Introduction
Legal measures
Practical aspects
Comment
Romanian practitioners offering assistance in protecting IP rights during customs operations at Romanian borders need to find the best way to support IP rights holders, the aim being to obtain the best results with limited resources and in a timely manner.
Since Romania is a gateway to the European Union and a "portal" for a large volume of counterfeited goods, mostly originating from Turkey and China, defending IP rights at the border is an ongoing day-to-day battle. In each case, the goal is to bring the seized goods into the authorities' custody and, if possible, to recuperate the costs associated with the confiscation.
The protection of IP rights at Romanian borders follows EU Regulation 608/2013 concerning the customs enforcement of IP rights and, respectively, national Law 344/2005 on certain measures for ensuring the protection of such rights during customs operations. Additional provisions derive from Government Ordinance 100/2005 (transposing the EU IP Rights Enforcement Directive (2004/48/EC)).
In accordance with legislation, IP rights holders may file before the Romanian customs authorities a national or an EU-wide application for action instructing customs officers to seize any goods identified during customs formalities at the Romanian borders that are suspected of infringing their rights.
Following the grant of an application for action, the customs authority notifies the IP rights holder or its appointed representative of the seizure and provides information regarding the seized goods, such as:
- their actual or estimated quantity;
- their actual or presumed nature;
- the names and addresses of the consignee, the consignor and the declarant or the holder of the goods;
- the origin, provenance and destination of the goods; and
- available images of the seized goods, where possible.
The addressee or declarant of the goods is also notified of the seizure.
Where the goods are confirmed as counterfeit, the IP rights holder must inform the customs authority within 10 working days (three working days for perishable goods) and request the destruction of the seized goods as per the simplified legal procedure.
The goods will be destroyed provided that the declarant or addressee of the seized goods has not formally opposed the seizure. If there has been opposition from the addressee or declarant of the seized goods, in order for the goods to remain seized and to be destroyed, the IP rights holder must initiate legal proceedings to ascertain that its rights have been infringed and must file evidence of this before the customs authority within 10 working days (three working days for perishable goods).
The above legal term may be extended by an additional period of 10 working days (except for the term provided for perishable goods, which may not be extended) in certain cases, at the written request of the IP rights holder. In the event that a civil or criminal complaint is filed, the goods remain seized until the court's decision becomes final.
Customs authorities also may seize goods ex officio, even if they are not covered by a decision granting an application for action, when there is a suspicion that the goods are infringing an IP right. In such cases, the IP rights holder is given a three-day notice to file an application for action.
The costs associated with the storage and handling of the seized goods, as well as the costs associated with their destruction, shall be borne by the IP rights holder, which may seek compensation of such costs from the infringer or other persons, according to law.
For all cases in which seized goods are confirmed as counterfeit, the criminal investigation bodies (usually the border police) open an ex officio criminal case. The seized goods remain in the authorities' custody until the case is closed. This means that any instruction from customs regarding the destruction of the seized goods can only be followed once the criminal investigation is completed. In practice, this means extending the term in which goods remain in custody by one to two years, or even longer, depending on the circumstances of the case.
In situations where the seized goods cannot be stored free of charge in customs' facilities (warehouses) (for example, due to their large volume), but have required private storage to be contracted by customs, the aforementioned delay directly impacts IP rights holders, who will be charged storage costs. At this time, the costs associated with the storage and destruction of goods seized by Romanian customs authorities are not fixed nor extremely transparent and it is generally rather difficult for IP rights holders to budget for such costs in advance, depending on the quantity of the seized goods and factors such as their nature, volume and weight. At times, practice has revealed that such costs can be quite considerable and, in some cases, disproportionate to the actual market value of the seized goods.
While the Romanian customs authorities are quite active in taking action in connection to suspicious goods and notifying an impressive number of seizures to IP rights holders, due to delays encountered in practice (and most often caused by ex officio criminal investigations), sometimes several years will go by without IP rights holders receiving any information regarding the destruction of the goods (or in connection with the costs associated with their storage). This can be explained by the fact that customs cannot organise such operations until they receive the prosecutor's ruling on the case.
It thus remains for the IP rights holders to actively chase the authorities should they wish to receive confirmation of the destruction of the seized goods and to remain in contact with customs and ensure that the storage costs to be ultimately incurred are not disproportionate with the enforcement effort.
It is further worth noting that where the seizures of goods are determined by IP rights holders to be counterfeit, the criminal cases opened ex officio by the criminal investigation bodies are usually closed with the prosecutor ruling not to send the case to trial. In most cases this occurs on the basis of article 16(1)(b) of the Code of Criminal Procedure, which states that the investigated act is not listed among those crimes prosecuted by law.
Prosecutors justify this course of action by saying that the criminal acts being investigated involve putting into circulation, without the IP rights holder's authorisation, a product bearing a sign that is identical or similar to a registered trademark. In the authorities' view, where goods are seized and subsequently destroyed prior to entering the market, the criminal act is no longer taking place. In such circumstances, the criminal investigation is prevented by the fact that no criminal deed exists, since the goods can no longer reach the market.
In the authors' view, this outcome (often seen in practice in Romania both in connection to the ex officio criminal cases mentioned above, as well as in cases when IP rights holders decide to seek justice before the criminal investigation bodies instead of a civil court) is the consequence of an incorrect interpretation and application of the legal provisions in such cases, with consequences prejudicial to IP rights holders.
In fact, according to the provisions of article 102(1)(b) of Law No. 84/1998 on trademarks and geographical indications, republished: "placing into market circulation a product bearing a sign that is identical or similar with a registered trademark for identical or similar products" without authorisation constitutes a criminal offence punishable by imprisonment from three months to two years, or by a fine.
Further, article 102(3) of the same law defines what "placing into market circulation" means according to the legislature, namely:
offering the products or marketing or holding them for this purpose or, as the case may be, offering or providing the services under this sign, as well as the import, export or transit of the products under this sign.
It is thus apparent that in the case of seizures relating to goods confirmed as counterfeit, in which such unauthorised goods are imported with the purpose of being placed onto the market affixed with signs identical or similar to a registered right, the act of merely importing such goods fulfils the material element required for being considered a criminal act according to law. This is the case even if the counterfeit goods have been successfully seized at the border prior to their actual entry into the market as a consequence of the joint efforts of the IP rights holder and the customs officers.
Having said this, and given the rather discouraging results of actions pursued before the criminal investigation bodies, it is noted that in practice there is an increased preference of IP rights holders to bring such conflicts directly before the law courts in the form of civil claims. Here, IP rights holders can ask the court not only to prohibit the identified infringement acts and any such future infringements from being perpetrated by defendants, but also to order their compensation for the damages and costs incurred in connection with such conflicts, when this compensation cannot be obtained amicably from the infringer.
Taking the above route is especially appealing in cases where the costs associated with the seizure (ie, the storage and destruction costs) are disproportionate to the actual market value of the seized goods and difficult to be predict in advance. The increased possibility of such costs being recuperated by the IP rights holders can justify the efforts of bringing the matters before the civil courts, instead of deciding to join the criminal investigation cases as a civil party.
Lastly, while the efforts employed by customs officials towards stopping as many counterfeit goods as possible at the Romanian borders – in cooperation with IP rights holders – are applaudable, the need for a better transparency in terms of the costs associated with such operations, concomitantly with a more expeditious process of the destruction operations, cannot be overlooked.
For further information on this topic please contact Andreea Bende or Zsófia Judit Halmágyi at Simion & Baciu by telephone (+40 31 419 04 88) or email ([email protected] or [email protected]). The Simion & Baciu website can be accessed at simionbaciu.ro.