12 July 2012

WTO as medicine for grey import

Russia will have to change its principles of struggle with infringing merchandise after accession to the World Trade Organization

Accession of Russia to the World Trade Organization is irreversible in essence. The Constitutional Court has already verified the legislative purity of the Protocol of Accession, on Tuesday the document was ratified by the State Duma. Some experts, including the head of Rospotrebnadzor Gennady Onischenko have a fear that Accession to the WTO will open the Russian market for the infringing merchandise. Thus the ideology observance of the World Trade Organization shall, on the contrary, finally result in the territorial principle cancellation of the grey import struggle that is currently effective in our country and it will be advantageous for the Russian consumers of the branded foreign goods.

Talking of the fact that the world manufacturers of the goods and right holders suffer from grey schemes of the products import to Russia, take place for many years. But the main victim of the Russian politics in relation to the foreign goods are the consumers. When acquiring the goods from an official dealer in RF they have to pay for them several times more or support the grey import (import of the goods through unofficial channels what is unauthorized by the right holders). One can reverse the situation only having changed the struggle principle with the grey import, enshrined in the 4th part of the Civil Code of RF.

In Russia the extensive struggle with the grey import started in the 00s through amending the law "Concerning trademarks". This document was effective from 1992 and contained article 23 on exhaustion of the rights of a right holder, based on a trademark registration. Up to December 2002 this article did not contain the principle of the territorial use limitation of a mark. The document text stated: "Registration of a trademark does not entitle its holder to prohibit this trademark use to other persons in relation to the goods that were introduced into the economic turnover directly by a trademark holder or with its consent". But in December of 2002, the article was supplemented by just several words – "in the territory of the Russian Federation", – and the document essence changed. Actually Russia changed the principle from the international to territorial one.

It is difficult to answer what goal it was done with. More than likely that the RF authorities, in doing so, wanted to support the Western manufacturers who kept criticizing and continue criticizing Russia that their intellectual rights are not observed in the country…

According to the territorial principle it is assumed that any person, whether it is a legal entity or natural person, when entering the RF territory, shall have a document about oneself confirming that a right holder permitted it/he/she to import these goods to Russia. But the extensive struggle of the right holders supported by the government, with the grey import, concerned for an unknown reason only the legal entities that declared and imported the goods for sale to the territory of the country. It was evident that individually taken tourists just can't get permits for purchases import on a one-off basis. Thus such selectability called into doubt a thesis  stating that we have the law that is equal for everybody...

In 2009, the Supreme Arbitration Court considered a very interesting case. A certain legal firm imported a Porshe car to the RF territory, and there had been attempts to stop and destroy this car as grey import. But the court adjudged that since the company had imported the car for its needs, therefore there were no grounds to stop and destroy the car. Subsequently the courts governed by the created precedent, rejected the rights protection to the right holders for some time.

Some time ago certain entrepreneurs from Kaliningrad tried to take an appeal at the Constitutional Court from a norm that had entitled a right holder to prohibit the unlawful use of a trademark. But the legal monopoly principle for a trademark as such was taken an appeal from (clause 2 article 4 of the law "Concerning trademarks"), for which reason the court took a decision to let everything be as it is. For the time being the court in Russia acts as the grey import regulator: despite the norm absence in the law that differentiates the rights of the legal entities and natural persons, exhaustion of an entitlement is applied in a different way.

Today the Federal Anti-Monopoly Service also states that it is necessary for Russia to transfer to the international principle and WTO – is an optimal cause to do it. After Russia's accession to the organization, the new principle will start having effect as from the time it is adopted. Moreover, there is an opportunity to contest at court the rules that have been effective since 2002, and in theoretical terms the cost of all the goods that were destroyed will have to be compensated to their carriers and a compensation collected from them - shall be returned to the "breakers"..

In the meanwhile many goods in our country cost by 2–3 times more expensive than in other countries, because the government in RF permits a right holder to establish such prices, in terms of struggling with grey import. Only when a principle of struggle with grey import becomes international, the prices will be normal. In the meanwhile certain branded things are simpler to buy abroad — at the same money which will be spent in Russia, one can not only purchase goods but also pay flight and accommodation at a place of purchase.

Sergey Anatolievich Zuykov — the president of Guild of patent attorneys and patent officials.See more details: http://www.ng.ru/economics/2012-07-12/3_kartblansh.html

Managing Partner / Patent Attorney of the Russian Federation / Eurasian Patent Attorney