On the question of the legality of parallel imports in Russia
The post on making amendments to the Law on Legal Entities, published last week, clearly demonstrated the relevance of legal information for small business representatives and the founders of startups. Our partners, the law firm Vetrov and Partners, are ready to continue, on a regular basis, to cover current issues related to the legal side of iT-entrepreneurship and the registration of intellectual property rights.
The new post is dedicated to what many startups start with in order to earn money on the launch of the project - trade and procurement activities. For example, the supply of new models of the popular iPhone to Russia, which has always been one of the last in the “queue for iPhones”.
Immediately it should be noted that the legal definition of "parallel import" is absent. Meanwhile, based on the established international practice, parallel imports usually mean importing “branded” products into a country where this product is not sold by the owner of the brand or by another person with the consent of the copyright holder.
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Now you can dwell on the distinguishing features of parallel imports.
First, an importer is any person importing original products, and not entities authorized by the copyright holder (official distributors, dealers, etc.).
Secondly, the imported products have a distinctive (unique) marking.
Thirdly, there is no permission of the trademark right holder to import products (put into circulation), that is, the importer and the right holder do not have a contractual relationship.
Consider the classic scheme with the participation of the Russian entrepreneur.
The Russian entrepreneur travels abroad, where he purchases a batch of original goods for further sale on the Russian market. The entrepreneur is driven by a natural desire to save money, and also to find the most advantageous offer, acceptable conditions for cooperation.
After all, buying goods at an inflated price from an official distributor is far less profitable than paying a lower producer price set, for example, for third countries.
It turns out that the entrepreneur does not use the official channel (acting through official distributors in the country where they are located), but “parallel”. Hence the name of the whole mechanism - “parallel import” or “gray import”. However, in this part we assume that the reader of this material has received confirmation of the information already available to him.
Next we move on to the most interesting question. Is parallel import legal in the Russian Federation?
To answer this question, it is worth starting with disclosing the main category used in the question under consideration, namely the principle of exhaustion of rights.
The essence of this principle is as follows.
If the right holder sold (put into civilian circulation) his products, he loses the right to further dictate to the new owners of the products the conditions of its sale, to make demands arising from the violation of trademark rights (for example, to pay compensation), to prevent further resale of goods.
The consolidation of this principle is due to the desire to ensure equality between the interests of the right holder and the interests of the state (society).
In total, there are three varieties of the principle of exhaustion of rights (hereinafter also referred to as the IPP): national, international and regional.
The national principle provides for the exhaustion of the exclusive rights of the right holder only if the goods are introduced into circulation within the country. Despite the repeated sale of goods abroad, for the importation of goods into the country with the current national PIP requires the consent of the trademark holder. Or in other words, the introduction of goods into circulation in the country of production of goods means the exhaustion of exclusive rights to a trademark only in this country, and not automatically in all other countries of the world.
The international principle implies the exhaustion of the exclusive right to a trademark in relation to products that have been put into circulation, both in the country of production of the goods and in any other country in the world.
The regional principle differs from the international one on the basis of territoriality, the sale of "branded" products in one of the regions leads to the exhaustion of the exclusive right to the brand in other regions.
In the Russian Federation, the national principle of exhaustion of exclusive rights operates, in the EU - regional, and, for example, in China - international.
In Russian legislation, the national PIP is enshrined directly in Art. 1487 of the Civil Code of the Russian Federation, which provides for the exhaustion of the exclusive right to a trademark in respect of those goods that were put into circulation on the territory of the Russian Federation directly by the copyright holder or with his consent.
It turns out that the consent of the copyright holder of the brand must be obtained for the import of goods with the original marking in the Russian Federation.
Under current Russian legislation, any use of a trademark without the consent of the copyright holder is illegal (Art. 1484 of the Civil Code of the Russian Federation). This article provides only an approximate list of possible ways to use a trademark.
Import of products marked with a trademark is an independent form of use of a trademark.
The importation of original products without the consent of the copyright holder of a brand is the illegal use of the copyright holder’s brand, for which civil liability is provided.
The trademark owner has the right to use the methods of protection provided for by the general rule - art. 1252 of the Civil Code of the Russian Federation (requirement for recognition of a right, prohibition of use, etc.), as well as a special one - Art. 1515 of the Civil Code of the Russian Federation (claim for loss or compensation).
The above rights also apply to foreign owners of trademarks, whose rights were violated as a result of the parallel import of their products into Russia. Most often, the right holders affected by parallel imports make demands on the importer to prohibit the introduction of branded products into circulation, including the prohibition of importation, sales, offers for sale, as well as the requirement to pay compensation. The amounts of recoverable compensation usually range from 1 million rubles. up to 5 million rubles. True, the courts usually award only half of the stated amounts of compensation.
So the court satisfied the claims of the companies-owners of the trademarks “LONGINES”, “OMEGA”, “RADO” for the recovery of compensation from the defendants for the offer to sell original watches in the territory of the Russian Federation, albeit in a smaller amount from the declared amount - 2.5 million rubles each. in favor of each of the plaintiffs. At the same time, the court did not accept the argument of one of the respondents about the impossibility of extending the territorial principle of exhaustion of rights to the Internet (Definition of the Supreme Arbitration Court of the Russian Federation to refuse transfer of the case to the Presidium of the Supreme Court of Arbitration of the Russian Federation No. YOU-12583/13 dated July 15, 2014).
In court practice, one can also meet record low amounts of compensation that the trademark right holder presents to the importer. For example, in one of the cases, the right holder of a trademark for medical equipment demanded that the importer pay compensation in the amount of 20 thousand rubles. (Judgment of the Court of Intellectual Property Rights dated June 19, 2014 on case No. 76–17672 / 2013).
But the rightholder of the KRUSOVICE brand was not lucky, the court reduced the amount of compensation from 1 million rubles. (10 thousand rubles each. For each fact of violation - 100 bottles were imported with the original marking) up to 30 thousand rubles. (Resolution of the AU of the Moscow District of February 25, 2013 in case No. A40-23850 / 12-27-216).
Can the right holder require the importer to remove from circulation the original goods imported by him and destroy.
These requirements, namely, withdrawal from circulation and destruction at the expense of the infringer may be claimed by the trademark right holder only in relation to counterfeit goods. According to the current norm (Article 1515 of the Civil Code of the Russian Federation), a counterfeit product is a product on which a trademark is illegally placed or a designation similar to it confusingly. In other words, counterfeit is always a fake.
For example, in a well-known case involving the owner of the Porsche Cayenne S brand, the court found no grounds for recognizing imported cars as counterfeit. After all, the cars had the original marking, which was applied by the right holder themselves. (Resolution of the Supreme Arbitration Court of the Russian Federation dated February 3, 2009 on case No. 40-9281 / 08-145-128).
The subject of parallel import is not a counterfeit product due to the fact that it was produced and labeled without violating the exclusive rights of third parties. So, right holders can not punish importers with the sanctions of civil liability provided for the sale of counterfeit goods. Thus, the manufacturer of motor oils “MAGNATEC” and “EDGE” filed a lawsuit against the company “KASTROL LIMITED”, in particular, with demands for the seizure and destruction of illegally imported products, calling it counterfeit. Meanwhile, the court refused to satisfy the claims on the grounds set out above (Resolution of the Court on intellectual property rights dated 10.24.2013 in case No. A53–33004 / 2012).
Not always parallel imports were outside the civil field. So, three years ago, the courts were more loyal to violators than to outraged right holders of brands. The number of refusals in the claims substantially prevailed over the number of judicial acts issued in favor of the right holders. The motivation of the judges was as follows: once the right holder of the brand introduced goods into circulation abroad, it means that its exclusive rights have been exhausted, which means that its requirements are irrelevant. Thus, the courts for some reason adhered to the international principle of exhaustion of exclusive rights with the national principle actually enshrined in Russia. It is not surprising that most of these decisions were overturned by higher courts.
Obviously, some sanctions of civil liability apply to parallel imports of violators, but what about administrative measures?
Administrative liability is provided for the illegal use of a trademark (Article 14.10 of the Administrative Code). From arbitration practice, in particular from the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation of February 17, 2011 No. 11, it is unambiguously seen that the sanctions of Art. 14.10 of the Administrative Code apply only to persons engaged in the production, sale of counterfeit goods. Thus, entrepreneurs practicing parallel imports can easily exhale, administrative responsibility for the illegal import of unique goods does not promise them.
We have described above what legal levers right holders can use, whose rights have been violated as a result of parallel imports. And what counter-arguments are most often used by violators?
We give some of them.
The argument of the offender that he imports goods not for commercial sale, makes an impression of just childish babbling and is immediately rejected by the courts as unreasonable.
The key argument in the position of the defendant is his argument that the actions of the right holder are aimed at restricting competition, and this is nothing more than an abuse of the right. In fact, the arguments presented reflect the position of the FAS, which actively supports the legalization of the type of import in question in Russia. The positive effect of this would be expressed in stimulating competition, expanding the channels of supply of goods, as well as in meeting the interests of the end user.
Naturally, all of the above is not at all in the interests of international companies that want to have a monopoly on their products and calmly dictate the conditions for its implementation to distributors.
So far, representatives of small businesses, even with the support of the FAS, cannot lobby for amendments that suit them to the Civil Code of the Russian Federation, which would legitimize parallel imports. Will the approach of the legislator, as well as judicial practice on this issue, time will tell. Especially after the merger of the Supreme Arbitration Court of the Russian Federation and the Armed Forces of the Russian Federation. In the meantime, small importers should be wary of only litigation in arbitration, as a result of which they can easily and unobtrusively part with a round sum.
Ask questions you are interested in on legal topics in the comments, we will answer the most important ones in the following posts of our weekly legal column on the VCStart.com collective investment platform blog.
The new post is dedicated to what many startups start with in order to earn money on the launch of the project - trade and procurement activities. For example, the supply of new models of the popular iPhone to Russia, which has always been one of the last in the “queue for iPhones”.
Parallel import
Immediately it should be noted that the legal definition of "parallel import" is absent. Meanwhile, based on the established international practice, parallel imports usually mean importing “branded” products into a country where this product is not sold by the owner of the brand or by another person with the consent of the copyright holder.
')
Now you can dwell on the distinguishing features of parallel imports.
First, an importer is any person importing original products, and not entities authorized by the copyright holder (official distributors, dealers, etc.).
Secondly, the imported products have a distinctive (unique) marking.
Thirdly, there is no permission of the trademark right holder to import products (put into circulation), that is, the importer and the right holder do not have a contractual relationship.
Consider the classic scheme with the participation of the Russian entrepreneur.
The Russian entrepreneur travels abroad, where he purchases a batch of original goods for further sale on the Russian market. The entrepreneur is driven by a natural desire to save money, and also to find the most advantageous offer, acceptable conditions for cooperation.
After all, buying goods at an inflated price from an official distributor is far less profitable than paying a lower producer price set, for example, for third countries.
It turns out that the entrepreneur does not use the official channel (acting through official distributors in the country where they are located), but “parallel”. Hence the name of the whole mechanism - “parallel import” or “gray import”. However, in this part we assume that the reader of this material has received confirmation of the information already available to him.
Next we move on to the most interesting question. Is parallel import legal in the Russian Federation?
To answer this question, it is worth starting with disclosing the main category used in the question under consideration, namely the principle of exhaustion of rights.
The essence of this principle is as follows.
If the right holder sold (put into civilian circulation) his products, he loses the right to further dictate to the new owners of the products the conditions of its sale, to make demands arising from the violation of trademark rights (for example, to pay compensation), to prevent further resale of goods.
The consolidation of this principle is due to the desire to ensure equality between the interests of the right holder and the interests of the state (society).
In total, there are three varieties of the principle of exhaustion of rights (hereinafter also referred to as the IPP): national, international and regional.
The national principle provides for the exhaustion of the exclusive rights of the right holder only if the goods are introduced into circulation within the country. Despite the repeated sale of goods abroad, for the importation of goods into the country with the current national PIP requires the consent of the trademark holder. Or in other words, the introduction of goods into circulation in the country of production of goods means the exhaustion of exclusive rights to a trademark only in this country, and not automatically in all other countries of the world.
The international principle implies the exhaustion of the exclusive right to a trademark in relation to products that have been put into circulation, both in the country of production of the goods and in any other country in the world.
The regional principle differs from the international one on the basis of territoriality, the sale of "branded" products in one of the regions leads to the exhaustion of the exclusive right to the brand in other regions.
In the Russian Federation, the national principle of exhaustion of exclusive rights operates, in the EU - regional, and, for example, in China - international.
In Russian legislation, the national PIP is enshrined directly in Art. 1487 of the Civil Code of the Russian Federation, which provides for the exhaustion of the exclusive right to a trademark in respect of those goods that were put into circulation on the territory of the Russian Federation directly by the copyright holder or with his consent.
It turns out that the consent of the copyright holder of the brand must be obtained for the import of goods with the original marking in the Russian Federation.
Under current Russian legislation, any use of a trademark without the consent of the copyright holder is illegal (Art. 1484 of the Civil Code of the Russian Federation). This article provides only an approximate list of possible ways to use a trademark.
Import of products marked with a trademark is an independent form of use of a trademark.
The importation of original products without the consent of the copyright holder of a brand is the illegal use of the copyright holder’s brand, for which civil liability is provided.
The trademark owner has the right to use the methods of protection provided for by the general rule - art. 1252 of the Civil Code of the Russian Federation (requirement for recognition of a right, prohibition of use, etc.), as well as a special one - Art. 1515 of the Civil Code of the Russian Federation (claim for loss or compensation).
The above rights also apply to foreign owners of trademarks, whose rights were violated as a result of the parallel import of their products into Russia. Most often, the right holders affected by parallel imports make demands on the importer to prohibit the introduction of branded products into circulation, including the prohibition of importation, sales, offers for sale, as well as the requirement to pay compensation. The amounts of recoverable compensation usually range from 1 million rubles. up to 5 million rubles. True, the courts usually award only half of the stated amounts of compensation.
So the court satisfied the claims of the companies-owners of the trademarks “LONGINES”, “OMEGA”, “RADO” for the recovery of compensation from the defendants for the offer to sell original watches in the territory of the Russian Federation, albeit in a smaller amount from the declared amount - 2.5 million rubles each. in favor of each of the plaintiffs. At the same time, the court did not accept the argument of one of the respondents about the impossibility of extending the territorial principle of exhaustion of rights to the Internet (Definition of the Supreme Arbitration Court of the Russian Federation to refuse transfer of the case to the Presidium of the Supreme Court of Arbitration of the Russian Federation No. YOU-12583/13 dated July 15, 2014).
In court practice, one can also meet record low amounts of compensation that the trademark right holder presents to the importer. For example, in one of the cases, the right holder of a trademark for medical equipment demanded that the importer pay compensation in the amount of 20 thousand rubles. (Judgment of the Court of Intellectual Property Rights dated June 19, 2014 on case No. 76–17672 / 2013).
But the rightholder of the KRUSOVICE brand was not lucky, the court reduced the amount of compensation from 1 million rubles. (10 thousand rubles each. For each fact of violation - 100 bottles were imported with the original marking) up to 30 thousand rubles. (Resolution of the AU of the Moscow District of February 25, 2013 in case No. A40-23850 / 12-27-216).
Can the right holder require the importer to remove from circulation the original goods imported by him and destroy.
These requirements, namely, withdrawal from circulation and destruction at the expense of the infringer may be claimed by the trademark right holder only in relation to counterfeit goods. According to the current norm (Article 1515 of the Civil Code of the Russian Federation), a counterfeit product is a product on which a trademark is illegally placed or a designation similar to it confusingly. In other words, counterfeit is always a fake.
For example, in a well-known case involving the owner of the Porsche Cayenne S brand, the court found no grounds for recognizing imported cars as counterfeit. After all, the cars had the original marking, which was applied by the right holder themselves. (Resolution of the Supreme Arbitration Court of the Russian Federation dated February 3, 2009 on case No. 40-9281 / 08-145-128).
The subject of parallel import is not a counterfeit product due to the fact that it was produced and labeled without violating the exclusive rights of third parties. So, right holders can not punish importers with the sanctions of civil liability provided for the sale of counterfeit goods. Thus, the manufacturer of motor oils “MAGNATEC” and “EDGE” filed a lawsuit against the company “KASTROL LIMITED”, in particular, with demands for the seizure and destruction of illegally imported products, calling it counterfeit. Meanwhile, the court refused to satisfy the claims on the grounds set out above (Resolution of the Court on intellectual property rights dated 10.24.2013 in case No. A53–33004 / 2012).
Not always parallel imports were outside the civil field. So, three years ago, the courts were more loyal to violators than to outraged right holders of brands. The number of refusals in the claims substantially prevailed over the number of judicial acts issued in favor of the right holders. The motivation of the judges was as follows: once the right holder of the brand introduced goods into circulation abroad, it means that its exclusive rights have been exhausted, which means that its requirements are irrelevant. Thus, the courts for some reason adhered to the international principle of exhaustion of exclusive rights with the national principle actually enshrined in Russia. It is not surprising that most of these decisions were overturned by higher courts.
Parallel import and administrative responsibility
Obviously, some sanctions of civil liability apply to parallel imports of violators, but what about administrative measures?
Administrative liability is provided for the illegal use of a trademark (Article 14.10 of the Administrative Code). From arbitration practice, in particular from the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation of February 17, 2011 No. 11, it is unambiguously seen that the sanctions of Art. 14.10 of the Administrative Code apply only to persons engaged in the production, sale of counterfeit goods. Thus, entrepreneurs practicing parallel imports can easily exhale, administrative responsibility for the illegal import of unique goods does not promise them.
We have described above what legal levers right holders can use, whose rights have been violated as a result of parallel imports. And what counter-arguments are most often used by violators?
We give some of them.
The argument of the offender that he imports goods not for commercial sale, makes an impression of just childish babbling and is immediately rejected by the courts as unreasonable.
The key argument in the position of the defendant is his argument that the actions of the right holder are aimed at restricting competition, and this is nothing more than an abuse of the right. In fact, the arguments presented reflect the position of the FAS, which actively supports the legalization of the type of import in question in Russia. The positive effect of this would be expressed in stimulating competition, expanding the channels of supply of goods, as well as in meeting the interests of the end user.
Naturally, all of the above is not at all in the interests of international companies that want to have a monopoly on their products and calmly dictate the conditions for its implementation to distributors.
So far, representatives of small businesses, even with the support of the FAS, cannot lobby for amendments that suit them to the Civil Code of the Russian Federation, which would legitimize parallel imports. Will the approach of the legislator, as well as judicial practice on this issue, time will tell. Especially after the merger of the Supreme Arbitration Court of the Russian Federation and the Armed Forces of the Russian Federation. In the meantime, small importers should be wary of only litigation in arbitration, as a result of which they can easily and unobtrusively part with a round sum.
Ask questions you are interested in on legal topics in the comments, we will answer the most important ones in the following posts of our weekly legal column on the VCStart.com collective investment platform blog.
Source: https://habr.com/ru/post/233977/
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