Constitutional Court Rules on Parallel Imports

16 March 2018

On 13 February 2018, the Constitutional Court of the Russian Federation (the Court) adopted Ruling No. 8-P that affects court practice in the sphere of parallel imports and beyond. The decision may not be appealed, it takes effect immediately on the date of its rendering and has direct application to relations in question.

In its Ruling, the Court confirmed in general the constitutionality of the principle of national (regional) exhaustion of rights in respect of trademarks.

At the same time, the Court formulated the following guidelines to Russian courts with regard to application of law to parallel importation.

It is stated that the courts shall not apply equal liability measures to parallel importers and importers of counterfeit goods because the degree of danger to legal turnover and public interests is not the same. Different civil law liability should be applied to parallel importers unless the amount of damages to rightholder inflicted by parallel import is comparable to the amount of damages inflicted by counterfeit. In each particular case, the liability measures applied to parallel importers should be adequate to their consequences (including in respect of specific infringer) and proportionate to the damage. Such remedies as an injunction and destruction may only be applied to parallel importers exceptionally in cases when the low quality of imported goods is confirmed and/or when there is a threat to safety, people’s life and health, the environment, or cultural values.

The Court required Russian courts to assess whether the rightholder’s activity is of bad faith nature and whether the rightholder’s remedies may pose a threat to security, people’s life and health, environment and cultural values, other public and constitutionally protected interests. Upon positive conclusion the claim of the rightholder to the parallel importer should be denied. Rightholders will be deemed acting in bad faith if they:

  • use the national (regional) exhaustion of rights regime to limit the import of specific goods (especially of vital importance), into Russia; or
  • set prices in the Russian market on a higher level than it is usual for conducting standard business activity and for addressing economic interests of the rightholder as compared to other markets.

The above listed actions, stated the Court, if performed in connection with sanctions against Russia, specifically endanger material public interests of the Russian Federation. Rightholders' abiding by the sanctions regime against Russia manifested in the aforementioned actions in the Russian market, may be regarded as bad faith practice per se.  

We will be pleased to provide our further comments to our clients on a case by case basis.