Parallel imports legislation unlikely in Russia in short term despite FAS lobbying

07.05.2013

Parallel imports are unlikely to be introduced in Russia any time soon, despite lobbying over the issue by the antitrust regulator in the country, the Federal Antimonopoly Agency (FAS).

A parallel import is a non-counterfeit product imported from another country without the permission of the intellectual property (IP) owner.

On 12 April, the Russian first Deputy Prime Minister Igor Shuvalov said that he thought parallel imports should be allowed in Russia. However, the rest of the Russian government has yet to decide on the issue, local antitrust lawyers said. Any legislation would need to be harmonised with the Customs Union of Russia, Belarus and Kazakhstan, and a relevant bill passed.

The approval of parallel imports has been lobbied for by FAS.During the Vedomosti Legal Forum in Moscow in April, the head of FAS, Igor Artemyev, said that FAS aims to introduce parallel imports in order to support entrepreneurship in Russia. Although there has been one meeting regarding parallel imports, the government still has not agreed a collective strategy on the issue. Economic agencies such as The Ministry of Industry and Trade of the Russian Federation (Minpromtorg) and the Ministry of Economic Development do not fully support the introduction of parallel imports, said Vladimir Tchikine, a partner in charge of customs and international trade at Goltsblat BLP, the Moscow branch of the law firm Berwin Leighton Paisner.

According to Tchikine, Minpromtorg is against the transition to the international principle of trademark exhaustion because if parallel imports are allowed, agreements with automobile makers, which localise production in Russia, may not be observed: automobile makers will not be able to control repair parts and equipment prices (wholesale and retail). Hence, dealers will have lower margins if prices go down and dealership problems could then influence upstream automobile manufacturers. In other words, competition conditions that were approved when investment decisions were taken, would not be preserved, according to Tchikine.

Ministry of Economic Development fears competition conditions could worsen

The Ministry of Economic Development may also have doubts over the issue because it might cause competition conditions for official dealers to worsen, Tchikine added.

The introduction of parallel imports may cause not only a decline in prices, but a decline in quality as well, said Oleg Moskvitin of Moscow law firm Muranov, Chernyakov & Partners. Hence, parallel imports will be advantageous for parallel importers, but it is not clear whether the rest of the market will benefit, he concluded.

Tchikine said that FAS and the Ministry of Industry and Trade of the Russian Federation have to prepare materials regarding the international principle of trademark exhaustion by 15 May 2013, as a meeting with Russian Prime Minister Dmitry Medvedev may take place thereafter.

A FAS spokesperson told PaRR that this document is currently being developed.

It is not clear who will win in the dispute between government agencies. Parallel imports is first of all an economic issue and should be resolved by economic agencies. In this situation, law should follow economics, said Vladimir Korneev, deputy chairman of the Intellectual Property Court of Russia.

The Supreme Commercial Court (VAS) has not expressed an official position on parallel imports. However, VAS uses current legislation, which implies national trademark exhaustion (and regional trademark expiry within the Customs Union), Korneev added.

The potential timeframe for the introduction of parallel imports is quite wide, lawyers said. In order to allow a parallel imports agreement with the Customs Union, principles regulating intellectual property rights should also be changed, Tchikine said. The agreement signed on 9 December 2010, establishes regional principles of trademark exhaustion from 1 January 2012.

However, introduction of the principle of parallel imports should not be too complicated, Tchikine explained, because Kazakhstan has always supported the international principle of trademark exhaustion and a regional principle was introduced on the issue in Kazakhstan on 1 January 2012. If Russia and Kazakhstan support the international principle of trademark exhaustion, Belarus is likely to support it as well, because there are not many producers in Belarus that are interested in regional trademark expiry, if any, Tchikine said.

In addition, the technical side of parallel imports introduction is quite time consuming considering there is no bill yet, said Sergey Klimenko of Khrenov & Partners. If the government supports the FAS, then the law (Article 1487 of the Civil Code of Russia ) should be changed, Tchikine said.

Such a bill has not been presented to Parliament yet and it cannot be presented before the meeting with the Prime Minister. The Russian legal system requires the bill to go through three readings in Parliament, said Moskvitin. Considering that the Parliament will go on holiday at the end of June, it is highly unlikely that such legislation will be passed before that, lawyers concluded.

If parallel imports are introduced in Russia, the number of competition cases may also increase, Moskvitin predicted.

by Natalia Lapotko in London

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