Legal Alerts/18 Feb 2014

Legal Alert – The CJEU Confirms the Rights of European IP Holders in Relation to International E-commerce Involving Counterfeit and Pirated Goods

The Court of Justice of the European Union (CJEU) handed down a judgment on 6 February 2014 which confirms the rights of European IP holders in relation to international e-commerce involving counterfeit and pirated goods. In case C-98/13 (Martin Blomqvist v Rolex SA, Manufacture des Montres Rolex SA), the CJEU ruled that goods bought online by EU residents are subject to EU trade mark and copyright laws even if the web shop in question does not target EU residents.

Mr Blomqvist, a Danish resident, had ordered a watch marketed as a Rolex from a Chinese online shop. After Blomqvist had placed the order and paid for the watch on the seller’s website the watch was dispatched from Hong Kong. Upon the arrival of the consignment to Denmark its release was suspended by the Danish Customs authorities who suspected that the watch infringed EU copyright and trademark rights. The right holder, Rolex, confirmed the watch to be counterfeit and requested that it be destroyed.

In accordance with the Customs Regulation in force at the time (1383/2003), Blomqvist was requested to give his consent to destruction. Blomqvist refused, claiming that since he had bought the watch for personal use, Rolex’ intellectual property rights in the EU had not been infringed. Therefore, the watch was not a counterfeit or pirated good for the purposes of the Customs Regulation, he stated.

Rolex filed a suit against Blomqvist in the Danish court of first instance, seeking to force Blomqvist to agree to the suspension of release and to destruction of the watch without compensation. The court decided against Blomqvist, who then appealed to the Danish Supreme Court. The Supreme Court decided to ask the Court of Justice for a preliminary ruling as to whether or not there had been any “distribution to the public” within the meaning of the Copyright Directive or any “use in the course of trade” within the meaning of the Trademark Directive and the Trademark Regulation.

The CJEU stated that goods coming from a non-member state that are imitations of goods protected in the EU by a trademark right, copy right, related right or design right can be classified as counterfeit goods or pirated goods, where it is proven that such goods are intended for the European Union market. Such intent is proven, for instance, by the fact that the goods have been sold to a consumer in the European Union. The CJEU accordingly ruled that the Council Regulation 1383/2003 “must be interpreted as meaning that the holder of an intellectual property right over goods sold to a person residing in the territory of a Member State through an online sales website in a non-member country enjoys the protection afforded to that holder by that regulation at the time when those goods enter the territory of that Member State merely by virtue of the acquisition of those goods. It is not necessary, in addition, for the goods at issue to have been the subject, prior to the sale, of an offer for sale or advertising targeting consumers of that State.”

The preliminary ruling by the CJEU is highly welcomed by Customs authorities and right-holders alike. The judgment means that EU Customs authorities can take action for the suspension and destruction of small consignments entering the EU without having to assess whether or not the goods have been ordered for commercial purposes, even if the addressee is a private person. This is in line with one of the main objectives of the new Customs Regulation (608/2013) (repealing the previous regulation (1983/2003)) to combat the increasing on-line sale of counterfeit and pirated goods into the EU. The new Customs Regulation introduced the so-called “small consignments procedure” which allows Customs authorities to destroy postal or express courier consignments that comprise three units or less or that weigh less than two kilograms of counterfeit or pirated goods without prior involvement from right holders or their representatives (provided that the right holder in question has opted into the system and the recipient of the goods has not expressly opposed destruction within ten working days).

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