From October 2016 to March 2017 the team is joined by Guest Kats Rosie Burbidge and Eibhlin Vardy, and by InternKats Verónica Rodríguez Arguijo, Tian Lu and Hayleigh Bosher.

Wednesday, 17 June 2015

Slowly stopping counterfeits in transit: EU prepares to prepare to act ...

EU take note: to succeed, the cat must
travel faster than the mouse.  IP owners
chasing infringers need to do so too ...
The problem of counterfeits and infringing goods transiting across the vast and affluent territory on their way to other markets, from which they sometimes return to the EU, is one that the European Union's legislators seem to this Kat to have been reluctant to grasp. It's not as if the problem is insoluble: all you need to do is to empower intellectual property right owners to enforce the rights they already have, against goods that have no right to be there -- and which in many instances have no right to exist at all. However, this simple solution troubles the conscience of some of the Continent's economists, who view goods from a rather different perspective and feel that even minimal intrusions of IP enforcement into the world of free competition cause distortions, imbalances, unfair pricing and so on.

Be that as it may, there has been some progress.  Joe Cohen (Collyer Bristow LLP), who has long taken a keen interest in IP enforcement issues, has treated us to the following news, with some contextual explanation to accompany it.  This is what he writes:
Preventing counterfeit goods transiting through the EU: an update

Readers may recall that, in the England and Wales High Court ruling in Nokia Corporation v Her Majesty's Commissioners of Revenue & Customs [2009] EWHC 1903 (Ch) [noted by the IPKat here], the then Mr Justice Kitchin refused -- upon the proper interpretation of the old Customs Regulation 1383/2003 -- Nokia's application for judicial review of (i) the decision by UK Customs authorities not to continue to detain a consignment of allegedly counterfeit goods and (ii) the policy of UK Customs to regard goods which move through the European Union to another country as not being capable of being counterfeit goods when they do not enter into free circulation in the EU.

 The judge concluded his judgment by saying, at paragraph 80:
"I recognise that this result is not satisfactory. I can only hope it provokes a review of the adequacy of the measures available to combat the international trade in fake goods by preventing their transhipment through Member States."
The judge’s interpretation was upheld by the Court of Justice of the European Union (CJEU) on 1 December 2011 in Joined Cases C-446/09 and C-495/09 [reviewed by the IPKat here].

After nearly two years of the EU legislative process, the Committee of Permanent Representatives of the EU agreed, on 10 June 2015, the final compromise text of the Council of the European Union on the proposal for a new EU Regulation on the (to be renamed) EU Trade Mark, which includes a provision which strengthens the fight against counterfeit goods in transit through the territory of the EU.   The text of the proposed new Regulation was adopted by the Legal Affairs Committee of the EU on 16 June 2015 [to get an idea of current thinking, you can check out the documents listed on this Class 46 blogpost here].

Article 9(5) of the Regulation provides that owners of an EU trade mark shall be entitled to prevent third parties from bringing counterfeit goods, in the course of trade, from third countries into the Union without being released for free circulation there, subject to a proviso that the entitlement to have the goods detained would lapse if the declarant or the holder of the goods is able to prove that the EU trade mark owner is not entitled to prohibit the sale of the goods in the country of final destination.

The first paragraph of the text of Article 9(5) reads:
Without prejudice to the rights of proprietors acquired before the filing date or the priority date of the European Union trade mark, the proprietor of a European Union trade mark shall also be entitled to prevent all third parties from bringing goods, in the course of trade , into the Union without being released for free circulation there, where such goods, including packaging, come from third countries and bear without authorization a trade mark which is identical to the European Union trade mark registered in respect of such goods, or which cannot be distinguished in its essential aspects from that trade mark.
The second paragraph of the text of Article 9(5) contains the proviso and reads:

The entitlement of the proprietor of a European Union trade mark pursuant to the first subparagraph shall lapse if during the proceedings to determine whether the European Union trade mark has been infringed, initiated in accordance with the provisions of Regulation (EU)608/2013 concerning customs enforcement of intellectual property rights, evidence is provided by the declarant or the holder of the goods that the proprietor of the European Union trade mark is not entitled to prohibit the placing of the goods on the market in the country of final destination.  

To appreciate the meaning and effect of Article 9(5), one has to read no less than five recitals to the proposed Regulation, being Recitals (19a) to (19e).

Recital (19a) explains that trade mark owners are given this remedy with the aim of strengthening trade mark protection and combating counterfeiting more effectively and in line with international obligations of the Union under the WTO framework, in particular Article V of the GATT on freedom of transit and, as regards generic medicines, the ‘Declaration on the TRIPS Agreement and Public Health’ adopted by the Doha WTO Ministerial Conference on 14 November 2001. 

Recital (19b) states that, to this effect, “it should be permitted to prevent the entry of infringing goods and their placement in all customs situations, including transit, transshipment, warehousing, free zones, temporary storage, inward processing or temporary admission, also when these goods are not intended to be placed on the market of the European Union. In performing the controls, the customs authorities should make use of the powers and procedures laid down in the Regulation (EU) No 608/2013 concerning customs enforcement of intellectual property rights, also at the request of the right holders. In particular, the customs authorities should carry out the relevant controls on the basis of risk analysis criteria.”

Recital (19c) explains the reason for the proviso in the second paragraph of Article 9(5), which is to reconcile the need to ensure the effective enforcement of trade mark rights with the necessity to avoid hampering the free flow of trade in legitimate goods.

Recital (19d) is a reminder that Article 28 of the Customs Regulation (EU) No 608/2013 provides that a right holder is to be liable in damages towards the holder of the goods where, inter alia, the goods in question are subsequently found not to infringe an intellectual property right.

Recital (19e) is an important reference to the desire that “appropriate measures should be taken with a view to ensuring the smooth transit of generic medicines. With respect to international non-proprietary names (INN) as globally recognized generic names for active substances in pharmaceutical preparations, it is vital to take due account of the existing limitations on the effect of European Union trade mark rights. Consequently, the proprietor of a European Union trade mark should not have the right to prevent any third party from bringing goods into the Union without being released for free circulation there based upon similarities between the INN for the active ingredient in the medicines and the trade mark.”

Linguistic checks and translations of the text will be done in early September 2015 and, after confirmation, it likely be put to the final vote by the European Parliament in October or November 2015 and, if passed, would come into force within 90 days of publication in the Official Journal, ie by January or February 2016.

The text of the proposed new Directive to approximate the laws of the Member States relating to trade marks (Recast) was also adopted by the Legal Affairs Committee of the EU on 16 June 2015.  The proposed new Directive contains a corresponding Article 10(5) and corresponding Recitals relating to goods in transit.

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