On 13 February 2018 the Russian Constitutional Court checked the compliance of the following provisions of Russian Civil Code (the “CCR“) related to parallel import with the Constitution of Russia:

• Clause 2 of Article 1252 of the CCR on interim remedies applicable to trademark infringements;
• Article 1487 of the CCR establishing the national exhaustion of trademark rights;
• Clauses 1 and 2 of Article 1515 of the CCR on recognition of goods as counterfeit and available remedies of trademark owner to request removal from the market and destruction of counterfeit goods; and
• Point 1 of Clause 4 of Article 1515 of the CCR empowering trademark owner to request payment of statutory damages in amount from RUB 10 000 to 5 000 000 (approx. from EUR 143 to 71 430) by an infringer (instead of damages recovery or compensation amounting to double price of counterfeit goods or double amount of respective due license price).

Upon results of the consideration the Constitutional Court declared that the above provisions are compliant with the Constitution of Russia but clarified the ways the rules should be applied so that there is no contradiction to the constitutional principles in practice. These clarifications reflect a longstanding discussion between IP right holders and parallel importers in Russia.

Thus, according to the recent decision No.8-P of 13 February 2018 (the “Decision“) the Constitutional Court established that, though national principle of exhaustion of IP rights does not contradict the Constitution of Russia, Russian courts shall treat parallel import infringements and import of counterfeit (fake) goods differently. The Decision states that destruction of parallel imported goods is allowed only if such goods are of improper quality or if this helps to ensure safety, protect people’s life and health, etc. In other cases Russian courts shall not grant requests on removal from the market and destruction of original goods imported without authorization of trademark owner.

Based on the Decision, Russian courts should not apply equal liability measures to parallel import cases and to cases involving use of trademark on fake goods but should opt for softer measures for parallel importers. The Constitutional Court stated, however, that such softer approach to parallel importers should not apply, if under the circumstances of a particular case such approach leads to damages for the trademark owner comparable with damages inflicted by counterfeit goods.

By the Decision the Constitutional Court proposed the Russian legislator to amend the national law so that it clearly differentiates legal remedies applicable to parallel import infringements and to counterfeit goods infringements.

The Constitutional Court also stated that exemption of IP rights from anti-trust restrictions should not be interpreted as justification of unfair or abusive behaviour of trademark owners. Russian courts may, therefore, partially or entirely refuse in legal remedies against parallel import infringements, if due to unfair practices of trademark owner such remedies may create a threat to citizen’s life and health or affect other significant public interest.

In the statement of reasons, the Constitutional Court gives examples of such unfair practices: if actions of a trademark owner are aimed at establishing unfair price policy or imposing unreasoned restrictions on distribution of goods affecting Russian consumers (i.e. related to the consumer goods market), especially with respect to vital goods, claims of such trademark owner against parallel import infringements should not be granted by Russian courts. The Constitutional Court notes that compliance of a trademark owner with foreign state’s sanctions against the Russian Federation established without due international law proceedings and in contradiction with international treaties, may itself be recognised as unfair practice.

The Decision also mentions that the national trademark exhaustion rule should apply in compliance with the international treaties ratified by Russia. Therefore, as far as Section 16 of Annex 26 of the Treaty on Eurasian Economic Union establishes the regional trademark exhaustion, it should overcome the national trademark exhaustion rule in practice.

The Decision came into force on 13 February 2018. As the Decision applies a new approach to parallel import infringements, we expect substantial changes in Russian court practice on parallel imports in the near future and will keep on monitoring developments.

The Russian Constitutional Court is the only court instance in Russia empowered to consider compliance of Russian laws and bylaws with the Constitution and interpret laws so that they are applied in line with the Constitution. Decisions of the Constitutional Court are final and subject to mandatory application by all Russian courts.

Link to the Decision in Russian language – http://doc.ksrf.ru/decision/KSRFDecision315752.pdf