Border Measures

European Commission officially referred ACTA to the European Court of Justice

Marius Schneider — 2012-05-15T05:14:23Z

Statement by John Clancy, EU Trade Spokesman:

“We can confirm that the European Commission has now officially submitted its request for an opinion on ACTA to the European Court of Justice. The Court's opinion is vital to respond to the wide-ranging concerns voiced by people across Europe on whether ACTA harms our fundamental rights in any way. The European Commission has a responsibility to provide Members of the European Parliament and the public at large with the most detailed and accurate information available. We now look forward to Europe's top court to independently clarifying the legality of this agreement. Let us reiterate our firm position that we call on the European Parliament to await this Court opinion before deciding on ACTA.”

Brazilian Anti-Counterfeiting Council Creates Trademark Database to Assist Enforcement Efforts

Olivier Vrins — 2011-12-28T11:53:35Z

LANDMARK DECISION ON COUNTERFEIT GOODS IN TRANSIT: The European Court of Justice Issues its Judgment in Joined Cases C-446/09 (PHILIPS) and C-495/09 (NOKIA)

Olivier Vrins — 2011-12-01T11:22:47Z

Background

Pursuant to Regulation (EC) No 1383/2003 (“the Border Measures Regulation”), Customs in the EU Member States are entitled to take action when coming across goods crossing the EU's external borders which are suspected of infringing an intellectual property right. Provided that such suspicions of an infringement exist, Customs may detain or suspend the release of the goods, irrespective of whether the consignment is only in transit or in transhipment through the EU customs territory (Article 1(1)). When determining whether goods can reasonably be suspected of infringing intellectual property rights (IPRs), the law of the Member State where the goods are found, is to apply. This includes the EU Regulations containing substantive provisions dealing with intellectual property rights, as well as the national laws of the Member States, which must in turn be in line with the EU harmonization Directives, where those exist.

The Court of Justice of the European Union (‘CJEU') held on several occasions that the mere transit of goods through the EU is not capable of constituting a trade mark or design infringement under the Community trade mark Regulation, the trade mark Directive, the Community design Regulation, and the Design Directive. The Court considers that transit does not interfere with the subject matter of trade mark and design rights, because it only consists of the mere transportation of goods, and does not involve any use of the appearance of the protected design or any marketing of the trade marked goods.

Only where the trade mark or design owner can establish that the goods have been subject to an act which necessarily entails their putting on the market in the EU, will his exclusive rights be adversely affected. The onus of proving interference must lie with the rights-holder who alleges it.

However, some have taken the view that “the Border Measures Regulation” contained a “manufacturing fiction”, whereby, for the determination of their infringing character, goods stopped by Customs at the EU's external borders had, in all cases, to be considered as having been produced in the Member State of the customs action. Therefore, in cases where the Regulation applied, it was thought that the above case law of the CJEU, according to which the mere placing of goods in transit should not be regarded as a trade mark or a design infringement, unless in those cases where the rights-holder could demonstrate that the goods would eventually be sold in the EU, was irrelevant: all goods falling under the scope of the Regulation simply had to be regarded, by way of a legal fiction, as goods produced in the Member State where the customs action took place. This has long been the position defended by the Dutch courts, for example; however, the fiction was also applied, for a while, in other Member States, such as Germany and – recently again – Denmark.

The “manufacturing fiction” theory essentially developed under Article 6(2)(b) of Regulation 3295/94. This provision has now been transferred into the eighth Recital of Regulation 1383/2003, which provides that:

“Proceedings initiated to determine whether an intellectual property right has been infringed under national law will be conducted with reference to the criteria used to establish whether goods produced in that Member State infringe intellectual property rights […].”

The CJEU itself may, at some point, have given some credit to the “manufacturing fiction” doctrine.

In its judgment in joined cases C-446/09 and C-495/09, the CJEU finally rebutted the “manufacturing fiction” theory.

The questions referred to the CJEU

In Philips, the Belgian customs authorities had detained a shipment of Chinese shavers, which had been declared under a temporary importation arrangement without stating a country of destination, and were suspected of infringing Philips' copyrights and registered design rights. Philips sought a ruling from the Antwerp Court of First Instance that its intellectual property rights had been infringed, based on the “manufacturing fiction” which, in Philips' opinion, circumvented the burden of proving that the goods concerned would be traded in the Union – a condition which is, in principle, unavoidable for the purpose of enforcing design rights in the EU. The Antwerp Court referred a question for preliminary ruling to the Court of Justice.

In Nokia, the UK Customs had detained a shipment of mobile phones in transit from China to Columbia. Nokia notified Customs that they were counterfeit. UK Customs responded that, in the light of the CJEU's case law on transit, it had difficulty in understanding how goods could be counterfeit within the meaning of the Border Measures Regulation, unless there was evidence that they might be diverted onto the EU market. Lacking such evidence, Customs said it did not believe that it would be lawful to deprive the owner of its goods. As Nokia could not provide evidence that the goods would be diverted onto the EU market, Customs decided to release the goods. Nokia applied for judicial review of that decision. At first instance Kitchin J held that the Regulation neither entitled nor required customs authorities to detain fake goods in transit where there was no evidence that the goods would be diverted onto the market in Member States: such goods were not ‘counterfeit goods' in the sense of the Regulation. On appeal, the Court of Appeal, in the light of Philips and of the divergent views adopted by different courts of the Member States, sought clarification of whether it was necessary to have evidence that the goods were going to be diverted onto the EU market for Customs to be able to detain the goods.

In Nokia, the CJEU was asked whether, for the purposes of detaining ‘suspect goods' under Regulation 1383/2003, the customs authorities must have some proof that the goods are to be marketed in the EU in one way or another, whereas, in Philips, it was asked whether that consideration was essential, in those cases where the Regulation applied, in order for a ruling to be made by the courts on whether or not an intellectual property right has been infringed.

Advocate General Cruz Villalón rendered his opinion in these cases on 3 February 2011, which was followed, to a large extent, by the CJEU.

The CJEU's judgment

The CJEU considers that goods coming from non-member States (“non-Community goods”) in transit through the EU cannot be considered as infringing copyrights and design and trade mark rights in the same way as if they were goods which had been unlawfully manufactured in the Member State in which they were in transit. It reiterates that non-Community goods in transit through the EU cannot, merely by the fact of being so placed, infringe intellectual property rights applicable in the EU. However, those rights may be infringed where, during their placement under the transit procedure in the EU customs territory, or even before their arrival in that territory, non-Community goods are the subject of a commercial act directed at European Union consumers, such as a sale, offer for sale or advertising.

Certain evidence enables such an infringement to be proved, including, in particular, the existence of a sale of goods to a customer in the EU, of an offer for sale or advertising addressed to consumers in the EU, or of documents or correspondence concerning the goods in question showing that diversion of those goods to EU consumers is envisaged.

Therefore, the CJEU's judgment does not have as a consequence to oblige the national courts to dismiss an intellectual property right infringement action in any case of transit, but makes it clear that they need to decide on a case-by-case basis with reference to the concrete indications that may suggest that the goods are actually bound for the country of transit, or for the EU market. The merely abstract risk that the goods may ‘leak out' before reaching the country of destination, simply because they are physically on EU territory, where they may be freely marketed is not sufficient for those goods to be regarded as infringing.

Similarly, in the Nokia case, the Court considered that the concept of ‘counterfeit goods' under the Regulation supposes that the goods concerned are destined for sale in the EU. Goods in transit which are not destined for the EU market cannot be considered ‘counterfeit goods' for the purposes of the Regulation; therefore, such goods fall outside its scope.

However, the Court emphasized that action by the customs authorities under the Regulation should not be made conditional upon a conclusive, irrefutable finding of an infringement, but rather on ‘suspicions', i.e. a ‘beginning of proof' that the goods in question may in fact infringe an intellectual property right.

Customs can legitimately act when there are indications before them that one or more of the operators involved in the manufacture, consignment or distribution of the goods, while not having yet begun to direct the goods towards European Union consumers, are about to do so or are disguising their commercial intentions. Such indications may include the fact that the destination of the goods is not declared whereas the suspensive procedure requested requires such a declaration, the lack of precise or reliable information as to the identity or address of the manufacturer or consignor of the goods, a lack of cooperation with the customs authorities or the discovery of documents or correspondence concerning the goods in question suggesting that there is liable to be a diversion of those goods to European Union consumers. Such suspicion must, in all instances, be based on the circumstances of each particular case.

Finally, the Court states that, in the absence of proof of infringement of an intellectual property right, goods placed under a suspensive procedure (which includes, inter alia, external transit) in the EU can, as appropriate, be seized in other situations covered by the EU Customs Code, such as where the goods in question pose a risk to health and safety.

Conclusion

According to the Court, the Border Measures Regulation only relates to the conditions under which the customs authorities from the EU Member States may take action with respect to goods which can be suspected of infringing an intellectual property right, but does not provide for any requirement for such an infringement. In other words:

• The CJEU's ruling in the Philips and Nokia cases confirms that the customs authorities from the Member States are entitled under the Border Measures Regulation to carry out checks on goods suspected of infringing certain intellectual property rights and to detain them, irrespective of the customs status of the goods, i.e. including in those cases where the goods have been placed in transit, provided that they have reasonable grounds to believe that these goods will eventually be released for free circulation in the EU.

• However, the Regulation does not provide for any criterion for the purpose of ascertaining the existence of an infringement of an intellectual property right, and, for example, for the purpose of determining whether there is a use of a trade mark, design or copyrighted work liable to be prohibited because it infringes intellectual property rights. Once Customs have taken action under the Regulation, it belongs to the national courts to decide, on the basis of substantive national law or EU legislation (other than the Border Measures Regulation) whether the goods, considering the customs procedure under which they circulate, do infringe an intellectual property right.

Counterfeiting is known to involve a specific risk of a delivery being declared to be transit goods only to be able to sell the counterfeits within the ‘transit' country at a later stage. Now that the “manufacturing fiction” doctrine has been finally rejected by the CJEU, it will be very important for rights-holders in future cases to gather as much evidence as possible for a planned distribution of the goods in the country where the goods are placed under a suspensive customs arrangement. In the meantime, the CJEU's judgment confers relatively large powers to Customs to continue to detain or to suspend the release of in-transit goods.

One may regret that the CJEU's judgment in Philips and Nokia fails to (clearly) address the question whether intellectual property rights owners can claim infringement in the country of transit, or at least seek an injunction in that country in order to prevent the occurrence of an infringement in the country of destination, where the distribution of the goods would be unlawful in the country of destination.

The CJEU's judgment in Philips and Nokia – and the fact that the Proposal for a new Regulation concerning customs enforcement of intellectual property rights released by the European Commission on 24 May 2011 does not intend to include any “manufacturing fiction” into the new Regulation – pleads, in our view, for a substantial reform of the current intellectual property law system, which would be more lenient to intellectual property rights-holders and properly balance their rights against those of legitimate traders and shipping companies. It should be noted in this regard that the review of the EU's trade mark system which is currently in progress aims to focus, inter alia, on ‘clarifying the scope of trade mark rights […] as regards goods in various situations throughout the EU customs territory'. The Study on the Overall Functioning of the European Trade Mark System presented on 15 February 2011 by the Max Planck Institute for Intellectual Property and Competition Law considers that the placing in transit of ‘counterfeit goods', as defined in footnote 14(a) to Article 51 of TRIPS, should be treated as an infringement under the new EU trade mark system. For that purpose, however, the goods would have to be infringing in the territory of transit as well as in the country of destination. Apart from that, the principle would remain valid that infringement would also be found if it can be established that the goods will be brought into free circulation in the EU or its Member States.

Read the CJEU's judgment here. Read the CJEU's Press Release here.

Korean Customs can now go after infringements of plant variety rights and geographical indications

Marius Schneider — 2011-07-14T07:54:59Z

CJEU advises that national courts must be able to order online auction platforms to take measures intended not only to bring to an end infringements of intellectual property rights but also to prevent further infringements of that kind

Marius Schneider — 2011-07-12T13:15:13Z

The facts

eBay operates a global electronic marketplace on the internet, where individuals and businesses can buy and sell a broad variety of goods and services.

L'Oréal is the owner of a wide range of well-known trade marks. Its products (especially cosmetics and perfumes) are distributed through a closed distribution network, in which authorised distributors are restrained from supplying products to other distributors.

The origine of the dispute

L'Oréal complains that eBay is involved in trade mark infringements committed by users of its website. Moreover, it claims that, by purchasing from paid internet referencing services (such as Google's AdWords) keywords corresponding to the names of L'Oréal trade marks, eBay directs its users towards goods that infringe trade mark law, which are offered for sale on its website. Furthermore, L'Oréal is of the view that eBay's efforts to prevent the sale of counterfeit goods on its website are inadequate. L'Oréal has identified various forms of infringement, including, inter alia, the sale and offer for sale, to consumers in the EU, of goods bearing L'Oréal's trade marks intended, by L'Oréal, for sale in third States (parallel importation).

The High Court (United Kingdom), before which the dispute is pending, has asked the Court of Justice a number of questions concerning the obligations to which a company operating an internet marketplace may be subject in order to prevent trade mark infringements by its users.

The CJEU

The Court states, as a preliminary point, that the proprietor of the trade mark may rely on his exclusive right as against an individual who sells trade-marked goods online only when those sales take place in the context of a commercial activity. That is the case, in particular, if the sales, owing to their volume and frequency, go beyond the realms of a private activity.

The Court rules first of all on commercial activities directed towards the EU by means of online marketplaces such as eBay. It states that the EU trade mark rules apply to offers for sale and advertisements relating to trade-marked goods located in third States as soon as it is clear that those offers for sale and advertisements are targeted at consumers in the EU.

It is for the national courts to assess, on a case-by-case basis, whether there are any relevant factors on the basis of which it may be concluded that an offer for sale or an advertisement, displayed on an online marketplace, is targeted at EU consumers. For example, the national courts will be able to take into account the geographic areas to which the seller is willing to dispatch the product.

Next, the Court holds that the operator of an internet marketplace does not itself ‘use' trade marks within the meaning of the EU legislation if it provides a service consisting merely in enabling its customers to display on its website, in the course of their commercial activities, signs corresponding to trade marks.

The Court also specifically mentions certain matters concerning the liability of the operator of an online marketplace. Whilst making clear that it is for the national courts to carry out the assessment concerned, the Court considers that the operator plays an active role of such a kind as to give it knowledge of, or control over, the data relating to the offers for sale, when it provides assistance which entails, in particular, optimising the presentation of the online offers for sale or promoting those offers.

When the operator has played an ‘active role' of that kind, it cannot rely on the exemption from liability which EU law confers, under certain conditions, on online service providers such as operators of internet marketplaces.

Moreover, even in cases in which the operator has not played an active role of that kind, it cannot rely on that exemption from liability if it was aware of facts or circumstances on the basis of which a diligent economic operator should have realised that the online offers for sale were unlawful and, in the event of it being so aware, failed to act promptly to remove the data concerned from its website or to disable access to them.

Finally, the Court rules on the question of injunctions which may be granted against the operator of an online marketplace when it does not decide, on its own initiative, to bring to an end infringements of intellectual property rights and to prevent further such infringements occurring.

Thus, the operator may be ordered to take measures making it easier to identify the sellers who are its customers. In that regard, although it is necessary to respect the protection of personal data, the fact remains that when the perpetrator of the infringement is operating in the course of trade, and not in a private matter, that person must be clearly identifiable.

Consequently, the Court holds that EU law requires the Member States to ensure that the national courts with jurisdiction in relation to the protection of intellectual property rights are able to order the operator to take measures which contribute, not only to bringing to an end infringements of those rights by the users, but also to preventing further infringements of that kind. Those injunctions must be effective, proportionate, and dissuasive and must not create barriers to legitimate trade.

The full judgment can be read here: http://curia.europa.eu/jurisp/cgi-b...