The European Parliament recently approved a new regulation intended to give national customs authorities extended powers to detain counterfeit or pirated goods at the borders of the European Union. This new regulation, that enters into force at the beginning of next year, supersedes the current legislative framework in the context of enforcement of intellectual property rights.
Intellectual property rights cover all forms of commercial activities and artistic creations. These include a diversity of rights such as patents (which protect inventions), trademarks, geographical indications and designs as well as copyright. The owner of these rights has the authority to decide for a specific and limited time how their inventions or creations are used, reproduced and commercialised.
Counterfeit or pirated goods infringe the intellectual property rights of the owner. Counterfeit goods may contain a symbol or mark on the product or on the packaging that looks identical to that of the genuine goods.
In cross-border trade, customs play an important role in identifying and detaining at the border shipments of goods suspected of infringing intellectual property rights.
For this purpose, the new customs regulation seeks to strengthen the legal framework for intellectual property protection at European borders, taking into account the increasing importance of intellectual property rights for the EU economy.
In particular, this is achieved through the broadening of the object and scope of application of the new regulation. Customs’ powers of enforcement will now cover a wider range of intellectual property rights’ infringements, such as confusingly similar trademarks.
New rights are included in the scope of protection such as trade names. On the other hand, non-commercial goods carried by passengers in their personal luggage earmarked exclusively for personal use are not targetted and customs are not empowered to detain such goods. The exclusion also applies to goods that carry a trade mark with the permission of the trade mark owner, parallel imports and goods made by licensees in breach of the terms of their licence.
The regulation enables right-holders to lodge an application with customs asking that goods that they suspect are infringing be detained at the border. Applications can be specific or general and can last for up to a year, but can be renewed annually. It is possible for a right-holder with an EU-wide right, such as a Community Trade Mark, to make an application centrally, which has the effect of alerting all national customs authorities throughout the EU. The right-holder seeking to protect IPR must always ask the customs authorities to take action, so they will intercept and detain goods they identify as suspected of being infringing goods.
The surge in postal traffic resulting from internet sales demonstrated the need for monitoring even small consignments. New rules intended to protect intellectual property rights in an efficient manner are included in the regulation. For infringing goods in small consigments, be they counterfeit or pirated goods, a highly-simplified procedure has been devised. The recipient of the goods will be offered the possibility to agree to their destruction, without having to pay costs or go through further formalities. Right-holders will be able to make an application for general destruction avoiding the need to give their separate consent in relation to each small postal or express courier consignment. This is a key benefit for rights-holders although they will have to pay the costs of destruction.
This simplified procedure empowers national customs authorities across all member states to destroy goods without a court determination
The main new item in the regulation is that the current optional simplified procedure for goods destruction will become mandatory. This simplified procedure empowers national customs authorities across all member states to destroy goods without a court determination that the goods infringe the applicable intellectual property rights. Goods are destroyed when the right-holders confirm the infringement and give their consent to destruction.
Customs may deem that the holder of the infringing goods has agreed to their destruction where there has been no opposition to the proposed destruction within 10 working days from notification.
If the holder of the goods opposes their destruction within such period, the right-holder must commence legal proceedings with a purpose of ascertaining whether the infringement has occurred. This new procedure has been looked upon as beneficial as it avoids long drawn out legal proceedings against the infringer.
Another important change relates to how right-holders can use information provided by customs. Right-holders are allowed to use the information obtained from customs to initiate civil proceedings for compensation against an infringer. Certain costs incurred by customs, such as storage and destruction costs, will continue to be borne by the right-holder but may be recovered by the right-holder from the infringer.
The purpose of this new and improved regime is to prevent the presence of counterfeit merchandise on the EU market and to take the measures necessary to stop illegal marketing of goods without hindering legitimate trade.
Josette Grech is adviser on EU law at Guido de Marco & Associates.