Tackling parallel imports

Parallel imports can cause major problems for rights holders. This contentious issue has led to debate at both national and international level. So what is the current situation? In light of the establishment of the Eurasian Economic Union (comprising Russia, Belarus, Kazakhstan and Armenia, with more countries expected to join), some lobbyists have resurrected the debate over parallel imports. As a result, the Eurasian Economic Union has set up a working committee to examine the issue, the first meeting of which recently took place. The minutes of the meeting show only that there was no agreement between the parties involved. The committee is staffed with representatives of different government bodies of the member countries. As expected, the Russian anti-monopoly body argued that the ban on parallel imports curtails competition. This view was also echoed by other committee members. However, there was no real agreement on any issue. The only definitive conclusion at the end of the meeting was that the committee would meet again at a time to be determined. Hence, no changes in the approach to parallel imports are expected in the near future.

In the meantime, the courts have ruled on a case involving a parallel importer. Ravenol Russland Co imported Shell motor oil. Shell Brands International filed suit in the Rostov region and the court confirmed that Shell’s trademarks had been infringed. What distinguishes this case out from a host of similar cases is that the court awarded Shell very high compensation. Previously, even though the courts handed down judgments in favour of trademark owners, they have been wary with regard to awarding sizeable compensation. However, in this case the court ordered the infringer to pay Shell $100,000 – a major increase on the compensation awarded in other parallel import judgments. Compensation need not be proven; it is merely claimed by the trademark owner. This offers a major advantage compared to claiming damages especially as it is particularly difficult to provide evidence of damages in the case of parallel imports. 

The local court's judgment was appealed to the IP Court, which upheld the judgment. The size of the compensation award should serve as a powerful deterrent to would-be parallel importers.

This is an Insight article, written by a selected partner as part of IAM's co-published content. Read more on Insight

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