Autor
Roland Mallinson

Roland Mallinson

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Autor
Roland Mallinson

Roland Mallinson

Partner

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3. Oktober 2013

What the new Customs Regulation means in practice

  • In-depth analysis

The European Parliament and the European Council have adopted a new customs regulation, replacing Regulation 1383/2003/EC.  The new regulation will come into force in January 2014.

The new regulation provides the framework for the customs authorities of EU Member States to deal with infringing/counterfeit products passing through the relevant customs, either on the application of a right-holder or on discovery by customs authorities through routine inspections.

The key changes include:

  • extension of the remit to other types of intellectual property rights (including trade names, semiconductor topographies and utility models);
  • making the accelerated procedure to secure destruction without a court order compulsory in all EU Member States;
  • provisions to address the growing problem of counterfeits imported by post or courier in small consignments;
  • relaxation of the rules (applied with varying strictness around the EU) about the use by rights holders of information learned from customs officers.

The Application

Under the new regulation, the application form requires the applicant right-holder (or any person formally authorised by the right-holder to initiate legal proceedings) to give certain information to the customs authority, including specific and technical data on the authentic goods, such as bar-coding and images and information relevant to the customs authorities' analysis and assessment of the risk of infringement of the relevant intellectual property rights.

The form also requires the applicant to give an undertaking assuming liability, including liability to the owner for damage suffered where the goods seized are subsequently found not to infringe. Providing detailed information on the application form may well reduce the risk of customs authorities detaining genuine goods and exposing the right-holder to this sort of liability.

The new regulation provides for two types of application: either a national application requesting the customs authorities of a Member State to take action in that Member State or a single EU application, designating one or more other Member States.

Assuming that the customs authorities grant the application, the application takes effect for a period of one year, which can be extended.

Notification of infringing goods

Where the customs authorities identify goods suspected of infringing an intellectual property right covered by the right-holder's application, they must suspend the release of the goods or detain them. Once goods have been suspended or detained, the procedure under the new regulation will be as follows:

  • The customs authority must notify the owner of the goods within one working day of that suspension or detention;
  • The customs authority must notify the right-holder of the decision to do so on the same day;
  • The customs authority must then inform both the owner and the right-holder of the actual or estimated quantity  and nature of the goods, including any available images of them, as well as informing the right-holder of the owner's name and address;
  • Both parties are then given an opportunity to inspect the goods. The customs authority may take samples and send them to the right-holder at the right-holder's request for the purposes of analysis (subject to various strict conditions).

Simplified procedure for destruction

The existing regulation provides for Member States to opt to provide for a simplified procedure allowing the destruction of certain goods without there being any obligation on the right-holder to commence proceedings to establish whether its intellectual property right(s) have been infringed.

This procedure has been implemented in approximately 15 Member States1 and has proved to be very successful, such that the European Parliament resolved that it should be made compulsory and this is reflected in the regulation.

Destruction of small consignments

The regulation introduces a new procedure for small consignments of counterfeit and pirated goods to be destroyed without the explicit agreement of the right-holder in each case. The right-holder has to have opted in for the procedure to apply. A small consignment is defined as one containing three units or less or having a gross weight of less than 2kg so its principal application will be to parcels arriving by post or courier.

Where a customs authority seizes goods suspected of being counterfeit or pirated in a small consignment:

  • the customs authority must notify the owner within one working day of their seizure, informing the owner that they intend to destroy the goods;
  • the owner then has 10 working days  to give a point of view;
  • the goods can then be destroyed after 10 working days where the owner has agreed to destruction or failed to notify opposition.

The new regulation states that "The customs authorities shall, upon request and as appropriate, provide the [right-holder] with information about the actual or estimated quantity of destroyed goods and their nature." The right-holder is therefore not automatically informed of the seizure.  For those that do opt in, it would seem prudent to make at least an annual request for this information.

Some right-holders may prefer not to opt in. To do so could mean that valuable evidence is destroyed in situations where the right-holder may wish to pursue a civil claim. For example, a consignment of 2kg of a pharmaceutical product or three samples of a (light weight) piece of designer jewellery may still merit civil action in the right-holder's eyes.

Establishment of new database

The new Regulation requires that the Commission must establish a central database to be operational as soon as possible and no later than 1 January 2015. The European Commission, in conjunction with the member states, has been developing this new database, currently known as COPIS. If adopted as originally envisaged, COPIS will be an EU electronic system for registering and disseminating companies' applications for action among customs authorities. It is essentially a tool for customs and it was hoped it would be ready for the second half of 2013.  Read section 3 of this report.

If the database is developed in line with the report, part of it will be accessible to rights holders who will be able to submit information into the respective file by uploading e.g. video-files to help officers identify counterfeit goods. This would certainly reduce time spent having to train local customs officers and could improve detection rates.

What is not in the new regulation

Disappointingly for rights holders, despite the European Commission's initial proposal, the new regulation will not apply to parallel imports or to overruns (i.e. goods which are manufactured as genuine goods but are beyond the quantity authorised by the right-holder). It also will not apply to goods just transiting through the EU. The position for the latter remains as determined in the Nokia v HMRC2 CJEU judgment, namely that even if the goods infringe rights in the country where detained, they cannot be seized unless there is a "substantial likelihood" that they will be diverted from their transit into the EU market.

If there is to be any change here, it will come in the revisions to European trade mark law which is currently under review. At present, the new draft European legislation provides that it will be up to the importer of goods placed under a customs’ suspensive procedure to provide evidence as to the final destination of the goods where there are grounds for suspecting the relevant goods will be placed on the EU market (thereby reversing the current burden of proof).  To read more about this, click here.

While parallel imports remain outside the scope of the regulation, the relaxation of the rules about the use by right-holders of information learned from customs officers will be helpful in tackling illegal parallel imports too. Right-holders may use information learnt to:

  • initiate proceedings to determine whether an intellectual property right has been infringed;
  • in connection with criminal investigations;
  • seek compensation;
  • agree destruction with the owner of those goods.

Previously, such information could only be used for proceedings to establish that goods were counterfeits or pirated. This relaxation of the rules means that if any goods detained as suspected counterfeits prove to be illegal parallel imports, the right-holder can use the information about the consignee, consignor, shipment volume and notes from their inspection of a sample to sue the relevant parties involved.

In summary, making an application to customs can be an extremely effective and cost efficient way for right-holders to remove infringing goods from circulation. The new regulation strengthens the position of right-holders, giving them some additional tools to police their intellectual property rights.

If you have any questions on this article or would like to propose a subject to be addressed by Synapse please contact us.


1 The UK has a simplified procedure (under Regulation 7 of SI 2004 No 1473) whereby the right-holder and the owner of the goods may reach an agreement that suspected goods may be destroyed without there being a need for a court proceedings to determine whether the goods are infringing.

2 C-495/09.

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