By Siân Croxon, Partner, DLA Piper UK

The CJEU has provided some clarification of the law on when EU customs officials can seize counterfeit goods that are merely in transit through the EU. 

The story began in 2008 when a consignment of Nokia branded mobile phones arrived in Heathrow in transit from China to Colombia.  The customs officer was suspicious and sent a sample to Nokia for inspection which duly revealed that the phones were indeed counterfeit.

Nokia requested the consignment be seized in accordance with the provisions of EU Regulation 1383/2003, but UK Customs hit a technical snag in being able to comply with that request.  As the consignment was said to be destined for Colombia and only in transit through the UK, in the absence of evidence that the goods would be diverted onto the EU market it was not possible to say that they were “counterfeit” within the meaning of Article 2(1)(a)(i) of the Regulation and thus subject to the Customs’ procedures.

Nokia was not giving up, and having obtained what details it could about the goods themselves and such information as Customs had on the consignor and consignee, they were unable to identify who these were and concluded that both had taken steps to disguise their identity.  The next step was to ask the English High Court to review the UK Customs’ decision not to detain the consignment.

Following a series of applications, a number of questions were referred to the CJEU in order to clarify the Regulation as regards goods in transit.  It is that decision (in joined cases also involving a reference from the Belgian courts of a case brought by Philips) that has just been announced and gives some encouragement to brand owners that they can, in certain circumstances, prevent goods in transit from one non-EU country to another from being released onto the market.  The key findings are as follows:

Goods in transit placed under a suspensive customs procedure may infringe IP rights if the goods are the subject of a commercial act directed at EU consumers such as a sale, offer for sale or advertisement, even if such an act is before the goods arrive in the Member State. 
Other circumstances which can lead to temporary detention include where there is an indication that those involved in the distribution chain are about to direct the goods to an EU consumer or are disguising their commercial intent. 
Evidence of disguising commercial intent can include no declared destination where such a statement is required, a lack of precise or reliable information on the identity or address of the manufacturer or consignee of the goods, or a lack of co-operation with Customs.  Additionally, if documents or correspondence come to light which suggest the goods are liable to be diverted, the evidence can be considered on a case by case basis. 
Even if none of the previous grounds of infringement can be established, Customs can still seize goods where they pose a risk to health and safety.
  • Goods in transit placed under a suspensive customs procedure may infringe IP rights if the goods are the subject of a commercial act directed at EU consumers such as a sale, offer for sale or advertisement, even if such an act is before the goods arrive in the Member State. 
  • Other circumstances which can lead to temporary detention include where there is an indication that those involved in the distribution chain are about to direct the goods to an EU consumer or are disguising their commercial intent. 
  • Evidence of disguising commercial intent can include no declared destination where such a statement is required, a lack of precise or reliable information on the identity or address of the manufacturer or consignee of the goods, or a lack of co-operation with Customs.  Additionally, if documents or correspondence come to light which suggest the goods are liable to be diverted, the evidence can be considered on a case by case basis. 
  • Even if none of the previous grounds of infringement can be established, Customs can still seize goods where they pose a risk to health and safety.
The case will now return to the High Court for the CJEU’s ruling to be applied. While the decision still leaves some uncertainty as to the procedure Customs must apply, and the burden of proving that the goods are not genuine still lies with the brand owner, the brand owner’s position is to some extent improved by this clarification of the Regulation in the tricky area of goods in transit.