01 Dec, 2011
European Union ruling on key Nokia case
The Court of Justice of the European Union (CJEU) today ruled that customs officials may not seize suspected counterfeit goods in transit through the EU to and from countries outside the EU, unless they suspect that those goods are intended to be placed on the market in the EU. Once the goods are seized by customs, to successfully prevent their release, owners of infringed trade marks must prove that the fake goods in question are intended for the EU market, regardless of their declared destination.
The Court judged that goods in transit cannot ‘be classified as “counterfeit goods” or “pirated goods” merely on the basis […] that they are brought into the customs territory of the European Union under a suspensive procedure.’
Customs officials can only seize fake goods in transit if there are ‘indications’ that the goods will enter the EU. Such indications include ‘the lack of precise or reliable information as to the identity or address of the manufacturer’ 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’. To prevent the goods’ release, brand owners will need to meet a higher threshold and prove that the goods are destined for the EU market. Mere ’indications’ at this stage will not be enough.
The judgment is in response to cases involving Nokia and Philips in the UK and Belgian courts respectively.
In the Nokia case, UK customs authorities, suspecting a batch of handsets in transit from Hong Kong to be fakes, established with the Finnish mobile manufacturer that this was the case, but subsequently refused to detain them because they were destined for Colombia and not the EU. Nokia subsequently launched a suit in the High Court to contest this decision and then an appeal in the Court of Appeal, which referred questions in the case to the CJEU.
Dafydd Bevan, Associate at Marks & Clerk Solicitors, (pictured) comments: “Although expected, this ruling is a blow to brand owners in the fight against counterfeiters. Customs officials have effectively been given the go-ahead to turn a blind eye to even obviously fake goods passing right under their noses if they are destined for non-EU states.
“Counterfeiters often abuse legitimate customs procedures to allow transit of goods through the EU between non-EU states in order to bypass customs checks and illicitly introduce fake goods to the EU market. This ruling reflects the current state of EU law but makes it difficult for brand owners and customs to put a stop to this practice. Counterfeiting networks have become so adept at covering their tracks, that it will often be virtually impossible for brand owners to prove that fake goods in transit will finish up in the EU. “
Dafydd Bevan continues: “Counterfeiters put consumers at risk by trading unsafe, unregulated products, and a lot of their earnings fund organised crime. The trade in counterfeits costs businesses millions of pounds and is becoming more and more difficult to fight.
“Constrained as it is by the current state of EU law on the matter, today’s ruling provides little assistance in combating counterfeiting in the global marketplace. If the position is to be improved, EU legislators will need to come up with proposals for changes in the law itself.”