The Tortuous Path of Parallel Import
19 November 2011The words ‘parallel import’ have become all too known to the Russian importers of the original goods in the last couple of years. In many cases they reconciled themselves to the fact that it is necessary to seek the trademark owner’s approval. In some other cases the importers either are not aware about the events happening around parallel supplies or choose to disregard them. In any case, the Customs perform their work efficiently.
The Russian administrative enforcement in regard to parallel import was exhau- sted at the time when the Supreme Arbitration (Commercial) Court ruled that parallel import does not affect public interest and as such should be the prerogative of the trademark owners themselves, i.e. they themselves may initiate civil actions against parallel importers.
Excerpt from the court ruling: The combination of liability measures forms an independent and sufficient set of means of protection of rights of the trademark owner, hence, application of measures of public liability cannot have as its goal protection of interests of the rights owner only. It should be directed at stopping unlawful behavior menacing the public order, in particular,
The Customs function as a well lubricated machine, they stop counterfeit goods and parallel goods every day. It may even seem that the Customs have specially assigned people to deal with intellectual property at different levels. After that landmark decision of the court was made there was a contentious lull. The trademark owners took time to find their bearings in the new circumstances.
One may understand temporary reluctance of the trademark owners. Administrative cases are initiated and handled by a government agency. The trademark owner is a third person in the court action and, as such, the brunt of the expenses is borne by the government while the harvest is reaped by the trademark owner. A civil action is more expensive for the trademark owner because he himself or rather his representative on his behalf will have to draft the claims and appear in court. The good point is that the plaintiff in a civil action (unlike administrative one) may claim damages. However, in case the «counterfeit» goods have not yet come to the market, it would be a stiff job to prove damages. An option would be to claim compensation instead of damages. The courts do not fight shy of awarding such remedies and use it more and more.
The Russian Law on Customs Regulation contains a provision to the effect that individuals are allowed to bring a small number of goods for personal needs unrelated to entrepreneurial activity. Sometimes the Customs overstretch their competence and stop such people. This however is a rare occasion nowadays.
As time went on, trademark owners started initiating civil cases against parallel importers. As a rule, the courts of the first instance dismissed the claims of the trademark owners. But, as the cases went up the judicial ladder the courts of higher instances (cassation courts) either themselves issued new judgments banning parallel import or were sending the cases down to the courts of lower instances to examine the cases anew and issue new decisions (in favor of the trademark owners (as a rule). One may cite several beer brands and automotive spare parts which were subject of consideration by the courts in connection with parallel import.
During consideration of the cases the court asked the infringers a question which they could not answer. The court would ask: the trademark law sets forth that where a trademark is registered in Russia any person using the trademark should have permission of any kind from the trademark owner. Please show that permission. The response was obvious. No one had such permission which led to the judgment against the infringer.
Given those judgments one may be tempted to deduce that the issue has crossed the point of no return. Not so. The bandying of judgments between the courts continues. Sometimes the courts of first instance motivate their judgments against trademark owners by abuse of right. Nevertheless the trend in 2011 is in favor of the trademark owners. More and more parallel goods are forbidden from entry to the Russian market. In one of the exotic cases there was even a criminal sentence pronounced against the parallel importer. There are still unresolved issues with parallel goods. If the infringement is confirmed what should be the fate of the goods? Destruction is envisaged for the counterfeit goods only. In one of the cases the goods were returned to the exporter. In other cases the courts recognized the illegal nature of imports but did not go as far as decide on destruction of the original goods. In the meantime, the issue of parallel import is continued to be debated. It was discussed at a government meeting with participation of Mr. Igor Shuvalov, the First Deputy Prime Minister. The issue was raised by the Russian Antimonopoly Service which believes that the ban on parallel import limits the choice of the consumer and thus raises prices to the original goods which is a clear sign of monopolistic activity. The consideration of the issue is put off to the spring of 2012.
While those discussions at different level are boiling in Russia the year 2012 approaches. The Customs Union between Russia, Belarus and Kazakhstan has been in existence for more than a year. So far it seemed to be like a theoretical structure however beginning from July 1, 2011 the Customs borders between Russia and Belarus and Russia and Kazakhstan have been eliminated (there are no common borders between Belarus and Kazakhstan). This means the free flow of goods within this now common market. It has been decided by the member countries that beginning from January 1, 2012 there will be a regional exhaustion of rights within the Customs Union. It is difficult to forecast how this already confirmed news will interact with the forthcoming discussions in the Russian government. One may assume that Russian international arrangements will prevail over intentions of the governmental officials to correct Russian international obligations.
A question apart but closely connected with imports is that there may be controversial issues in cases where one and the same trademark is registered in one country and is not registered in another country of the Union. Or, where one and the same trademark belongs to different entities in different union countries. This question will hardly be cleared before some experience is obtained. Practice only will help resolve possible controversies, possibly through changing national or international regulations.
The Customs function as a well lubricated machine, they stop counterfeit goods and parallel goods every day. It may even seem that the Customs have specially assigned people to deal with intellectual property at different levels The Russian Law on Customs Regulation contains a provision to the effect that individuals are allowed to bring a small number of goods for personal needs unrelated to entrepreneurial activity.
In the meantime, the issue of parallel import is continued to be debated.
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