Database

Russian data protection has been covered since 27 July 2006 by Federal Law no. 152-FZ, also known as the OPD-law (“On Personal Data”). In July 2014, the law was amended by the Federal Law No. 242-FZ to include a clear data localisation requirement. Article 18 §5 requires data operators to ensure that the recording, systematisation, accumulation, storage, update/amendment and retrieval of personal data of the citizens of the Russian Federation is made using databases located in the Russian Federation. This amendment entered into force on 1 September 2015.

It is not clear how restrictive the data localisation requirement is, but it appears that the OPD-Law does not prohibit accessing the servers from abroad and does not impose any special restriction on cross-border data transfers or duplication of personal data.

Online websites that violate the prohibition could be placed on the Roscomnadzor's blacklist of websites.

It is reported that complicated and burdensome procedures related to the issuance of visas and work permits have over the years led to delays in employing foreign specialists in Russia, resulting also in financial loss and limited freedom of movement for economic operators in Russia.

A temporary residing foreigner may not change his domicile on his own within the subject of the Russian Federation where he has residence permit or outside of it. In the latter case, he must get a permission of a local body of the Federal Migration Service of Russia.

For Intra-Corporate Transferees (ICT) and Independent Service Suppliers (ISS), there are limitations on stay of 3 years. There are no time limitations for Contractual Service Suppliers (CSS), because the quota for this type of service supplier is set at zero.

Annually approved quotas are issued in accordance with demographic conditions of the Russian citizens and the potential effect it would have on them when letting foreign citizens enter the Russian Federation. This can be interpreted as a labour market test.

There are laboour quotas, but these are not applicable to highly qualified specialists with work experience, skills or achievements in a specific field for Intra-Corporate Transferees (ICTs) and Contractual Service Suppliers (CSS). For independent service suppliers (ISS), the quota is set at zero as this type of contract of service supplier is not recognized within Russian law.
Since 2013, the number of the quotas has been systematically lowered on a yearly basis and amounted to 177,043 in 2017.

Russian incumbent operator is Rostelecom, a state-owned enterprise. Rostelecom has increased its market share in all market segments in the recent years and it plays a dominant, but not monopolistic, role in international and domestic backbone connectivity. Independent mobile operators and ISPs (Internet Service Providers) in most markets typically rely on Rostelecom’s infrastructure.

Federal Law 374 allows Russian security services to request that internet companies hand over their encryption keys. Firms who do not comply with these orders risk having their services blocked in the country, as happened to the messaging app Telegram

There are reports that Intellectual Property Right (IPR) enforcement declined in 2014, following similar refusals in the prior two years. Moreover, it is reported that resource allocated for enforcement personnel have been reduced.

There is not clear provision on fair use/fair dealing in Russia. The exclusive rights of an author on his/her works are limited by a number of allowed free uses. The regime covers a three-step test as a general clause and an additional provision for a three-step test for computer programs and databases. The reproduction of a lawfully disclosed work is allowed for purely personal purposes, without paying royalties and without the consent of the author of the work. Exempted from this are reproductions of architectural works, databases and computer programs (but backups are allowed).

In the process of patent application, foreign applicants must designate a Russian representative who is registered with the Patent Office of the Russian Federation.

Moreover, there are requirements for working of the patent. Namely, if a patent is not worked in Russia, it is subject to compulsory license after four years of non-working.

According to the Communications Law, telecommunication services can only be provided on the basis of a license. Among the communications services subject to mandatory licensing are, for example, local telephone communications services, radio, cellular, or satellite communications services and communications services via data transmission networks. Important to notice is that VoIP servuces are also included in this category.

A foreign investor must notify the Federal Antimonopoly Service (FAS) of any transaction that would allow the foreign investor to acquire 5% or more of the shares in a strategic entity. The notification must be delivered to the FAS within 45 days of closing of the relevant transaction.

For some investment transactions, prior approval by the Federal Antimonopoly Service is required. Notification and approval requirements established by the Federal Law No. 57-FZ are separate from the merger control regime provided for by Russian antitrust law. However, where transactions require clearance under both regimes, the Federal Antimonopoly Service (FAS) will postpone the merger control review until clearance under the Strategic Investment Law is obtained.

If a transaction is blocked under the Federal Law No. 57-FZ process, this automatically constitutes the basis for the FAS to deny merger clearance. Approval is not required for transactions between entities that are each ultimately controlled by the Russian Federation or a Russian citizen who does not hold any other citizenship and is a Russian tax resident.

To date, there are no reports of telecommunication or ICT investments having been blocked by the Russian Government on national interest grounds. However, investors must obtain a Government Commission clearance when:
- acquiring more than 50% in a company of strategic importance; and/or
- the investor is state controlled and acquires more than 25%.