From Nov. 9 to 11, Gowlings participated in the Anti-counterfeiting and IPR Protection sessions convened by Russian Customs in Krasnodar. The Krasnodar sessions were the third and last of the series organized by Russian Customs for its regional branches1.

Krasnodar is known as the “southern capital of Russia” and is a main transportation hub for Russian southern borders, including access by the Black Sea.

Overview of the sessions

The anti-counterfeiting sessions were organized for the Southern, the Volga and the North Caucasus Federal districts as well as the Crimean and Sevastopol regions. To demonstrate the vast scale of the territory covered by these regions, consider these numbers: together, these three custom branches are responsible for 117 custom points, 24 airports and 7 sea ports. Its main international borders are with Ukraine, Kazakhstan and Georgia, as well as open sea access via the Black Sea port Novorossiysk, Europe’s fifth-largest sea port.

The three-day training seminar brought together approximately 120 participants from the following sectors:

  • Custom officials from the Southern, the Volga and the North-Caucasus Federal districts as well as Crimea and Sevastopol customs;
  • Representatives from the Central Committee of Russian Customs Services and the CIS countries, members of the Eurasian Economic Union;
  • Brand owners (pharma, auto manufacturers, technology, luxury goods, food and beverages, clothing, sports, entertainment, consumer goods and many others);
  • Law firms on behalf of brand owners.

The main objective of these events is to convene face-to-face information sessions between brand owners and Russian customs officials. The open discussions are intended to raise awareness as to current counterfeiting problems, and to allow brand owners to give product identification presentations, discuss current issues with respect to brand protection in Russia and advocate on behalf of clients.

What we learned from customs

The seminar kicked-off with presentations from Russian customs. About 80 customs representatives were in attendance. The following official statistics were shared:

  • In 2015, 13.2 million counterfeit articles were seized, which represents a significant increase from 9.5 million in 2014;
  • 3,843 brands are currently registered on the Customs Register, a steady increase over the years (for example 404 brands were registered in 2004);
  • 728 administrative cases were opened in 2015,which represents only half of the cases opened in 2014.

We can conclude from these statistics that customs inspection and controls are more effective to stop counterfeited goods immediately at the border. It is also a positive sign that registration with the Customs Register is helping customs to identify illicit products more efficiently, and encourages them to take ex-officio actions.

Presentations by brand owners

Over 20 high-profile global brand owners were represented. Their products were exemplified and product identification training was made for custom officials. Recent counterfeiting experiences were also shared.

It is clear from the brand owners in attendance that counterfeiting remains an acute problem in Russia. For example, only this year a global consumer goods manufacturer had over 100,000 counterfeited articles of its three main brands seized at the various custom points in Southern Russia. Similarly, a well-known car manufacturer had to deal with seizure of about 12,000 fake spare parts from distribution in Moscow in 2014 and stopped 10,000 more at the border last September.

Re-labeling/re-packaging was identified as another challenge for brand owners. Labels, logos, branded clothing accessories (e.g. buttons) are brought in separately to evade   detection by customs controls. They are then attached to unbranded goods of cheap quality and sold as authentic.

Typical counterfeiting routes are China, Southeast Asia, Turkey and CIS countries. China is also a source for “grey goods”. There were also cases of illicit imports from the UAE and Egypt.

Most attempts to bring in fake/grey goods to Russia are through “weaker” regional customs points as opposed to Moscow transit points. This reinforces the importance of focusing on the outer regions as points of illegal entry and educating local officials on product awareness and identification.

At the sessions, Gowlings team raised the issue of design protection. Several cases of “design copycats” — where original designs are copied but branded under a different trademark — were identified as one of the areas for concern for brand owners.

Key considerations

  • To help customs officials effectively detect and detain counterfeit goods, rights holders are advised to develop a “risk profile,” which is a checklist of 4-5 key counterfeiting features for border controls and inspectors to pay attention to when identifying counterfeits.
  • “Ex-officio” actions fort trademarks not registered with the Customs Register: custom authorities alerted rights holders that under customs laws, they can only initiate such actions once. As a more effective preventative measure, brand owners are advised to record their IP rights on the official Customs Register.
  • The Eurasian Economic Union’s unified IPR protection regime for its member states is an emerging issue to be monitored very closely. EEU plans to introduce a Unified Customs Register next year. Details regarding inclusion of IP rights into the Unified Register are yet to be announced. Gowlings will monitor this issue and provide updates to its clients.
  • Seven specialized custom points to allow parallel importation of pharmaceuticals and medical devices will be created in 2016. This is in response to the recent government pilot initiative to allow parallel importation in three key segments: pharmaceuticals, medical equipment and automotive spare parts.2