Counterfeits in the frames of Eurasian Economic Union

Article by Sojuzpatent’s Senior Lawyer Maria Plotkina published in the IPPro Magazine (Issue 28, August 20, 2019)

Counterfeits in the frames of Eurasian Economic Union: what to expect?

Sojuzpatent’s Maria Plotkina explains how counterfeits are still problematic in the Eurasian Economic Union

The Eurasian Economic Union (EAEU) is an international organisation of regional economic integration, established by The Treaty on the Eurasian Economic Union, which came into force in January 2015. Today the members of the Union include Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan.

The EAEU introduces the free movement of goods, capital, services and people and provides common policies in the macroeconomic sphere, transport, industry and agriculture, energy, foreign trade and investment, customs, technical regulation, competition and antitrust regulation.

Speaking about intellectual property protection as one of the priorities, the main goals in the frames of the EAEU are to harmonise and unify the national legislation of the EAEU member states in the field of IP rights protection, as well as to defend the interests of owners of IP rights in the EAEU member states

One of the principal problems in the sphere of protection of IP rights is the importation of counterfeit goods through the EAEU customs border and, therefore, customs protection of IP rights. Providing the fact that there are no customs borders inside the union between Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan, local and foreign rights holders need effective measures for the protection of the unified market from the counterfeits.

Customs authorities of EAEU member states manage national customs IP registers as an effective tool for detection and prevention of illegal importations. However, there is a problem of significant difference in the number of registered objects in the national registers and, as a result, different levels of IP protections in the EAEU countries. Taking into consideration the absence of the internal customs borders, this difference can cause unimpeded import of goods on the territory of one member state with its further distribution within the union. In such a situation, it is recommended to record the trademark in the national customs IP registers in each member state. The only complication here is that the trademark, before its registration in the national customs register, should have a local state registration.  

In this regard, it is necessary to point out that the Customs Code of the EAEU, which entered into force in 2018, provides for the establishment of the unified customs IP register.

The main advantage of this register is to avoid unnecessary actions and to centralise registrations of trademarks, service marks, appellations of origin and copyright in the unified customs IP register in one body—the Eurasian Economic Commission. The rightsholders will be able to file an application for registration directly to the Eurasian Economic Commission, which will forward the information to the customs authorities of each member state. The main point here is that the trademark should be registered in all EAEU member states, otherwise, the application will be rejected.

In addition, it should be noted that in December, 2018 members of the Board of the Eurasian Economic Commission of the EAEU signed an agreement on trademarks, service marks, and appellations of origin of goods of the EAEU. The agreement will provide an opportunity to register ‘union trademarks’ and ‘the Union’s appellation of origin of goods’, that are protected in the territories of all the member states of the EAEU and will eliminate redundant administrative barriers.

Among the most important provisions of the Agreement are the following:

• One application for a Union trademark (the Union’s appellation of origin of goods) filed with any of the member states’ patent offices. If at least one of the national patent offices refuse to register the designation, registration of the Union trademark will be denied
• Interaction with only one national patent office at the applicant’s choice (“one window” system)
• Creation of the Union’s Unified Register posted on the EAEU official website
• Resolution of disputes concerning Union trademark infringements taking place on a member state territory in accordance with that state’s legislation (by national courts)
• Official fees for the Union trademark registration will be set independently by each member state.

Thus, both the unified customs IP register and the Union trademark, that should become active in 2020, will improve the level of IP protection in the EAEU.

According to the research from the Eurasian Economic Commission, the main reasons IP infringements in the EAEU are:

• Significant increases in the costs of original products, that lead to the increase in the inflow of the counterfeit products;
• Lack of rightsholder’s participation in the protection of the market against counterfeits, caused by reputational risks;
• Insufficiently effective customs control along the entire perimeter of the EAEU customs border;
• Distribution of the counterfeit products through the Internet sales and international mail.

Each member state takes measures for improvement of the mechanism if IP protection, detection and suppression of illegal importations. 

As for Russia, the customs authorities run an experiment, which provides an opportunity for the online cooperation between the customs and the rights holders, including filing an application for recordation of the trademark into the customs IP register in electronic form using a personal account on the website of Federal customs service. Furthermore, electronic cooperation gives an opportunity to integrate the data, especially information about the suspension of the release of the goods, directly to the personal account of the rightsholder online. This should help to react on the right holder's notifications in time and take decisions on the prohibition of the release of counterfeit goods. 

After two years of experiments, online cooperation between the customs and the rights holders are now stipulated in a new Customs Administrative Regulations on managing of the national customs IP register, which entered into force in July, 2019. Although the special software continues to be upgraded, the system is currently working, and the customs authorities of the other state members consider its adaptation into their work.

Another important issue is the gradual introduction of a product marking system for prevention of IP infringements in the EAEU.  An agreement on marking of goods by identification devices in the Eurasian Economic Union was signed by the member states of the EAEU in 2018 and should help to increase control over the circulation of goods in the territories of member states, ensure transaction transparency and avoid the sales of counterfeit goods in the EAEU. New rules apply to manufacturers, wholesalers and retailers, as well as importers of goods that will need to be marked according to the law.

In Russia, a list of certain groups and types of goods subject to mandatory marking has been approved. First in the line—tobacco products and shoes. Starting from July  2019, it is prohibited to manufacture and import cigarettes without new marking in the form of unique barcode in Data Matrix format. Unmarked residues can be sold until July 2020. 

From December 2019, the marking system will be introduced for several goods, including perfumes, tires, and leather clothes, among others.

From January 2020, the marking system will come in force for jewellery. As for the medicines, from October 2019 it will be necessary to mark the drugs from the list of high-cost nosologies and from January 2020—all the other categories. The term for introduction of the marking system for fine wood and milk products are still under consideration. 

It is necessary to point out that administrative responsibility with the fine and confiscation of goods is stipulated in case of infringement of marking requirement with respect to the groups of goods subject to mandatory marking. 

The functional and technological parameters of the information system for marking of goods will create a digital system of traceability of goods, covering most categories of goods, which in turn will help to avoid the sales of counterfeit goods in the EAEU.

The above possible instruments, in case of its balanced and consistent applying, can be quite efficient for protection of IP rights, depending on the aims of the rights holders, and form a unified law enforcement practice in the frames of the EAEU.