Importing goods without the trade mark owner’s consent

01.12.2009

Let us imagine that a bona fide importer has acquired legally goods from abroad that are protected by trade marks (for example, it has concluded a foreign trade contract, executed the requisite forwarding documents) and declared the goods for customs clearance and that it transpired during customs clearance that the importer did not have the consent of the trademark owner to import the goods into the Russian Federation. How will this affect the customs clearance of the goods and the possibility that they will be released on the market?

 I personally believe that the import of goods bearing trade marks is covered by the definition governing their use and requires the consent of the owner.
Trade marks are one of the most common forms of intellectual property. The exclusive right to a trade mark is owned by a legal entity or an individual entrepreneur that obtained a relevant certificate or acquired this right on the basis of an agreement on alienation of an exclusive right to a trade mark.

The legal substance of this competence implies that it is up to the trade mark owner to decide whether to permit or prohibit the use of means of identification by other persons. It should be stressed here that the lack of a ban does not constitute the consent (permission) of the trade mark owner.

Pursuant to the provisions of part 4 of the Civil Code of the Russian Federation (hereinafter - the “Civil Code of the Russian Federation”), this consent should be expressed in a contract on the alienation of an exclusive right to a trade mark (which stipulates de facto the sale of the exclusive right to the trade mark) or a licensing agreement (which implies only the transfer of the right to use the trade mark).

According to part 1, article 1229 of the Civil Code of the Russian Federation, the use of intellectual property or means of identification without the consent of the trade mark owner is unlawful and entails liability.  

The provisions on ensuring compliance with said legal norms are, inter alia, contained in the Customs Code of the Russian Federation (hereinafter - the “Customs Code”) and the Code of Administrative Offences of the Russian Federation (hereinafter - the “Сode of Administrative Offences”).

Pursuant to article 403 of the Customs Code, protection of rights to intellectual property is one of the functions of the customs authorities, which are granted the right on this basis to suspend the release of goods that contain the indicia of counterfeit products.

To arrange for customs protection of its goods, a trade mark owner (or its representative) must register the corresponding trade mark in advance with the Customs Register of Intellectual Property Assets (hereinafter  - the “Customs Register”) maintained by the Federal Customs Service of Russia. Then the customs authorities perform work to identify goods that have been imported in violation of intellectual property laws by applying a dedicated risk management system within the scope of customs clearance procedures.  This work is performed primarily by the intellectual property divisions of customs offices, regional customs agencies and customs posts.

If a trade mark has been registered with the Customs Register, the customs authorities check: 1) whether this good has been imported by a licensed importer or by a person that has not obtained such a consent from the trade mark owner; 2) whether the goods have the indicia of counterfeit products (forgeries).
In the Russian Federation the unlawful use of trade marks owned by another party is subject to the administrative liability set by article 14.10 of the Сode of Administrative Offences, which stipulates a fine of 30,000-40,000 roubles, including confiscation of items containing unlawful reproductions of the trade mark.

To clarify whether goods have been legally imported, the customs authorities have the competence to suspend the release of goods. The goal of this procedure is to provide the owner of a trade mark with sufficient time to collect evidence demonstrating that its rights have been violated and to file for protection of said rights by the competent authorities.   

In practice the import of goods with indicia of potential infringements of the rights of the trade mark owner is established by the customs authorities, which communicate such facts to the trade mark owner or to its Russian representative, which then decides at its own discretion whether or not to submit a formal application for the protection of its rights.

One should not rule out the possibility that the Russian customs authorities will soon receive the so-called  “ex officio” right to independently suspend (on their own initiative) the release of goods on the market (without receiving a corresponding application from the trade mark owner). This issue has already been debated by the State Duma of the Russian Federation in connection with the submission of the relevant draft law for consideration by the Federal Customs Service of Russia.

The release of a good is suspended for 10 days. This term may be extended for another 10 days. In this case the customs authority has to notify the declarant and the trade mark owner (its representative) about such an extension. Then the trade mark owner is expected to collect evidence showing that its rights have been violated by the importer. The customs authorities assist the trade mark owner by supplying samples of imported goods and any requisite additional information. Here the importer should bear in mind that certain confidential information about the goods or the terms of its delivery may be disclosed to third parties represented by the trade mark owner or its representative, although any further disclosure is punishable by law.

If the trade mark owner does not receive a decision from the competent authority by the end of the aforementioned timeframe 1) to seize 2) to arrest; or 3) to confiscate the goods, the suspension will be lifted and regular customs clearance will continue in accordance with mandatory customs procedures. 

Until recently, the customs authority was understood by administrative and arbitration practice to be the competent authority entitled to seize or arrest goods on suspicion that the rights of the trade owner have been infringed. Prior to the adoption of the Resolution on case No. А40-9281/08-145-128 by the Supreme Arbitration Court of the Russian Federation, the customs authorities and arbitration courts proceeded from the assumption that both the import of forgeries and “parallel import” of goods constituted an administrative offence. In connection with this fact, importers were confronted by a situation where they were the targets of administrative cases instigated in relation to the import of goods legally purchased in foreign countries into the Russian Federation.

This practice is changing, however. A court of arbitration is now the authority empowered to seize, arrest or confiscate goods imported under the “parallel import” arrangement. Now the trade mark owner has to prove within the scope of competitive arbitration proceedings that its exclusive rights have been violated.
According to article 14.10 of the Code of Administrative Offence, administrative offences may be only instituted with respect to goods that contain unlawful reproductions of a trade mark. If the trade mark is placed on a good by the trade mark owner or its authorised representative (in other words, original goods), there are no indicia of unlawful reproductions of the trade mark.

Consequently at present there is no risk that administrative proceedings will be instituted against an importer if it imports original goods. However, to rule out the risk of a possible suspension, the importer should clarify whether the trade mark has been registered with Rospatent (the Russian Agency for Patents and Trade Marks) and the Customs Register for legal protection in the Russian Federation before starting to deliver goods and also conclude a licensing agreement with the trade mark owner (or its representative) on importing goods and releasing them on the market in the Russian Federation.

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