Localization Investment and Opportunities for Legalization of Parallel Import in Russia

Abstract

In this paper, we present an analysis of foreign trademark-owning companies’ capital investment in localization in the territory of Russia under the conditions of national (regional) exhaustion of intellectual property rights. The purpose of this research is to estimate the impact of the choice of the regime of right exhaustion on the decision on localization in Russia, as well as the structure of production assets of trademark owners in Russia. Data for analysis contains trademark owners’ production capacities and investments in the territory of Russia for the period from 1991 to 2016. We present an estimate of the volume of trademark owners’ localization on the territory of Russia by sector, territory and time of capital investments. The paper shows that investments in production by trademark owners are not correlated to the ban on parallel import and are more likely explained by other factors than the introduction of national exhaustion of intellectual property rights. Also, upon comparison of data on the volumes of localization of trademark owners and import statistics for protected trademarks, it was revealed that a significant proportion of trademark owners, which gain a benefit from the ban of parallel import, did not invest in production in Russia. The research results are useful for the government intellectual property policy, especially, in deciding on parallel import legalization and developing measures for the transition to international exhaustion of intellectual property rights.