Russia to seize IP and assets of companies leaving the country

Managing IP is part of Legal Benchmarking Limited, 1-2 Paris Gardens, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Russia to seize IP and assets of companies leaving the country

rflag-min.jpeg

The Russian government wants legislation that would allow it to seize the IP and other assets of departing companies

The Russian government has drafted a bill that would allow it to seize intellectual property and other assets of some foreign companies that have decided to leave or scale down operations in the country.

The bill has yet to be tabled before Russia’s parliament the State Duma, a local practitioner confirmed to Managing IP today, March 16.

It could apply to foreign companies with more than 100 employees or a valuation of 1 billion rubles ($9.1 million) in which individuals from “unfriendly countries” own at least a 25% stake.

An English translation of the draft bill, seen by Managing IP, stipulates that the seized assets would go to an “external administration”, either the Russian state development corporation VEB.RF or the State Corporation Deposit Insurance Agency.

It comes after numerous major brands, including Mercedes-Benz, Volkswagen, Adidas, Disney, H&M, McDonald’s, Coca-Cola, Pepsi, and Starbucks, announced that they were suspending, shutting, or scaling down their operations in Russia.

Several law firms, including those with strong IP practices such as Allen & Overy, Gowling WLG and Latham & Watkins, followed suit.

The proposed legislation would allow the external administration to take control of and use IP belonging to the foreign company, as well as IP licensed to it.

This could effectively include IP licensed to a Russian subsidiary by a foreign parent company or any unrelated company that merely licensed its rights in Russia.

On top of that, the government could also reinstate any IP licences that were revoked or cancelled on or after February 24 – when Russia began its Ukraine invasion.

Related stories

The heads of potentially affected companies must have “avoided exercising their powers”, left Russia, or caused unjustified termination of the organisation’s activity, liquidation, or bankruptcy after February 24 without any obvious economic reason.

Russia previously approved a list of 24 foreign states and territories that have committed unfriendly acts, including Australia, EU member states, Japan, Singapore, Ukraine, the UK, and the US.

The proposed law is one of the several legislative steps that the government has taken to push back against Western sanctions and businesses that have decided to shut their operations in Russia.

For instance, the government announced on March 7 that rights owners from sanctioning territories would not be entitled to any compensation for the unauthorised use of their IP, and passed a law just two days later that allowed it to exclude specific goods from IP protection.

The newly proposed law stipulates that the external administration would take over a company for up to three months, during which the oversight body would control all the assets and liabilities of the company.

Thereafter it would transfer all assets of the foreign company including IP to a newly created business.

The shares in this new company would be sold via an auction to ensure the continued operation of the shut-down business.

It potentially means that a third party that won such an auction would be able to acquire rights in and use a company’s IP assets legally in Russia, while the original IP owners could potentially perpetually lose their rights in the territory.

To avoid a takeover, a company may apply to a court before the external administration’s appointment, indicating its intent to resume or continue its operations in Russia.

President Vladimir Putin, in a conference with members of his government, said last week that the Kremlin could find legally viable ways to seize international businesses.

He added that the government would “introduce external management and then transfer these enterprises to those who actually want to work”. The new bill seems to have been framed to carry out this objective.

more from across site and SHARED ros bottom lb

More from across our site

Stephen Yang joins us for our ‘Five minutes with’ series to explain why his role requires him to wear many hats
The complaint follows a declaratory ruling issued by the England and Wales High Court last month that said Samsung is entitled to an interim licence
Tobias Hahn explains how the firm's multi-jurisdictional setup enabled it to secure an injunction on behalf of Fujifilm relating to defendant Kodak’s non-UPC activity
Reckitt Benckiser is to divest its Essential Home business, which includes more than 70 brands, to private equity firm Advent International
Litigator Neel Chatterjee, who has joined the firm as a co-leader of the IP team, reveals tech ambitions and expansion plans
A settlement between Philips and Transsion and a loss for AstraZeneca in the UK were also among the top talking points
Working with Harvey and Microsoft, the firm has been at the forefront of developing AI tools for its lawyers, and is now exploring new projects and business models
The Emotional Perception AI case, which centres on the patentability of an artificial neural network, will be heard next week
Developments included a court order related to InterDigital’s anti-anti-suit injunction against Disney, and clarification on recoverable costs
Partners at Foley Hoag examine how recent CJEU jurisprudence may serve as a catalyst for recalibrating US judicial reluctance to entertain foreign patent claims
Gift this article