Be aware of the challenges when fighting against counterfeits in Russia

The attack of Russia to Ukraine in February this year has also affected the IP field. Especially the sanctions imposed against Russia and the counteractions of Russia against unfriendly countries have raised uncertainty and concern among IP right holders. New regulations have come into force, the recent one allowing parallel import of certain goods. All this has also had an impact on the fight against counterfeits in Russia.

Customs registration for IP rights is a tool for fighting counterfeits

Registration of IP rights at Russian Customs is still an efficient tool for fighting against counterfeits. The Register of IP rights is an open database which is regularly updated. Once the IP rights are recorded at the Customs Register, any unauthorized import or export of counterfeit products will be blocked by the Customs authorities, which stimulates the growth of legal sales.

The Customs procedure is straightforward – when detecting suspected goods (for example, imported by an unauthorized importer), the Customs authorities suspend the clearance of the goods for ten business days and contact the IP rights holder.

During this period, the rights holder has an opportunity to get information on the circumstances of the import and details of the importer, obtain a description and photographs of the goods, and even get a sample. If the rights holder confirms that the suspended goods are counterfeits, Customs will start an ex-officio administrative investigation against the importer. In obvious counterfeit cases, Customs is authorized to proceed with investigation even without the rights holder’s confirmation.

Registration process at Customs

At first glance, the procedure of recordal of IP rights at the Customs Register is quite simple. The minimum list of documents to be attached to an application for the Customs recordal includes:

• power of attorney
• extract from the Company Register
• detailed description of the IP object and original goods
• samples or images of original and counterfeit goods
• written declaration to cover all expenses of Customs authorities
• damage caused to the owner of suspended goods in case the infringement will not be confirmed, and
• copy of a civil liability insurance to cover possible damages. The amount of insurance should be no less than 300,000 RUB ($3,759).

The application and needed documents must be filed with Customs with a translation into Russian. The translations and any copies of the documents must be notarized.

Most usual challenges

Despite the simplicity of the process, trademark owners usually face difficulties when applying to Customs. According to regulations, Customs should consider the Customs surveillance application within 30 working days. However, in practice it usually takes at least three to four months. There are no clear rules on how many documents and examples should be submitted, and thus additional inquiries from Customs are possible.

The time frame to provide a response to a Customs inquiry is one month. In the absence of a response, the application may be refused. Therefore, applicants should be ready to provide clarifications and additional information to Customs inquiries in order to not lose the application.

The biggest challenge, especially for foreign companies, is that Russian Customs requires evidence confirming the violation of IP rights in connection with import of counterfeit products, as well as photographs or samples of counterfeit goods. In case there is no prior counterfeit cases available, this requirement often becomes a challenge. In case the applicant does not have evidence of illegal import of the products, the IP rights may not be registered at the Customs Register.

Russia allows parallel import

The sanctions and counteractions have not changed the procedures of including IP rights into the Register and identifying counterfeits. However, as a countermeasure against the sanctions imposed on Russia, the Russian Government has recently allowed parallel import for some categories of goods. The reason for this is the fact that many foreign companies have left the Russian market, and thus there is a need to ensure the availability of goods and different products.

In short, parallel import means import of original goods into Russia without the consent of a rights holder. The law now allows non-authorized distributors to import goods into Russia, avoiding official distribution channels. Previously, parallel import without the consent of the rights holder has been prohibited in Russia.

The reason for allowing parallel import at this stage is obvious – this approach will guarantee the shipment of goods to Russia in a situation where many companies have left the country or scaled down their business. Russian retailers, which in the current circumstances find it difficult to obtain foreign goods, have expressed their support for legalizing parallel import.

Goods and brands listed

The list of goods for which parallel import is allowed not only includes very different types of goods, such as “pharmaceutical products, textile products for technical purposes, toys, games and sports equipment; their parts and accessories, electrical machines and equipment, sound recording and reproducing apparatus, aluminum and products from it, watches”, but also names the companies, such as Texaco, Hummer, Panasonic, Libresse, ExxonMobil, John Deere, Tesla, BMW, etc., for the goods of which parallel import will be allowed. The list of companies mainly includes companies which have left the Russian market.

The list is regularly updated, and some brands have even been deleted from the list. For instance, the perfumery and cosmetic products of Lancôme, Redken, Yves Saint Laurent, Helena Rubinstein, Valentino, Giorgio Armani, Kerastase have now been withdrawn from the list. This means that the goods of these companies cannot be imported to Russia without the owner’s consent.

Also, such categories of goods as silk, wool, cotton, other vegetable textile fibers; paper yarn and fabrics from paper yarn, chemical threads, chemical fibers have been excluded from the list, since a wide range of Russian analogues and related products from “friendly” countries are currently available at the Russian market.

Where do we stand now?

In addition to specific goods, there are also additional preconditions for allowing parallel import. One such condition is that the goods must have been put into circulation in another country before entering Russia. It will be interesting to follow how, and by whom, these requirements will be monitored.

From the right holders’ point of view, parallel import weakens the control of the right holder in respect of prices, volumes, markets, etc. Although the question is about original goods, the holder may no longer decide where, how and by whom the goods enter the market.

The control will also become difficult at Customs – monitoring the allowed parallel import while at the same time prohibiting the entry of counterfeits into Russia will definitely be a challenging job. This new situation would require lots of additional personnel, new processes, and understanding of the mechanism of parallel import.  And this will not be made any easier by the fact that many infringers are trying to take advantage of these new unsteady circumstances.