Legal Alerts/3 Dec 2013

Legal Alert – New EU Regulation Concerning Customs Enforcement of Intellectual Property Rights

On 12 June 2013, the European Parliament and the Council of Ministers adopted a new regulation concerning customs enforcement of intellectual property rights, which will extend the powers of customs authorities in relation to counterfeit goods detained at the borders of the EU. The new regulation 608/2013 repeals the current regulation 1383/2003 and will apply from 1 January 2014.

The new regulation clarifies the general procedure for interception of consignments at the borders of the EU Member States. The first step of this simplified procedure  requires (and will continue to require) the submission of a formal application by the intellectual property rights-holder to the relevant customs authorities to suspend the release of goods suspected of infringing specified IP rights. The simplified procedure is mandatory under the new regulation.

The above-mentioned application can only be filed in the name of a rights-holder or an exclusive licensee with the power to initiate legal proceedings. However, contrary to the old regime, the new regulation will allow rights-holders to request existing surveillance decisions to also cover new IP rights.

The new regulation mandates the establishment of a new EU-wide central database for the registration and dissemination of companies’ applications for action. The database will provide country-specific information on all suspected and established infringements for the collection of statistics and risk analyses. This information exchange system (currently referred to as ‘COPIS’) will be operational as of 1 January 2014.

Under the new regulation, the powers of the customs authorities regarding interceptions will be extended to also cover e.g. confusingly similar trademarks and trade names, which were not covered by the old rules.

Moreover, rights-holders who have called for a more cost-efficient procedure for having counterfeit and pirated goods detained and destroyed will be pleased to learn about the new procedure regarding ‘small consignments’. These are defined as postal or express courier consignments that comprise three units or less or that weigh less than two kilograms. Following the suspension of release or detention of a small consignment of counterfeit goods, it is no longer mandatory to obtain the recipient’s consent to the destruction. If the recipient fails to respond within ten working days, the customs authorities may destroy the goods.

As for large consignments, the new regulation will continue to allow Member States to determine whether or not they will require explicit consent to the destruction when a recipient has failed to oppose a rights-holder’s notification of its intention to destroy the infringing products within a set time limit. Member States may determine that the recipient’s failure to respond in such situations shall be deemed an implied consent, on the basis of which destruction can take place.

Most Member States already observe the principle of implied consent. However, this is not the case for example in Finland and Sweden, where a rights-holder who has failed to obtain a recipient’s explicit consent to destruction must currently take legal action to determine that its IP rights have been infringed in order to have the goods destroyed. Finnish customs will issue guidelines on applicable procedures in relation to detentions by the end of this year. The principle of implied consent will potentially be adopted also with regard to larger consignments of counterfeit or pirated goods intercepted at Finnish borders.

The principle of implied consent is also expected to be adopted in Latvia under the new regime. Estonia and Lithuania, on the contrary, have already been applying the principle of implied consent under the old regime. No essential changes to the Estonian and Lithuanian customs procedures are thus expected.

The new regulation empowers customs authorities within the EU to share information with third countries in relation to goods in transit. However, the new regulation does not challenge the position determined in the Philips and Nokia cases (C-446/09 and C-495/09). Accordingly, even if goods in transit infringe rights in the country in which they have been detained, they cannot be seized unless there is a “substantial likelihood” that they will be diverted from their transit into the EU market.

Finnish law is, however, stricter than EU legislation in this regard, and this remains the case also under the new regime. Accordingly, goods in transit that have been intercepted by Finnish customs can be found to infringe intellectual property rights in force in Finland.

Rights-holders are eagerly following the ongoing debate on the so-called EU TM Package (the proposed revisions of the Trademark Directive and the CTM Regulation) with regard to goods in transit. According to the Commission’s proposal (COM(2013) 161 final, 2 March 2013), a proprietor of a European trade mark shall be entitled to prevent third parties from bringing counterfeit goods, in the context of commercial activity, into the customs territory of the EU without being released here in the EU for free circulation.

The Parliament and Minister of Councils have recently issued draft reports including some proposals for changes to the transit clause. The Parliament is expected to vote on the TM Package in the beginning of April next year. If the Commission’s proposal on counterfeit goods in transit is approved, such transit goods will be deemed infringing under the new TM Package and will thus automatically also fall subject to Customs Regulation.

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