Counterfeit goods in transit can be seized by Customs in the EU…sometimes

The Advocate General (AG) of the Court of Justice of the European Union (CJEU) has just published his Opinion in Nokia Corporation v HMRC. The case was referred by the English High Court and followed the detention by UK Customs of allegedly counterfeit goods which were subject to the ‘external transit’ Customs procedure. (External transit applies to ‘noncommunity goods’ not subject to import duties or other charges which originate in and are destined for non-EU countries, but which pass through an EU member state.)

The AG’s Opinion is not binding, but in the majority of cases judges in the CJEU will follow it. In this case, it would mean that Customs authorities in the EU can seize goods which are subject to the external transit procedure. Until now, the power of EU Customs to seize such goods has been very unclear. The AG has now formulated a test to be applied.  

The AG’s Opinion

The AG has said that goods can be seized if there are “sufficient grounds for suspecting” that they are counterfeit and, in particular, that they are to be put on the market in the EU. In other words, the goods do not actually have to appear on the EU market, but there should be something to suggest that this will happen.  

The AG’s answer begs an obvious question: what are “sufficient grounds for suspecting”? The AG appears to have recognised that this is an issue and that Customs authorities should not have total discretion. Only limited guidance is provided by the wording that authorities “must at the very least have ‘the beginnings of proof’, that is to say, some evidence that those goods may in fact infringe an intellectual property right” if they are to lawfully seize them.  

Need for clarity  

The AG’s Opinion lacks certainty and if the CJEU does follow the Opinion, brand owners must hope there will be more guidance on how “sufficient grounds for suspicion” should be applied in practice.  

Without this, there is a danger that Customs authorities and courts in individual member states will apply the Opinion in different ways. Counterfeiters could potentially take advantage by targeting EU countries which are perceived to be a ‘soft touch’.