Just passing through: What the new EU trademark legislation means for counterfeit goods

Jeremy Morton, partner at Harbottle & Lewis, takes a look at the new updated EU trademark legislation regarding counterfeits in transit, and it what it means for IP owners.
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Good news for intellectual property has arrived in the form of updated EU trademark legislation.

One welcome aspect of the new law will be enhanced protections against goods in transit through the EU.

Smart businesses already know to register their intellectual property rights with EU Customs, in order to block imports of knock-offs at the border.

The system is a success, as the most recent statistics from the European Commission show. In fact, of the 36 million infringing products blocked by Customs in 2014 (the most recent year reported), toys accounted for a whopping 10 per cent. That was the second highest category of goods after tobacco, and significantly bigger than medicines and clothes.

A primary attraction of this system is that over 85 per cent of all detained goods are destroyed without the need for court action. Perhaps unsurprisingly, statistics consistently show that most problem items come from China.

Infringement of European intellectual property rights occurs when acts are done in the EU territory, such as offering, selling or importing goods bearing a trademark without permission.

Owners of European rights have long sought to persuade courts that these should also apply to goods transiting through the EU en route to non-EU countries.

The logic is simple: Customs should be able to grab any infringing goods ‘touching down’ in the EU, instead of waving counterfeits off on their way to the US or other markets.

But the law was tested unsuccessfully by Nokia and Philips in 2011, revealing a vast deficit in EU weaponry. Put simply, goods transiting through Europe did not engage EU intellectual property law, unless there was reason to suspect that they would be sold into the EU market.

The EU has recently agreed a package of reforms to trademark law, designed to promote innovation and growth and to streamline procedures. They take the form of a revised Regulation, entering into force on March 23rd 2016, and Directive, which entered into force on January 13th 2016. These now make it clear that European trademarks can be enforced against goods in transit.

It will still be possible for the importer to secure the release of goods, by showing that the trademark owner has no relevant rights in the final destination country.

However, the burden of proof is on the importer, and most cases won’t get that far: as the statistics show, most detained goods are simply destroyed without any contested proceedings.

The advantage of the new system is that EU Customs will sweep up infringing goods in one place, before you have to worry about enforcing rights in countries outside the EU (many of which would be far less attractive places to bring enforcement proceedings).

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