Category: Russia

Vadim Panin and Evgeny Yuriev have been promoted to Partner at Herbert Smith Freehills in Russia.

Vadim Panin joined Herbert Smith Freehills in 2009 after spending two and a half years at Allen and Overy. He earned his Ph.D at the Russian Presidential Academy of National Economy and Public Administration.

Evgeny Yuriev joined Herbert Smith Freehills in 2008 after spending three years at Salans. He obtained an LL.M. (2004) and Ph.D. (2000) in Law from the Moscow State Institute of International Relations.

According to Herbert Smith Freehills, “Vadim Panin, a banking and finance specialist advises international and domestic lenders, as well as sponsors and borrowers, on secured and unsecured bilateral and syndicated loans, structured finance transactions and restructurings. Vadim specialises in international and domestic project finance transactions involving international, Russian and Asian banks, ECAs and multilaterals. He has an in-depth experience and knowledge of the oil and gas, petrochemical and infrastructure sectors. Vadim has advised on a number of complex, award-winning transactions which involved innovative solutions and structures.”

“Evgeny Yuriev,” the firm reports, “advises both international and domestic clients on all aspects of cross-border M&A transactions, joint ventures and corporate restructurings. Amongst his clients are the major Russian companies Gazprom, Vnesheconombank and Sberbank, and several major international investors including Japanese trading houses, US private equity funds, Chinese SOEs, and major European corporations. He has particular expertise in the energy, automotive, TMT, pharma and other sectors. Aside from his corporate/M&A practice, Evgeny also leads the regulatory offering in our Russian practice. His regulatory expertise includes advising major international investors and Russian companies on foreign direct investments, antitrust and merger control, industry-specific regulation, data protection and many other areas.”

“Our firm consistently develops and reinforces the corporate and finance practices which allows us to support clients more effectively in such hard times for all,” said Herbert Smith Freehills EMEA Managing Partner. “We thank Vadim Panin and Evgeny Yuriev for the work they have done and highly appreciate their professional and leadership skills. We are sure that their participation in the partnership will enable us to strengthen our positions in Russia.”

Clifford Chance has advised the Russian Far East and Arctic Development Fund on a loan of RUB 5.7 billion (approximately USD 80 million) for the Amur hydrometallurgical plant, a subsidiary of Polymetal.

The Far East and Arctic Development Fund JSC is a subsidiary of the State Corporation VEB.RF – the Bank for Development and Foreign Economic Affairs. The fund facilitates the inflow of investments by providing preferential and long-term financing for prioritized investment projects.

According to Clifford Chance, “the proceeds will be used to partially finance the construction of the second stage of the Amursk pressure oxidation plant POX-2 in 2020-2021. POX-2 capital expenditures until the end of 2020 are estimated at approximately USD 100 million, while the total investments remaining until the end of the construction are expected to amount to USD 312 million. The loan has the tenor of ten years and a 5% fixed rate.”

Clifford Chance’s team included Partner Vladimir Barbolin, Counsel Ella Omelchenko, and Senior Associates Elena Dmitrieva and Arina Skrebkova.

White & Case has advised Alliance Oil Company Ltd. on a tender offer and consent solicitation in respect of its USD 500 million 7.000% Guaranteed Notes due 2020.

According to White & Case, “Alliance Oil is a vertically-integrated oil and gas company which operates in Russia and Kazakhstan. The company’s objective was to manage its debt maturity profile and it successfully extended maturity of the notes until 2023. The capped tender offer was conditional on the consent solicitation and resulted in redemption of USD 100 million of its notes. The consent solicitation had the novel feature of a virtual bondholders’ meeting due to the ongoing Covid-19 lockdown restrictions.”

White & Case’s team included, in London, Partners Darina Lozovsky and Stuart Matty and Counsel Doron Loewinger; in Moscow, Partner Dmitry Lapshin and Associates Renat Akhmetzyanov and Yulia Akulinina; in Nur-Sultan, Partner Pavel Kornilov and Associate Alikhan Baizakov; and in Paris, Counsel Olga Fedosova.

The issue of compulsory licenses for patent rights to pharmaceuticals is becoming more and more controversial in Russia, due to the growing number of important court rulings involving compulsory licenses affecting leaders of the pharma industry over the last few years.

Key Elements of the Russian Rules

According to the Russian Civil Code, the court can uphold the claim of a claimant (i.e., the intended compulsory licensee) to be issued a license for the invention, utility model, or industrial design (objects) owned by the defendant (i.e., the patent owner), in two scenarios: (1) if those objects are not used or are insufficiently used by the patent owner for four years from the patent issuance (for patents and industrial designs), and for three years from the patent issuance (for utility models), which results in such products being insufficiently offered on the market. If the claimant is willing and ready to use such objects but the patent owner refuses to grant to the claimant a license on fair market terms, the claimant can bring a claim for a compulsory license; (2) if the owner of a later-registered patent (a second patent or dependent patent) cannot use the patented invention without violating the rights of the earlier-registered patent (the first patent), and the first patent owner refuses to grant the second patent owner a license on fair market terms. The claim of the second patent owner in that case will be granted if the second patent owner proves that the invention patented by the second patent owner represents an important technical achievement and possesses significant economic advantages over the invention possessed by the first patent owner.

Practical Application of the Rules

In practice, the most sensitive disputes over compulsory licenses in Russia have arisen in connection with patents on pharmaceutical substances mostly owned by multinational pharma companies such as AstraZeneca, Bayer, Bristol-Myers Squibb, Pfizer, etc.

A common claimant in these disputes is Russian-based company OOO Nativa, which is involved in the commercialization of generic medicines. Within the last five years several such court disputes took place, usually involving hearings in multiple court instances, and all very complex. Each case has raised questions about how exactly the criteria of insufficient use, important technical achievement and/or significant economic advantages should be approached in order to achieve a fair balance of rights.

At present, Russian court practice is shifting towards more frequently supporting claimants against senior patent owners. The state tends to support local manufacturers of generics, partly because of a lack of financing for clinical trials and the development of medicines. On the other side, generic manufacturers are themselves acting aggressively on the market and often have their medicines registered with the Russian healthcare authorities even before the expiry of the original patent validity terms (this was repeatedly recognized as patent infringement by courts), and then file a court claim to obtain a compulsory license against the original patent owners.

Court Cases

In one prominent case, OOO Nativa and Mr. Mikhaylov vs. Celgene Corporation, the court partially satisfied the claimant’s claim to have Celgene issue a compulsory license on the following terms: (1) the volume of use includes the manufacture, application, offer for sale, sale and storage of pharmaceuticals containing lenalidomide as an API; (2) the amount of license fees is 30% of the revenue part of the price; and (3) the payment is to be made annually.

Celgene unsuccessfully appealed and only thereafter were the parties able to amicably settle the dispute.

In another case, OOO Nativa vs. Sugen LLC and Pharmacia/Upjohn Company, OOO Nativa claimed that its patented invention is dependent on the defendant’s invention, and won. The courts of several instances supported OOO Nativa’s demand for a compulsory license from Sugen in connection with the preparation based on sunitinib as an API. The latest development in the case was the higher court’s refusal to consider the case at the Economic Dispute Collegium of the Supreme Court.

These examples signal the controversial trend and apparent difficulties for pharma patent owners to protect their rights on the Russian market. Such vague criteria as “important technical achievement” are still assessed very subjectively by different experts and courts, and it is difficult to rely on any solid position here. There is also no doubt that Russian authorities often tend to support local generic manufacturers due to political reasons. Nevertheless, all industry participants hope that the higher courts will eventually elaborate more solid approaches that would be of benefit in making the concept of compulsory licenses more balanced and transparent.

By Julien Hansen, Partner, Julianna Tabastajewa, Counsel, and Pavel Arievich, Legal Director, DLA Piper Moscow

This Article was originally published in Issue 7.3 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Vegas Lex has won what it calls “two crushing victories” in the Arbitration Court of the North-Western District in the interests of pharmaceutical company Alium in disputes related to the construction contract of a large pharmaceutical plant. 

Vegas Lex reports that it demonstrated the “illegal payment under a bank guarantee and … the recovery of a large sum paid by the bank, as well as in the dispute on the issuance of a writ of execution for the enforcement of the ICAC decision at the CCI (also made in favor of the client as a result of the successful work of our team).”

According to Vegas Lex, “both victories were won during the first three days after the resumption of the courts, previously suspended due to restrictions imposed due to the spread of coronavirus infection.” According to the firm, “the dispute was examined under severe restrictions for the participants in the process (the mandatory presence of protective equipment – masks and gloves, admission to the courtroom for one representative immediately before the meeting, strict regulations on the duration of the speech, etc.).”

According to Vegas Lex, “the project was not without difficulties, [as] the opponents did their utmost to …. artificially change the jurisdiction of the dispute and discredit by any means the issued bank guarantee and the actions of the bank and the customer (our client).”

The firm’s successful representation of Alium was led by Partner and Head of Real Estate Igor Chumachenko.

BGP Litigation has announces the opening of a Family Law practice.

According to BGP Litigation, “the firm will provide legal support in complex inheritance and divorce proceedings, including disputes on the division of jointly acquired property of spouses, recovery of alimony, determination of the place of residence of children and the procedure for communicating with them, their departure from the Russian Federation, contesting and establishing paternity, [and the] deprivation and restriction of parental rights.

In addition, the firm reports, “the new BGP Litigation Family Law practice team has the unique experience of positively resolving cross-border family disputes, as well as structuring family assets, in particular through prenuptial agreements, property sharing agreements, alimony agreements, wills, including joint wills of spouses, inheritance agreements and foundations. Also, the practice’s lawyers often act as mediators for the peaceful settlement of disputes related to family law, including cross-border inheritance issues.”

The Family Law practice will be headed by Partner Victoria Dergunova, who, the firm reports, “specializes in resolving disputes about raising children, their return from foreign countries in the event of unlawful abduction or detention, [and] development of the concept of property relations of spouses and inheritance planning.” 

Liniya Prava has helped the VTB Group attract investors to Demeter Holding.

According to Liniya Prava, “Demeter Holding holds infrastructure companies in the Russian grain export logistics market. As part of this transaction, Agronova JSC, with a 25% share, and Marathon Group investment company, with a 24.999% share, were included in the holding’s capital.”

Liniya Prava’s team included Partner Valery Kachura and Senior Lawyer Alexander Kuznetsov.

Liniya Prava did not reply to our inquiry on the matter.

The Russian government has approved the rules* for selling over-the-counter (OTC) drugs online.

The new rules set the conditions for:

• obtaining a permit to sell drugs remotely;

• the requirements for information to be provided to consumers;

• the rules for the delivery of drugs; and

• the conditions for their return.

The rules also clarify the possible negative consequences of online sales in breach of the requirements.

Online sales of OTC drugs were formally legalised in Russia in early April 2020. However, that law and the presidential executive order did not establish the procedure for obtaining a permit for this type of sales. The recent government decree addresses this gap by establishing the requirements for pharmacy chains seeking to obtain such a permit.

Conditions for obtaining an online sales permit

In accordance with the new rules, a pharmacy must have a licence for the retail sale of drugs for at least one year and must also have:

• at least ten locations where it sells drugs;
• storage facilities that meet the requirements of good storage and transportation practices for drugs;
• a website and optionally a mobile application;
• a courier service (the pharmacy’s own or a contracted service), which has the necessary equipment for the transport of drugs requiring compliance with a special temperature regime (i.e. for thermolabile drugs); and
• an electronic payment system and/or mobile payment terminals.

To obtain a permit, the pharmacy must submit an application and supporting documents to the Federal Service for Surveillance in Healthcare (“Roszdravnadzor”). Decisions are to be issued within five business days. The register for permits issued will be accessible on Roszdravnadzor’s website.

Roszdravnadzor will establish the documents confirming compliance with the above requirements, and a more detailed procedure for submitting and considering applications.

Website requirements

The rules set forth the information which must be posted on the e-pharmacy’s website. In particular, it is necessary to provide the following: information about the organisation selling online, graphic copies of its licence and permit, information on medicines (including instructions for use), information necessary to protect consumer rights (e.g. online sales rules and a list of the authorities supervising the online sale of drugs) and details on the obligations of buyers.

Delivery terms

Drugs can be delivered either by a pharmacy employee or an employee of the courier service hired by the e-pharmacy. The rules, however, do not establish any requirements for couriers. Hence, a person who does not have a pharmaceutical education can conduct a delivery, but all essential information about the drug (e.g. its interaction with other drugs) must be communicated to the buyer upon receipt of the order.

Drugs must be delivered in accordance with the applicable conditions of their storage and transportation. When thermolabile drugs are delivered, consumers will have the right to request confirmation of compliance with the relevant requirements. In addition, transported drugs must be packaged in such a way that it is possible to control whether they have been opened.

Returning drugs

Although, as a general rule, the return of drugs of good quality is not allowed, good-quality drugs purchased remotely can be returned before payment of the order, subject to payment for the cost of delivery.

Consequences of breaches by online pharmacies

Permit termination

An online sales permit can be terminated if:

• the pharmacy’s licence is terminated;
• the pharmacy decides to stop selling online;
• the pharmacy does not meet the requirements to obtain a permit; or
• the pharmacy has been held liable two times or more for violation of the ban on the sale of unregistered, substandard and falsified drugs, or for violation of the procedure for the wholesale and retail sale of drugs.

Site blocking

Roszdravnadzor can decide to block a website when drugs are sold online without a licence and/or permit, or when drugs that are prohibited to be sold remotely are sold online (e.g. prescription drugs).

Conclusion

The new rules have established fairly detailed and stringent requirements for the implementation of online sales of drugs. Nevertheless, it remains formally impossible to sell drugs online until Roszdravnadzor adopts the necessary legal acts and all information systems have been tested. Online drug sales are scheduled to start at the beginning of June 2020 at the earliest.

A pharmacy can now assess whether it meets the requirements and can begin preparing for the launch of an online pharmacy. This entails developing an agreement for working with consumers (i.e. drafting sales rules), adjusting, if necessary, privacy policies posted on websites and concluding an agreement with an organisation to provide courier services.

* In Russian

By Vsevolod Tyupa, Counsel, and Alexey Shadrin, Associate, CMS Russia

Debevoise & Plimpton is advising PAO TMK, a producer of tubular products for the oil and gas industry, on the repurchase of its regular shares by subsidiary Volzhsky Pipe Plant JSC, and on the prospective delisting of TMK’s global depositary receipts from the London Stock Exchange.

According to Debevoise & Plimpton, “the repurchase is being carried out by way of a voluntary tender offer by VTZ under Russian law made in compliance with the requirements for mandatory tender offers in respect of up to 358,758,064, or 34.7%, of ordinary shares of TMK, representing all outstanding shares of TMK other than those held by VTZ and its affiliates. The purchase price is RUB 61 per ordinary share with a total purchase amount of RUB 21.9 billion (or approximately USD 300 million). On 18 May 2020, VTZ submitted the voluntary tender offer to TMK, following the expiry of its statutory review period by the Central Bank of Russia, and on 19 May 2020, the Board of Directors of TMK unanimously recommended that TMK’s shareholders accept the offer. Following the completion of the voluntary tender offer, TMK expects to proceed with the cancellation of the listing of its global depositary receipts on the London Stock Exchange.”

Debevoise & Plimpton’s team includes Moscow-based Partners Alan Kartashkin and Natalia Drebezgina and Associates Tamara Kulyk and Evgenii Lebedev, while its team in London includes Partner Jams Scoville.

Gorodissky & Partners lawyers Sergey Vasiliev, Valentin Kirilov, and Elizaveta Popova have joined the firm’s partnership.

Sergey Vasiliev has been working at Gorodissky & Partners since 2007. According to the firm, “he advises clients on non-contentious and contentious use of IP/IT, unfair competition and false advertising, parallel imports and anti-counterfeiting, licensing, franchising, and due-diligence. He has extensive experience in representing clients in courts and various administrative bodies.” He graduated and then obtained an Ph.D. from the Moscow Lomonosov State University. Prior to joining Gorodissky and Partners he spent two years working with the Moscow government, two years with the Andreevsky Flag film company, and another year with the Top Line Group.

Valentin Kirilov has been with Gorodissky & Partners since 2005. According to the firm, “he represents Russian and foreign companies before the Russian and Eurasian PTOs, advises on patenting strategy in Russia and Eurasia. His areas of particular experience include computers and other types of data processing equipment, artificial intelligence systems, production of tires, pumps, compressors and hydraulic systems, lifting and handling equipment, machinery and equipment for agriculture and forestry, cars, trailers and semi-trailers, internal combustion engines for vehicles, and others. He has vast experience representing clients before the Russian PTO and commercial courts in objection cases against the patent grant, court cases on infringement, etc.” He graduated from the Bauman Moscow State Technical University. Prior to joining Gorodissky & Partners he spent three years with the Federal Institute of Industrial Property.

Elizaveta Popova has been with Gorodissky & Partners since 1999. According to the firm, “she has extensive experience in advising Russian and foreign clients on patenting inventions and utility models and compliance with the requirements of national and foreign PTOs. She also interacts with Russian and Eurasian PTOs and overseas PTOs.” She is a graduate of the Plekhanov Russian Academy of Economics and the Russian State Academy of Intellectual Property. Prior to joining Gorodissky & Partners, she spent five years with Sojuzpatent.

“We highly appreciate the success, dedicated work, and significant contribution to the development of Gorodissky & Partners made by Sergey, Valentin, and Elizaveta,” said Gorodissky & Partners Managing Partner Valery Medvedev. “I am very pleased to welcome them among the partners of our firm — now there are more than 30 of us. I wish my colleagues further professional success, to be eager to work within our business and more new and interesting projects!”