There has previously been debate among the Spanish criminal courts over who should bear the storage and destruction costs for goods infringing certain IP rights which are the object of judicial proceedings and which are retained by Customs under the EU Customs Regulation (1383/2003) (for further details please see "Courts debate who should bear destruction and storage costs").

The debate started five years ago when, in criminal proceedings opened following complaints filed by holders of infringed IP rights, several shipping companies requested that the criminal courts order rights holders to pay the costs.

In November 2010 Section 2 of the Valencia Court of Appeal issued a ruling which contradicted a decision of that same court (March 2010) and a decision of the Madrid Court of Appeal (October 2010), both of which ordered the destruction costs to be paid by the rights holder. Both courts accepted that when a final condemnatory judgment is issued, the costs could be claimed from the guilty party.

In those previous rulings, the Valencia and Madrid courts considered that Article 11 of the Customs Regulation (which establishes the simplified procedure) and Spanish Transposition Order EHA/2434/2006 (which implements the simplified procedure in Spain) applied. Thus, the courts concluded that the destruction costs had to be borne by the rights holder.

The November 2010 decision suggested that Section 2 of the Valencia Court of Appeal wished to rectify this situation. It established that the administrative provisions (particularly Order EHA/2343/2006) applied only in those cases for which their application was foreseen and which were only "cases in which Customs must intervene in the specific situations established by the Order". Consequently, these provisions could not be applied in judicial proceedings initiated by filing a complaint once Customs has intervened.

Rather, these provisions applied only during the administrative phase before the opening of judicial proceedings, and not in the judicial phase opened by the rights holder which filed a complaint before the competent criminal court.

It is under this simplified procedure – the (non-judicial) administrative procedure foreseen in Article 11 of the Customs Regulation and implemented by the order – that the rights holder must bear the destruction costs.

Despite this, also in November 2010 Section 3 of the Valencia Court of Appeal issued a ruling that both the destruction costs and the cost of storing the infringing goods had to be borne by the rights holder.

Following these contradictory rulings, four new rulings have been issued which signal a change of direction:

  • the June 21 2011 decision of Section 4 of the Valencia Court of Appeal;
  • the December 5 2011 decision of the Barcelona Court of Appeal;
  • the December 12 2013 decision of Section 3 of the Madrid Court of Appeal; and
  • the February 14 2014 decision of the Gipuzkoa Court of Appeal.

The latest two rulings were issued after the court accepted arguments that the provisions referred to above apply only during the administrative phase, and not during the judicial phase opened by filing a complaint.

The holder of an infringed IP right has the status of an injured party in the criminal proceedings opened as a result of its complaint. It is the victim of a crime against its IP right, and as such it is unacceptable to expect the victim to pay the storage and destruction costs for goods which infringe its own IP right. This would make it a doubly injured party.

The rulings issued by the Valencia Court of Appeal in March 2010 and the Madrid Court of Appeal in October 2010 (as well as others along the same line) had an additional negative effect. Some criminal courts applied them even in cases unrelated to the retention of goods by Customs to order rights holders to pay the destruction and storage costs.

Although it was hoped that the four new rulings had concluded the debate, on January 10 2014 Section 2 of the Valencia Court of Appeal again ruled that destruction and storage costs had to be borne by the rights holder. Consequently, it seems that the debate is far from over. However, these four rulings should help to tip the balance of the debate in the right direction.

For further information on this topic please contact Jordi Camó at Grau & Angulo by telephone (+34 93 202 34 56), fax (+34 93 240 53 83) or email (j.camo@gba-ip.com). The Grau & Angulo website can be accessed at www.gba-ip.com.