SERGEY PUZYREVSKIY: BAN ON PARALLEL IMPORT DETERS COMPETITION

At session of the Association of European Business (AEB) on 18 May, Deputy Head of FAS called upon representatives of business not to fear parallel import legalization. At the same time, clear boundaries for conduct of the right holders should be established

According to Deputy Head of FAS, parallel import is at the intersection of protecting intellectual property rights of the right-holders and the issues of goods circulation.

FAS is concerned that some IP trends deter market competition.

“Goods circulation is regulated by the antimonopoly law and in most cases solutions are efficient”, explained Sergey Puzyrevskiy. “There are some restrictions and requirements to vertical agreements. Vertical agreements and parallel import are practically the same. Under vertical agreements, goods are transferred from sellers to distributors”.

A threat to competition depends on the company’s market share. “If after importing goods an importer has a small market share – no restrictions are necessary”, confirmed the speaker. “As soon as the share of a market player increases to 20% some threat to competition emerges. In this case, for instance, agreements between producer and distributor may contain certain restrictions.  For example, pricing conditions cannot be included in the agreement:  setting resale prices except the maximum resale price. They also cannot ban to resell goods of their competitors. Stricter requirements are introduced when the entity has a dominant position and its share exceeds 35%. For example, additional requirements for selecting distributors are set”.

“Unfortunately enforcement practice has shifted these norms away. Regardless of the market share, Courts began to apply the norms of the intellectual property law. If goods are introduced into circulation outside Russia, the right holder decides whether to import to Russia or not. Thus, IP issues are solved in one way, and antimonopoly regulation – in a different way”, said Sergey Puzyrevskiy.

He drew attention to the recent judicial precedents. They imply that under the parallel import ban particular markets can be monopolized.

“We live in legal uncertainty”, added the speaker. “The boundaries of the allowed conduct of the right holders should be clearly specified. In particular, we should solve the issues with non-applicability of rules to the right-holders that localized production.  The right of such holders to ban parallel import should be introduced. If localization does not take place, antimonopoly rules should be in effect, preventing to control the market. It will be beneficial for the right holders that operate in Russia”.

Sergey Puzyrevsky called upon representatives of business not to be concerned with the risks associated with possible legalization of parallel import.

“Parallel import is not a way to breach all rights. One should not forget that when we talk about the principle of international exhaustion of rights, the laws that determine import and circulation of goods remains in effect (the customs law, the law on consumer rights protection, etc.)”, summed up Deputy Head of FAS.