How do customs authorities aid the fight against IP infringement?
Kirill Osipov and Mikhail Khmara of ARS-Patent evaluate the role of Russian customs authorities in the battle against IP infringement, detailing the requirements for a piece of IP to be included in the FCS register
These days counterfeiting and parallel imports are of great concern in Russia, especially in relation to trademarks. Different ways of protection associated with this issue are provided for by law. There are civil, administrative and criminal repercussions for infringers of IP rights. Court practice has been quite variable in these cases. However, in 2018 the Russian Constitutional Court prohibited the same penalty for parallel imports of original products which are marked with a trademark and imported without a rights holder's permission and for counterfeiting (No. A21-7328/2014, Court Decision No. 8-P/2018). According to the decision, goods which are brought into Russia by way of parallel imports may be subject to destruction only when they are of insufficient quality or for security reasons, the life and health of the public, the environment or cultural heritage reasons.
The main activity of the Federal Customs Service of the Russian Federation (FCS) is to discover counterfeit goods and prevent their entry into the country. In 2018, customs authorities found 16.2 million units of counterfeit goods – 6.1 million units more than 2017. The number of administrative offence cases started in the IP field in the past year amounted to 1,255 (cf. 1,072 cases in 2017). The sum of the rights holders' averted losses was 6.8 billion roubles in 2018 and 4.5 billion roubles in 2017.
An effective method to protect against counterfeiting provided by the FCS is inclusion of an IP object in the Customs Register of Intellectual Property Objects of the Russian Federation (hereinafter the register). This register is a part of the unified customs register of intellectual property objects of the customs union, for which an international agreement was ratified by the Russian Federation in 2011. As of September 2019, 5,081 objects were included in the register. This register is publicly available at http://customs.ru/opendata/7730176610-trois/ (in Russian).
According to Article 334 of Federal Act No 289 of August 3 2018 On customs regulation in the Russian Federation and on amendments to a number of legislative acts of the Russian Federation, copyright objects, related rights objects, trademarks, and designations of origin may be included in the register. Thus, not every piece of IP can be included in the register – only those specified in the federal act.
Preparing an application for inclusion of IP objects in the register is governed by the Administrative Regulations of the FCS for providing public service on maintenance of the Customs Register of Intellectual Property Objects (the Administrative Regulations) approved by FCS's order No 131 of January 28 2019. The regulations provide detailed information about the procedure for inclusion of different IP in the register. First of all, it is necessary to file an application with the FCS in the established form as follows:
details of rights holder;
details of IP object to be included in the register;
details of people involved in the turnover of the original goods and goods indicating infringement of the rights holder's rights;
details of goods which are imported into Russia, their export from Russia or other actions concerning goods controlled by the customs authorities which result in infringement of IP rights should be sufficiently detailed for customs authorities to identify such goods (data should be provided on distinctive features and characteristics of goods);
details of the documents accompanying goods;
customs commodity codes of the goods (original and counterfeit).
The following documents should be enclosed in the application:
power of attorney (if the submission is performed by a representative of the rights holder);
extract from the Russian Unified State Register of Legal Entities or Individual Entrepreneurs (dated no earlier than one month before the submission) or Principle State Registration Number, Tax Identification Number, certificate of registration (if a rights holder is a foreign entity, an extract from a commercial register or from the incorporation certificate or any other similar document of a corresponding country should be presented);
the rights holder's right to compensation if damage is caused by an importer or a recipient of goods or other persons in connection with suspension of term to release goods by the FCS;
document confirming insurance;
samples of the original packages (if any) and photos of goods;
samples (photos) of counterfeit goods;
certified copies of licence or sub-licence or assignment agreements;
copy of a trademark (or other IP object) certificate.
There is an exhaustive list of necessary documents indicated in paragraphs 18 to 32 of the Administrative Regulations.
Before going into detail about refusal of IP objects for inclusion in the register, it should be noted immediately that, according to the general rule, the object is included in the register for a term of three years with a possibility of further extension an unlimited number of times. However, the term of protection of rights holder's rights by the FCS cannot exceed the term of the rights holder's exclusive right to the corresponding IP object.
At first sight, it seems that there is no difficulty in preparing the above set of documents. However, in practice, rights holders often face problems, and, as a consequence, receive refusals for inclusion of their IP objects in the register.
Customs control can be quite effective at protecting IP rights, especially when these objects are included in the register
The most common ground for refusal is based on Article 19.3 of the Administrative Regulations, according to which, if the application does not include detailed information about distinctive features and characteristics of goods and cases of IP infringement, it cannot be considered. In its responses, the FCS usually points out that a rights holder should have submitted full information about the goods and IP infringement in order to allow the FCS to find them. As a result of the provision above, a rights holder cannot include an IP object in the register unless he has the requisite information confirming infringement of IP rights due to the importation of goods into Russia or export out of Russia. The filing of the application with the FCS to have the IP object included in the register is reasonable only when coupled with reliable and complete information about real infringement of IP rights by other people.
Rights holders do not agree with such an approach and believe that they should not have to wait until their rights are infringed. They should have the chance to include their IP objects in the register to prevent any infringement. Some rights holders even contest the refusals of the FCS. For example, in 2013 a rights holder appealed to the Arbitration Court of Moscow with a lawsuit to have the FCS's decision on refusal to include a trademark in the register cancelled (ref A40-125620/2013). The rights holder considered the FCS's demand to present any information confirming import of counterfeit goods marked with the trademark into Russia illegally. Nonetheless, the court took the FCS's side: the court of first instance rejected the rights holder's lawsuit, and decision was upheld by the court of appeal and the court of cassation. This case is of particular interest as the rights holder brought the appeal to the Russian Supreme Arbitration Court, but the appeal was refused consideration. This case showed that applying to exclude possible IP infringement in the future does not comply with the principles behind the register. However, it seems that the courts' stand has started changing recently. Thus, in the Ruling of January 22 2020 issued in case no. A40-241863/2018, the Russian Supreme Court questioned the legality of such an approach to the register and required the first instance court to reconsider this case contesting the FCS's decision not to include a trademark in the register.
Advice to rights holders
Particular attention should still be given to information about counterfeit goods.. A rights holder should submit this information in order to provide the FCS with the chance to discover such goods. The required information may contain any of the following: description of goods infringing IP rights (e.g. their packages or label tags along with photos of them), distinctive features of the counterfeit goods, comparative analysis of the original and counterfeit goods, as well as information about supposed places of import into Russia (or export from Russia) and about importers (or exporters), if any. In circumstances where counterfeiting has been discovered on the internet, print screens of a corresponding website may be submitted to the FCS. As evidence of counterfeit goods, it is also possible to get a public notary's inspection report of a website where counterfeit goods are on sale.
Rights holders can make sample purchases of counterfeit goods and forward them to the FCS along with sales checks and full description of the goods and place where they were bought.
All these actions considerably increase the chances of having an IP object included in the register.
The ex officio principle
It should be remembered that the customs authorities may suspend not only release of goods containing IP objects that are in the register, but also other goods if they are branded with registered trademarks. The FCS's authorities are provided ex officio and correspond to international obligations connected with the Russian Federation joining the WTO as well. In accordance with the principle of ex officio when the FCS suspects infringement (illegal use of a trademark registered in Russia), the FCS may suspend release of goods at its sole discretion for no longer than seven working days. During this period the rights holder must check photos of the samples of goods provided by customs and confirm that these goods are imported (or exported) and infringe their IP rights.
Based on our experience, it is safe to say that the customs authorities use the principle ex officio very actively. We consistently receive inquiries from customs referring to registered trademarks which are not in the register. Thus, the application of the principle helps rights holders protect their rights even if customs refused to include a trademark in the register. However, in case counterfeit goods are discovered and furthermore, when there is information about the way they are imported, we highly recommend applying to the FCS for inclusion of IP objects, as the registration of these objects in the register allows customs authorities to perform their legally entrusted functions more effectively, and suppress the import of counterfeit goods as well as control goods transfer across the customs border of the Eurasian Economic Union.
Customs control can be quite effective at protecting IP rights, especially when these objects are included in the register. Nonetheless, currently rights holders face difficulties associated with inclusion of their IP objects in the register. As a result, a set of documents to be filed with the Russian FCS should be prepared with particular care.
Kirill Osipov is the head of the legal department at ARS-PATENT. He is a Russian and Eurasian patent attorney with extensive experience in IP. He specialises in patent litigation and prosecution, as well as technology licensing in the fields of pharmaceuticals, biotechnology and chemistry. As the key lawyer at the firm, Kirill Osipov assists clients on various contentious matters, whether patent or trademark, or copyright-related. He is a member of AIPLA, the Russian Chamber of Patent Attorneys and the St Petersburg Bar of Patent Attorneys.
Mikhail Khmara is a partner and head of patent practice at ARS-Patent. He is a registered Russian and Eurasian patent attorney with more than 20 years of experience in IP. His other responsibilities include licensing and cession agreements, and handling patent oppositions. Years of experience working with trademarks and patents have resulted in his unique set of skills and in-depth understanding of IP law. He served in the Appeals Commission of the Russian Patent and Trademark Office and has been listed several times in the publication Russia’s Best Lawyers. He is a member of FICPI, AIPPI and the Russian Chamber of Patent Attorneys.