A new "simplified procedure" for the seizure and destruction by Customs of goods infringing intellectual property rights at the request of the rights holder and without a court order, is set out in the Goods Infringing Intellectual Property Rights Customs (Amendment) Regulations 2010 which come into force tomorrow (10 March 2010). Previously this procedure was only available in relation to trade mark and copyright infringing goods, but now it is to be applied much more widely to most other intellectual property rights, including patents and designs.
The new procedure applies the previous customs regime whereby counterfeit or pirated (trade mark and/or copyright and related right infringing goods) could be seized and destroyed on the basis of a witness statement from the rights holder (as long as there was no objection from the holders/owners of the goods), to "goods infringing intellectual property" as defined in Article 2(1) of the Counterfeit Goods Regulation 1383/2003 ("CGR") to include patents, SPCs, plant variety rights, trade marks, copyright and related rights, design rights and geographical indications.
Last year HMRC issued notice of the withdrawal of its old "simplified procedure" following the decision of the Belfast Magistrates Court in HMRC v Penbrook in December 2008. The Magistrates Court had held that this procedure did not fulfil the requirements Article 13 of the CGR. As a result, HMRC announced that no allegedly counterfeit or pirated goods would be formally seized by Customs unless court proceedings were initiated by the rights holder within 10 days of notification, and that there could be no destruction of the goods without a court order (as per the requirements of Article 13 CGR). Before this Customs had only required proceedings to be on foot and court orders obtained in relation to goods infringing intellectual property rights other than counterfeit or pirated goods. The new procedure thus reverts back to the position of not requiring proceedings to be initiated but also extends it to most intellectual property rights, not just trade mark and copyright.
- Rights holders will see this as a welcome return to the previous procedure in relation to counterfeit and pirated goods, where they had a quick and cheap "fix" available to them to limit the circulation of infringing items.
- The expansion of the simplified procedure to incorporate items infringing other intellectual property rights (such as patents) is a significant advantage to rights holders. Goods infringing patent, SPC, plant variety, designation of origin or geographical indications rights will potentially now be much easier to have seized and destroyed.
- However, in cases where the owner or holder of the goods (or the declarant) objects to seizure or destruction, the procedure, as set out in Article 13 CGR, still applies - i.e. no formal seizure or destruction without a court order.
- Goods infringing the Olympic Symbol etc (Protection) Act 1995 (those with Olympics and Paralympics words, mottos and symbols applied to them), although they may be seized by customs (see SI 2007/1508 - The Goods Infringing the Olympics and Paralympics Associated Rights (Customs) Regulations 2007) it seems will not be subject to the simplified procedure as these rights do not appear in Article 2(1) of the CGR.
- There are still outstanding issues as to whether goods "in transit" can be said to be infringing and therefore whether the seizure and destruction procedures under the CGR can apply to them at all. This is the subject of a reference to the ECJ in Nokia v HMRC made by the Court of Appeal last year. At first instance Kitchin J upheld HMRC's decision not to detain suspected counterfeit goods in transit unless there was evidence of likely diversion onto the EU market. A similar Belgian reference is also due to be heard by the ECJ at the same time.
The new "simplified procedure":
The new "simplified procedure" is set out in the Goods Infringing Intellectual Property Rights Customs (Amendment) Regulations 2010 ("the 2010 Regulations"). It substitutes a new regulation 7 into the Goods Infringing Intellectual Property Rights (Customs) Regulations 2004 to the effect as follows:
- Suspended goods may be treated as abandoned for destruction where the rights holder has informed Customs in writing with the specified period (10 working days from receipt of notification (extendable for a further 10 at HMRC's discretion - or 3 days in case of perishable goods that it believes that those goods infringe an intellectual property right and
- the rights holder has provided Customs with the written agreement of the holder or owner of the goods ("interested parties") that the goods may be destroyed (this can also come direct from the interested party, but it is at Customs discretion whether to accept it or not);
- none of the interested parties has opposed destruction of the goods within the specified period (10 days) the agreement is then presumed
If there is more than one "interested" party and at least one of them opposes destruction, the goods cannot be destroyed even if the others agree to it in writing
The rights holder bears the expense of destruction
Customs must retain a sample of the goods that can be used in evidence if required in legal proceedings
Any goods infringing an intellectual property right (as defined by the CGR) may be subject to this procedure
The rights holder needs to indemnify HMRC where goods are destroyed under this procedure.
Regulations 3, 4(2),8 (which excluded intellectual property rights other than trade mark related or copyright related rights from the application of the previous Article 11 procedure) and 9 are also to be deleted from the 2004 Regulation.
Prior to this development, rights holders who wished Customs to seize and destroy goods infringing rights other than trade mark and copyright had to apply to Customs under the Article 13 procedure, there being no "simplified procedure" in place in relation to other intellectual property rights. This required the rights holder to first obtain a court order.
The CGR defines "goods infringing an intellectual property right" at Article 2(1), as
- "counterfeit goods" - involving trade mark infringements;
- "pirated goods" - involving copyright and/or related right or design right infringements;
- patent and SPC infringing goods;
- plant variety infringing goods;
- goods infringing designations of origin or geographical indications.
In addition, moulds or matrices specifically designed or adapted for the manufacture of goods infringing intellectual property rights will not be treated as goods of that kind if the use of them infringes intellectual property rights under Community or Member State laws.
There was widespread comment, last year, following Customs' announcement, by letter in June 2009 to rights holders who had "watching briefs" registered with Customs, that, pending the issuing of a new simplified procedure:
- Customs would no longer formally seize goods without a court order or written consent from the owner or holder of the goods;
- Proceedings needed to be on foot within 10 days of the rights holder receiving notification from Customs of their identification of potentially infringing goods (extendable to 20 days at HMRC's discretion, but only 3 days (non-extendable) for perishable goods).
Without a court order, Customs would only seize and destroy goods if the holder of the goods or the owner of the goods consented, which was unlikely to happen in most cases. There was widespread concern amongst rights holders that what had previously been a quick and cheap way of stopping infringing goods had become expensive and difficult with the introduction of the requirement for proceedings to be on foot for Customs to retain the goods beyond 10 days and a court order before formal seizure and destruction could take place.
However, Article 11 of the Counterfeit Good Regulation 1383/2003 requires there to be a "simplified procedure" for allegedly infringing goods to be given up for destruction under Customs' control without there being any need to determine whether they were actually infringing. The previous "simplified procedure" was challenged in the Belfast Magistrates court in December 2008 (HMRC v Penbrook) and found wanting. Until this case, Customs had a "quick fix" procedure which was regarded as the "simplified procedure" required by the CGR:
- Rights holders would alert Customs when they thought there were counterfeit items circulating (trade mark or copyright infringing goods only);
- Customs would seize the counterfeits found by them when inspecting goods in transit in planes, ships etc or when the items were coming into the UK via Customs, and notify the rights holders;
- Rights holders would inspect the items and provide a witness statement (declaration) confirming that the goods were counterfeit ;
- Customs would formally seize the goods and that would usually end the matter as counterfeiters rarely appealed.
The Belfast Magistrates court held that this procedure did not fulfil the requirements of Regulation 1383/2003, Article 13 of which requires that if, after the 10 day period following notification, HMRC "has not been notified that proceedings have been initiated to determine whether an intellectual property right has been infringed under national law" HMRC must release the detained goods. The Council Regulation has direct effect in the UK and therefore the court held that no departure from the Article 13 process could be justified. Following this case customs wrote to rights holders in June 2009 as explained above, asserting that a new "simplified procedure " would be forthcoming, as it now has been in the form set out in the 2010 Regulations.