Russian Constitutional Court Clarifies How to Tackle Parallel Imports

Following the recent Moscow Arbitration Court’s decision in line with the Federal Antimonopoly Service’s (FAS) stance on parallel imports, in a February 13, 2018 ruling, the Russian Constitutional Court clarified the conditions under which courts may authorize parallel imports into Russia. From now on lower instance courts will probably apply these guiding principles when considering parallel import cases, which may make the right holders’ goal to prevent parallel imports more complex.

Following a complaint raised by the Russian parallel importer PAG LLC against Sony Corporation, the Constitutional Court examined the constitutionality of Civil Code provisions prohibiting parallel imports and ruled that, while the provisions do not contradict Russia’s constitution, the principle of regional exhaustion of rights in Russia should not be automatically applied to all cases without considering the facts and circumstances related to every case.

In particular, parallel imports may be authorized for public interest reasons such as the protection of health or if the right holder acted in bad faith or abused his trademark rights, for instance if the actions of the trademark owner constitute unfair competition or are in favor of economic sanctions against Russia. The ruling can, however, give rise to various interpretations, and even a right holder’s failure to reply to a permission request from an importer may be considered “abusive”.

The Constitutional Court also ruled that, when imposing remedies, courts should distinguish between parallel imports and counterfeit goods. As a general rule, remedies, especially monetary fines, for parallel imports should not be as severe because losses incurred are generally not as high as in the case of the importation of counterfeit goods. Seizure and destruction of parallel imports should only be applied if the goods do not meet the required quality standards and can undermine public health and security.

By: Julia Zhevid

For more information, please contact Julia Zhevid at our Russia office.