Kazakhstan Allows Inspections of Small Businesses Suspected of IPR Infringement if Based on “Relevant Grounds”
The President of Kazakhstan signed Decree No. 44 on December 7, 2022, extending the ban on inspections of small businesses until January 1, 2024, but allowing inspections based on relevant grounds starting from the Decree’s entry into force on January 1, 2023.
Decree No. 44 amends Decree No. 299, which limited administrative actions that IPR owners could take against small businesses suspected of IPR infringement and which suspended police actions such as raids of premises suspected of storing counterfeit goods. The ban took effect on January 1, 2020 and continued until January 1, 2023.
Decree No. 44 extends this ban but introduces a new clause regarding ‘unscheduled inspections’, which allows inspections of small businesses (individual entrepreneurs and legal entities whose average annual number of employees does not exceed 100 people) that are based on relevant grounds.
According to the Kazakh Entrepreneurial Code, one of the grounds for an unscheduled inspection is an appeal of an individual or a legal entity regarding a business’s illegal activity, if there are convincing reasons and supporting evidence. This means that IPR owners can take administrative actions against small businesses suspected of IPR infringement if their appeals are grounded and supported by evidence. This is good news for trademark owners, because many local infringers involved in counterfeiting activities correspond to the requirements of a small business entity, and even if they do not, mid-size infringers may re-organize their business entities so that they consist of several small business entities instead of one medium entity.
It is also possible to initiate cases under the Criminal Code, but thresholds based on numbers and values of infringing goods must be met.
By: Sultan Tleubekov
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