Analytical Center coached proposals on parallel imports legalization order

22 december 2014

The expert discussion on “Legalization of parallel imports: allocation criteria and procedures on legalization of international exhaustion mode” took place in the Analytical Center on November 13. The main topic for discussion was the one on Operating procedures of parallel imports legalization initiated by FAS alongside with previously developed regulatory legal acts which provide for the Russian Federation transition to international principle of exhaustion of trade marks.

As a criterion for holders determination, which may limit or prohibit the import of products under their own trade mark in Russia, FAS has proposed to use the facts of location and direct production of substitutes on the territory of Russia. Concerning primary markets (perfumery and cosmetic products, auto parts, food) where the agency suggests carrying out the introduction of the international principle of exhaustion of ownership rights on trademarks at the origin, the list should be formed with due consideration to the opinion of market participants and concerned authorities. However, criteria which characterize these markets were announced: range of products latitude available in the market, complexity of products transportation and timing of its implementation.

The discussion showed that the parties concerned are not ready to compromise. During the discussion, attention was focused on the issue of the relevance and necessity of parallel imports legalization in Russia, as well as the applicability of the differentiated approach and market participants' discrimination on various criteria. Experts' opinions on this issue were divided.

However, taking into account comments made during the discussion three main proposals were formulated:

·        The decision on the shift of regime of exhaustion of trademark rights is effective if made at the level of Eurasian Economic Commission, and in this regard, it is correct to postpone discussion of activities on this issue at the site of the Commission’s working group.

·         In case of differentiated regime of trademark rights exhaustion for localized (taking into account the degree of localization) and unlocated rightsholders it is recommended to conduct further legal analysis of regulations for accordance of these criteria with provisions of the Convention on industrial property protection.

·         As a part of criteria establishing on the priority markets selection it is recommended to consider the criterion "the imports share in the Russian market", as well as criteria for the need of products specialized care and costs of products validation by consumers before purchasing.

These proposals were directed to FAS Russia, the RF Ministry of Industry and Trade, the RF Ministry of Economic Development and the Eurasian Economic Commission for possible consideration in further actions on parallel imports legalization formulation and coordination.

The expert discussion took place at the Analytical Center on November 13.