Trademark Rights Protection Under Import of Goods

Alexander Solntsev
Senior Lawyer
“Yakovlev & Partners” Law Offices

A trademark is a designation that serves as a means of individualization of goods. Verbal, graphic, volumetric and other designations and combinations thereof may be registered as trademarks. A trademark may be registered in any color or color combination.

The issues of trademark use are presently governed in Russia by the rules of Part IV of the Civil Code of the Russian Federation. This Law, in particular, stipulates the exclusive trademark right of legal entities and individual entrepreneurs, which is proved by trademark certificate. For a trademark to be recognized, it must be registered, by being entered in the State Trademark register. The trademark certificate guarantees the trademark priority and the exclusive trademark right in respect to the goods stated in the certificate.

Unlawful trademark use entails civil, administrative and criminal liability. Let us consider in more detail the issues of administrative liability.

For unlawful use of an alien trademark, the offender bears administrative responsibility under article 14.10 of the Administrative Code of the Russian Federation. In accordance with the above article, the unlawful trademark use may entail such administrative punishments as: administrative fine imposed on citizens at the rate of 1,500 to 2,000 rubles with confiscation of the subjects containing the unlawful trademark reproduction; imposed on officials — from 10,000 rubles to 20,000 rubles with confiscation of the subjects containing the unlawful trademark reproduction; on legal entities — from 30,000 rubles to 40,000 rubles with confiscation of the subjects containing the unlawful trademark reproduction.

An import to the Russian Federation of products marked with an alien trademark without the respective permit constitutes an infringement of the exclusive trademark right, provided that the above counterfeit actions are carried out with the purpose of putting such products in civil circulation on the territory of the Russian Federation.

In life, this problem gave rise to a new concept, the so-called parallel import, which means import of original products without the right-holder’s consent to their import to Russia. The major companies have always endeavored to monopolize the market of this or that country through the creation of authorized dealers for sales of their products, thereby influencing the prices and scale of goods, depending on the economic situation in a particular country. This problem became especially serious when applied to cars and car parts because of sharp decline of the official dealers’ sales after the decline of the U.S. dollar and activation of the car and car parts import from U.S.A. The Russian courts used to uphold customs’ and the trademark owners’ claims against the parallel importers on administrative responsibility for import of original products and confiscation of cars. However, in early 2009, the situation changed because of the issue of Decision No. 10458/08 by the Presidium of Supreme Arbitration Court of the Russian Federation of Feb. 3, 2009 regarding the import to Russia of a product (car “Porsche Cayenne S”) without the trademark owner’s consent.

The matter was as follows. In 2007, ООО Genesis attempted to import used Porsche Cayenne S cars. ООО Porsche Russland, the owner of exclusive license to use trademarks “Porsche” and “Cayenne” in Russia, filed an application with customs on infringement of trademark rights. The above trademarks have been registered with Rospatent in accordance with an agreement between Porsche AG (Germany) and ООО Porsche Russland. The above circumstances served as grounds for the customs’ address to the arbitration court with an application on administrative liability of the defendant — ООО Genesis in accordance with Article 14.10 CAO RF (The Federal Code of Administrative Offenses).

Arbitration courts of the first and appellate instances (cassation was not filed) have satisfied customs’ claim, having concluded that for import of goods to the Russian Federation marked with the trademark without the right-holder’s consent, the defendant is subject to liability under Article 14.10 CAO RF. However, the Presidium of HAC RF has made another conclusion: car “Porsche Cayenne S,” the subject of offense confiscated by decision of the court, was produced by the right-holder of this trademark and, therefore, does not constitute unlawful trademark reproduction, and so the company is not subject to administrative liability under Article 14.10 CAO RF for its import to the territory of Russia.

Thus, now, according to the position of the Presidium of HAC RF, unlawful trademark use is deemed to be the import to the Russian Federation of goods that bear the alien trademark.

The above position of the Presidium of HAC RF legalizes the practice of small businesses and individual entrepreneurs (let alone citizen-consumers), who purchase goods abroad without concluding agreements with the trademark owners (e.g., purchasing second-hand cars not from their manufacturers or dealers, but at the market) both for their own needs and for resale.