In the case of Nokia Corporation v Her Majesty's Commissioners of Revenue & Customs (HMRC) the High Court has considered the extent to which brandowners can use the Counterfeit Goods Regulations (the Regulations) to seize counterfeit goods merely passing through the UK and not intended for sale here.

Background

The Regulations give customs authorities in the UK power to detain and ultimately seize goods which infringe an intellectual property right. 'Goods infringing an intellectual property right' include 'counterfeit goods' which are defined as "goods, including packaging, bearing without authorisation a trade mark identical to the trade mark validly registered in respect of the same type of goods … and which thereby infringes the trade mark holder's right under Community law … or the law of the Member State in which the application for action by the customs authorities is made."

Article 5 of the Trade Marks Directive provides for the rights conferred by a trade mark. The proprietor of a trade mark is entitled to prevent all third parties not having his consent from using in the course of trade an identical sign for identical goods or a similar sign for identical or similar goods where there is a likelihood of confusion between the sign and the trade mark. The Trade Marks Directive was implemented in the UK by the Trade Marks Act 1994.

Facts

HMRC stopped and inspected a consignment at Heathrow Airport being shipped from Hong Kong to Columbia. The consignment comprised 400 mobile telephone handsets, batteries, manuals, boxes and hands-free kits each of which bore NOKIA trade marks. Nokia subsequently verified that the telephones were fakes and asked HMRC to seize the goods under the Regulation. HMRC declined to seize the goods on the basis that it did not have the legal power to do so without any evidence that the goods would be released onto the EU market.

Nokia applied for judicial review of:

  • The decision not to seize / detain the goods;
  • The policy followed by HMRC whereby goods in transit through the EU being sent from one non-EUcountry to another non-EU country were not considered to fall within the definition of 'counterfeit goods'under the Regulation.

HMRC argued that to fall within the definition of 'counterfeit goods' in the Regulation, the goods must infringe a trade mark in the UK. For there to be trade mark infringement in the UK the mark in question must be being used in the course of trade. This entailed the goods being put on the market in the UK and this had not and would not happen here.

Nokia claimed that the Regulation gave IPR owners powers to prevent counterfeit goods getting into circulation. By failing to recognise this, HMRC had applied an unduly restrictive interpretation of the Regulation.

Decision

The court rejected Nokia's application for judicial review. It accepted that HMRC's arguments were correct. It held that the Regulation did not create any new rights. The Regulation focused on whether the goods were counterfeit. If they were, then HMRC had authority to take action. For goods to be counterfeit there must be trade mark infringement and trade mark infringement required the goods were put on the market in the UK. Goods merely passing through the UK in transit never to be put on the market here cannot satisfy this requirement. It is not enough that there is a risk that the goods may end up on the UK market.

Comment

This is a disappointing decision for brandowners. It confirms that the Regulation cannot be used to seize counterfeit goods that are merely passing through the UK but which will not be put on the market here. The Regulation cannot be used therefore as a means of intercepting fake goods and prohibiting their sale in the destination territory. The High Court noted that this interpretation of the Regulation was unsatisfactory and expressed a hope that there will be a review of the measures currently available to prevent the international trade in counterfeit goods.

Further reading

Click here for a copy of the judgment