One Man’s Garbage – Lexology

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Intellectual property is protected by many laws, not just a set of specific laws such as patent law, trademark law, etc. In Russia, these laws are summarized in one book: “Part IV of the Civil Code”. Several other laws also contain isolated intellectual property provisions.

One would think that the rights of the IP owners are strictly protected. Not always. Practice shows that infringers are no less inventive than inventors themselves. As soon as a law or regulation is passed, unscrupulous people look for ways to circumvent a patent or trademark.

Understandably, they are interested in patents and brands with good marketing potential. In patents, they look for the flaws in the claims that enable them to stay formally within the limits of the law. In trademarks, they invent designations that can appear similar to the protected trademarks. In many cases, justice can be sought and restored – but with expenditure of effort, time and money. For example, it took years to clarify the question of parallel imports in favor of the brand owners.

Depending on the nature of the product, infringers may look for specific ways to freeride someone else’s intellectual property.

Cartridge cases

Several years ago there were several cases where printer manufacturers vehemently protested the repeated use of their printer cartridges. Obviously, remanufactured cartridges may be of poor quality compared to the original items. However, the lower price of used cartridges entices many users to buy.

Incidentally, different countries have different policies regarding remanufactured items. For example, the US Supreme Court ruled (several years ago) in favor of remanufacturers that property rights take precedence over patent rights. The case concerned a patent infringement suit brought by Lexmark against Impression Products: The latter bought used ink cartridges, refilled them and sold them to users.

Russian law appears to have retained the same approach to cartridges. Several lawsuits were lost from printer / cartridge manufacturers. These judgments could be applied to any device that allows for repeated use.

Spare parts and trademark rights

Now the situation seems to have changed for the better. The Russian Interior Ministry sued Reikanen Parts (defendant) in administrative proceedings for infringement of trademark rights. The respondent collected and used auto parts from many companies (Audi, Skoda, Mercedes, BMW, Volvo and others) before repairing and selling them.

The police found and confiscated many of these spare parts. The automotive companies were involved as third parties and submitted their comments to the court, which ordered an expert examination which confirmed that the seized spare parts differed significantly from the original goods and should not be regarded as originals.

The defendant requested that the expert who prepared the report be invited to the hearing. However, the expert confirmed his findings and re-established that the goods examined by him did not correspond to the originals and showed obvious signs of forgery. The court thus rejected the defendant’s argument, which insisted that the goods were not manufactured, but only repaired.

The court interpreted the term “production” broadly. It was explained that the production can be realized not only through the entire manufacturing cycle, but also through repairs or reconditioning. The defendant could not explain where the goods came from. He just stated that he removed the parts from the cars and fixed those parts. Representatives of the brand owners compared the confiscated products with the originals and found significant differences that should rule out sale.

The court also relied on judgment 11 of the plenary session of the Supreme Court of the Russian Federation, in which it was previously stated that not only the persons who have branded the goods are liable. The methods of using a mark are not limited by the direct placement of a mark on the commodity and should be further interpreted.

Illegal use of a trademark should also include cases where the trademark is used without the trademark owner’s consent. This statement reflects the important decision of the Constitutional Court on parallel imports.

The court confirmed that the trademark owner has the exclusive right to use his trademark. Section 14.10 of the Law on Administrative Offenses covers cases of legal violations such as the unlawful duplication of means of individualization and the placing on the market of goods protected under trademark law without the consent of the trademark owner.

The court agreed with the third party invited to the hearing that goods sold under brands such as Audi, Volkswagen and others create the impression that the goods specifically belong to the brand owners – which is not the case. In addition, such goods may not be safe for the consumer and therefore harm the trademark owners.

The “Law for the Protection of Consumer Rights” (February 7, 1992) provides that the manufacturer of the goods must ensure the safety of the goods during the prescribed period of use, which cannot be guaranteed with reprocessed products. The defendant did not provide any evidence that it took reasonable steps to comply with the law.

The court then fined the defendant and confiscated the confiscated items.

The defendant appealed against the judgment to the court of appeal. He admitted having restored auto parts but claimed the expert review was biased. The court of appeal confirmed that the use of brand-like names without the consent of the owner is not permitted and that such unauthorized use (in this case) entails liability.

The defendant stubbornly appealed against the judgment, this time in the court of cassation (IP Court). The defendant could only properly invoke the allegedly incorrect application of the substantive legal norms and the resulting false conclusions.

He went on in the same way, claiming that the exclusive right could not be extended to the repair and restoration of the goods. However, the IP court upheld the conclusions of the lower courts that repaired and restored products differ from the originals. Hence, they should be considered counterfeit without the trademark owner’s permission.

The court also found that marketing is not just about selling, producing, etc., but also presenting the product at trade shows. The system for marketing intellectual property provided for in the law is not exhaustive either.

The respondent argued that he did not manufacture the goods and therefore did not use the trademarks. The court stated that the term “production” also includes the repair and restoration of the products, creating a new product that is different from the original.

Sum up

The court also addressed the principle of exhaustion of rights. Following on from the above statement, she stated that the intellectual property owner cannot impede the sale of products marketed with his authorization. In this case, the repaired products will not have original features. Finally, the court pointed out that the defendants’ arguments tended to negate the conclusions of the lower courts and dismissed the appeal.

This time the defendant made a gesture of desperation and sued the Constitutional Court, claiming that Article 14.10 of the Code of Administrative Offenses contradicted constitutional principles. The Constitutional Court examined the relevant documents and found no basis on which to accept and examine the complaint.

This case went through all possible courts. It is not an obvious parallel import, but nevertheless resulted in a judgment in favor of the trademark owners. This confirms that Russia is sticking to its loyalty to the national / regional exhaustion of rights.


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