Parallel Import: Exceptions in Trademark Protection, Importers' Obligations, Difficulties, and Risks from Practice

Most enterprises during their activities encounter designations that individualize the goods of legal entities or individual entrepreneurs, known as trademarks.

The current provisions of the Civil Code of the Russian Federation provide legal protection to trademarks upon their proper registration [1]. As a result of intellectual activity, a trademark provides its owner with an exclusive right to use it in any manner not contrary to the law [2].

However, in the conditions of the economic sanctions applicable to the Russian Federation, exceptions have been made by the legislator in the protection of some trademarks [3].

According to part 3 of Article 18 of the Federal Law of March 8, 2022 No. 46-FZ “On Amendments to Certain Legislative Acts of the Russian Federation”, the use of the results of intellectual activity expressed in goods (groups of goods), the list of which is established in accordance with paragraph 13 of part 1 of the said article, as well as the means of individualization by which such goods are marked, is not a violation of the exclusive right to the results of intellectual activity or means of individualization.

The mentioned construction is called “parallel import”.

All information about the product in parallel import is disclosed by the importer. The product is imported to the territory of the Russian Federation either by filling out a conformity declaration or by certifying the product.

When declaring, it is necessary to describe the technical solutions and assess the risks. These requirements are introduced to ensure the safety of imported products. Thus, the import declaration will be an official document based on which the imported product is allowed into the Russian market, and all possible risks are transferred to the product importer.

In practice, the application of the institution of parallel import has proven to be quite problematic. For the recognition of parallel import as admissible and not contradicting the provisions of the Civil Code of the Russian Federation, courts require simultaneous compliance with the following conditions:

Firstly, the product must be recognized as original, i.e. produced by the rights holder and released into circulation in a foreign state with their permission [4].

The following signs of counterfeiting are distinguished in judicial practice: [5]

• The discovered goods were not produced by the trademark owner and were not introduced into civil circulation by them or with their consent;
• The labels on the goods do not match those placed on the original products;
• The size of the packaging does not correspond to that of the original products of the trademark owner;
• The production date is missing;
• The color of the logo on the packaging is different from that of the logo placed on the original product.

Today, one of the most difficult issues in the application of parallel import is the confirmation of originality. The supplier must have all the documents confirming the origin of the goods and the lawfulness of their sale before the purchase of the goods by the buyer when importing goods into the territory of the Russian Federation.

In this context, the burden of proof of the originality of the imported goods is significant.

The establishment of the originality of the goods is subject to general requirements for the distribution of the burden of proof.

For example, if the plaintiff refers to the defendant’s violation of the exclusive right to a trademark, for example, in the case of the defendant’s sale of counterfeit goods, and the defendant does not prove the originality of the goods (if the fact of use is proven), the counterfeiting of the sold goods is considered proven in accordance with part 3.1 of Article 70 of the Arbitration Procedure Code of the Russian Federation, according to which circumstances on which a party relies to substantiate its claims or objections are deemed to be recognized by the other party if they are not directly contested by it or if disagreement with such circumstances does not follow from other evidence substantiating objections to the substance of the claims made [6].

Additionally, the supply of goods under parallel import should take place after the entry into force of Resolution of the Government of the Russian Federation dated March 29, 2022 No. 506 and Order of the Ministry of Industry and Trade of Russia dated April 19, 2022 No. 1532 [7].

Supplies made before the entry into force of these legal acts, even if they are realized later, will not be considered imported under parallel import [8].

The above circumstances are the most common reasons for holding entrepreneurs liable in case of attempts to carry out supplies under parallel import.

We remind you that in case of violations of the rules of importing goods under parallel import, the importer may be held liable under Article 14.10 of the Code of Administrative Offences of the Russian Federation, with a fine ranging from fifty thousand to two hundred thousand rubles and confiscation of items containing illegally reproduced trademarks, service marks, names of places of origin of goods, as well as materials and equipment used for their production, and other instruments of committing an administrative offense.

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[1] Article 1477 of the Civil Code of the Russian Federation.

[2] Article 1484 of the Civil Code of the Russian Federation.

[3] Resolution of the Government of the Russian Federation of March 29, 2022 No. 506 “On goods (groups of goods), in relation to which certain provisions of the Civil Code of the Russian Federation on the protection of exclusive rights to the results of intellectual activity expressed in such goods, and means of individualization, by which such goods are marked, cannot be applied.”

[4] Resolution of the Intellectual Property Court of February 1, 2023 No. C01-2414/2022 in case No. A33-14168/2022; Resolution of the Intellectual Property Court of January 25, 2023 No. C01-2407/2022 in case No. A51-4937/2022.

[5] Decision of the Arbitration Court of Primorsky Krai of November 2, 2022 in case No. A51-15189/2022.

[6] Decision of the Intellectual Property Court dated November 30, 2022, in case No. A27-709/2022, file No. С01-2011/2022.

[7] Decision of the Intellectual Property Court dated October 19, 2022, in case No. A40-222245/2021, file No. С01-1299/2022.

[8] Decision of the Intellectual Property Court dated June 2, 2022, in case No. A21-3352/2021, file No. С01-599/2022.