How to Protect Business Methods in Russia

According to the Russian Patent Law, business conduct methods are not included into the list of non-patentable inventions.

In particular, pursuant to par. 3 of Article 4 of the Russian Patent Law, non-patentable inventions include:

• business administration and management methods;
• programs for computer and algorithms;
• intellectual operations performance methods.

Business conduct methods which do not fall under any of the categories mentioned above can be patented on the territory of the Russian Federation, provided that appropriate specifications and claims contain a description of essential features of an invention subject-matter which is subject to patent protection. The following features are typically used to describe a method:

• there is an action or a series of related actions;
• there is a temporal sequence in which such actions are performed;
• there are conditions which need to be fulfilled prior to the performance of such actions.

It is advisable, but not mandatory, to illustrate the method with an example of its implementation using certain technical means.

The Russian Patent Office practices also testify to patentability of business conduct methods. For instance, among the recent e-commerce patents of the Russian Federation, one could quote Patent No. 2145436 corr. to PCT/US95/12164 "A System and Method for Retail", and Patent No. 2134901 corr. to PCT/US96/01421 "Virtual POS Terminal and Method."

Even when business conduct methods, including banking business conduct methods, are not patentable, they are subject to legal protection in Russia both under the existing civil law and under specialized laws governing matters related to unfair competition. It should be noted that methods used to conduct commercial operations did not have such protection in the former USSR even when they were the product of intellectual endeavors.

Article 139 "Business and Trade Secrets" of the current Civil Code of the Russian Federation maintains that information which constitutes business or trade secrets is protected by civil remedies, the chief of such remedies being the right to claim indemnification for damage from the person which illegally obtained information constituting another person's trade secret. The same remedy is applicable to disclosing employees of the trade secret owner.

The law defines three attributes which information should have in order to be classified as business or trade secret, namely:

• the information should have actual or potential competitive value;
• the information should be unknown to third parties and generally inaccessible through channels permitted by law; and
• the information owner should be taking steps aimed at protecting its confidentiality.

The law also provides a list of information which cannot be classified as trade secrets, and which should be disclosed by entrepreneurs to certain government agencies (in particular, tax and law enforcement agencies), but this information is not related to business conduct methods.

Trade secrets can also be protected under unfair competition laws. Article 10 of the Law on Competition and Restriction of Monopolistic Practices in Commodity Markets passed in 1992 defines unfair competition as "acquisition, use and disclosure of scientific, technical, production or trade information, including trade secrets, without the owner's consent." In addition to the right of the trade secrets owner to claim indemnification for damage sustained by it due to illegal acquisition, use or disclosure of confidential information, the competition law provides administrative remedies against infringers. For instance, such infringements may be punishable by fines of up to $80,000 paid to the government. Such fines may be imposed by government agencies authorized to enforce competition laws. The Ministry of Antimonopoly Policies and Support of Entrepreneurs maintains a network of regional bodies hearing entrepreneurs' trade secret infringement claims. Resolutions passed by antimonopoly bodies may be appealed in courts of arbitration.

As was noted above, programs for computer and algorithms are not patentable inventions in the Russian Federation. Unfortunately, legislators have not provided more specific criteria of patentability of programm for computer and algorithms . Therefore, until several years ago any reference to program for computer or algorithms in invention specifications (not to mention invention claims) was considered sufficient reason to decline the patent application pursuant to provisions of Article 4 of the Russian Patent Law. Since then the situation has changed. The Russian Patent Office practices in relation to computer algorithms and applications have become decidedly more liberal. Currently only "algorithms as such", i.e. algorithms presented as a series of logical operations regardless of specific implementation methods or devices, are considered non-patentable.

The exclusion of program for computer and algorithms "Aas such" from patent protection coverage does not apply to related inventions. Methods and/or devices which consist of applications and have features of patentable subject-matters, i.e. subject-matters which are characterized by specific technical implementation, may be classified as patentable.

It is possible to track competitive e-commerce technologies by monitoring the Russian Patent Office publications which list patent application filings, granted patents, registered databases, computer and DBMS applications, and registered integrated circuit topologies. This information is also available on the "Rospatent" Internet Site (http://www.fips.ru).

Court rulings related to e-commerce technologies are virtually non-existent due to the fact that this area of business in Russia is only at an incipient stage of its development. This article was originally published in the September 2000 issue of Managing Intellectual Property, and republished with their kind permission.