Russia Allows Companies to Use American Brand Names Without Paying Owners

Russia has reportedly hit on a brutally effective solution to the problem of big-name Western brands like Coca-Cola and McDonald’s pulling out after the invasion of Ukraine: simply allow Russian companies to keep using those valuable brand names without compensating the owners.

Reuters reported on Wednesday that Russian courts “show little sympathy for firms that depart” when those overseas corporations file suit against Russian knockoffs and “gray market” theft of copyrights:

Coca-Cola, first available in the Soviet Union in 1979, is already ensnared in fights against gray-market goods, which are unauthorized imports, and Russian knockoffs of its fruit-infused Fanta line, according to court documents and interviews with attorneys involved.

Other companies’ battles are just beginning as Russian entrepreneurs aim to capitalize on their well-known names as they depart.

Rospatent, the Russian government’s intellectual property agency, is receiving an influx of applications for trademarks of Western brands popular in the country, said Robert Reading, head of content strategy in the intellectual property group at analytics firm Clarivate Plc , which tracks the filings.

The Russian government issued a decree after the invasion began, authorizing Russian companies to steal patents from foreign corporations based in “unfriendly” countries like the United States. Russia’s “gray market” of knockoffs is also government-approved, not just a shadowy enterprise informally indulged by law enforcement looking the other way. Some Russian companies are not waiting for official approval before pumping out their knockoff “parallel imports,” and the government seems uninterested in stopping them.

Some very big brand names are on the auction block, with Russian “entrepreneurs” announcing plans to produce merchandise branded “Adidas,” “Mercedes Benz,” and “Pampers” without permission from the foreign owners of those trademarks. 

Most of the companies in question have apparently been intimidated out of complaining about the theft, as they did not respond to requests for comment. Coca-Cola is fighting back in Russian court without much success, as Reuters demonstrated with photos of bizarrely unimaginative imitation beverages packed onto Russian store shelves. The Russian ripoff racket does not put much effort into shelf appeal, as the bleak and nearly identical labels on “CoolCola” and “Fantola” demonstrate.

Some of the copyright theft indulged by Russian courts is even more blatant, as with companies that are simply rewriting the names of international brands like New Balance and Haribo’s in Cyrillic letters. The “entrepreneur” attempting to steal McDonald’s name by rewriting it as “Mother’s Borsch” in Cyrillic made a point of swiping the golden arches too. It should be easy for Russians to swipe the revived Toys R Us brand, since the “R” is already backwards.

Among the first victims of IP theft was British cartoon character Peppa Pig, who was kidnapped and replaced by a Russian double over the legal objections of her trademark owners because Russian judges ruled “unfriendly” Britain deserved no copyright protection. When the rightful owners demanded compensation, another Russian court ruled that paying them any money would be an “abuse” of the Russian copyright thieves.

The Washington Post noted on Thursday that Russia was already one of nine nations on the Office of the U.S. Trade Representative’s (USTR) “priority watch list” for failing to protect intellectual property. Of course, Russia’s ally China topped the list with its well-oiled IP theft machine, having unsurprisingly failed to implement long-promised reforms.

Intellectual property lawyer Josh Gerben told the Washington Post that Russia may have already passed a point of no return and has “forever changed” its relationship with the rest of the world, since foreign investors will grow more reluctant to expose themselves to IP theft, even after the war in Ukraine concludes.

Moscow is threatening to formally approve even more copyright and IP theft to “mitigate the impact on the market of supply chain breaks, as well as shortages of goods and services that have arisen due to the new sanctions of western countries.” 

Gerben suggested the next step could involve Russian “entrepreneurs” simply reopening the 850 restaurants McDonald’s shut down this week, without acknowledging the withdrawal of the company at all.