Introduction

The Taxation and Customs Union at the European Commission has recently published its statistics for 2010 of customs data relating to the enforcement of intellectual property rights (IPRs) across the EU.

The Customs Union takes a robust approach to tackling the problem of counterfeit goods and provides for Member States to implement enforcement measures via national customs authorities under the Counterfeit Goods Regulation (1383/2003).  Member States are also required to provide details of any detentions of goods made by customs involving infringements of IPRs under Regulation 1891/2004.  This submission of information enables the creation of the report and the breakdown of data shows interesting trends on an EU wide scale.

The report utilises the data gleaned from, among other things, the number of cases, the number of articles (i.e.  the total number of individual infringing goods), and the total domestic retail value of the goods, which is calculated on the basis of what the goods would be worth if they were genuine.

Key outcomes of 2010

  • The amount of cases increased significantly, with 79,112 cases in 2010 as opposed to 43,572 cases in 2009.  However the total number of articles detained decreased slightly.
  • Germany and the UK between them comprised over half of the total number of cases in the EU. 
  • The total value of all goods detained is estimated at 1 billion euro.
  • 91.82% of articles detained were those suspected of infringing trade marks (either national or CTM) as opposed to other IPRs (notably patents, design rights and copyright).
  • The number of applications made by right-holders was just over 18,000, an increase of nearly 4,000 from the previous year.
  • The main country of provenance, or the country where the goods were known to have been sent from (note this is not necessarily the same as the country of origin), was China, accounting for 85% of all articles detained.

The 82% increase in the number of cases since 2009 is undoubtedly due to the increase in detentions of postal items and this now comprises the biggest proportion of cases (61.93%).  This increase has in turn arguably come about as a result of the rise in internet sales.  The rise in postal detentions (there were 48,997 cases as opposed to just 15,003 in 2009), is interesting considering that distribution by post makes it difficult for customs authorities to intercept infringing items, especially when it is not cost-efficient or administratively workable to search every small package potentially containing only a couple of items. 

UK figures

There are two follow-up procedures available to right-holders whose IPRs are infringed in relation to counterfeit goods; the court procedure and the simplified procedure.  The simplified procedure avoids the need to start proceedings and allows for the right-holder to instruct customs to destroy the infringing goods if the importer fails to respond when given the opportunity by the right-holder to object.

Across the EU as a whole, 75.83% of detentions resulted in the destruction of the infringing goods under a national simplified procedure and only 15.67% of detentions resulted in court proceedings. 

The simplified procedure has been available to all Member States under Article 11 of Regulation 1383/2003, to adopt if they choose.  Last year, the UK brought this procedure into full effect, under the Goods Infringing Intellectual Property Rights (Customs) (Amendment) Regulations 2010 (SI 2010/324).  These Regulations came into force on 10 March 2010.

The availability of this procedure has clearly had a significant effect on the number of cases in the UK: the number of cases rose dramatically from 2,117 in 2009 to 22,125 in 2010, a 945% rise.  There was also a 60% increase in the number of articles detained in the UK, although considering the steep rise in cases it is surprising this is not higher – presumably this is because right-holders are choosing to flex their muscle on small consignments of counterfeit goods, and whereas previously costly court proceedings would not have been a viable or attractive option, the simplified procedure has made this a much easier and quicker process. 

It will be interesting to see if this trend continues throughout 2011.

Sector analysis

The charts below show the allocation of cases among three key industry sectors:  Technology, Media and Telecoms (TMT), Consumer Products and Lifesciences.  TMT and Consumer Products are further divided to show the various product groups (Lifesciences cases comprised medicines and medical devices).

High profile patent case

A recent case which demonstrated a high profile use of detention relying on patent rights was a dispute in the Netherlands between LG and Sony (Sony Supply Chain Solutions (Europe) B.V. and LG Electronics, Inc. (case nr: 389067 / KG ZA 11-269)).

In a move that attracted widespread press coverage, LG had succeeded in having the Netherlands customs authority detain a consignment of Sony PS3 games consoles, alleging that they infringed LG’s Blu-Ray patents.  A court order was also obtained for the seizure of the goods.  On 10 March 2011 the District Court of The Hague ordered the release of the goods.  This was largely due to the fact that the parties were members of a patent pool which had an agreed process for resolving disputes without litigation.  In the latest development, on 11 August 2011, both companies agreed to drop all patent infringement cases against each other and signed a cross-licensing deal.  This nevertheless demonstrates the power of customs detention as a tool in patent infringement disputes, in the right circumstances.

Reform proposals

A proposal to replace the 2003 Regulation was advanced by the European Commission in May 2011, when a new draft Regulation was published.  The new Regulation will broaden and strengthen the current provisions in relation to the enforcement of IPRs and has the potential to make a significant impact on the current regime.  In particular, the scope will include infringements arising from parallel trade, and infringement of unregistered trade mark rights.  It remains to be seen if and when this Regulation will be implemented. 

Click here to view breakdown diagrams