Parallel imports allowed in Russia

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published on 1 April 2022
 

The Russian government decided to legalize the import of high-demand original foreign goods without the rights holder’s permission by decriminalizing the so-called parallel imports[1]. The amendments entered into force on 30 March 2022.

   

  

 

 
The issue of the legality of parallel (or “grey”) imports in the Russian Federation remained unresolved for a long time. In Russia, the principle of national exhaustion of rights applies, according to which the rights holder loses all exclusive rights stipulated by the Russian intellectual property law after the goods are first released for civil commerce within the country by the rights holder or with its consent (Article 1487 of the Russian Civil Code). In 2014, the Federal Antimonopoly Service of Russia (FAS) prepared a draft law on the legalization of parallel imports[2] and suggested switching to the international principle of exhaustion of rights, according to which an exclusive right is considered exhausted as soon as the product has been sold by the rights holder or with its consent in any part of the world.  

 

The Russian law provides for civil liability and administrative sanctions for parallel imports. According to the Russian Civil Code, the rights holder may recover compensation from the importer as two-fold of the value of the imported “grey” goods or as an amount of cash which may range between RUB 10,000 and RUB 5,000,000 (Article 1515 of the Russian Civil Code). The Russian Code of Administrative Offences also provides for fines and confiscation of goods which demonstrate the illegal use of means of identification as well as of materials and equipment used for production of these goods (Article 14.10 of the Russian Code of Administrative Offences). 
 
However, in February 2018, the Constitutional Court of the Russian Federation virtually legalized parallel imports[3], stating that seizure and destruction of goods imported to Russia may only be applied where the concerned “grey” goods are of inferior quality and/or their importation for civil commerce must be limited to ensure safety and to protect human life and health, the environment and items of cultural value. At the same time, the Constitutional Court underlined the need to check each individual case of parallel imports for the applicability of a particular punishment, based primarily on the presence or absence of damage caused to public interests by parallel imports.  The Constitutional Court also noted that the same sanctions may not be applied for parallel imports and for counterfeit goods. This position was also supported by the case law: later on, courts dismissed the claims for seizure and destruction of goods which did not prove to be counterfeit.[4]
 
In March 2022, a law was passed that entitled the Russian Government to determine the list of products to which the international principle of exhaustion of trademark rights shall apply if they are sold by the owner in any part of the world.[5] Therefore, a number of original foreign goods may be imported into the territory of the Russian Federation without the rights holder’s consent. The list of such goods will be made by the Ministry of Industry and Trade based on suggestions of federal agencies, and all necessary customs and control procedures will be carried out in relation to these goods. In addition, these goods will be subject to warranty service. It should be emphasized that parallel import does not mean legalization of counterfeit goods. What is meant here is that original goods produced by the rights holder itself or with its consent will be imported through alternative channels.  The Ministry of Industry and Trade clarifies that this measure aims to reduce the risks of application of civil law remedies to importers by the rights holders whose products will be imported outside the official distribution channels. However, the decree adopted by the Government does not cancel the provisions of the Russian Code of Administrative Offences regarding administrative sanctions for the illegal use of means of goods identification.
 
It is expected that the decision will help to provide the domestic market with high-demand goods and stabilize prices for them amid external restrictions.  At the same time, the FAS believes that parallel imports should not be applied if the rights holder or other persons, with its consent, have localized and ensured the continuous production of goods in Russia.

  



[1] Decree no. 506 of the Russian Government “On goods (groups of goods) to which certain provisions of the Russian Civil Code regarding the protection of exclusive rights to intellectual property expressed in such goods, and the means of identification used for labelling of such goods may not apply” of 29 March 2022 
[3] Decree no. 8-P of 13.02.2018 pronounced by the Constitutional Court of the Russian Federation in the case of checking the constitutionality of provisions of Article 1252.4, Article 1487 and Articles 1515.1, 1515.2 and 1515.4 of the Russian Civil Code in connection with the complaint of OOO PAG
[4] Decision pronounced by the State Arbitration Court for Rostov Region on 01.10.2018 in Case no. А53-15192/17, upheld by Judgement no. S01-307/2018 of the Intellectual Rights Court and Decree no. 308-ES19-15209 of the Supreme Court of the Russian Federation of 23.09.2019
[5] Clause 13 Part 1 and Part 2 Article 18 of Federal Law no. 46-FZ “On introduction of amendments to certain laws of the Russian Federation” of 08.08.2022
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