The war waged by intellectual property (IP) rights holders in the EU against infringement by shipments of goods has recently become more intense. These rights mainly relate to trade marks, design and copyright, and IP rights holders pursue their claims through the customs authorities of EU member states. For example, the number of shipments stopped by Austrian customs authorities on the basis of Regulation (EC) No 1383/2003 of 22 July 2003 (the 2003 Regulation) and Regulation (EC) No 1891/2004 of 21 October 2004 (the 2004 Regulation) has greatly increased in recent years.1 In 2002 only 490 shipments of goods were stopped, while in 2009 the number had risen to 2,519.2
Interestingly, the shipments of goods most frequently stopped by Austrian customs authorities in 2009 were of (alleged) medicinal products, amounting to 593 shipments or approximately 23.6% of the total. Shoes (excluding sports shoes but including accessories) accounted for 380 seizures and involved 256,050 items. According to estimates approved by the products’ IP rights holders, the value of these shoes and accessories as genuine items would have been €8,021,229.3
This article briefly sets out the provisions of the 2003 Regulation relating to applications for action, and highlights some of the specific provisions of the relevant procedures in Austria, Romania and Slovenia.
Applications for action according to the 2003 Regulation
According to Article 5(1) of the 2003 Regulation, IP rights holders may file an application for action by customs authorities with each EU member state. If the applicant owns IP rights that grant EU-wide protection (such as a European Community (EC) trade mark or EC design right), action by the customs authorities of one or more other member states may be requested simultaneously through an application lodged in one member state (Article 5(4) of the 2003 Regulation).
Pursuant to Article 1(2) of the 2003 Regulation, a right holder is the holder of EC or national IP rights in an EU member state referred to in Article 1(1) of the 2003 Regulation. This applies to holders of, for example, trade mark, copyright, design, patent or supplementary protection certificates. According to Article 5(5) of the 2003 Regulation, the application for action needs to be accompanied by proof that the applicant holds the rights for the goods in question.
Goods suspected of infringing IP rights under Article 1(1) of the 2003 Regulation are:
- counterfeit goods (Article 2(1)(a) of the 2003 Regulation), such as those that infringe trade mark rights; or
- pirated goods (Article 2(1)(b) of the 2003 Regulation), such as those that infringe any other IP rights referred to in Article 1(2) of the 2003 Regulation.
According to Article 3 of the 2003 Regulation, goods that have been manufactured with the consent of the IP rights holder (parallel trade), as well as non-commercial goods in travellers’ luggage that comply with the duty-free allowance, are not subject to an application for action, unless there are material indications of commercial trafficking.
Article 4 of the 2003 Regulation provides that customs authorities can temporarily suspend the release of goods even before an application for action has been lodged or granted. This requires that customs authorities have sufficient grounds for suspecting that the goods infringe IP rights. Following the relevant notification, the IP rights holder may then submit an application for action.
According to Article 5(7) of the 2003 Regulation, the application for action is free of charge. However, the IP rights holder has to declare in writing that it will bear, inter alia, all the costs incurred due to customs seizures and the destruction of goods following a simplified procedure (see Article 6 of the 2003 Regulation).
Customs seizures of counterfeit goods in Austria
Pursuant to s1(1) of the Austrian product piracy act Produktpirateriegesetz 2004 (the Austrian Act), the Klagenfurt Villach office is the customs department in charge of applications for action filed by IP rights holders in Austria under Article 5(1) of the 2003 Regulation.4
Adopting the simplified procedure under Article 11 of the 2003 Regulation, s4 of the Austrian Act provides that where customs authorities have detained a shipment of goods suspected of infringing IP rights, no civil or criminal court decision is needed to establish whether the goods infringe IP rights if certain conditions are met.
The declarant or holder of the goods and the IP rights holder must consent to the immediate destruction of the goods, to be carried out under the supervision of customs authorities. The declarant or holder’s consent in this context is deemed to be expressed if no written objection to the destruction is lodged with customs authorities within ten working days (three working days for perishable goods) of the receipt of its notification from the customs authorities. The declarant or holder may submit its declaration of consent directly to customs authorities. Customs authorities then notify the IP rights holder of whether the declarant or holder has consented (or is deemed to have consented) to the goods’ destruction.
According to s4(4) of the Austrian Act, the simplified procedure also applies to cases where the IP rights holder has filed a timely application for action following a notification pursuant to Article 4 of the 2003 Regulation (which s3 of the Austrian Act is based on).
In the event that consent cannot be obtained from the relevant parties, the IP rights holder needs to file a civil or criminal action to establish whether its IP rights have been infringed. The competent court in civil IP matters is the Commercial Court of Vienna (Handelsgericht Wien). Criminal proceedings on EC trade marks and design matters need to be taken before the Regional Court of Vienna for Criminal Matters (Landesgericht für Strafsachen Wien). In all other criminal matters the respective regional courts that have local jurisdiction are the competent courts.
Extensions of prescribed periods
Both during the simplified procedure and the regular procedure under Article 13 of the 2003 Regulation, the period within which the IP rights holder needs to respond to the customs authorities may be extended by a maximum of ten working days. The Klagenfurt Villach customs office usually grants such extension applications for both procedures without requiring a submission of reasons for doing so.
In accordance with Article 18 of the 2003 Regulation, which obliges each member state to introduce effective, proportionate and dissuasive penalties for violations of the regulation, s7(1) of the Austrian Act states that imports into and exports out of the EU of goods found to infringe IP rights pursuant to Article 9 of the 2003 Regulation are financial offences. They are penalised by fines of up to €15,000 if committed with intent and up to €4,000 in cases of negligent behaviour.
Customs seizures of counterfeit goods in Romania
The 2003 Regulation and the 2004 Regulation have been applicable in Romania since 2007. Law No 344/2005 (the Romanian Law) on certain measures to ensure the observance of IP rights during customs clearance operations, which had been adopted before Romania joined the EU, resembles aspects of the 2003 Regulation. The Romanian Law also contains several provisions regarding the competent authorities.
Application for action
IP rights holders may file an application to the Romanian National Customs Authority (RNCA), which must contain mandatory information, such as:
- the name and address of the IP rights holder;
- an accurate and detailed technical description and photos of the original goods; and
- any specific information that the IP rights holder may have concerning the type and pattern of the potential infringement.
Two copies of the application must be filed in a prescribed format, one for the customs authority (marked as number one) and the other for the IP rights holder (marked as number two). A model for such applications can be found at www.anv.ro. Any applications that do not contain the mandatory information may be rejected by the RNCA. The IP rights holder may challenge the decision issued by the RNCA before the ordinary courts (the administrative contentious section of the tribunal).
As a general and mandatory rule, the IP rights holder must inform the RNCA within 15 days if its IP rights have expired.
Other procedural specifics
The Romanian Law provides a simplified procedure similar to that of the Austrian Act. If the IP rights holder does not prove that it has filed a civil action or criminal complaint within ten working days, and the simplified procedure is not applicable, customs authorities may release the goods. This term may be extended by another ten working days. However, such extensions will be granted by the RNCA only where there are well-founded reasons.
Detained goods that infringe IP rights may be destroyed or donated to certain legal or natural persons. The latter is subject to the prior written approval of the IP rights holder. Such donations also require that the goods are suitable for consumption or use by the recipient, and that they are not sold on.
Quantities of goods detained and destroyed
According to the information provided by the RNCA, between 1 January 2008 and 30 September 2008 Romanian customs authorities detained over 17 million goods infringing IP rights in customs clearance operations and destroyed more than 2.5 million counterfeit goods. More than 560 applications have been filed, analysed and granted by the RNCA, of which 169 were EC applications.
Customs seizures of counterfeit goods in Slovenia
The 2003 Regulation was implemented in Slovenia by the Act Implementing the Customs Regulation of the European Community, Zakon o izvajanju carinskih predpisov Evropske skupnosti (the Slovenian Act). The Slovenian Act entered into force on 1 May 2004, the date on which Slovenia became an EU member state.
Procedural and practical aspects
Chapter 6 of the Slovenian Act regulates applications for action by customs authorities against counterfeit goods. The IP rights holder, as defined by Article 2 of the 2003 Regulation, may apply to the general customs office in Ljubljana, Generalni carinski urad, for action by customs authorities when goods are suspected of infringing IP rights. The decisions issued by customs offices can be challenged in an administrative procedure before the administrative court, Upravno sodišce.
In Slovenia, as in Austria and Romania, a simplified procedure is available. The IP rights holder must file a claim with customs authorities within ten working days only where the declarant, holder or owner of the goods objects to their destruction. The competent court for filing such a claim is the District Court of Ljubljana. In practice, the declarant, holder or owner of the goods rarely opposes their destruction.
The IP rights holder may apply for an extension of the period of ten working days to respond to the notification, both in the simplified and standard procedures. Such applications are usually granted without the IP rights holder being required to submit detailed reasons for the request.
Customs offices effectively apply the provisions on customs action relating to goods infringing IP rights. If the IP rights holder acts quickly and the simplified procedure is applied, counterfeit goods will be destroyed within approximately one month of being seized and at a low cost. (For example, it costs about €800 to destroy 1,000kg of DVDs.) However, if a claim needs to be filed, reaching a final decision can be expected to take two to four years.
Customs seizures as a procedural tool are becoming increasingly important to IP rights holders in the EU and beyond. Although the enforcement of IP rights is largely determined by the 2003 Regulation, some procedural aspects vary with differing national implementation of the legislation. Similarly, the local application of the 2003 Regulation and its national implementation varies across member states. Therefore seeking advice from local lawyers on filing applications for action and handling customs seizures on the basis of such applications is recommended.
- The 2003 Regulation concerns customs action against goods suspected of infringing certain intellectual property rights and the measures to be taken against goods found to have infringed such rights. It repealed Council Regulation No 3295/94 of 22 December 1994.
- The facts and figures on product piracy seizures carried out by Austrian customs authorities in 2002-09, published by the Austrian Federal Ministry of Finance, can be read at www.bmf.gv.at/Zoll/Produktpiraterie/DatenundFakten_3041.htm (only available in German).
- The facts and figures on product piracy seizures carried out by Austrian customs authorities in 2009, also published by the Austrian Federal Ministry of Finance, can be read at www.bmf.gv.at/Zoll/Produktpiraterie/2009.pdf (only available in German).
- A list of the contact details of member states’ customs authorities competent in dealing with applications for action pursuant to Article 5(2) of the 2003 Regulation can be read at http://ec.europa.eu/taxation_customs/resources/documents/customs/customs_controls/counterfeit_piracy/right_holders/contactlist_intervention_en.pdf