Introduction

The European Commission has recently published its annual report on Customs detentions of articles suspected of infringing intellectual property rights for the 2011 calendar year. Under Article 8 of Commission Regulation (EC) 1891/2004, EU member states must send the European Commission an annual list of all written applications for action and a quarterly list of detentions.

Key outcomes of 2011

  • 115 million individual articles were detained in 2011 compared to 103 million in 2010, with the value of these goods reaching €1.3 billion.
  • Medicines head the list of detained articles in terms of volume (24%), followed by packaging materials (21%) and cigarettes (18%).
  • There were over 91,000 detention cases in total, representing an increase of 15% compared to 2010.
  • In respect of cases, as opposed to volume of individual articles, the top three categories were shoes, clothing and bags, and wallets and purses.
  • The number of applications made by rightholders continued to increase, from just over 18,000 in 2010 to approximately 20,500 in 2011.
  • China remains the main source of infringing goods, accounting for 73% of detained articles.

The overall increase in detained articles is a result of escalation in postal and courier traffic linked to the growth of the e-commerce market. The number of cases in sea and road transport actually decreased, demonstrating the marked effect of internet sales on IPR infringement.

Rights relied on

As usual, the vast majority of articles detained were suspected of infringing a Community or national trade mark, with other rights fairly evenly divided. Generally shoes, medicines and toys were the products most often found to infringe design and utility model rights, while medicines, audio/video apparatus, unrecorded CD/DVDs and mobile phones were the articles most relevant in respect of patent infringement. CD and DVDs formed the bulk of copyright infringements – interestingly, Syria entered the top ten countries of origin of infringing articles for the first time this year due to detentions of recorded CDs and DVDs.

Outcomes following detention

Overall, the outcomes for rightholders continue to be very positive. The percentage of detentions resulting in the destruction of goods has risen slightly since 2010, and the percentage of detentions resulting in court proceedings has fallen slightly. In less than 10% of cases, the goods were released either because they appeared to be original goods (not detainable under the current Council Regulation (CE) 1383/2003, but this will change: see below), or because no action was undertaken by the rightholder following notification by Customs authorities (this tends to indicate very small consignments).

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Most effective Customs authorities

Belgium, Germany, Italy, Netherlands, Spain and the UK account for 76.9% of detentions overall and 45% of articles detained. The UK was the busiest, with 36% of all cases of detention, whilst Bulgarian Customs detained the highest volume of articles (28%).

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Conclusions

The protection of IPRs forms a key part of EU economic strategy for the current decade. As stated by the Commissioner for Taxation, Customs, Anti-fraud and Audit, “Customs is the EU’s first line of defence against fake products which threaten the safety of our citizens and undermine legal businesses.” Rightholders should always consider EU Customs detention as a weapon in their armoury. It can be cost-effectively co-ordinated by advisers in one location, and administered largely by paralegals.  The above statistics demonstrate the need for multi-country legal counsel to support follow-up action, from Bulgaria to the UK and all points in between.  In addition, education of Customs officers by right holders continues to be important, and could assist in increasing detentions in those countries with lower detention rates.

New regulation

In May 2011 the European Commission proposed a new regulation to strengthen Customs enforcement of IPRs. The amended rules will broaden the scope of IPR infringements that can be actioned by Customs at borders, to include parallel imports of original goods, as well as devices designed to circumvent digital content management.  There will also be extension of the categories of goods to which protected rights apply, by including unregistered trade names as well as utility models.

The aim of the proposal is to further contribute to a single, harmonised market that ensures more effective protection to rightholders. The new regulation would introduce more consistent procedures enabling Customs, under certain conditions, to have goods abandoned for destruction without the need for formal legal proceedings. These procedures would be differentiated according to the type of infringement. For counterfeit and pirated goods, the owner’s agreement to destroy the goods could be presumed if the destruction had not been explicitly opposed. For other situations, the owner of the goods would have to explicitly agree to their destruction. If no agreement is reached, the rightholder would have to initiate legal proceedings to establish the infringement, or the goods would be released. A specific procedure has also been proposed for small consignments of suspected counterfeit and pirated goods allowing destruction of such goods without the rightholder’s involvement and with costs borne by Customs.

In terms of enhancing the legitimacy and strength of Customs action, additional rules have been proposed to ensure protection of legitimate traders’ interests from potential abuse of Customs enforcement procedures and to integrate the fundamental EU Charter rights into the regulation. The new rules will therefore clarify the timelines for detaining suspected goods, the conditions in which information about consignments would be passed on to rightholders, the conditions for destruction of goods infringing in ways other than counterfeiting and piracy, and the right of defence. The regulation would continue to provide that storage and destruction costs directly incurred by Customs be assumed by the rightholders requesting action, but with a new exception in relation to small consignments.

The European Parliament substantially amended the text of the proposal in July 2012, including a proposal for expedited destruction of suspected counterfeit goods. This amended text will now be examined by the European Council. If the European Council approves all amendments and does not otherwise alter the original proposal, the text will be adopted; if not, its position will be referred back to the European Parliament.