Russian copycats are stealing intellectual property of American brands
Yahoo Finance's Alexis Keenan details the intellectual property theft of companies that have pulled business out of Russia and the impact these Russian copycats are having on multinational brands.
Video Transcript
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- Welcome back, everyone. Corporate America is taking a stand against the war in Ukraine. But some of America's best known brands are facing intellectual property theft from Russian companies. Our very own Alexis Keenan is here with a look at whether they can actually do anything about it. Alexis, what can you tell us?
ALEXIS KEENAN: Yeah, it's not looking good right now, at least in the immediate future. So there are US company trademarks that are really being snatched up by opportunists in Russia. Russian officials have made it clear that the assets of departing foreign companies are, indeed, at risk. In response to sanctions, Russian laws have been changed. Those that protect physical and intellectual property, they've been really overhauled at this point.
Now, Russia's government has warned foreign companies that suspending their operations in the country also means suspending their rights. So we can already see this playing out, these changes and how they're impacting US and other foreign companies really to their detriment. We can look at some trademark applications that were filed this week with Rospatent. And that's Russia's version of the US Patent and Trademark Office.
And they handle IP registration and ownership. These were also tweeted out by an IP attorney who I spoke with, Josh Gerben. Now, some of the applications for these trademarks, they resemble marks owned by-- you can see there-- McDonald's, Starbucks, IKEA, also Instagram. But really there's no real legal recourse here for these companies, at least at this point, to stop this unauthorized use.
Russian courts are seen on one hand as a really dead end, with local lawyers really not probably wanting to appear sympathetic to any Western interests. So they're not going to run into court and advocate on behalf of companies that have left also for fear of their own safety, perhaps. And a judge has already denied compensation to the UK's Hasbro company. And specifically, admitting, the judge there, the administrative judge, that the ruling was in retaliation for UK sanctions in that case.
Another avenue that's really not looking like one that's viable right now is through the WTO. Now, in theory, the WTO can handle IP disputes particularly between the US and Russia. They're both parties to a treaty that provides for that. But it's really off the table because the US has already suspended normal trade relations with Russia. So not an avenue right now.
A spokesperson for IKEA answered our requests for more information about how they're handling the protection of their IP. A company spokesperson said, we don't want to speculate at this point. It's too soon to talk about any potential consequences of these actions. We also put out requests to the other companies, but we have not heard back from McDonald's or from Meta, for Instagram, either for Starbucks as well. So kind of a quagmire here.
And whether it's really reached a point where these companies have grave concerns about their IP use, that is not certain at this point, because we haven't heard back from them. But certainly there must be some level of concern. And this isn't the first time, especially for McDonald's that this has happened where the usurping of their intellectual property has been used in times of conflict.
- This is a remarkable crossroads. And when we think about the legal recourse that you laid out-- at least for two of those companies that we just saw logos for on screen. I'm thinking about Starbucks and McDonald's-- those are entities that have a franchise and franchisee model with some corporate owned locations. But a outsized amount of percentage of franchisee owned locations as well.
And so with that in mind, the intellectual property is so critical to that marketing engine side of their business that they create and could hit on their revenue. And so for them, moving forward from here, what does this mean between the relationship between the corporate entities that they are and some of the franchisees that are in this region?
ALEXIS KEENAN: Yeah, and certainly you would think that there are franchisees in Russia still running their stores. Now, McDonald's has said that they have suspended operations there. But regardless, some of the franchisees have said, no, we're going to go ahead and keep business afloat here.
Now, I would think it would be in their interest to want to protect that intellectual property. I don't think they want McDonald's coming after them later for unauthorized use. And it's a good question, though. Is it unauthorized use at this point or is it not authorized use?
I think McDonald's would perhaps be all right with franchisees who were rightfully using that intellectual property. But certainly a question comes into play as to whether they continue those operations legally while McDonald's has otherwise said they'd like to be out of the country for now.
- And for some of these franchises who are still in Russia, they do actually want to keep doing business there. Some of the arguments that we hear is that, look, especially something as basic as food, that affects the Russian people and not necessarily the Russian politics. So trying to really strike that balance between trying to still actually help Russian people eat without affecting the brand, how, if you're McDonald's, do you view this if you're still then seen as technically still doing business in the company, even though your brand as a whole has decided that it won't?
ALEXIS KEENAN: Right. I think these calculations are very challenging for companies deciding whether they're going to stay or whether they're going to leave. There's got to be a calculus there for company executives to say on one hand, they might be able to better protect their intellectual property by staying and hanging on to both their intellectual property, and what about their physical property too? Maybe keeping a closer eye on it is one path that has been considered.
On the other hand, you have political and moral considerations that could be even more costly for the brands if they don't go with the political flow and ideology, at least it being expressed by a lot of Western nations, to not do business there. So really some hard decisions here for the executives. And I do hope that we hear more from them about how to navigate these waters as things move forward.
- Yahoo Finance's own, Alexis Keenan. Thanks so much for the legal breakdown on the matters that are taking place overseas and some of the company announcements to refrain from doing business in Russia while they're facing some intellectual property headwinds as well at the same time. Thanks so much, Alexis. Appreciate it.
