Science and Technology Legislation

3.4.1 The legal environment

The institutional structure of applied R&D is shaped by the legal environment of a nation. There are three kinds of relevant laws: general laws relating to property, enterprises, and contracts; science and technology policy laws; and laws on intellectual property.

The Soviet system of central planning and state ownership did not require the complex legal structure of a market economy. With centralized direction and one owner – the state – there was no need for detailed legislation for market contracts or to carefully define property rights. The transition to a market system created a drastic and immediate need for a complex legal structure. The difficulties were compounded by Russia’s new status as an independent state. The Russian Constitution, adopted in December 1993, further complicated the adoption of new laws for it identified two levels of legislation (federal and regional legislation). It was noted earlier that regional authorities now have an important role in S&T and other policies.

3.4.2 General laws

The Civil Code, adopted in January 1995, regulates civil and property rights of indi-viduals and organizations. The law sets out the general procedures for registration, reorganization, and dissolution of all organizations including those in S&T. Simi-larly, general privatization laws applies to the S&T sector unless the state chooses to exempt an R&D institution under the procedures described earlier. The 1995 law on State Support to Small Enterprises also applies to small science-oriented businesses but gives special support to commercial organizations in the Science and Scientific Services sector.

The law on Conversion of Defense Industry states the legal basis for activities of defense enterprises and R&D institutions and gives two general principles of conversion of military facilities to civilian facilities:

Utilization of high technologies, developed in the military sector, for produc-tion of internaproduc-tionally competitive products.

Utilization of production facilities for state programs to ensure socioeconomic development.

This law applies to both production and R&D activities. The legislation has some significant omissions for it leaves uncertain the status of international activi-ties of former military sector enterprises, the provision for national security, the use of classified technologies, and the legal mechanisms for transferring technologies applicable to both military and civilian uses to the civilian sector.

General laws on standardization, certification, and tax legislation have had a major impact on the R&D sector. These topics are discussed in Chapter 7.

3.4.3 Laws on science and technology policy

General laws are insufficient to encompass the special features of science and technology. In July 1995 the State Duma passed the law on Science and State Science and Technology Policy to deal with this insufficiency. The law was in preparation for three years.

The law defines the strategy for developing state S&T policy; the place of S&T activities in the state, society and economy; and the legal status of researchers and R&D institutions. It also spells out sources of R&D financing; a system of tax, credit, and customs incentives; and provisions for international S&T cooperation.

The law contains a number of completely new measures, including the following:

Regulations for state certification of R&D institutions.

Rules for undertaking state orders for R&D on the basis of agreements (contracts).

Licensing provisions of individual S&T activities.

Basic principles of state S&T policy.

Responsibilities of different levels of state authorities for S&T activities.

Budget and non-budget funds for promoting S&T in Russia.

Priorities for basic research.

Provisions for a fixed share of R&D expenditure in the government budget.

Unfortunately, the law has some shortcomings. For example, there is no mechanism for certification of R&D institutions nor are certified institutions given any special incentives. The principles for certification are to be developed, but it seems likely that all existing R&D institutions will be certified thereby reducing the significance of the procedure. The law does not address state support to small business engaged in S&T. Nevertheless, the new law provides a basis for further development of S&T policy as social and economic conditions change.

3.4.4 Legislation on intellectual property

Legislation for the protection of intellectual property was enacted in the Soviet Union as early as 1931. At that time it was acknowledged that recognition must be given to new inventions and “other technical improvements.” Inventors re-ceived certificates and remuneration from organizations using their inventions.

This system of legal protections remained in place until 1992. During this 60-year period, two systems of legal protection of inventions were in existence: the copy-right certificate on invention and the system of patenting. The copycopy-right certificate was the most widely used device. Soviet citizens seeking to patent their invention abroad were required to receive permission from the Committee on Inventions established in 1931.

The new Patent Law of the Russian Federation was adopted in September 1992. This law protects a wider spectrum of intellectual property than the old Soviet certificates and includes provisions for industrial design and utility models.

This law regulates certain relations between the inventor and his or her employer.

To protect the employer’s right to commercial secrecy the Patent Law allows the employer to forgo submitting a patent application. If the patent is granted in the inventor’s name (according to an agreement between inventor and employer), the employer has the right to use the invention in his or her enterprise without a license agreement but with payment of proper compensation to the inventor. A Russian inventor may apply to foreign patent offices three months after an application has been submitted to the Russian Patent Office.

In 1992 the law on Trademarks, Service Marks and Names of Place of Goods’

Origin was also adopted. This law provides trademark protection. After obtaining

a certificate for a trademark, its owner has the exclusive right to its use for 10 years. Trademarks have become increasingly important in recent years. Between 1980 and 1988, 5,000 to 7,000 trademarks were applied for annually; the number increased to 12,000 in 1989 and to 29,000 in 1992.

Along with laws on patents and trademarks, legislation regulating intellectual property rights includes laws on Legal Protection of Software and Databases, Legal Protection of Integrated Circuits Topology, and Copyright and Adjacent Rights.

Acts under preparation include laws on In-duty Inventions, Utility Models and Industrial Prototypes, and the Patent Court.

The implementation of patent legislation is assigned to the Committee of the Russian Federation for Patents and Trademarks (Rospatent). This federal executive agency, established by a 1993 presidential decree, performs the duties of a state patent office. It carries out state policy on industrial property protection, including the protection of inventions, utility models, industrial designs, and trademarks and identification of places of origin of goods, as well as legally protects computer software, databases, and integrated circuit design.

In August 1993 a government resolution approved a list of organizations that are to be supervised by Rospatent; these organizations perform individual patent functions. Together they form the State Patent Service. The list includes the Russian Research Institute for State Patent Expertise, the Board of Appeals, the Russian State Patent Library, the Russian Institute of Industrial Property and Innovations, the Administration of Industrial Property Rights, the Russian Research Institute for Patent Information, the Center of Patent Information Services (Informpatent), the Domodedovo Production Complex, and the Production Enterprise (Patent).

Even with these institutions in place, Russia still does not have an effective patent system. The necessary legislation has not been approved. The Patent Court has not yet been established, and the civil and arbitration courts do not have enough experience or enough qualified specialists to deal with S&T issues or to make patent legislation effective. Supervision by a patent procurator also does not exist.

An unresolved problem is the financing of patenting and licensing abroad. In 1990 the USSR Council of Ministers stopped the central financing of patenting and licensing. Since then applications for patents in other countries have been obtained at the expense of individual institutions. Budgetary allocations by ministries and governmental committees to institutions to recover patent expenses incurred abroad have either stopped or considerably decreased. The failure to pay renewal fees has caused three-quarters of the patents filed abroad in 1990 to lapse (OECD, 1994a, p. 64). There are few instances of Russians obtaining new foreign patents.

3.4.5 Proposed legislation

The State Program on Protection of the S&T Output in Russia has had some impact on intellectual property rights. This program aims at creating the conditions for innovation by providing a clear definition of rights on S&T output being financed by the federal budget; a control system for monitoring rights on S&T output; a control system for transferring dual-use technologies to the civilian sector; and support and control of international S&T cooperation.

The details of these provisions are to be resolved jointly by federal and local authorities with the MSTP supervising the process. The program envisages the development of laws to bridge the gaps in legislation on intellectual property protection, the creation of a federal database on inventions, and the promotion of technologies applicable to both defense and civilian industries.

Urgent issues in S&T are now being settled by presidential and governmental decrees. Presidential decrees have been ratified on the following: Urgent Measures for Preservation of the S&T Potential of the Russian Federation, State Research Centers, Measures for Material Support of Russia’s Scientists, and the Board on S&T Policy Attached to the President of the Russian Federation. The government has enacted decrees on the establishment of the Russian Foundation for Basic Research, the Russian Humanities Research Foundation, and the Foundation for Promotion of Small Enterprises in S&T; on the procedure and use of sectoral and intersectoral non-budget funds for R&D; on privatization of R&D institutions;

on the establishment of the Governmental Commission on S&T Policy; and on governmental support of R&D. In addition, a number of governmental decisions have been made concerning the Russian Academy of Sciences.

Even though numerous, the various laws are fragmentary, sometimes insuf-ficiently coordinated with one another, and have major gaps. There is no law to regulate the relations between the state, participants of S&T activities, and con-sumers of their results; nor have many of the principles of the state’s S&T policy been determined.

A doctrine on the development of Russian science was prepared by the MSTP and approved by the president in June 1996. As a basis for policy-making, this document is extremely important, not only for the country’s scientific community, but also for the development of future governmental decisions and the prospects for political and economic reforms. The document states general policies whose realization at the federal level will secure a stable, goal-oriented transformation of the R&D sector.

Development of detailed legislation to regulate the status and activities of R&D institutions and to determine the procedure of giving preferences and privileges to some of them has started; the government is preparing a law on the status of the Russian Academy of Sciences. Draft legislation is about to be proposed to develop government support for innovation in enterprises. Legislative work continues on the development of intellectual property protection; on a draft law on non-budget funds in science, culture, and education; and on changes in the taxation and customs codes to provide more incentive for R&D and innovation. A federal contract system for financing R&D projects from government sources and a system of repayable financing of applied R&D are also in preparation.

3.5 Conclusions

The policymakers in Russia have attempted to transform the R&D sector by adopt-ing new legislation and introducadopt-ing tax incentives. These attempts, however, are being made within the old centralized system of S&T management with all its prin-cipal components such as intersectoral barriers and centralized financing. Most government R&D funds are still distributed through old industrial ministries or de-partments which control specific programs. The share of government R&D funds distributed on a competitive basis remains small. There is a long way to go to create an efficient and internationally competitive S&T system. As time passes, federal agencies will become less able to carry out a top-to-bottom transformation of the S&T activity. Many R&D institutions are being privatized, so that highly qualified research teams are no longer under governmental control. The share of the government budget in the nation’s expenditure on R&D is declining. The necessity of transition to a new S&T policy is becoming more widely recognized.

Direct management by the state should be replaced by indirect measures, and state support should be limited to the most promising activities.

The strategic objective is to rearrange R&D institutions according to the types of customers served. This approach would create a diversity in the R&D sector:

some organizations would be integrated into production enterprises, some would be run by research consortia, some would be classified as government laboratories, and others would be largely independent. Some would eventually be privately financed; others would remain state financed. The diversity would be similar to that found in other major industrial economies. The system of governance and financing of the Russian Academy of Sciences must also be reviewed carefully.