russia and Belarus in response to geopolitical developments. These sanctions have broadly curtailed commercial activities involving these countries, with recent measures extending their reach into the realm of intellectual property (IP) rights and trade secrets.

The EU’s regulatory framework defines “EU persons” expansively to include companies incorporated in the EU and their branches worldwide, EU nationals regardless of location, and any individual or entity conducting activities within the EU. From June 24, 2023, these EU persons face prohibitions on selling, licensing, transferring, or granting access to IP rights or trade secrets to any natural or legal person in Russia or for use in Russia, where such IP relates to goods and technologies subject to export restrictions under the EU Russia Sanctions Regulation (Council Regulation (EU) No 833/2014) and the EU Belarus Sanctions Regulation (Council Regulation (EC) No 765/2006).

The scope of IP rights covered is broad, encompassing trademarks, designs, patents, copyrights, utility models, and trade secrets. The EU Commission’s FAQs, last updated on November 5, 2024, emphasize a wide interpretation of these terms. This means that not only direct sales or licenses are restricted but also any indirect provision or use of IP rights that could facilitate the manufacture or supply of restricted goods to Russia.

For example, the EU Commission clarifies that selling trademarks or patents, or sharing trade secrets with third-country operators who may use them to produce restricted goods destined for Russia, is prohibited. Similarly, granting access to copyrighted data for regulatory approvals or licenses that enable manufacturing of restricted technologies for use in Russia falls within the sanctions’ ambit.

A significant new obligation arises under Article 12ga of the EU Russia Sanctions Regulation, which will come into force on December 26, 2024. This provision mandates that EU persons include a specific contractual clause in all agreements involving the sale, licensing, or transfer of IP rights or trade secrets related to items listed on the EU’s Common High Priority Items List.

This contractual clause must explicitly prohibit the use of IP rights or trade secrets connected to these high-priority items for sale, supply, transfer, or export, directly or indirectly, to Russia or for use in Russia. Furthermore, agreements must contain adequate remedies to address any breaches of this clause.

The obligation extends to ensuring that third-country commercial counterparts and any sublicensees are contractually barred from using the relevant IP rights or trade secrets in connection with these items intended for Russia. This requirement applies even if the agreements themselves have no direct connection to Russia, reflecting the EU’s intent to close potential circumvention routes.

These measures represent a substantial tightening of the regulatory environment for IP rights holders and traders operating within or connected to the EU. They underscore the need for careful due diligence and contract drafting to ensure compliance with the evolving sanctions landscape.

In summary, IP rights holders must be vigilant about the expanded prohibitions on transactions involving IP connected to restricted goods destined for Russia. The new contractual clause requirement effective from late 2024 further heightens compliance obligations, making it essential for businesses to review and update their agreements accordingly to avoid sanctions violations.