Fulfilment of Obligations to "Unfriendly" Copyright Holders in Rubles

On 27 May 2022 Russia’s President signed a decree "On the temporary procedure for fulfilling obligations to certain copyright holders"[1] (hereinafter referred to as the Decree). The Decree allows Russian companies to fulfil obligations in rubles to copyright holders who:

• are associated with unfriendly countries or are under the control of such foreign copyright holders,
• support anti-Russian restrictive measures and discredit the Russian army,
• have banned the use in Russia of the results of intellectual activity (hereinafter RIA) and/or means of individualization due to restrictive measures, and who "left" Russia after 23 February 2022,
• disseminate information in an indecent form that violates human dignity and morality, expresses disrespect for Russia, its society, authorities and official symbols.

To fulfil a monetary obligation, a resident (debtor) will need to open one special type “O” ruble account in the copyright holder’s name with an authorized bank to be determined by the Russian Federation government. The copyright holder does not have to be present to open the account but will be notified by postal or e-mail address, or SMS message, if there is reliable contact information.

Money may be debited from a special type "O" account only after the Government Commission’s permission has been obtained by either the debtor or the copyright holder.

The debtor will be deemed to have duly fulfilled its obligations when it deposits funds on the special type "O" account with or without the copyright holder's consent to deposit funds on the account. The debtor can request consent or the copyright holder will “grant” it by posting the details of the type "O" account on its website.

The Decree requires a special type "O" account to fulfil obligations under licence and sublicence agreements, agreements transferring management powers and other agreements providing remuneration for the use of RIA and/or means of individualization.

The Decree does not apply to:

• copyright holders from unfriendly countries whose IP is used to import into or manufacture in Russia medicines, medical products, industrial and agricultural products, and foodstuffs; to provide communication services and traffic services; to create and use computer programs, databases, information systems and data processing centres in Russia,
• for payments of individual residents not exceeding 100,000 rubles, if the IP is used for personal purposes,
• if the copyright holder from an unfriendly country properly fulfils its obligations under contracts concluded with debtors.

Previously, Presidential Decree No. 254 of 4 May 2022 also introduced a temporary procedure for fulfilling obligations to pay profits of resident LLCs, business partnerships, and production cooperatives to their foreign participants from unfriendly countries or persons controlled by them by opening a type "S" ruble account.

[1] Decree of the President of the Russian Federation No. 322 of 27/05/2022 "On the temporary procedure for fulfilling obligations to certain copyright holders"