Importing Goods Without the Trademark Owner’s Consent

Alexander Kirilchenko
Associate, Customs & Foreign Exchange Regulation
Goltsblat BLP

Let us imagine that a bona fide importer has legally acquired goods from abroad that are protected by trademarks (for example, it has concluded a foreign trade contract and executed the requisite forwarding documents) and declared the goods for customs clearance, and that it transpired during customs clearance that the importer did not have the consent of the trademark owner to import the goods into the Russian Federation. How will this affect the customs clearance of the goods and the possibility that they will be released on the market?

I personally believe that the import of goods bearing trademarks is covered by the definition governing their use and requires the consent of the owner. Trademarks are one of the most common forms of intellectual property. The exclusive right to a trademark is owned by a legal entity or an individual entrepreneur that obtained the relevant certificate or acquired this right on the basis of an agreement on alienation of an exclusive right to a trademark. The legal substance of this competence implies that it is up to the trademark owner to decide whether to permit or prohibit the use of means of identification by other persons. It should be stressed here that the lack of a ban does not constitute the consent of the trademark owner.

Pursuant to the provisions of Part IV of the Civil Code of the Russian Federation, this consent should be expressed in a contract on the alienation of an exclusive right to a trademark (which stipulates de facto the sale of the exclusive right to the trademark) or a licensing agreement (which implies only the transfer of the right to use the trademark). According to Part 1, Article 1229 of the Civil Code of the Russian Federation, the use of intellectual property or means of identification without the consent of the trademark owner is unlawful and entails liability. The provisions on ensuring compliance with said legal norms are, inter alia, contained in the Customs Code of the Russian Federation (hereinafter — the “Customs Code”) and the Code of Administrative Offences of the Russian Federation (hereinafter — the “Сode of Administrative Offences”).

Pursuant to Article 403 of the Customs Code, protection of rights to intellectual property is one of the functions of the customs authorities, who are granted the right on this basis to suspend the release of goods that contain the indicia of counterfeit products. To arrange for customs protection of its goods, a trademark owner (or its representative) must register the corresponding trademark in advance with the Customs Register of Intellectual Property Assets (hereinafter — the “Customs Register”) maintained by the Federal Customs Service of Russia. Then the customs authorities work to identify goods that have been imported in violation of intellectual property laws by applying a dedicated risk management system within the scope of customs clearance procedures. This work is performed primarily by the intellectual property divisions of customs offices, regional customs agencies and customs posts.

If a trademark has been registered with the Customs Register, the customs authorities check: 1) whether these goods have been imported by a licensed importer or by a person that has not obtained consent from the trademark owner; 2) whether the goods have the indicia of counterfeit products. In the Russian Federation, the unlawful use of trademarks owned by another party is subject to administrative liability set by Article 14.10 of the Сode of Administrative Offences, which stipulates a fine of 30,000-40,000 rubles, including confiscation of the items containing unlawful reproductions of the trademark.

To clarify whether goods have been legally imported, the customs authorities have the authority to suspend the release of goods. The goal of this procedure is to provide the owner of a trademark sufficient time to collect evidence demonstrating that its rights have been violated and to file for protection of said rights by the competent authorities.    

In practice, the import of goods with the indicia of potential infringements of the rights of the trademark owner is established by the customs authorities, which communicate such facts to the trademark owner or to its Russian representative, which then decides at its own discretion whether or not to submit a formal application for the protection of its rights.

One should not rule out the possibility that the Russian customs authorities will soon receive the so-called  “ex officio” right to independently suspend (on their own initiative) the release of goods on the market (without receiving a corresponding application from the trademark owner). This issue has already been debated by the State Duma of the Russian Federation in connection with the submission of the relevant draft law for consideration by the Federal Customs Service of Russia.

The release of goods is suspended for 10 days. This term may be extended for another 10 days. In this case, the customs authority has to notify the declarant and the trademark owner (or its representative) about such an extension. Then the trademark owner is expected to collect evidence showing that its rights have been violated by the importer. The customs authorities assist the trademark owner by supplying samples of imported goods and any requisite additional information. Here the importer should bear in mind that certain confidential information about the goods or the terms of delivery may be disclosed to third parties represented by the trademark owner or its representative, although any further disclosure is punishable by law.

If the trademark owner does not receive a decision from the competent authority by the end of the aforementioned time frame to 1) seize; 2) arrest; or 3) confiscate the goods, the suspension will be lifted, and regular customs clearance will continue in accordance with mandatory customs procedures.  

Until recently, the customs authority was understood by administrative and arbitration practice to be the competent authority entitled to seize or arrest goods on suspicion that the rights of the trade owner have been infringed. Prior to the adoption of the Resolution on case No. А40-9281/08-145-128 by the Supreme Arbitration Court of the Russian Federation, the customs authorities and arbitration courts proceeded from the assumption that both the import of forgeries and “parallel import” of goods constituted an administrative offence. In connection with this fact, importers were confronted by a situation where they were the targets of administrative cases instigated in relation to the import of goods legally purchased in foreign countries into the Russian Federation.

This practice is changing, however. A court of arbitration is now the authority empowered to seize, arrest or confiscate goods imported under the “parallel import” arrangement. Now the trademark owner has to prove within the scope of competitive arbitration proceedings that its exclusive rights have been violated.

According to Article 14.10 of the Code of Administrative Offences, administrative offences may be only instituted with respect to goods that contain unlawful reproductions of a trademark. If the trademark is placed on a product by the trademark owner or its authorized representative (in other words, original goods), there are no indicia of unlawful reproductions of the trademark.

Consequently at present there is no risk that administrative proceedings will be instituted against an importer if it imports original goods. However, to rule out the risk of a possible suspension, the importer should clarify whether the trademark has been registered with Rospatent (the Russian Agency for Patents and Trademarks) and the Customs Register for legal protection in the Russian Federation before starting to deliver goods, and also conclude a licensing agreement with the trademark owner (or its representative) on importing goods and releasing them on the market in the Russian Federation.