Legal protection of intellectual property in the defense sphere.

One of the more important problems at the modem stage in Russia's economic development is securing the legal protection of results of research, development and technological works designated for military, special and dual purposes, so-called results of intellectual activities (RIA), as these are drawn into the economic and civilian legal turnover. (1) On the one hand, the State, being normally the main and more often than not the only contractor for this kind of works and financing them from the budget, should own lawful rights to the results thus obtained. Consequently, it is entitled to a portion of profits from RIA capitalization. On the other, the State has a duty to see to it that the process of commercialization of these activities should not be detrimental to its security. The basics of legal relations in regard of registration and use of RIA, the owner of rights to which is the Russian Federation, are regulated by some recently passed normative legal acts. (2)

Yet, efforts to find a comprehensive solution to that problem are held in check by the absence of a mechanism for valid decision-making in the area of legal protection of results of intellectual activities, which, bereft of this kind of protection, do not form objects of intellectual property (OIP) and are not covered by the civilian legislation on property relations. That calls for the creation of as balanced a regime of access to and dissemination of RIA information as would on the one hand preclude (minimize) the damage that might be caused by its unsanctioned leaks from the military-industrial complex, and on the other maximize the benefits afforded by the employment of these results in other areas of state activities.

RIA determine the State's technological development level, the combat capabilities of weapons and military equipment (WME) in the course of development, and the competitiveness of military and civilian products in the world markets. There is an interest in RIA information, displayed by both intelligence services of foreign States and foreign rivals competing with Russian WME suppliers. The information has these sources: private proprietors (owners, users) of information; publications in the general-access press; standard technical documents, design plans and specifications, production forms and records, and service forms and records, as regulating the process of creation, production, operation, combat employment, modernization, maintenance and destruction (disposal) of WME; results of fundamental and applied investigations, exploratory R & D; data on basic technologies involved in the creation of WME and determining their scientific and technological potential.

Information contained in descriptions of WME, whose creation, operation, combat employment, modernization, maintenance and destruction (disposal) involve the use of RIA, can be revelatory of the protected data. The main methods for obtaining information contained in OIP are the following: the leaking of data by their proprietor (owner, user); perusal of general-access RIA information sources; covert agent intelligence, technical reconnaissance; scientific and technical analysis of RIA-based WME models, obtained either lawfully or in an unsanctioned manner; creation of joint ventures and organization of international projects with the participation of scientific and industrial leaders specializing in the defense themes; the holding of contests and operation of science advancement charities practicing the award of money grants, both forms encouraging the sending of applications with descriptions of RIA; analytical treatment of materials of international information or commercial exchanges as well as those of s cientific-technical or military-technical cooperation between Russia and foreign States.

Fraught with much danger from the point of view of unsanctioned acquisition of information about RIA is the reduction of budget allocations for military-related fundamental, exploratory investigations, applied R & D, and programs of creation of new WME models. Forced to look for additional sources of finance, defense complex enterprises got involved in a spontaneous conversion drive, in whose course RIA at best came to be used in the civilian sector and at worst ended up as the property of non-public enterprises which, acting on their proprietary rights, launched, practically unhindered (on account of gaps in the legal and regulatory framework), their illegal exports abroad. Actually it was a new channel for RIA information leaks: uncontrolled, stock companies started trading in previously classified data representing products competitive in the world markets, this at what was by the world standards some grossly reduced prices.

The uncontrolled process of dissemination and use of RIA gave foreign States greater chances for obtaining confidential information, enabling them, first, to reliably monitor shifts in the levels of combat capabilities of Russian WME; second, to cause considerable damage to the Russian interests by the use of countermeasures blunting the efficiency of Russian WME, by bringing disrepute on Russian products in the world markets and thus detracting from their competitiveness, by working to erode Russia's international prestige, etc.; third, to preempt the drawing of relevant patents, thereby robbing the true OIP owners of the opportunity to lawfully realize them and derive corresponding incomes, and the developers, to make improvements in their own products and create new models on their basis. There is a tendency in evidence to bring actions against Russia in connection with the use of borrowed RIA.

The expected Russian accession to the World Trade Organization will, as we see it, only aggravate the negative tendencies toward misappropriation of Russian-owned RIA by foreign States, for it will aid an unhindered inflow of foreign capital to the domestic market. This fact will inevitably serve as a cause forcing domestic enterprises and the economy as a whole to become plunged in "patent wars." On patenting in Russia today the currently available R & D, foreign companies will prospectively be guaranteed the right to demand that domestic enterprises pay them considerable sums or hand over the whole (or part) of their production facilities in compensation for the RIA they registered in their name, the latter having failed to be given the timely legal protection. At the same time, banning without a good reason the open use of RIA is highly detrimental to the Russian economy, causing the loss of profit, and holds back the adjustment of the scientific and technical levels in the military and the civilian secto rs.

The world's annual OIP turnover adds up to 133 billion U.S. dollars, of which Russia accounts for a mere 0.07%. (3) Though the domestic RIA market is still in its formative stage, one may claim that information already has all the real hallmarks of a commodity possessing a value of its own and owners of its own. However, OIP should be regarded as a special type of commodity. Unlike conventional products, creative activities cannot keep their owners in sure-fire profit unless they enjoy specialized legal protection.

Thus, in order to provide for Russia's security it is urgent that we deal with the RIA protection problem, which is about creating and practicing a state legal system of restrictions on dissemination of and access to OIP. Previously, the RIA protection mechanism was based on the principle of their consideration as a carrier of information about protected WME models. In consequence, the decision-making on the necessity or otherwise of protecting those objects was limited to a comparison of benefits and damage likely to be caused in the military area by RIA information leaks. Therefore, organizational measures and classification formed the main protective methods in regard of defense-related OIP.

Russia's currently existing OIP legal protection system, which consists of 39 laws, 141 Presidential Decrees and 365 Governmental Orders, falls short of providing the due protection of RIA: information leaks about them do interfere with the state security and owner rights. With the process of RIA commercialization and military-technical cooperation with foreign partners expanding, national information security and technological independence cannot be guaranteed unless an effort is made to improve the system of regulatory legal protection and to promote state regulation of relations in that area. The a i m s of the would-be protective system are the following: prevention (considerable reduction) of damage likely to be inflicted to the state security or the rights of the proprietor (owner, user) of RIA in consequence of their unsanctioned leaking from the industrial sector's defense segment, as well as involvement of OIP in the economic turnover through their use as objects of property right in order to increa se profits of RIA information owners. This system will make it possible to establish a balance of Russia's military-political and economic interests.

To practice state regulation in the RIA protection sphere, we must create a mechanism for defending them against the risks of unsanctioned disclosure, use and dissemination. Being protected against these will reduce the danger of possible losses as RIA are introduced into the production of new WME, transferred to other areas (in order to stimulate innovation activities and enhance scientific and technological potential of the civilian industries), and increasingly sold for export (to derive benefits from Russia's military-technical cooperation with foreign States).

The mechanism of the legal system of restrictions on the dissemination of and access to RIA is based on the principles of "differentiated protection" and "validity of decisions." The former principle is about the necessity of going over from concealment and suppression of the use of new RIA or those potentially promising export-wise in areas other than the military one to the differentiated protection of information about them in "vulnerable spots" on the criterion of the required security level. The latter principle is about the necessity of making a comprehensive analysis of the admissibility of some or other decision on the criterion of reliable evaluation of risks involved in an unsanctioned disclosure of information that may result from its implementation (or its making), to wit, we ought to evaluate the aggregate balance of damage and benefits to be incurred through the use and dissemination of information about HA across the entire spectrum of Russian political, military and economic interests.

Serving as the means of preventing the unsanctioned use of OIP is the institution of the exclusive right of possession and use of results of intellectual activities. In keeping with this right, it is only the proprietor that has the exclusive powers to use a relevant object within some definite timeframe established by the legislation.

Shaping the mechanism for the legal system of restrictions on the dissemination of and access to RIA information, mechanism designed to deal effectively with problems connected with prevention of its leakage and with its security, is about drawing up a methodological apparatus that enables evaluation of the intellectual significance of the results of creative work and their legal protection, identification of the proprietor, and its registration as the owner of all rights to the results thus obtained. In that case, even if we are faced with an unsanctioned acquisition by foreign rivals of Russian WME suppliers of this information from an OIP developer (creator), all rights to patented or licensed results of creative work will belong to their owner.

The Russian legislation's protection of OIP rests on the exclusive right of an author (collective) to RIA he (it) has created. But if he realizes his creative plans in line of duty or carries out assignments coming from an employer (contractor), the laws (4) establish the latter's priority in getting the preferential property rights to the use of any products created in accordance with a plan, if not otherwise specified by the contract between the author/employee and the contractor. It is also assumed that the author will be paid definite remuneration, whose amount is fixed by the contract, if his professional work is put to commercial use. The contract (agreement) also lists the general conditions of cooperation between the sides in the process of realization of the author's rights to the creative product, something that helps to forestall possible subsequent disputes.

Thus, given that the contractual intellectual property is formed on the basis of state budget allocations and is an inalienable part of scientific and technical production obtained as a result of intellectual activities, the property rights to it and to its use are the exclusive property of the State Contractor (5) and are liable to the state registration.

The Russian legislation regulates RIA copyright holders' relations in cases when it is necessary to capitalize RIA and use them in the economy, to wit, when products of creative activities are transferred from the area of non-property interests to that of property interests, via the purchase and sale procedure. The practical realization of OIP in the economic sphere in this way means that the use of acts on entrepreneurship is possible along with the laws regulating purely copyright relations. Therefore, it is possible to accompany and secure the OIP possession and use regime by way of using a system of contracts and licenses.

The creation of OIP is secured by the signing of a state contract for R & D, under which a group of authors (an enterprise) pledges to develop some creative product in keeping with its conditions and to hand it over to the contractor, which effects acceptance of and payment for the work. The handover of an existing OIP from its owner to a consumer for use is secured by two types of contractual ties: first, under a copyright agreement (it is signed in writing and contains the following conditions: the scope and methods of use of RIA; the payment procedure and amount of remuneration for each of these, normally as a percentage of proceeds; duration and territory under an agreement), second, under a license agreement, which makes it possible to combine the interests of all sides to a maximum degree.

In accordance with the effective legislation, the copyright and license agreements can involve the transfer of exclusive or non-exclusive user rights. In the former case, the rights holder gives a permission to use property in a definite way within limits stipulated by the agreement to a concrete person, to whom those rights are transferred. As a rule, this sort of agreements imposes a ban on the transfer of rights to third persons. If what is stipulated is the complete cession of all or some property rights, even the holder of rights to the professional production cannot use it by the same methods as are allowed (transferred) under a rights cession agreement. In the latter case, a definite subject (licensee) is allowed to use property rights, while at the same time the rights holder can realize them as well. This kind of agreement establishes the scope of and a procedure for using a relevant OIP.

As was noted, RIA are increasingly involved in the economic turnover. They may constitute a contribution to the charter capital of enterprises and stock companies under the condition that this contribution is in the form of an object of property right (patents, licenses, etc.). The basic document in this sense is the articles of association. (6) If, however, an OIP is used as an object of investment or joint economic activities via contribution of copyright to entrepreneurship for profit and a positive social effect, the basic documents are an investment agreement and an agreement on joint economic activity. (7) Thus, the OIP that join the economic turnover and production rights to these as obtained under an agreement obey the general economic rules.

Organizationally, in order to convert OIP to intellectual capital, those of them, which form part of intangible assets, must be legally assigned, in accordance with the established procedure, to an establishment, and their intellectual significance and value must also be estimated. In this context, being part of the charter capital, they transfer their value to the enterprise's products in accordance with the wear rates applicable to intangible assets. Skilful management of objects of intellectual property may secure dividends from introduction of creative products into the general economic process, bring profits to industrial enterprises, and help protect results of intellectual activities.

The mechanism for OIP security in the innovation and export spheres, let us stress it again, is based, among other things, on the principle of validity of decisions and protection from risks of an unsanctioned disclosure of RIA. As a rule, a set of such results that are potentially suitable for realization through the instrumentality of innovations and export cannot, under the RF legislation, possess protective authorship or related rights or belong to OIP by virtue of proximity to objects protected by the state secret legal protection system. Following official lifting of legislative restrictions on the open use, obviously, there remains the problem of not allowing their unsanctioned use and dissemination, in connection with which it is necessary to exercise state regulation and protection with regard to OIP not covered by the exclusive right of authorship. In this case their protection actually derives from the right to information about available results effective until it is kept secret or until a third p erson independently achieves an identical result. Moreover, it is essential that we use the regime of the confidential keeping of information and nondisclosure of professional (commercial) secrets as stipulated by laws and regulations. (8)

For well-founded decision-making on the necessary level of protection of RIA not covered by the exclusive right, the said mechanism should use, instead of a multitude of departmental duel models, an unified multi-factor one that would make it possible to evaluate the strategic consequences of information leaks. Its implementation calls for the elaboration of a relevant apparatus containing a methodology of reliable estimation of risks involved in an unsanctioned disclosure of RIA and identification of the risk group (there should be several of these, depending on the level of damage inflicted on the State's national interests), to which these particular results belong. For that, we must address a number of particular tasks:

* to hold an investigation into the specific traits of the existing potentially dangerous factors of an unsanctioned acquisition and use of RIA in areas other than the military one, to reveal reasons for their emergence, to identify the arising unfavorable events, and to construct their cause-and-effect connections;

* to form the criterion of evaluation of information security in connection with the use of RIA in such areas, criterion based on the quantitative measurement of danger as determined by the level of risk of emergence of unfavorable events brought about by specific incidents (the risk indicators are the amount of damage and probability of its occurrence);

* to draw up a methodological apparatus for assessment of security of using RIA in the same areas, one based on an analysis of a multitude of potential danger sources and on measurements of the risk indicators, this for a subsequent calculation of the measure of information security of using intellectual property in accordance with the said criterion;

* to choose mathematical methods of forecasts, which make it possible to form a risk assessment algorithm in regard of an unsanctioned disclosure of RIA as they are used in areas other than the military one.

An analysis of the totality of reasons, sources and methods of an unsanctioned acquisition of data on results of research, development and technological works designated for military, special and dual purposes, as well as of the possible consequences of their uncontrolled use confirms the necessity of having RIA protected by law. For that, we must have a fitting state regulation system based, first, on an effective management of OIP with the use of the existing systems of copyright protection and RIA patenting, confidential information (professional secret) protection, safeguarding of state secrets, opposition to foreign technical intelligence services, technical protection of information, and export control; second, on large-scale ("umbrella") patenting of RIA with the use of state budget allocations and assignation of the titles to OIP and their further use to state contractors; third, on a reliable estimation of risks of an unsanctioned disclosure of RIA, which is necessary for forecasting possible losses that may result from their introduction in WME production as well as their use in areas other than the military one or for export in the process of military-technical cooperation between Russia and foreign States.

NOTES:

(1.) Decree of RF President of May 14, 1998, #556 "On Legal Protection of Results of Research, Development and Technological Works Designated for Military, Special and Dual Purposes."

(2.) Order of RF Government of February 26, 2002, #131 "On State Registration of Results of Research, Development and Technological Works Designated for Military, Special and Dual Purposes;" Ordinance of RE Government of November 30,2001, #1607-r "Main Directions of Realization of the State Policy of Involvement in the Economic Turnover of Results of Scientific and Technical Activities," etc.

(3.) Komsomolskaya Pravda, December 11,2001.

(4.) "RE Patent Law" of September 23, 1992, #3517-1; RE Law of July 9, 1993, #5351-1 "On Copyright and Related Rights."

(5.) Order of RE Government of September 29, 1998, #1132 "On Priority Measures for Legal Protection of State Interests in the Process of Economic and Civilian-Legal Circulation of Results of Research, Development and Technological Works Designated for Military, Special and Dual Purposes;" Order of RE Government of September 2, 1999, #982 "On Using Results of Dual-Purpose Scientific-Technical Activities."

(6.) Federal Law of December 26, 1995, #208-FZ "On Joint-Stock Societies;" Order of the Presidium of the RE Supreme Soviet of March 2, 1992, #2435-1 "On Some Issues Connected with the Activities of the Antimonopoly Committee."

(7.) RE Law of June 26, 1991, "On Investment Activities in the RSFSR."

(8.) RE Civil Code. Art. 139.