Phones not on hold

Just out this morning and freshly available on BAILII is Mr Justice Kitchin's judgment n Nokia Corporation v Her Majesty's Commissioners of Revenue & Customs [2009] EWHC 1903 (Ch), in which he dismissed Nokia's application for judicial review of HMRC's refusal to detain a consignment of counterfeit 400 Nokia phones and accessories under the Counterfeit Goods Regulation (Regulation 1383/2003), which has been incorporated into UK law by The Goods Infringing Intellectual Property Rights (Customs) Regulations 2004 (SI 2004/1473).

Right: phoning from Colombia, Geraldine was baffled to discover that her brand new Nokia wasn't living up to her expectations ...

The items in question were on their way from Hong Kong to Colombia -- neither of which are countries within the European Union -- and it was during a brief transitory stop at London's Heathrow Airport that they were inspected and found to be fakes. "Detain these goods!", said Nokia. "Can't", said HMRC, which "had difficulty in understanding how goods could be counterfeit within the meaning of the Counterfeit Goods Regulation unless there was evidence that they might be diverted onto the EU market".

After an extensive recitation and review of the law, Kitchin J got straight to the heart of the issue:
"Clearly any power of arrest or detention of goods by HMRC must be exercised in accordance with law. It must have a clear basis for interfering with the property of a third party".
The judge then reviewed the not insubstantial ECJ case law and summarised it as follows:
"49. ... First, infringement of registered trade mark requires goods to be placed on the market and that goods in transit and subject to suspensive customs procedures do not, without more, satisfy this requirement. ...
50. Second, the position is different if the goods in the transit procedure are subject to the act of a third party which necessarily entails their being put on the market (“the Montex exception”). But the burden of establishing this rests on the trade mark proprietor.
51. Third, a mere risk that the goods may be diverted is not sufficient to justify a conclusion that the goods have been or will be put on the market.
52. Fourth, the Counterfeit Goods Regulation has not introduced a new criterion for the purposes of ascertaining the existence of an infringement of a registered trade mark or to determine whether there is a use of the mark which is liable to be prohibited".
Applying these four principles, Kitchin J could only refuse the application for judicial review and express his regret:
"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 IPKat shares the judge's sentiments. Merpel adds, the same ruling presumably applies equally to situations in which the goods in question are fake brake pads, counterfeit medicines or, which is just as serious, tainted cat food. A review of both the policy and the mechanics of implementation of the detention of goods is certainly in order.
Phones not on hold Phones not on hold Reviewed by Jeremy on Monday, July 27, 2009 Rating: 5


  1. "Merpel adds, the same ruling presumably applies equally to situations in which the goods in question are fake brake pads, counterfeit medicines or, which is just as serious, tainted cat food."

    Merpel is being disingenuous with these comments. Just because a product is counterfeit doesn't mean that it is necessarily of inferior technical quality.

    Looking at the state of outsourcing, there is going to be very little distinction in terms of quality between counterfeit product and product that has a rentiers label.

    Also, I haven't seen any rebuttal of the presumption that counterfeiting is a mechanism of price differentiation.

  2. Can anybody comment whether this same reasoning "put on the market" applies to the patented goods.

    Does the transit constitute an infringement?

    Further more, does a transit from outside of EU to the final destination in EU, where the patent has expired, infringe the patent rights in the transit countries where patent is in force?

  3. Anon. 27.07.2009, 17:10,

    My thoughts were also that patent infringement would have been a productive avenue to pursue, with the infringing act being that of importing or possible keeping. The exceptions provided under section 60(5)(d)-(f) do not apply.

    Perhaps Nokia does not have any patents which would have been infringed by the Chinese goods.

  4. It sure sounds like a review is in order. How can this policy be so lenient? No wonder there are so many counterfeit goods.

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