For several years Uzbekistan is showing an instant grow of FDI and taking unprecedented measures to further create a favorable investment climate and improve investment attractiveness, which contributes to increasing the inflow of foreign investment.
Uzbekistan improved its World Bank Doing Business ranking: in 2020, Uzbekistan rose by 7 positions and took 69th place, which is one of the best indicators in the Central-Asian region.
In general, legislation of Uzbekistan related to IPR is in compliance with the international treaties and minimum standards According to the legislation of Uzbekistan, an intellectual property rights owner has an exclusive right to use its assets, as well as allow and prohibit its use by third parties.
Unauthorized use of the IPR, as well as import, sale, and offer for sale of goods bearing the IPR's, are considered as a violation of exclusive rights.
However, weak enforcement of intellectual property rights and unclear status of parallel importation creates market barriers to rights-owners and foreign and local investors.
Deficiencies in lawmaking - Lack of strict measures of restraint provided by the Uzbek legislation.
Counterfeit products are goods produced in violation of the IPR of a certain person. Thus, the increase in the production of counterfeit products in Uzbekistan creates an unfavorable climate for doing business and attracting investment.
Now for the illegal use of someone else's trademark, name of place of origin of goods, brand name in Uzbekistan only administrative liability is established. Therefore, the fine is not high and varies from 2,500,000 to 5,000,000 Uzbek sums.
Meanwhile, if we rely on the experience of foreign countries, we can observe, that in the U.S. the production, sale and transportation of counterfeit goods are criminalized and in according to the U.S. Criminal Code, the punishment for such crime is a fine up to 250,000 or imprisonment up to 20 years.
Criminal liability is stipulated only for plagiarism and violation of exclusive rights of the patent owner.
Absence of punitive damages for production, sale, importation of counterfeits
Guaranteed compensation amounts for violation of intellectual property rights have not stipulated in the legislation of Uzbekistan. According to Article 11 of the Civil Code, the main ways of protection of exclusive rights are: compensation for damages and compensation for moral harm. However, the exact amount of damages and compensation for the violation of exclusive rights is not mentioned. So, the courts usually do not award compensation to the entity/person whose exclusive right has been violated.
Enforcement procedures are long-term and costly for any business entity. Absence of guarantees to recover damages as well as legal fees are one of the main obstacles preventing the market development.
Absence of “ex-officio” power of customs body and burdensome obligations of the right holders to provide information about possible unauthorized importation
In order to get customs protection from an unauthorized import of trademarked goods or counterfeited products, a trademark owner should register its trademarks with the Customs Intellectual Property Registry.
However, the Customs Committee does not yet have the power to identify and prevent potential violations of trademark holders' rights independently. In accordance with the Customs Code, the rights- owner must provide in the application information about goods that violate his rights to the IP object, information about the manufacturer, exporter, importer or consignee, the possible place and date of movement of goods across the customs border and etc. Otherwise, the Customs Body cannot conduct a monitoring of the imported goods by third parties.
The rights-owner cannot possibly predict grey importer's action and provide such information. Such requirements and burdensome obligations imposed on the right owners diminishes effectiveness of the existing border enforcement measures.
Unclear status of exhaustion of rights and parallel importation
There is no legal definition for parallel imports in Uzbek legislation; thus, it is neither permitted nor forbidden. However, if the trademarks are registered with the Customs Registry, trademark owners have a right to apply to customs authorities for securing their exclusive rights from parallel import, i.e., unauthorized importation resulting in violation of the exclusive rights.
The principle of exhaustion of rights was introduced into the legislation of the Republic of Uzbekistan, according to the Law on Amendments and Additions to Certain Legislative Acts dated April 18, 2017. According to the latest amendments to the Civil Code and the Law «On Trademarks and Appellations of Origin» of the Republic of Uzbekistan, new regulations on exhaustion of exclusive rights to the trademark have been introduced (Article 11071 and Article 26 respectively), according to which:
- use of the trademark by others in respect of goods that were legally put into civil circulation directly by the trademark owner or upon his consent does not constitute an infringement of exclusive rights to the trademark.
Simple interpretation of the clause provides that exclusive right to trademark covers the goods that were put into civil circulation by the trademark owner of under his consent. Third parties, importing the goods must provide an evidence that the goods were put into civil circulation by the trademark owner or under its consent, otherwise such importation treated as unauthorized according to Trademark Law.
However, there is a number of controversial court decisions in relation to parallel importation in Uzbekistan. Inconsistent practice and absence of unified approach to parallel imports affects the business of all foreign trademark owners and diminishes the level of protection of their exclusive rights in Uzbekistan.
In general, to promote the enforcement of intellectual property rights a number of amendments shall be introduced to the legislation of Uzbekistan, namely:
- Amending the Trademark Law to clarify that the exhaustion of exclusive rights for trademarks occurs once the goods were put into civil circulation in Uzbekistan by trademark owner directly or with its consent;
- Amending the Customs Code to grant customs authorities with “ex-officio” power to independently locate, seize infringing goods, as well as to obligate customs authorities to check the authority of a distributor to import the goods by sending the notification to the right owners and remove the burdensome obligations imposed on the right owners to provide a detailed information about the possible importation;
- Amending the Trademark Law to introduce the punitive damages system into the legislation that would allow right owners to recover monetary relief from the infringing party both legal entities and individuals;
- Amending the Criminal Code and Code on Administrative Offense to introduce direct criminal and administrative liability for production, importation, sale, storage and advertising of counterfeited goods, copycat products and lookalikes and impose fines based on the illegal revenue obtained by the infringing individual.
Only strict enforcement of intellectual property rights is an only way to provide the environment which would allow to develop a merging market of intellectual property assets in Uzbekistan and foster friendly environment for business both local and foreign origin
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.