EU customs detention in intellectual property cases: analysis of the latest statistics

Introduction

The European Commission has recently published its report on EU customs enforcement of intellectual property rights for the year 2012. The annual report contains statistical information about detentions made under customs procedure at the EU external borders. The statistics are based on information provided by EU member states in accordance with Council Regulation (EC) 1383/2003 (the “Customs Regulation”) and Commission Regulation (EC) 1891/2004.

The Customs Regulation will soon be replaced by a new regulation, which will apply from January 2014. This new regulation will introduce a variety of changes, discussed in further detail below.

Key outcomes of 2012

• Approximately 40 million articles were detained in 2012 compared to 115 million in 2011. The retail value of these goods was just short of €1 billion.

• Although there was a significant decrease in the number of detained articles compared to 2011, there was only a 1% decrease in the number of detention cases, with just under 91,000 in total. The consistently high number of cases is thought to be attributed to internet sales, resulting in a high level of postal and courier traffic.
• Cigarettes made up the largest volume of detained articles, at 30%, and Moldova entered the top ten countries of origin of infringing articles for the first time due to detentions of cigarettes. The next largest categories were ‘other goods’, such as bottles, lamps, glue, batteries and washing powder (11%), packaging materials (9%) and clothing (8%).
• With regard to numbers of detention cases, however, the top three categories were non-sport shoes, clothing and bags, and wallets and purses, replicating the position in 2011.
• Just over 23,000 applications for action were made by rightholders in member states in 2012, compared to 20,500 in 2011. This is a figure that has seen a significant increase over the past decade – only 1,900 applications were made in 2003.
• As in previous years, China remains the main country of origin of infringing goods.

Rights relied on

Trade mark infringement remains the most significant breach of intellectual property rights relied on, with 95% of articles detained suspected of infringing a Community or national trade mark, covering all product sectors. There was a fairly even spread across other rights.

Toys, body care items and watches and shoes were the products that most frequently infringed design and model rights. Copyright infringements focused mainly on toys, clothing and CD/DVDs, while the main categories of products for patent infringements were medicines and audio/video apparatus.

Outcomes following detention

In 91% of detentions, the infringing goods were either destroyed under the simplified procedure or a court case was initiated to examine the infringement. This is an encouraging statistic for rightholders. 5% of goods were released because the rightholder failed to respond to the customs notification. Only 3% of articles were released as they appeared to be original goods (which could include parallel imports).

Most effective customs authorities

The UK and Germany remain the countries with the highest number of cases, with 26,000 and 23,000 respectively. The highest volume of articles was detained in Italy, closely followed by Malta. More than six million articles were detained in both of these countries.

Conclusions

EU customs detentions remain a key method by which rightholders can enforce their intellectual property. Although the number of detained articles significantly decreased in 2012, the number of cases remained roughly the same, demonstrating that customs authorities are continuing to play an active role in the protection of these rights.

As the popularity of e-commerce continues to increase, so too will the resulting postal and courier traffic of both authorised and counterfeit goods. Rightholders should be vigilant in enforcing their intellectual property rights, using EU customs applications as an important part of their enforcement strategy.

New European Customs Regulation

The European Parliament has approved new regulation 608/2013 (the “New Regulation”), which replaces the current Customs Regulation and gives customs authorities extended powers to detain counterfeit or pirated goods at EU borders. The New Regulation will apply from January 2014. Like the current Customs Regulation, the New Regulation only contains procedural rules for customs authorities and does not provide any criteria for ascertaining whether or not an intellectual property right has been infringed.

The New Regulation provides the following key changes:

1. Extension of protection

In order to strengthen the enforcement of intellectual property rights, the range of intellectual property rights covered has been extended in the New Regulation, to include unregistered trade names (insofar as they are protected by national law as exclusive intellectual property rights); topographies of semiconductor products; utility models; and devices for the purpose of enabling or facilitating the circumvention of technical measures.

2. Compulsory simplified procedure

A simplified procedure for the detention and destruction of goods is no longer optional for Member States. The New Regulation states that the simplified procedure, which allows the destruction of certain goods without having to initiate legal proceedings, has been very successful in those Member States where it has already been applied. Under the New Regulation, a simplified procedure is compulsory in all Member States, and should be applied where the declarant or the holder of the goods agrees to the destruction. Such agreement can be inferred where the declarant or holder of the goods has not explicitly opposed destruction within 10 days of notification.

3. New rules for small consignments

The New Regulation introduces a specific procedure for the destruction of small consignments of goods, being those containing three units or less or weighing less than two kilograms. Such goods can be destroyed without requiring agreement; however, the applicant is required to “opt in” to this procedure when submitting its application. This is likely to be particularly useful in light of the increasing number of infringing goods detained in postal and courier traffic as a result of internet sales.

4. Costs

Although the rightholder must still reimburse any costs incurred by the customs authorities in enforcing its intellectual property rights, the New Regulation allows the rightholder to seek compensation from the infringer or any other party that may be liable under the law of the Member State in which the goods were detained.

5. Goods in transit

Under the existing law, goods from non-EU countries destined for other non-EU Member States cannot infringe EU intellectual property rights if they only enter the EU in transit. This was clarified by the Court of Justice of the European Union in 2011, stating that a customs authority can legitimately act only where there are indications that the goods are about to be directed towards EU customers, or the real commercial intentions are being disguised.(1)

This position is not varied under the New Regulation. However, the New Regulation introduces the ability of customs authorities in different Member States to share information on suspected breaches of intellectual property rights with other non-EU countries, which includes goods which are only in transit in the EU.

6. Exchange of information

In addition, a central electronic database will be established to which customs authorities will be required to submit certain information relating to decisions on applications and detention of goods. This information will then be accessible by customs authorities in other Member States. The database is to be established by January 2015.

(1) Joined Cases C-446/09 Koninklijke Philips Electronics NV v Lucheng Meijing Industrial Company Ltd and othersC-495/09 Nokia Corporation v Her Majesty’s Commissioners of Revenue and Customs and , December 2011.