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RUSSIA: IP Court Rules against Parallel Imports

Feb 6 2017 - 16:47

On June 20, 2016, the Russian Intellectual Property Court ruled in favor of German brewery Paulaner Brauerei Gmbh & Co. KG in a parallel import lawsuit against a local importer, Water Group, LLC, which imported 24,600 bottles of beer without the rights holder’s consent. The IP Court upheld both the Moscow Arbitrazh Court (first instance) and the Ninth Arbitrazh Court of Appeal (second instance) decisions, and the Russian importer eventually had to withdraw the products from the market.

While the Russian courts treat parallel imports as counterfeits, the Russian Federal Assembly is considering draft amendments to Article 1487 of the Civil Code (Exhaustion of the Exclusive Right to a Trademark) that would legalize parallel imports, an initiative driven by Russia’s Federal Antimonopoly Service (FAS). The amendments would substitute the current principle of regional exhaustion of trademark rights with the international principle of exhaustion by excluding the phrase “within the territory of the Russian Federation” from the provision. It should be noted that two principles of exhaustion of trademark rights exist in the Russian Federation: national and regional. The regional principle exists for the members of the Eurasian Customs Union, the national principal exists for other countries.

According to FAS, legalizing parallel imports would help prevent monopolization and reduce prices by 20 percent. Opponents of this legislation change argue that real counterfeit goods, in addition to parallel imports, would flood the Eurasian Customs Union (EACU) because trademark owners would not be able to guarantee the quality of these goods.

According to the latest estimates, the changes may be implemented by 2020, not by 2018, as initially projected in 2014. To test the waters, Russian Prime Minister Dmitry Medvedev approved parallel importation of specific products in April 2015 and the following list of products is now subject to government approval:

– Medicine and medical products;
– Perfumes and cosmetics;
– Spare parts for passenger cars and for commercial vehicles;
– Food;
– Non-alcoholic beverages (excluding beer);
– Personal hygiene products, including diapers; and
– Baby products, including car seats.

Additionally, Igor Artemyev, head of FAS, recently stated that all EACU members had decided to legalize parallel import by 2020. The EACU is also creating a list of products, for which it suggests parallel importation should be legalized, and it will soon circulate it for discussion among member states.

By Sitora Rakhmanova, Associate at PETOŠEVIĆ Russia

This article first appeared here in the INTA Bulletin and was reprinted with permission from the International Trademark Association (INTA).

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