Problems of parallel importing and import of counterfeit products in Azerbaijan

Problems of parallel importing and import of counterfeit products in Azerbaijan

Baku, Azerbaijan, August 20

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Emil Bashirov is a senior lawyer responsible for intellectual property practice at EKVITA consulting company. He received a bachelor degree in law from the Academy of Public Administration under the President of the Republic of Azerbaijan in 2012 and LL.M degree in Commercial and Corporate Law from Erasmus University Rotterdam. Emil advised many local and multinational companies on various legal matters concerning intellectual property such as registration of intellectual property rights under national and international procedures, challenging and termination of registrations of competitors as well as dispute settlement on IPR registration or use. Emil is a member of Bar Association of the Republic of Azerbaijan since 2018 and thus, is entitled to represent both local and international clients in courts of all instances.

It is not a secret that one of the main concerns of business, particularly regarding the marketing of imported products in Azerbaijan, is a large volume of counterfeit goods on the market as well as existence of goods imported via so-called parallel import. Despite the latter can be original products, such import is agreed with neither producers nor overseas trademark holders. Though such products might not have substantial differences from the original goods in terms of reliability and applicability, their availability on the market causes numerous problems for both business people and consumers. Foreign manufacturers and local distributors cannot predict the success of their commercial operations in the region which jeopardizes respective investments. As marketing of “the grey goods” does not entail extra cost like payment of royalty to the trademark holder, market promotion and service network maintenance, actual expenses are mostly lower than those for “the white goods” which is often the main factor that influences consumers choice in Azerbaijan.

It is also worth noting that marketing of “the grey goods” on the Azerbaijani market may not be accompanied with manuals in the local language and information for Azerbaijani consumers on complaints to manufacturers. Considering the fact that there are very few companies that provide international warranty and the right for service in any country regardless of the point of purchase, a consumer might lose the right for warranty service of the purchased product. Currently, the legislation of the Republic of Azerbaijan does not envisage effective arrangements for the fighting parallel import, therefore, a large number of grey products easily enter Azerbaijan.

The Customs Code of the Republic of Azerbaijan contains provisions that regulate maintenance of specific register of goods which include objects of intellectual property and establish related arrangements for fighting counterfeit products. This mechanism is based on the possibility of suspension of import if the goods raise doubts about their authenticity. Right holders are protected for up to five-year period upon inclusion of their goods in the register by the Customs Committee. This period may be extended for another five years based on the right holder’s application. The applicant can also provide the customs office with the confidential data to help identify pirated and counterfeit products as well as submit original and counterfeit product samples.

At the recent meeting between the Intellectual Property Agency and State Customs Committee that discussed cooperation on IPR protection regarding imported goods in Azerbaijan, deputy chairman of the Customs Committee general-major Javad Gasimov noted that currently products of about 50 companies are already included in the relevant register to fight counterfeit goods. The meeting stressed the importance of cooperation and continued information sharing on the matter between the Customs Committee and the Intellectual Property Agency.

Taking into account pressing issues of grey and counterfeit products import in Azerbaijan, they were discussed in the White Paper prepared by the American Chamber of Commerce in Azerbaijan in 2018 that included recommendations on improving the business environment and related legal framework in the country. This document suggested such recommendations on changes to the current legislation as prohibition of import of original products that lack the trademark holder’s permission and provision of the list of exceptions (e.g., for anti-monopoly reasons, in case of deficit of certain products, pricing manipulation, etc.).

Obviously, legal framework on customs and intellectual property needs further improvements to adjust to the modern context and business requirements. Creation of effective arrangements to fight parallel import as well as strengthening control over counterfeit products import in Azerbaijan will certainly encourage sound business environment as well as protection of Azerbaijani consumers.

Earlier in July this year with the support of EKVITA consulting company the Customs Committee of the Republic of Azerbaijan hosted a meeting with Azerbaijan-French Chamber of Commerce and Industry and Azerbaijan-Italian Chamber of Commerce that discussed business promotion issues. At the meeting, the first deputy chairman of the State Customs Committee major-general Ismail Huseinov informed about ongoing customs reforms and stated the need for strengthening cooperation between the business community and customs authorities.

EKVITA consulting company can provide advice to your company on fighting counterfeit goods and procedure for inclusion of your products in the relevant customs register as well as provide your company with legal support for approaching the State Customs Committee. Lawyers and advocates of Ekvita can also represent your company in judicial cases on the suspension of counterfeit products import in courts of all instances.

EKVİTA is a full-service legal, tax and management consulting company with circa 40 full time professionals. Its active clients include several Fortune 500 companies operating globally. The company have also been engaged in government projects as well as worked for international donor organizations such as World Bank.

EKVİTA company delivers integrated professional services combining general business advisory support with very strong legal, finance and tax practice.

The leading position of EKVİTA in the market has been recognized by international ranking institutions and other relevant international standards.

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