In early March this year the Kirov Court in Russia rejected a trademark and copyright infringement action and claim for damages raised by Entertainment One UK Limited. This decision was then appealed, and on 21 June 2022 the Appeal Court issued a decision overturning the decision of the Kirov Court in Russia.
Russia allows parallel import
Russia continues to adopt countermeasures against the sanctions imposed on Russia. One of the most recent countermeasures concerning intellectual property rights is the Decree-Law of March 2022 which legalized parallel import of certain goods into Russia.
Parallel import means the import of original goods without the consent of a right holder. In practice, the law now allows non-authorized distributors to import goods into Russia, avoiding official distribution channels. Previously, parallel import without the consent of a right holder has been prohibited in Russia.
The reason for legalizing parallel import at this stage is obvious – this new approach will guarantee the shipment of goods to Russia in a situation where many companies have left the country or scaled down their business there. Russian retailers, which in the current circumstances find it difficult to get foreign goods, have expressed support for legalizing parallel import.
Parallel import for specific goods and companies
According to the law, parallel import will be possible only for certain goods. The categories of goods for which parallel import is now allowed were published on 6 May 2022 by the Ministry of Industry and Trade of the Russian Federation. The list includes 96 categories of different types of goods, for example “cars and car parts, trains, industrial machinery and equipment, electronics and consumer products from clothing to perfumes”.
Additionally, the list also includes names of the companies, for example Texaco, Hummer, Tesla, Audi, Scania, Volvo, Mercedes-Benz, Panasonic Corporation, Samsung, Nokia, Libresse, ExxonMobil, John Deere, L’Oreal, Prada etc., for the goods of which the parallel import will be allowed. The list of companies mainly includes companies which have left the Russian market.
Furthermore, there is a special requirement for allowing parallel import, which is that the goods must have been put into circulation in another country before entering Russia. It will be interesting to see how, and by whom, these requirements will be monitored.
Distribution control will be weakened
From the right holders’ point of view, parallel import weakens the control over the distribution channels, pricing, volumes, markets, etc. Although it’s a question of original goods, the right holders may no longer decide where, how and by whom the goods enter the Russian market. But most importantly, the holders cannot prevent the import of their goods into Russia, even if they would like to do so.
Control will also become difficult and challenging for the Customs – monitoring the allowed parallel import at the same time with prohibiting the entry of counterfeit goods into Russia will definitely be a hard task. This will require a lot of new resources, such as additional personnel, new processes and especially understanding about the mechanism of parallel import.
Many details of the parallel import still remain open, and only time will tell how the legalization on parallel import will change the market situation and what the consequences for right holders will be.