Constitutional Court Explains Options for Fighting Parallel Imports

On February 13, 2018 the Constitutional Court of the Russian Federation announced its decision with respect to parallel import cases. The Court confirmed the principle of regional exhaustion of rights in Russia as part of the Eurasian Economic Union (Russia, Kazakhstan, Belarus, Kyrgyzstan, Armenia) which means that parallel import in Russia is prohibited.

This principle however should not be applied automatically without consideration of all circumstances surrounding the case, including good faith of the trademark owner.

In particular, the Constitutional Court has ruled that it shall not be allowed that a trademark owner could abusively use his trademark rights for restriction of importation of some selected goods of public interest such as drugs, life-support equipment, etc. or providing overpricing policy in Russia in comparison with other countries. The court may raise the issue of good faith of the trademark owner who may have to prove that his lawsuit is not an abuse of trademark rights, including his pricing policy for the Russian market and that the ban on parallel import will not jeopardize health and life of people or pose risk for public interest.

Recognizing the right of a trademark owner to prevent unauthorized importation of goods to Russia the Constitutional Court has ruled that the legal consequences for the same actions with respect to grey products and counterfeit goods should not be the same. In particular, the amount of compensation for parallel import should be less than for importation of fake goods. At that, courts are free to reduce the claimed amount of compensation at their own discretion depending on the circumstances of the case and possible negative consequences for the trademark owner. Besides, the destruction of goods, imported in Russia as a result of parallel import, shall be permitted only if they are of low quality or for reasons of security, safeguarding people’s health and life, protecting the environment and cultural values.

From practical point of view the decision of the Constitutional Court means that it has become more complicated to enforce trademark rights against parallel import in Russia. Although it is still possible to claim a ban on importation of a particular consignment and statutory compensation, courts may not agree with the claims and dismiss the case.