The Dutch practice

As reported earlier in relation to customs seizures based on Anti Piracy Regulation 1383/2003, Dutch Courts, including the Supreme Court, have often applied a legal fiction to cases concerning the transit of goods through The Netherlands. In other words, counterfeit goods in transit are treated as if they have been manufactured in The Netherlands.[1] This essentially means that intellectual property right holders can enforce border measures if the goods are considered to be counterfeit according to Dutch laws.

The most recent and controversial ruling is the extensively motivated judgment rendered by the Vice President of the department of the District Court of The Hague in the Sosecal v Sisvel case.[2] The Court took all relevant previous judgments into account and analysed the Montex/Diesel judgment in depth, thereby considering the objectives of the Regulation. The Court considered that there is no indication that Montex/Diesel impairs previous ECJ decisions and cited remarks made by the European Commission, who stated that custom authorities ‘can stop suspected fakes during import, export, transit or transhipment.’ The Court concluded that Montex/Diesel was not intended to stop right holders from objecting to the transit of counterfeit goods under the Regulation and that the legal fiction should be applied.

Brazil and India complain to the World Trade Organization about Dutch customs policy

This view is not widely shared, as became clear when Brazil and India recently complained to the World Trade Organization about the Dutch Customs policy after Dutch customs detained a shipment of generic medicines shipped from India en route to Brazil. The Permanent Representative of Brazil stated that the measure taken by the Dutch authorities clearly violated the freedom of transit.

In its response the European Community emphasised that the generic medicines were temporarily detained by Dutch Customs based on provisions in the Regulation which are in line with TRIPS.

The Dutch Government also commented on this specific issue, stating that Dutch customs acted in conformity with European and national laws. Despite this, it seems as though the Dutch Government has taken the international outrage seriously, as it has asked the European Commission to further investigate this matter.

The European Commission responded by announcing that it would prepare an ‘explanatory memorandum’ in which it would point out how custom authorities can use the Regulation in a way that does not negatively impact the transit of generic medicines.

No unified European practice

It is thus currently still possible for intellectual property right holders to stop the transit of infringing goods through The Netherlands. This situation is the exact opposite to the situation in the United Kingdom, where Justice Kitchin J recently dismissed Nokia’s application for judicial review of the HMRC’s refusal to detain a shipment of counterfeit phones and accessories after reviewing the ECJ case law.

United Kingdom and Belgian Courts refer ‘transit’ questions to European Court of Justice

On 9 November 2009 the Court of Appeal decided to refer questions to the ECJ in the case of Nokia v Her Majesty's Revenue and Customs [2009] EWHC 1903(Ch) (27 July 2009). At the time of publishing, the exact formulation of the questions was unclear. However, it is expected that the questions will address whether non-Community goods in transit from one non-Member State to another, fall under the definition of ‘counterfeit goods’ as stated in Article 2 (1) (a) of the Regulation, in cases where there is no evidence that the goods will be released or otherwise made available in the European Union.

And on 4 November 2009 in the case of NV Koninklijke Philips Electronics v Far East Sourcing Limited AR No 02/7600/A, the Court of First Instance of Antwerp referred the following question to the European Court of Justice (‘ECJ’):

“Is Article 6.2(b) of Council Regulation 3295/94[3] of 22 December 1994 (the old Customs Regulation) a rule of standardised Community law that must be observed by the Court of the Member State that has been applied to by the holder of that right in accordance with Article 7 of the Regulation, and does that rule mean that the court, in making its assessment, may not take into account the temporary storage status /the transit status and must apply the legal fiction that the goods were manufactured in that same Member State, and must subsequently decide, while applying the law of that same Member State, whether such goods infringe the intellectual right in question?”

An ECJ decision on this topic is thus both much needed and wanted, as the current status creates uncertainty and inequality amongst right holders throughout the European Community. Although neither referrals deal with patent rights, the outcome of the ECJ rulings is important to the life sciences field, as the rulings will be able to apply mutatis mutandis to cases concerning patent infringement and therefore also medicinal products.