Customs not up to the mark in WELLA Case

Russian Federation

The Commercial Court has dismissed an action filed by Ekaterinburg Customs on the grounds that the latter had failed to prove the infringement of the trademarks WELLA and WELLAFLEX (Case 09-9960/07-C1, December 3 2007).

The customs authorities are at the forefront of the fight against counterfeiting. The authorities may seize goods which are suspected of being counterfeit and transfer the case to the courts. They may also investigate goods that have obtained customs clearance at the border (post-clearance inspection).

In the case at hand, the owner of the trademarks WELLA and WELLAFLEX requested a post-clearance inspection in Ekaterinburg. During the inspection of a warehouse, the customs officers found hair care products bearing the trademark WELLAFLEX. The products were offered for sale by Trafik Ltd without the authorization of the trademark owner. Ekaterinburg Customs prepared a report of infringement and filed an administrative action against Trafik. The Commercial Court dismissed the action on the grounds that the authority had failed to prove infringement.

The Administrative Code establishes administrative liability for the unauthorized use of a registered trademark or of a sign similar to a registered mark. However, under the Trademarks Law (which came into force in 2007), a trademark owner cannot prevent third parties from using the mark with regard to genuine goods which have been placed on the market with its consent.

In the case at hand, the court found that Trafik sold goods which had already been placed on the market by the trademark owner. Therefore, the owner's rights in the trademarks WELLA and WELLAFLEX were exhausted. Moreover, the court established that Trafik had not brought the goods into the Russian territory. Under the Commercial Code of Procedure, the burden of proving the infringement lies on the customs authorities. The court found that Ekaterinburg Customs had failed to prove that the goods had been imported into Russia illegally. The authority's appeal was unsuccessful.

The decision is significant in that it highlights the fact that the customs authorities must establish a chain of evidence in order to prove that goods are counterfeit. In the case at hand, Ekaterinburg Customs should have thoroughly investigated the circumstances which led to Trafik being in possession of the goods.

Vladimir Biriulin, Gorodissky & Partners, Moscow

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