ANDREY KASHEVAROV: FAS IS ORIENTED TO PREVENT COUNTERFEIT AND PROTECT INVESTMENTS IN RUSSIAN BUSINESS, WHILE TAKING INTO ACCOUNT CONSUMER INTERESTS

Allowing parallel import, FAS adds to the distribution system rather than breaks it

Deputy Head of FAS had a meeting with David Lossignol, President of the International Trademark Association.

“I’d like to emphasize that we delineate national and regional rights exhausting and protection from counterfeit as our opponents try to link these issues. Here we are based on the principles laid down by the World Trade Organization: free movement of goods between countries and a recently recognized principle that original goods cannot be considered counterfeit”, pointed out Andrey Kashevarov.

In his view, FAS is investigating three cases related to import of original goods from foreign manufacturers, where the antimonopoly authority evaluates legitimacy of refusing imports of goods by particular companies and granting permission to other importers:

“Our logic was that when the so-called parallel importer asked the right-holder’s consent to import original goods, the procedure of Article 1487 of the Civil Code of the Russian Federation is observed. Then FAS evaluates actions of the right-holders in terms of consent or refusal to import their goods”.

Studies carried out by antimonopoly colleagues from EAEU show that prices for a lot of goods, including cars and spare parts for them, medicines and medical products considerably exceed prices for the same goods in Europe. Russian parallel importers are prepared to buy the same goods from official European distributors of the relevant trademarks but the right-holders deny them such a possibility.

“When we propose to move to the international principle of rights exhaustion for particular categories of goods, we also propose the conditions to protect the right-holders’ interests”, stated Deputy Head of FAS.

Such proposals include, in particular, creating specialized customs stations, through which parallel importers can import goods, for example, a special customs station for import of medicinal drugs.

“We do not break the established distribution system; we propose to add to it. FAS is in favour of strengthening control: mandatory Manufacturer’s Certificates and equipping specialized customs stations with a laboratory to check the quality of the imported drugs. Thus, protecting import of the original goods of the right-holders is an absolute and incontestable priority”, said Andrey Kashevarov. “As for the companies making investments in the Russian Federation, we suggest to maintain the national principles of rights exhaustion for their goods. That is why anti-counterfeit efforts and protection of investments is important for us, but the interests of Russian consumers is the priority, and parallel import should ensure safety and accessibility of the goods, for which import-dependence remains”.

David Lossignol, President of the International Trademark Association confirmed “a long-established position” of the International Trademark Association in favour of national (or regional) exhaustion of trademark rights with regard to parallel import of goods in accord with the resolution of the Council of the International Trademark Association on exhausting the trademark rights and parallel import. David Lossignol emphasized the need to satisfy consumer expectations in terms of the quality and properties of the goods aimed at a particular market since any discrepancy reduces consumer confidence and, therefore, damages brand reputation considerably. He stressed the relations between counterfeit products and parallel import and added that the international principle of rights exhaustion also has adverse consequences, facilitating sale of counterfeit goods, because it would be extremely expensive for any government and trademark owners to investigate every batch of parallel import in order to identify counterfeit goods. Therefore, any public interest that can exist in the context of enabling “free trade” in parallel import, must match an obvious public interest in preventing sales of counterfeit goods.