Russia and UK IP business
The current situation in Ukraine following Russia’s invasion is complex and fast-moving. Guidance on the UK Government’s sanctions can be found on the GOV.UK website.
3 July 2023 - ban on the provision of legal advisory services to non-UK persons*
Please ensure that you are compliant with these requirements. If you are unsure about any aspect of them, please seek independent legal advice.
On 30 June 2023, The Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations 2023 came into force. This bans UK lawyers from providing ‘legal advisory services’ directly or non-directly to a person who is not a UK person in respect of certain activities*. Legal advisory services are defined in Schedule 3J (paragraph 8A) to the Russia (Sanctions) (EU Exit) Regulation 2019/855 as:
8A.— Meaning of legal advisory services
(1) "Legal advisory services":
(a) means the provision of legal advice to a client in non-contentious matters, involving any of the following:
(i) the application or interpretation of law;
(ii) acting on behalf of a client, or providing advice on or in connection with, a commercial transaction, negotiation or any other dealing with a third party;
(iii) the preparation, execution or verification of a legal document;
(b) do not include any representation, advice, preparation of documents or verification of documents undertaken as part of legal representation services provided in, or in anticipation of:
(i) any proceedings before administrative agencies, courts or other duly constituted official tribunals, or
(ii) arbitral or mediation proceedings.
(2) In sub-paragraph (1):
(a) "legal document" includes any document which is governed in whole or in part by law, or which satisfies a legal requirement;
(b) "legal representation services" include advice given in relation to a dispute or potential dispute, and on the settlement of a dispute, whether or not proceedings referred to in sub-paragraph (1)(b) are commenced in relation to the dispute.
Regulation 54D sets out categories of activity in respect of which the provision of legal advisory services are prohibited. Attorneys and firms should consider Regulation 54D carefully to determine whether they apply to their practice, and take legal advice if they have any doubt.*
*Edited for clarity and additional information, 12 July 2023
3 May 2023 - New Legal Services General Licence
On Friday 28 April 2023, General Licence INT/2022/2252300 expired. At 00:01 hours on Saturday 29 April 2023, a new General Licence was issued covering legal services - General Licence INT/2023/2954852 (the General Licence). The General Licence and its reporting forms can be found here on GOV.UK
Anybody intending to use the General Licence should consult the copy of the licence for full details of the definitions, permissions, and usage requirements as these do not mirror those of General Licence INT/2022/2252300.
To accompany this update, OFSI has published a blog detailing the amendments to the General Licence.
28 November - Guidance on sanctions (Solicitors Regulation Authority)
You may find this Guidance from the Solicitors Regulation Authority helpful. In particular, it provides information about sanctions risk assessments and key risk factors. It also sets out "red flags" for attempted circumvention of the sanctions framework that you should look out for.
1 November - Legal Fees General Licence
Since the economic sanctions regime was introduced in February 2022, UK lawyers and firms have been unable to receive payments from or make payments to or on behalf of a Designated Person, unless they sought and were granted a specific licence from OFSI. Given the extraordinarily high number of licences sought to date, OFSI has now issued General Licence INT/2022/2252300 which allows a UK legal firm or Counsel to immediately receive or make payments concerning Designated Persons.
Attorneys or firms wishing to take advantage of the General Licence should read its terms carefully and in full. The licence distinguishes between work started before and after the designation of the relevant person. A fee cap of £500,000 (inc VAT) and individual hourly rate caps apply in relation to both pre and post designation work and in addition, fees for post designation work must be considered ‘reasonable’, with additional evidence of hourly rates and workstreams required. If fees are expected to be above the prescribed amount, a specific licence should be sought.
The General Licence has a term of 6 months, expiring on 27 April 2023 and OFSI can vary, suspend or revoke the licence at any time. Within 7 days of the work being completed or the General Licence coming to an end, attorneys and firms must provide certain information to OFSI including the identity of the designated person, the legal adviser(s) involved and together with copies of the relevant letter of engagement, invoices and the completed General Licence Form. Records must be kept for 6 years.
Regulated persons seeking to use a General Licence should read the following resources published by OFSI:
- General Licence INT/2022/2252300 and associated Reporting Forms
- OFSI’s Legal Fees General Licence blog
5 October - we are aware that the Government has said that it is extending sanctions to include "transactional legal advisory services". IPReg has asked the Ministry of Justice for further information about what this includes. We understand that work is currently being undertaken to expand the definition and scope of the new requirements. UPDATE 9 November - we note that the legal press is reporting that OFSI stated recently that: "the details of this were currently being consulted on and would be announced later this year or early next". We will publish more information here when it becomes available.
28 September – OFSI decision to impose a financial sanctions - includes intangible economic resources
Please consider this decision by OFSI to impose a financial sanction. The breaches identified by OFSI included the provision of “intangible economic resources” to a sanctioned firm.
The OFSI decision (at paragraph 14) states:
- This illustrates the need for companies to consider their potential sanctions risk exposure broadly, to include the potential provision of intangible economic resources, and not just financial transactions and tangible economic resources. As well as publicity, intangible economic resources could include certain types of intellectual property. (Emphasis added.)
The OFSI decision also states (at paragraph 16):
- Companies should consider the international scope of their activities, assess their own exposure, and put appropriate due diligence measures in place to identify and manage potential risks of breaching financial sanctions. OFSI does not mandate specific measures to be taken but makes the following suggestions set out below. However, the responsibility remains with companies to ensure they have put in place sufficient measures to ensure they do not breach financial sanctions.
- Make yourself aware of financial sanctions imposed by the UK as well as the UN and those that are subject to them. Information on which persons are designated under each financial sanction regime is published by OFSI and is available as a consolidated list on [the OFSI] website: https://www.gov.uk/government/collections/financial-sanctions-regimespecificconsolidated-lists-and-releases You can also sign up for [OFSI] email alerts, so you are notified each time the consolidated list is updated.
- Assess all aspects of your business to identify if any companies or individuals you conduct or are considering conducting business with appear on the consolidated sanctions list or are owned or controlled by any listed persons.
- Consider your exposure, especially when operating in high-risk regions, and take steps to mitigate against dealing with designated persons/entities.
21 September - the UK government held a webinar briefing on UK sanctions relating to Russia. A recording of this webinar is available for a short time.
Payments to Russian firms
CIPA has provided us with the following information about making payments to Russian firms:
The Central Bank of the Russian Federation is subject to UK sanctions. It is widely understood that the Russian Federal Service for Intellectual Property, Rospatent, banks at the Central Bank. Many CIPA members have therefore asked the question:
If I pay a non-sanctioned Russian agent, or organisation, in order to file/maintain rights and that payment ends up with the Central Bank, am I in breach of sanctions?
Following meetings with government officials, it is CIPA’s understanding that fees can be paid to Rospatent without fear of breaching sanctions, unless they are being paid by, or on behalf of, someone on the UK sanctions list. This is because the Central Bank of the Russian Federation has been designated in a different way to commercial banks. The relevant regulation prohibits the provision of financial services, not the filing and maintaining of IP rights.
CIPA members have also enquired about the status of UniCredit, in relation to the filing of Eurasian patent applications. It is CIPA’s understanding that UniCredit is not subject to UK sanctions.
You should not consider the above guidance as legal advice and should make your own checks regarding sanctioned individuals and organisations using the links provided on the IPReg website.
IPReg Guidance
IPReg cannot provide you with legal advice on whether any actions or business with Russian clients, Russian government departments or the Russian IPO would engage the UK Government’s sanctions directives. However, IPReg has published Guidance on what it would expect firms to do when they are considering what action to take on an issue relating to sanctions.
Government helpdesk details
You may be assisted by the Government’s dedicated helpdesk which has been set up to answer questions about trading with Russia. The Export Support Service can also be contacted online or by telephone: 0300 303 8955.
OFSI
The Office of Financial Sanctions Implementation (OFSI) has issued guidance on trading with Russia. It also publishes a blog which you may find useful.
You should note in particular:
- Your reporting obligations if you think you are dealing with a sanctions target; and
- The obligation to apply for a licence from OFSI to deal with or make funds or economic resources available to a sanctions target.
Please notify IPReg if you apply for a licence from OFSI.
OFSI publishes a Consolidated List of financial sanctions targets. It has a "fuzzy search" tool which will find matches in the Consolidated List even when users misspell search terms or enter only partial words for the search.
National Crime Agency Guidance
The National Crime Agency has issued a red alert about Financial Sanctions Evasion Typologies: Russian Elites and Enablers. The purpose of the alert is to provide information from law enforcement and the legal and financial services sectors as to some common techniques designated persons (DPs) and their UK enablers are suspected to be using to evade financial sanctions.
UKIPO and EPO statements
The UKIPO and the EPO have issued statements and their websites should be checked for any updates.
Practical Law - free toolkit
You may find that this toolkit on the Practical Law website provides useful information.
Due diligence
If you are unsure about the legal and funding status of your client in view of the sanctions experienced by some Russian businesses, please check with your due diligence team and/or obtain independent legal advice. This might be prudent even if your direct client is not technically an organisation incorporated in Russia.
Cyber Security
The National Cyber Security Centre has issued guidance on steps that organisations can take to improve security in the wake of Russia’s attack on Ukraine and a heightened cyber threat. You should read this guidance and take appropriate action to protect your systems and people from the threat of an attack.
If you are the victim of a cyber attack, please refer to IPReg’s dedicated webpage and report the matter to us if there has been a regulatory breach or the possibility of harm to client information or money.