New customs regulation to target counterfeit goods

In January, the European Commission proposed a new Customs Regulation to facilitate seizures of counterfeit and pirate goods from outside the EU. Between 1998 and 2001, Customs have seen the number of counterfeit goods intercepted at EU borders increase from 10 million to 100 million items. Counterfeiters are aware of the high profits and low risk involved in making fakes. They are no longer targeting high value luxury items, now the focus is on low value items such as household goods, car and aircraft parts and foodstuffs. In 2001, the seizures of foodstuff almost equalled the seizures of clothing. Pirated or counterfeit CDs were up 15,300% from 1999. The authorities are also aware of increasing participation by organised crime in the counterfeiting industry making enforcement action against counterfeiting of high priority.

The Commission has recognised that the current Regulation (EC) 3295/94 of 22 December 1994 needs to be replaced by improved legislation. The proposed Regulation aims to harmonise and make more effective customs action in dealing with intellectual property offences and make the rules more accessible to right holders.

Under the current Regulation, right holders may apply directly to customs to prevent goods which may infringe their intellectual property rights (IPRs) from being released into circulation or exported. Customs decide whether the application is admissible. If it is admissible, the goods will be suspended for release or detained. The applicant then has 10 days to apply to the competent judicial authority to make a ruling, and any goods may be destroyed. If no such application or precautionary measure is taken, customs will release the goods. The proposed Regulation operates on the same principles but it aims to improve the current Regulation and extend its application to new IPRs: plant variety rights, geographical indications, designations of origin and Community Designs.

Some of the key measures of the proposed Regulation are as follows:

• Improved quality of information provided to customs by right holders applying for action. It harmonises the application form and the period of validity to one year in all Member States and encourages right holders to apply by computer
• If information provided to right holders is not used in accordance with the Regulation, the application for action may be suspended for the remainder of its period of its validity, or may not be renewed
• Fees and securities have been abolished to allow access to small and medium sized enterprises, security will be replaced by an undertaking from the right holder covering their liability and guaranteeing to pay all costs arising from keeping the goods under customs control
• The procedure which allows customs to act without prior application will be extended. This allows customs to inform right holders that goods suspected of counterfeiting or pirating their rights have been intercepted.
• Right holders will receive more detailed and frequent information from customs
• Right holders may be provided with samples of goods for analysis to see if goods are counterfeit
• Goods may be destroyed with the agreement of the holder of the goods before proceedings have finished. This should resolve the problems with storage and its related costs
• Control of counterfeit and pirate goods in travellers personal luggage within the limits of duty-free (175 euros) will be tightened if goods are suspected to be part of a larger operation

The proposed provision that goods may be destroyed on the request of the right holder and agreement by the holder of the goods should enable suspect goods to be taken out of circulation more easily. Whereas before, legal proceedings were often abandoned because neither the consignor nor the consignee were on Community territory. The proposed regulation will allow the destruction of infringing goods which are in transit. Where the goods holder does not agree, the standard procedure will apply.

The proposed Regulation will be reviewed after 2 years for any amendments and additions necessary.

The text of the proposed Regulation on the conditions for customs action against counterfeit or pirated goods can be found by clicking here.

For further information, please contact: Stephen Whybrow by telephone on +44 (0) 20 7367 2175 or by e-mail at [email protected], or Lydia Watts by telephone on +44 (0) 20 7367 2054 or by e-mail at [email protected]