The levels of the applicable fines for the production or sale of fake products now depend upon the scope of the infringement, which will be based on the value of the fake products seized.
On 3 August 2013 relevant changes to the Russian Code on Administrative Offences (the “Amendments”) came into force.
The essence of the Amendments
The most serious sanctions relate to companies that produce or sell infringing goods. The fine to be imposed in this case would be triple the value of the infringing products seized, and in any event will never be lower than RUB 40,000 (approximately EUR 900). The fake products will also be confiscated.
The trademark infringer is administratively liable if the damage caused by the infringement does not reach RUB 1,500,000 (approximately EUR 34,000). If it does reach or exceed this level, the infringer may become criminally liable. The infringer may also become criminally liable if he/she repeats the offence.
The previous maximum fine applicable to corporate IP infringers has now become the minimum fine. This is not only in line with the Government’s policy, but it is also linked with the harmonisation of Russian laws and regulations with the WTO requirements.
The method used to calculate the value of the infringing products, for the purposes of determining the damage caused, is not provided either in the Code on Administrative Offences or in any other legal acts. Normally, in cases that do not concern trademark infringements, the court evaluates the seized products on the basis of their average market price. However, in trademark infringement matters the Russian enforcement authorities have traditionally evaluated damage on the basis of the average retail price of similar genuine products.
In the absence of a current practice relating to the application of the Amendments, we believe that both methods of calculating the value of the seized products will be applied, before a uniform approach is developed by the courts and enforcement authorities.
One can hope that the Amendments will act as a deterrent on IP infringers.
In view of the Amendments, we would recommend trademark owners consider increasing their trademark enforcement activities in Russia, should they face trademark piracy issues. In this respect, we draw their attention to the fact that, as confirmed by court practice, administrative liability for trademark infringement will be imposed on not only the first seller of the fake products, but also each subsequent re-seller.