New Developments on Exhaustion and Parallel Imports in the Russia/CIS Region

Published: July 1, 2015

Denis Khabarov Moscow, Russia Parallel Imports’ Europe and Central Asia Subcommittee

The Parallel Imports’ Europe and Central Asia Subcommittee has been closely monitoring the “hot topic” of exhaustion of IP rights and parallel importation in the Russia/Commonwealth of Independent States (CIS) region. An entirely new round of rather unexpected discussions and lobbying initiatives is rapidly unfolding at the level of the Russian federal government, as well as the Eurasian Economic Commission (EEC), the governing body of the Eurasian Economic Union.

Russia is a member of the Customs Union with Belarus and Kazakhstan, as well as the Eurasian Economic Union. International treaties endorsed by the Customs Union members, and more broadly at the level of the Eurasian Economic Union, provide for regional exhaustion of trademark rights. Thus, the obligations accepted by Russia will not allow for a unilateral change to the standard of exhaustion for Russia alone. Any such decision must be endorsed by other member states of the Eurasian Economic Union.

Recently, the Russian government began demonstrating a very strong desire to reconsider the principles of regional and national exhaustion of rights existing in the Customs Union and in Russia. The Russian government seems to be seriously considering changing its standard of exhaustion of trademark rights from regional to international and allowing protection against parallel imports only to those companies that have localized their production facilities in Russia. Russian officials believe that the flow of parallel imports is likely to decrease prices and give Russian consumers access to cheaper goods.

Concurrently with the discussions in the Russian government, the issue of exhaustion of rights and liberalization of parallel imports is being reviewed at the level of the Eurasian Economic Union by the EEC. It appears that Russia is trying to persuade the EEC to agree to ending the currently existing regional exhaustion regime and to liberalizing parallel imports.

So far, it seems that this suggestion is not enthusiastically supported by the EEC; officials from the EEC believe that this may be detrimental to foreign investment, the economy and other considerations. The most recent idea being considered by the EEC is to leave the national/regional exhaustion of rights intact generally, but changing the standard to international exhaustion for three industrial sectors: automobile spare parts, pharmaceuticals and medical equipment.

As Russia is unlikely to be able to change the standard of exhaustion unilaterally, it appears that there is some serious negotiation ahead. The subcommittee will be following further developments and, if necessary, recommend appropriate advocacy activities.

In May, the INTA Board of Directors adopted a resolution on international exhaustion for trademark rights, arguing that, in jurisdictions where international exhaustion is allowed, a “material differences” standard should be adopted “in order to exclude parallel imports that are materially different from those products authorized for sale by the trademark owner in the domestic market” and to protect consumers’ interests.

INTA firmly supports a standard of national (or regional) exhaustion for trademark rights with respect to parallel imports.

For more information, read the INTA Blog post “Trademark Protection in the Customs Union: INTA Speaks in Belarus” (April 9, 2013).

Although every effort has been made to verify the accuracy of items in the INTA Bulletin, readers are urged to check independently on matters of specific concern or interest.

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