On 1 January 2014, a new Regulation 608/2013 setting out the powers of customs authorities to deal with goods suspected of infringing intellectual property rights became applicable across the EU.  The new Regulation improves the position of rights-holders by strengthening and streamlining customs procedures around the enforcement of intellectual property rights. 

Background

The New Regulation repeals and replaces Regulation 1383/2003. Under the old Regulation, customs authorities could, of their own volition, detain goods suspected of infringing intellectual property rights discovered following a routine inspection of goods at the border.   Alternatively, a rights-holder could make an application to the customs authorities, giving full details of its intellectual property rights and authentic goods, and asking them to keep a look out for counterfeits and pirated goods.  For a period of one year (which could be extended), customs authorities could detain any goods suspected of infringing the rights-holder’s intellectual property rights. 

The old Regulation gave Member States discretion to introduce a ‘simplified procedure’ under which goods detained could be destroyed by agreement of the rights-holder and owner of the detained goods without the rights-holder having to establish that the goods did infringe its rights or obtain a court order for destruction.  Only around half of the EU Member States implemented a simplified procedure.  Where no simplified procedure was available, rights-holders had to initiate infringement proceedings within 10 working days of being notified by customs authorities that goods had been seized, failing which the goods would be released. 

The New Regulation

The new Regulation retains this basic application/detention procedure but introduces a number of changes to improve the position of rights-holders: 

  1. The simplified procedure is now compulsory in every EU Member State.  In addition, customs authorities may now deem that the owner of the goods has consented to their destruction under this procedure where they do not oppose destruction within 10 working days of being notified that the goods have been detained.
  2. Customs authorities now have powers in respect of a wider range of intellectual property rights, including trade names.  The addition of trade names will be welcomed by rights-holders who do not have registered trade marks in place (although having registered protection is still preferable as enforcement is likely to be more straightforward). 
  3. Rights-holders now have greater freedom to use information supplied to them by customs authorities about detained goods, including images of the goods, information about the quantity and nature of the goods and the owner’s name and address.  Previously, a rights-holder could only use this information for proceedings to establish whether the goods were counterfeit or pirated.   Now, there is nothing to stop them using it for other purposes, for example, to being infringement proceedings in respect of detained goods which are subsequently found to be outside the scope of the Regulation (such as parallel imports – see below).  
  4. Customs authorities have new powers to detain and destroy small consignments of counterfeit goods, imported by post or courier, without the explicit consent of the rights-holder.  They can do this where the owner of the goods has agreed to destruction or not opposed destruction within 10 days of notification of detention of the goods.  For these powers to apply, the rights-holder would need to have opted-in via a general request for destruction.  The definition of ‘small consignment’ would cover counterfeit goods purchased online, which are becoming an increasing problem for rights-holders.  Although this procedure is likely to reduce the bureaucracy around small quantities of goods, some rights-holders may choose not to opt-in, preferring instead to preserve the goods as evidence for use in infringement proceedings. 
  5. The Regulation will be underpinned by a new database to be developed and managed by OHIM, currently due to be launched in April 2014.  The database will hold, and allow customs authorities to exchange, details of applications from rights-holders.  It is intended to be a tool to improve the efficiency with which customs authorities operate and their detection rates.  Rights-holders can upload information about their IP rights and products to the database, including pictures, company information, distribution channels or any other data they think relevant and useful to customs authorities in tackling counterfeits.  The database will be confidential and free to use and the data will be translated into the official EU languages. 

Gaps in the New Regulation

Although the new Regulation generally strengthens the position of rights-holders, it has some significant gaps.  Customs authorities have no powers in relation to parallel imports (goods manufactured with the rights-holder’s consent but put on the market for the first time in the European Economic Area without their consent – the EEA comprises all of the EU member states plus Norway, Iceland and Liechtenstein).  In addition, the Regulation will not apply to goods merely passing through the EU between two non-EU countries, unless there is a substantial likelihood that they will be released onto the EU market.  These gaps may be filled by proposed changes to European trade mark law and the increased information sharing by customs authorities promoted by the new database, which may help eliminate international trade in counterfeit goods. 

Conclusions

Making an application to customs is a cost-effective way for rights-holders to remove counterfeit goods from circulation in the EU.  The new Regulation improves the position of rights-holders by strengthening and streamlining customs procedures around the enforcement of intellectual property rights.