Q&A: IP rights in competition in Kazakhstan

Competition

What statutes set out competition law?

The main statute that sets out competition law is the Entrepreneurship Code, dated 29 October 2015. The Code provides for regulation in areas such as bad faith competition, anti-monopoly regulation, economic concentration and price regulation.

Do the competition laws make specific mention of any IP rights?

Competition laws specifically mention IP rights. In particular, the unauthorised use of other entities' means of individualisation (eg, trademarks, trade names) and copyright is considered an act of bad faith competition. The Code on Administrative Offences provides for separate liability for bad faith competition activity.

Which authorities may review or investigate the competitive effect of conduct related to exercise of IP rights?

The Agency for the Protection and Development of Competition is the main state authority responsible for control of compliance with competition laws. Generally, this authority is responsible for considering cases related to the competitive effect of conduct related to the exercise of IP rights.

However, there is no developed practice on this. While the concept of abuse of civil rights exists, it does not have wide application in the practice of enforcing competition laws. Currently, competition authorities are not experienced in IP laws. As a result, the potential to use competition laws as a tool for protecting IP rights is not fully realised.

Can a private party recover for competition-related damages caused by the exercise, licensing or transfer of IP rights?

From a legal perspective, a private party may try to recover damages if he or she can prove that there has been an abuse of his or her IP rights. However, such practice is not well developed. We have not seen cases where such damages were claimed or awarded.

Have the competition authorities, or any other authority, issued guidelines or other statements regarding the overlap of competition law and IP?

There are no official guidelines regarding the overlap of competition law and IP rights.

Are there aspects or uses of IP rights that are specifically exempt from the application of competition law?

There are certain exemptions from the application of competition law in connection with the exercise of IP rights. In particular, the Entrepreneurship Code generally prohibits anticompetitive agreements (eg, agreements that regulate prices). The Entrepreneurship Code expressly provides that these restrictions do not apply to agreements that relate to the exercise of IP rights.

At the same time, the Entrepreneurship Code also provides that this exemption will apply provided that there is no limitation or elimination of the competition. Given that anticompetitive agreements in their essence limit competition, it is difficult to prove how the relevant exemption may be applied in cases involving IP rights.

Does your jurisdiction have a doctrine of, or akin to, ‘copyright exhaustion’ (EU) or ‘first sale’ (US)? If so, how does that doctrine interact with competition laws?

The Copyright Law provides for the concept of copyright exhaustion. In particular, with a few exemptions, after the first legal sale of a copy, further sales of this copy do not require the consent of the relevant copyright holder.

After exhaustion of the copyright, exemptions in the competition law do not apply and any further sales are subject to the general regulation of competition laws.

To what extent can an IP rights holder prevent ‘grey-market’ or unauthorised importation or distribution of its products?

With regard to certain IP rights (eg, trademarks), it is possible to record the relevant objects in the special register of IP rights (TROIS). This allows Customs to suspend imports of any products bearing those registered objects for 10 business days. Customs then alerts the right holder of the import to allow it to challenge it or request interim relief. If the owner does nothing in the 10 days, the authorities will lift the suspension.

Irrespective of the Customs registration, an import without the consent of the IP rights holder may be a breach of the IP rights. Accordingly, the IP rights holder can apply to courts of general jurisdiction with a claim to cease any violation and demand compensation of damages.

Are there authorities with exclusive jurisdiction over IP-related or competition-related matters? For example, are there circumstances in which a competition claim might be transferred to an IP court to satisfy subject matter jurisdiction? Are there circumstances where the resolution of an IP dispute will be handled by a court of general jurisdiction?

In Kazakhstan, there are no specialised IP or competition courts. Accordingly, within civil litigation, all claims are considered by general civil courts.

For administrative and criminal procedures, different authorities have the competence to initiate such proceedings. In particular, there are specialised authorities responsible for the control of compliance with competition laws (eg, the Agency for the Protection and Development of Competition and its territorial departments). IP matters are overseen by different authorities (eg, the justice authorities, Customs, state income authorities). Copyright matters are in the jurisdiction of the police. Depending on the circumstances, the case will be handled by an administrative or criminal court.