Russia's Intellekt firm sends message in a bottle

Moscow company gets patent for 'glass containers' and claims everyday bottlers owe royalties for its 'invention.'

In Russia's volatile commercial climate, few could have foreseen that the latest tempest would erupt in a bottle.

A Moscow company has thrown Russian businesses - breweries especially - into tumult by successfully patenting "glass containers," including the lowly bottle.

The little-known firm Intellekt, which claims to represent struggling inventors, is demanding bottlers of everyday products pay up to 0.5 percent of their total income in royalties. "They are trying to intimidate us into signing a license to use bottles. It's unbelievable," says Valery Krasnopolsky, chief lawyer for the Moskvoretsky Brewery in Moscow, one of half a dozen companies targeted by Intellekt. "This country is just crawling with people who are trying to make money from thin air."

Vladimir Zaichenko, director of Intellekt, says his company was set up to help inventors navigate the labyrinth of Russian patent law. He says the invention is a new and useful one, and that the company's legal case is solid. "Let the beer companies prove in court that they aren't using the bottles described in the patent, or that they were using exactly those bottles before the patent was filed," he says.

Mr. Zaichenko says he will start going after dairies, soft drink makers, even bottlers of perfume and other products after he wins the case with the beermakers.

The former Soviet Union is already notorious as a haven for counterfeiters, software pirates, and trademark copy artists, who collectively cost Western companies an estimated $1 billion per year, according to the Coalition for Intellectual Property Rights, an industry-funded lobby group.

But the chaos doesn't stop there. A new type of huckster is using Russia's fledgling intellectual property laws to corner the market on items that have been around for years.

Vague intellectual property laws

"The trick is to define an old invention in new terms, which isn't so hard to do," says Nikolai Lynnik, director of the Institute of Industrial Property in Moscow, which advises the Russian government on property issues. "It's pure bluff, of course, but you'd be surprised how much trouble this sort of thing can cause."

So far, no one has paid anything for the use of bottles. Both Intellekt and lawyers for the breweries are playing a waiting game. "We think the onus is on Intellekt to take us to court and prove we're using their invention," says Julietta Arutunyan, chief lawyer for the Badyevsky Brewery near Moscow. But she admits that Russian courts can be unpredictable, and in the vague world of intellectual property law, there is no such thing as a cut-and-dried case. "Basically, we're just going to fight this thing for as long as it takes," she says.

The breweries blame Rospatent, the government patent bureau, for issuing the certificate to Intellekt. Russian patent law is poorly developed, and those who administer it lack experience, acknowledges Valery Djermakyan, deputy head of Rospatent's expertise department.

First come, first serve

"Speaking frankly, we can't prevent this sort of thing from happening," he says. "The only thing we can really do is check to see that such a patent hasn't been filed before. And it hadn't."

Not that the officers who issued the patent were foolish enough to think the bottle was really a fresh idea. "The drawings that were submitted described a particular kind of geometric curve, detailing a difference in thickness between inside and outside edges. It looked new," says Mr. Djermakyan.

Unfortunately, that particular sleight of Euclidean geometry could apply to almost any bottle, jar, ampule, or flask. "We know we are dealing with a new type of racketeer, but we lack the tools to weed them out," says Djermakyan. Over the past year, he says, Rospatent has accepted patent applications from various small companies that might give them legal grounds to claim the tin can, the oil tank, the wing nut, the screw and the common nail as their own.

The cost of obtaining a patent in Russia is as low as $25, with other fees added for "expertise" and processing.

Djermankyan says the bottle patent will probably be annulled if it is properly challenged. "The producers just need to prove in court that they were making these bottles before the patent was issued," he says. "It's not for us to do this. There has to be a process."

Zaichenko, Intellekt's director, insists the law is on his company's side, and bottle users will eventually have to pay up. "If a patent is issued, then Rospatent recognizes the idea as original," he says. "They are the experts."

Zaichenko accused beer bottlers of resisting capitalism. "The directors (of the beer companies) are reacting to our proposals in a completely Soviet way," he says. "They immediately begin to sling mud at us instead of negotiating, as should be done in a civilized market economy.

"Their problem is they don't want to pay, though they are using a product they didn't invent. They simply don't understand patent law at all," Zaichenko says.

The real problem is Russia's short experience with such market tools as patents, says Tom Thomson, Russia representative of the Coalition for Intellectual Property Rights.

"This story with the bottles is really absurd, and it underlines the kind of problems we face in the former Soviet Union," says Mr. Thomson. "Russian laws on intellectual property are actually very good, and getting better every year. The difficulty comes in enforcement. Private industry, the courts, and the patent office are very inexperienced in this country."

(c) Copyright 2000. The Christian Science Publishing Society

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