Jamshid Turdibekov

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Protecting intellectual property rights at customs is so essential that it could prevent importing and exporting the infringed goods. Therefore, in today’s legal world, the regime of “ex officio” and the term “parallel import” is a matter of great concern in international trade. The Office of the United States Trade Representative (USTR) reports that Uzbekistan lacks ( source )  the legislation on ex officio authority for border enforcement. Regarding the parallel import, this concept is not tackled accurately in legislation. This blog post examines the benefits and possible problems of implementing such concepts in Uzbekistan.

What is parallel import? 

Parallel importation refers to the free entry of original and branded products into the country without the trademark holder’s permission. Import of goods, in this case, is carried out not by the rights holder, its authorized importers, or official distributors but by other persons. There are two main points on parallel import. First,  parallelly imported goods are not counterfeit; second, this process happens without the permission of the intellectual property rights holder (IPR holder).

      Here, it is vital to observe that each IPR holder has the exclusive right, meaning nobody else has the right to use it unless the IPR holder consents to such use. Nevertheless, the rights conferred on IPR holders to use their protected IPRs are limited by the principle of exhaustion. According to this principle, once the IPR holder has sold the product bearing respective IPR, he cannot prohibit the subsequent resale of such product, i.e., his rights in respect of this individual product are deemed “exhausted” by the act of selling it. Here, a “first sale doctrine” is connected with the exhaustion principle. This doctrine gives the owners of copyrighted works the right to sell, land, or share their copies without having to obtain permission. The first sale doctrine allows the resale of items bearing a trademark, such as a logo or brand name, after the trademark owner has sold those items unless this is likely to confuse or deceive consumers. 

     I will examine Russia and Kazakhstan’s legislation on the exhaustion of rights here. In Kazakhstan, the legislation does not directly define counterfeit goods. However, according to Article 19.7 of the Law “On Trademarks, Service Marks and Appellations of Origin of Goods,” the use of a trademark by others about goods that have been legally put into civil circulation in the territory of the Eurasian Economic Union (EAEU) member-states by the right holder or with its consent, shall not be considered as the infringement of the exclusive right to the trademark. In other words, if the goods are put into civil circulation not by the right holder or without its consent, it shall be considered an infringement of trademark right. In short, a “parallel importer” can be made administratively liable by the customs authority of Kazakhstan. 

   As for Russia, articles 1359 and 1487 of the Russian Civil Code are the primary regulators in the exhaustion of rights. Furthermore, Annex No. 26 to the treaty on EAEU noted that using the trademark in the territory of EAEU member states is allowed by the right owner or his consent. In other words, parallel import is illegal for the EAEU. However, in practice, due to Western sanctions, the Russian Federation adopted Resolution No. 506 on protecting exclusive rights to the results of intellectual activity. Although all the member countries of EAEU in a single international document have established that the import into the territory of a country of original goods with a trademark, which is carried out without the consent of the right owner of such a trademark in the territory of this country is an infringement to the right owner’s rights, the main party, Russia, behaved another way. More precisely, the Russian scheme offered importers legal protection from civil suits for bypassing official distribution channels. That is against the treaty on the EAEU. 

What does the legislation of Uzbekistan say about parallel import?

As Dinara Abdunayimova noted, there are three types of exhaustion of rights: international, regional, and national. There is no single and transparent legal framework on the concept of parallel import. It is neither permitted nor forbidden except for some principles on “exhaustion of exclusive rights.” More clearly, “national exhaustion” is expressed in the Civil Code of Uzbekistan. According to the Law “On Amendments and Additions to Certain Legislative Acts” (2017), new regulations on the exhaustion of exclusive rights to the trademark have been introduced. Article 1107-1 states that : 

It does not constitute an infringement of the exclusive right to trademark use of this trademark by other persons in respect of goods that have been legally introduced into civil circulation directly by the trademark owner or with his consent.  

Interpretation of the clause provides that the exclusive right to trademark covers the goods that were put into civil circulation by the trademark owner under his consent. Third parties importing the goods must provide evidence that the trademark owner put them into civil circulation or under its consent. In short, the national regime of exhaustion of exclusive rights was set up clearly, while international principles are inconclusive. 

The role of the customs office in protecting the IPR holders

In the further development of parallel import in Uzbekistan, it is crucial to implement several measures, such as “ex officio .”Article 58 of the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights ( TRIPS Agreement) states the concept of the term “ex officio,” which expresses in short that an IPR holder shall have registered his or her IPR with Customs. Furthermore, when the Customs Office discovers any import/export goods suspected of infringing any registered IPR, it shall suspend the release of the said goods and inform the relevant IPR holder. More importantly, Customs Office must have the right to confiscate such goods and to impose an administrative penalty on the relevant consignee or consignor.

   Although Uzbekistan maintains customs register, the ex officio principle is not fully applied. Suppose the trademarks are registered with the Customs Registry. In that case, trademark owners have a right to apply to customs authorities to secure their exclusive rights from parallel import, i.e., unauthorized importation that violates the exclusive rights. According to Article 386 of the Customs Code of Uzbekistan (source ), the Customs Committee requires a written application for inclusion in the Customs Register of intellectual property objects. Therefore, the only way to prevent the import of goods infringing the intellectual property right of the right holder into the territory of Uzbekistan is to apply to the Customs Committee in advance. However, as there is no institution of customs recordation in the country today, the customs authorities are under no obligation (ex officio) to initiate monitoring of any goods infringing the rights of any brand owner. Hence, customs authorities are completely relieved from any fault or resulting liability if some infringers import any cargo infringing a brand owner’s intellectual property rights into the country’s customs territory. In other words, amending the Customs Code to grant customs authorities with “ex-officio” power to locate independently and seize infringing goods, as well as to obligate customs authorities to check the authority of a distributor to import the goods by sending the notification to the right owners and remove the burdensome obligations imposed on the right owners to provide detailed information about the possible importation would be an enormous step towards the protection IPR holders and a bridge to accession to WTO, too.

Conclusion  

To conclude, there is no clear legislation in parallel, though protecting the intellectual property rights holders is critical. Therefore by making conclusions on the dispute between Russia and Kazakhstan, setting clear, strict legal protection ( such as “ex officio” ) on the Customs legislation of Uzbekistan will increase the level of respect for intellectual property as well as the economic dynamics of the country. 

Cite as:  Jamshid Turdibekov, “What are the benefits of “ex officio” for Uzbekistan and the concept of parallel import?”, Uzbekistan Law Blog, 08.03.2023.