Since the start of military operations in Ukraine, the European Union has imposed sanctions against Russia, with the seventh package of sanctions already implemented. In addition, from February 24th to August 2022, more than 1,000 foreign companies have left Russia or suspended their operations in the country. To avoid a shortage of goods, the Russian government issued Decree No. 506 dated March 29th, 2022, “Referring to goods for which certain provisions of the Civil Code of the Russian Federation about the protection of exclusive intellectual activity rights cannot be applied,” hereinafter referred to as “Parallel imports”. The Ministry of Industry and Trade of the Russian Federation prepared a list of goods, this list is constantly updated, with the latest update made in July 2022.

What is a Parallel Import?

“Parallel import is a scheme for importing into the country, original products manufactured by the manufacturer in compliance with the production technology and all quality standards, but without the permission of the copyright holder. The possibilities of parallel imports are used in cases where, for various reasons, the import of a certain product to a certain region is prohibited or restricted.”

Goods imported through parallel imports undergo all the necessary customs declaration procedures, the only exception being that the importer is not required to confirm the consent of the owner (right holder) of the brand for the supply of such goods. As for all other requirements, the customs authorities control goods imported under a parallel import using the risk management system of the Federal Customs Service of the Russian Federation.

An interesting fact to point out is that parallel imports in Russia have already previously been in place before, as up until 2002, parallel imports were allowed in Russia. The seller could go to another country, buy a consignment of goods and bring them to Russia, although in 2002, parallel imports were banned. Big brands began to define distributors or dealers who could sell goods and this measure helped to attract investment to the country.

Parallel imports are not the import of counterfeit goods or fakes. The goods must be original, with all documents, including those regarding to quality. Imports are known as parallel as the sellers’ supplies derive from the official supplies of the copyright holder or its official distributor. Usually, goods are imported only through an official distributor: if it is permissible. For example, Apple manufacture smartphones, the distributor buys the smartphones and imports to Russia, and then sells them to customers or local stores.

Are parallel imports legal from the point of view of the copyright holder?

International trade rules allow for parallel imports. For example, in the USA, Turkey, Canada, suppliers have long been able to import goods into the country without the permission of the copyright holder.

Whether permission is needed from the copyright holder for import or not, each country shall decide for itself. In simpler terms, a country may choose when the copyright holder ceases to determine the fate of the goods.

There are two systems for the importation of goods, that is, two regimes – international and national.

  1. Under the international regime, a permit for the import of goods is not needed. The bottom line is: the rights holder sold the goods to the first supplier in the chain, and thus the right to sell automatically extends to future transactions in any country. The rights holder ceases to determine the fate of the goods at the time of the first sale.
  2. Under the national regime, an import permit is required. It doesn’t matter how many times and to whom the goods were sold: when crossing the border, the national authorities of a country will ask for permission. The rights holder ceases to determine the fate of the goods in the country after crossing the border.

 

At D’Andrea & Partners Legal Counsel we continue to monitor the development of the situation in Russia and will promptly inform you of any changes that take place. For more information, please contact our Russian Desk professionals at russiadesk@dandreapartners.com.