counterfeits & transit david butler. overview how are goods imported and stored? what is...
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Counterfeits & Transit
David Butler
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Overview
How are goods imported and stored?
What is transit?
How do counterfeiters “use” transit?
WCO/EU figures
Regulation 1383/2003
Facts in the Nokia case
Case law - Class International, Montex, Polo, Rolex
Article 1(1)(b) and the Recitals
Manufacturing Fiction – Sisvel
Nokia’s appeal
Philips reference
The future?
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Port of Liverpool
One of UK & N. Europe’s major container ports
Handles more than 700,000 TEUS (20ft container units) per year
Planned expansion (1,500,000 TEUS)
Liverpool Freeport - UK’s largest free zone (3 million square feet of warehousing)
Serves more than 100+ non-EU destinations
“ideally located for re-distribution throughout the UK/EU and third country destinations”
Source: Peel Ports Group
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Top 20 World Ports by Throughput - 2008
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Customs Procedures
Release into free circulation:
– Declaration filed– Formalities e.g. submit invoice– Make goods available for inspection– Pay import duties– Check as to compliance with health regulations
Inward processing
Outward processing
Processing under customs control
Temporary import
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Storage of goods
Type of Storage
Temporary storage premises Intended for the short-term storage of goods under customs control
Customs warehouse Intended for the long-term storage of goods under customs control. Physical control by Customs may be partly replaced by an audit of the warehouse keeper's accounts.
Free warehouse / free zone Store for unlimited period of time
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Transit of goods
The shipment of goods to an intermediate destination, and then from there to yet another destination
– Change of means of transport e.g. ship to road
– Combine small shipments into one large shipment
– Break down one large shipment into smaller shipments
External transit
Internal transit
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World’s Busiest Transit Ports
Source: Drewry 2004
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How do counterfeiters “use” transit?
Counterfeiters try to conceal the true country of export:– Use several transport routes
– Use several modes of transport
– Use free trade zones
No conventional or consistent network
Change the route used
Use counterfeiting “hubs” e.g. CDG, Antwerp, Dubai, Hong Kong
Counterfeiters take advantage of customs territories where border enforcement for in transit goods is known to be weak
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Ability to stop transit goods crucial
Large consignment at border vs small quantities in market
No guarantee that consignment will be identified and detained at final destination
Prevent potentially harmful products entering distribution chain
Customs detention = opportunity to identify manufacturing source
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OECD Update Survey
$200 billion (2005) $250 billion (2007)
1.85% of world trade (2000)
1.95% of world trade (2007)
Source: OECD Magnitude of Counterfeiting & Piracy of Tangible Products: An Update – November 2009
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Source: WCO Customs & IPR Report - 2008
Cases: 14,981 +77%
Articles: 371m+316%
Origin Unknown: 4,993 cases
Departure Unknown:
3,289 cases
Destination Unknown:
1,132 cases
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Source: WCO Customs & IPR Report - 2008
Transit: 3,111 cases
21%
Transit >2: 306 shipments
Transit >3: 52 shipments
Shipments using transit routes:
46% seized at final destination54% intercepted en route
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Top 10 Transit Countries - Seizures
Country Seizures
Germany 854
Netherlands 445
France 222
Hong Kong, China 146
Norway 121
Spain 115
Romania 110
Belgium 82
Bulgaria 79
Chile 64
Poland 61
Source: WCO Customs & IPR Report 2008
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Cases: 49,381+13%
Articles: 179m+126%
Applications: 12,866
Source: Report on EU Customs Enforcement of IPR - 2008
Provenance Unknown:
3.02%
Origin Unknown:
9.89%
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Source: Report on EU Customs Enforcement of IPR - 2008
Cases: 90% under import
procedure; 7% in transit
Articles: 43% under import
procedure; 42% in transit
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Source: Report on EU Customs Enforcement of IPR - 2008
Cases: +57%Articles: +118% Medifake:
32m stopped; 15% infringed IPR;50% under import
procedure;26% in transit;
21% in re-export;6% based on patent93% based on TM
(25% were in transit)
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Counterfeits & Transit
Arty Rajendra
Rouse
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• Community goods and non-Community goods
• Non-Community goods must be assigned Customs-approved treatment
• Such procedures include:• Release for free circulation• Suspensive procedures=transit
Community Customs Code
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• “Counterfeit Goods Regulation” (CGR)• “Anti-Piracy Regulation” (APR)• Purpose• History
– 3842/86 (1986)– 3295/94 (1994)– 1383/2003 (2003)
Regulation 1383
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Regulation 1383
Definition of ‘counterfeit goods’:Goods... bearing... a trademark identical to the trademark.. registered in respect of the same type of goods, or which cannot be distinguished in its essential aspects from such a trademark, and which thereby infringes the trademark-holder's rights under Community law.
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• Customs check goods entering into UK territory
• Customs notify rights holder and send sample of suspect goods
• Rights holder verifies status of sample• Customs seize goods if ‘counterfeit’• Goods forfeited for destruction
How Regulation 1383 worked in the UK
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The UK Customs policy
Staff should cease to target or detain goods suspected of infringing intellectual property rights of goods in transit/transhipment absent evidence of a likely diversion onto the UK or wider EU market.
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Class International (2005)
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• Infringement under the Trade Marks Directive
• Proprietor cannot oppose mere entry into the EU of goods under external transit
• Infringement only if goods are being put on the EU market
Class International (2005)
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Montex (2006)
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Montex (2006)
• Infringement under the Trade Marks Directive
• Trade mark owner does not have right to prohibit the mere transit of goods
• Infringement requires evidence that importer engaged in acts aimed at putting goods on the EU market
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Regulation 1383
Definition of ‘counterfeit goods’:Goods... bearing... a trademark identical to the trademark.. registered in respect of the same type of goods, or which cannot be distinguished in its essential aspects from such a trademark, and which thereby infringes the trademark-holder's rights under Community law.
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Polo (2000)
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Polo (2000)
• CGR was expressly designed to apply to goods in transit
• Risk that goods fraudulently brought back into the EU
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Rolex (2004)
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Rolex (2004)
• Counterfeit Rolex watches intercepted by Austrian Customs
• No criminal provisions prohibiting transit• CGR applies to transit
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Regulation 1383
• Recital 3 - Counterfeit goods under suspensive procedure, i.e. transit, should be prohibited
• Article 1(1)(b) - Goods can be found on checks when under suspensive procedure i.e. transit
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• Recital 8 – use criteria to establish whether goods produced in that Member State would infringe
• Manufacturing Fiction deployed in Sisvel (Case Number 311378 Court of the Hague)
Manufacturing Fiction
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Regulation 1383
Definition of ‘counterfeit goods’Goods... bearing... a trademark identical to the trademark.. registered in respect of the same type of goods, or which cannot be distinguished in its essential aspects from such a trademark, and which thereby infringes the trademark-holder's rights under Community law.
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“Are non-Community goods in transit capable of constituting “counterfeit goods” within the CGR if there is no evidence to suggest that those goods will be put on the market in the EC, either in conformity with a customs procedure or by means of an illicit diversion.”
Nokia reference
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• consignment of 7,000 shavers from China to no designated destination
• intercepted by Antwerp Customs• Chinese shipper challenges detention
relying on Montex• Philips rely on Manufacturing Fiction
Facts in Philips case
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• relates to Regulation 3295/94 • relates to all IP rights• should the court take into account the
temporary storage status/the transit status and apply the legal fiction that the goods were manufactured in that same Member State when assessing infringement?
Philips reference
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• Request for Nokia reference to be joined with Philips reference
• INTA amicus intervention• INTA’s Observations filed March 2010• Customs’, Member States’ and Nokia’s
Observations due to be filed
Next steps
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The Future ?
ECJ has to rule:
– Policy considerations– Position of Member States?– Position of Commission?– Follow Class / Montex or Polo / Rolex?
Amendment to 1383/2003?
Amend Trade Marks Directive?
ACTA?
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TAXUD / EFPIA Joint Statement
2. It is important to respect the right of Customs Authorities to control goods in transit and ensure that measures can be taken against global trade in pharmaceutical products suspected of infringing IPR
4. European Customs Authorities will pay particular attention to cases involving the transit of medicines through the Community Customs Territory
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IMPACT – Lisbon 2007
Responsibilities
Government responsibilities include, but are not limited to, the following:
3.1. establish an adequate legal basis (including criminal, administrative and civil frameworks) for imposing, ensuring compliance with, and enforcement of obligations of all concerned parties;
3.2. ensure that this legal basis can be applied to all medical products, including those that may be counterfeit medical products, and/or in transit/trans-shipment, bonded warehouses, free trade zones, and all situations of the international trade
Illegal acts:
It is prohibited to:
4.2. own, possess or control counterfeit medical products in transit, trans-shipment, free trade zones, bonded-warehouses and other situations of international commerce