Summary and implications

The Advocate General of the Court of Justice of the European Union (CJEU) has just published his Opinion in Nokia Corporation v HMRC.

The case was referred by the English High Court and involves the detention by UK Customs of allegedly counterfeit goods which were subject to the “external transit” Customs procedure.  

The AG’s Opinion is not binding, but in the majority of cases judges in the CJEU follow the AG’s Opinion. If the CJEU does so in this case, it would mean that in certain circumstances Customs authorities in the EU can seize goods which are subject to the external transit procedure. The AG’s proposed test could, however, be applied very differently in individual EU Member States.

The AG’s opinion and further clarity needed

The external transit procedure applies to goods originating from one non-EU country which are destined for another non-EU country, but which travel through an EU Member State. The goods are therefore treated as “non-Community goods” and are not subject to import duties or other charges.  

The English High Court asked the CJEU to rule on whether goods subject to the external transit procedure can be seized by Customs authorities in the EU under the EU Customs Regulation. The AG has said that goods can be seized if there are “sufficient grounds for suspecting” that they are counterfeit goods and, in particular, that they are to be put on the market in the EU. In other words, there is no requirement for the goods actually to be put on the EU market, but there needs to be something to suggest that this will happen despite the goods purportedly being bound for a non-EU market.

This is, in part, welcome news. Up until now, the power of EU Customs to seize goods in transit has been very unclear. The AG has at least formulated a test to be applied.  

The AG’s answer does however raise an obvious question: what are “sufficient grounds for suspecting”? The AG appears to have recognised this is an issue and that Customs authorities should not have total discretion on how to act. However, the AG’s proposal that “for the customs authorities to be able lawfully to seize goods in transit subject to their control, they must at the very least have ‘the beginnings of proof’, that is to say, some evidence that those goods may in fact infringe an intellectual property right” provides limited guidance.

The AG’s Opinion lacks certainty and if the CJEU does follow the Opinion, brand owners must hope it will provide more guidance on how “sufficient grounds for suspicion” should be applied in practice. Otherwise, Customs authorities and courts in individual Member States could interpret its application in different ways. Counterfeiters could then take advantage by working out which EU countries are an apparent soft touch and choose to transport infringing goods through those countries.