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Legalisation of Parallel Imports of Goods

The law now allows non-authorized distributors to import goods into Russia, avoiding official distribution channels.

Parallel imports is a very debated subject. In this article we tried to explain the arguments of Russian experts, lawyers and economists on the issue.

Polina Murygina, Associate INTELLECT

Legalisation of parallel imports was among the retaliatory measures introduced by the Russian Government in order to reduce the burden of sanctions that affected all sectors of the Russian economy. Parallel import is defined as the import of original goods from abroad without the consent of the copyright holder or trademark owner – the definition established by the Constitutional Court back in 2018 (Decree from 13.02.2018.1).

On March 29, 2022, by the Decree of the Government of the Russian Federation N 506 the parallel imports of certain goods were legalised. In particular, the Decree allowed import into the country of original foreign-made goods without the consent of the copyright holders. The Decree also abolished liability for parallel imports – the provisions of subparagraph 6 of Art. 1359 and Art. 1487 of the Civil Code of the Russian Federation stopped applying to a number of goods. Only in the beginning of May the Government finally published a list of goods that were to be imported from "unfriendly" countries without consent of the copyright holders and trademark owners. Among others, the list included – cars from GM, Chevrolet, Mitsubishi, Tesla, Nissan, Mercedes-Benz, BMW, Audi, etc., musical instruments, Xbox, Playstation and Nintendo game consoles, technics by Apple, Samsung, Canon, HP, Xerox, Toshiba, Dell and others.

The Ministry of Industry and Trade of the Russian Federation reasons such a decision on the grounds that parallel imports do not concern counterfeit products – the imported goods are supposed to be legally accepted in the market of the country from which they are imported. The Ministry also specified that one of the principles for compiling the list was to protect the interests of domestic consumers against the "unfriendly" countries' sanction regimes.

The society divided into parts in regard to the issue: some suppose that without the legalisation of parallel imports, the Russian economy would face an unprecedented shortage of certain categories of goods, especially in the high-tech and sensitive technology sphere. Others assume that as a result, the Russian market will face a record influx of counterfeit products. And there are also some, who believe that this was the one and only decision possible that would let the economy survive. Probably, there is a true bit in all of these statements.

The world practice proves that in countries, where parallel imports of goods are legalised, prices for certain items from unofficial suppliers may be lower due to the absence of a monopoly of the trademark owner.

Another argument is that parallel imports may leave a legal way for owners, who cannot supply goods directly to the Russian market due to sanctions, to actually supply these goods through third parties. However, for trademark owners in cases where non-supplying of goods to Russia is a principle and a moral, there is a possibility to add additional provisions to the contract with distributors, that prohibit the supply of their goods to Russia under the fear of penalties.

No one can predict how long these norms on legalisation of parallel imports would be kept in force, yet one thing became quite clear from the beginning of the sanction-war: without parallel imports some sectors of the economy would not be able to function.

Business Transactions, Intellectual Property, International Law, International Patent, International Trademarks, Patents, Trademarks

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