Following a policy change by HM Revenue & Customs (HMRC), IP rights holders will now be required to go to court every time they want the customs authorities to seize counterfeit goods entering the UK.
Using powers in the Counterfeit Goods Regulations (1383/2003/EC) (the Regulation), HMRC may detain and ultimately permanently seize goods entering the UK suspected of infringing an intellectual property right. Prior to the policy change, HMRC would detain goods arriving in the UK suspected of infringing an intellectual property right. HMRC would notify the IPR owner of the detention. HMRC would go on to permanently seize the goods provided the IPR owner gave a witness statement confirming that the goods were in fact infringing its intellectual property rights.
Since June of this year, HMRC have implemented a new policy on detention and seizure of goods. Now, HMRC will detain goods which are suspected of infringing intellectual property rights and notify the intellectual property rights owner of the detention, as before. An IPR owner then has 10 days in which to issue proceedings to establish whether its intellectual property rights have been infringed. HMRC will only permanently seize the goods if it has a court order permitting it to do so. If the IPR owner does not issue proceedings within 10 days or otherwise reach an agreement with the owner of the goods to abandon them, then the goods will be released to their owner.
This policy change has been made as a result of a successful legal challenge to HMRC's detention and seizure policy. It was found that seizing goods on the strength of witness statement alone did not meet the precise requirements of the Regulation. To bring the procedures fully in line with the Regulation, the onus is now on the IPR owner to prove that the goods infringe its intellectual property right.
The implications of this change are yet to be seen. It is likely to result in increased costs for IPR owners and may result in higher numbers of counterfeit goods entering the UK market. Counterfeiters will no doubt quickly become aware that if the IPR owner does not commence legal proceedings within 10 days the goods will be released to them. The solution for brandowners is to put in place a process to quickly and cost effectively identify fake goods and issue proceedings.