The Court of Justice of the European Union clarifies that infringing goods sold by a non-EU entity via the Internet and shipped by post or otherwise into the EU are “infringing goods” subject to customs seizure.

Rolex was informed by Danish customs of the arrival by post from Hong Kong of a shipment to a private individual, Mr. Blomqvist, containing a watch suspected of infringing trademarks and copyrights of Rolex. Mr. Blomqvist did not agree to the seizure and destruction. Rolex brought a case against Mr. Blomqvist seeking an order that he should consent to the final customs seizure. When the case reached the Danish Supreme Court, the court referred the following questions to the Court of Justice of the European Union:

Is Article 4 (1) Directive 2001/29/EC (Information Society Directive) to be interpreted in such a way that it must be viewed as constituting “distribution to the public” in a Member State of copyright-protected goods if an undertaking enters into an agreement via a website in a third country for the sale and dispatch of the goods to a private purchaser with an address known to the vendor in the Member State where the goods are protected by copyright, receives payment for the goods and effects dispatch to the purchaser at the agreed address, or is it also a condition in that situation that the goods must have been the subject, prior to the sale, of an offer for sale or an advertisement targeted at, or shown on a website intended for, consumers in the Member State where the goods are delivered?

Is Article 5 (1) and (3) Directive 2008/95/EC (Trademarks Directive) to be interpreted in such a way that it must be viewed as constituting “[use] in the course of trade” of a trademark in a Member State if an undertaking enters into an agreement via a website in a third country for the sale and dispatch of goods bearing the trademark to a private purchaser with an address known to the vendor in the Member State where the trademark is registered, receives payment for the goods and effects dispatch to the purchaser at the agreed address, or is it also a condition in that situation that the goods must have been the subject, prior to the sale, of an offer for sale or an advertisement targeted at, or shown on a website intended for, consumers in the State in question?

Is Article 9 (1) and (2) CTMR to be interpreted in such a way that it must be viewed as constituting “[use] in the course of trade” of a trademark in a Member State if an undertaking enters into an agreement via a website in a third country for the sale and dispatch of goods bearing the Community trademark to a private purchaser with an address known to the vendor in a Member State, receives payment for the goods and effects dispatch to the purchaser at the agreed address, or is it also a condition in that situation that the goods must have been the subject, prior to the sale, of an offer for sale or an advertisement targeted at, or shown on a website intended for, consumers in the State in question?

Is Article 2 (1) lit b Regulation (EC) No 1383/2003 (Customs Regulation) to be interpreted in such a way that it is a condition for the application in a Member State of the provisions on the prevention of release for free circulation and the destruction of “pirated goods” that “distribution to the public” must have occurred in the Member State under the same criteria as indicated in the answer to question 1?

Is Article 2 (1) lit a Regulation (EC) No 1383/2003 to be interpreted in such a way that it is a condition for the application in a Member State of the provisions on the prevention of release for free circulation and the destruction of “counterfeit goods” that “[use] in the course of trade” must have occurred in the Member State under the same criteria as indicated in the answers to questions 2 and 3?

The Court gave the following answer:

Regulation (EC) No 1383/2003 must be interpreted as meaning that the holder of an intellectual property right over goods sold to a person residing in the territory of a Member State through an online sales website in a non-member country enjoys the protection afforded to that holder by that regulation at the time when those goods enter the territory of that Member State merely by virtue of the acquisition of those goods. It is not necessary, in addition, for the goods at issue to have been the subject, prior to the sale, of an offer for sale or advertising targeting consumers of that State.

Remarks

The importation of counterfeit or pirated goods into the European Union in small quantities to private purchasers of such goods has puzzled the authorities and the legal profession for some time. The private purchaser is not liable for infringement – he is not using in the course of trade or distributing to the public – and the foreign seller, the “importer”, is often not subject to being prosecuted at reasonable costs. When goods arrive at customs and the purchaser objects to their seizure, he cannot be sued, and often the goods must be released.

In the present case, Rolex used, for now successfully, an inventive approach, namely requesting not a decision that the importer, Mr. Blomqvist, had infringed Rolex rights but seeking a judgment ordering him to consent to final seizure and destruction. Nevertheless, the Danish Supreme Court, to whom Mr. Blomqvist had appealed – he must love his fake Rolex indeed very much – referred the questions reproduced above to the Court of Justice. The Court had no trouble finding that the goods had been distributed and imported into the EU “in the course of trade” – the seller is a commercial enterprise – and distributed in the EU. The goods are thus “infringing” goods within the meaning of the Customs Regulation. The Court, not being asked a question, did not speak at all to the question of how such infringing goods can be disposed of – perhaps not being sufficiently aware that in the normal course of events when the recipient of the goods or the importer objects to the seizure, the proprietor must bring a civil infringement action, which is, as we have seen, not available against the private purchaser (see above). Thus, it is not clear at all whether the inventive approach by Rolex will succeed – that the goods are “infringing” is not really the final answer.

The proposals presented by the Commission in March 2013 for an amendment of the Community Trademark Regulation and the Trademarks Directive seek to address the issue by an amendment of the infringement rights in Article 9 of the Regulation and the (new) Article 10 of the Directive. That proposal – in the Regulation – reads as follows:

4. The proprietor of a European trademark shall also be entitled to prevent the importing of goods referred to in paragraph 3 lit c where only the consignor of the goods acts for commercial purposes.

That provision states the obvious – the importation is done in the course of trade; and the provision does not provide an answer as to how to enforce it vis-à-vis a third-country seller. In view of the Court of Justice’s Rolex judgment the provision is actually no longer necessary. It remains to be seen how the legislature (Parliament, Council) will react to this decision, and whether they will – as they should – simply delete it from the project.

Regulation (EC) No 1383/2003 referred to in the questions and in the answer was replaced from January 15, 2014, by Regulation (EU) No 608/2013 of the European Parliament and of the Council of June 12, 2013, concerning customs enforcement of intellectual property rights and repealing Council Regulation (EC) No 1383/2003 (OJ 2013 L 181, p. 15). The answers of the Court would, however, be the same under the new Regulation because the definition of “counterfeit” and “pirated” goods in Article 2 (5) and (6) of Regulation No 608/2013, while worded somewhat differently, has not changed in substance: What is decisive is an infringement of a trademark or copyright in the Member State into which the goods are brought.

By the way: Under the old and under the new Regulation goods of a non-commercial nature in a traveller’s luggage may not be seized by customs. Thus, Mr. Blomqvist could have peacefully imported a fake Rolex watch if he had travelled to Hong Kong himself, perhaps cheaper than fighting through many instances and losing in the end (counterfeiting and piracy are prohibited in Hong Kong as well).