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14-02-2011 » On Suspicion

Following the European Court of Justice’s rulings in the cases Class International (C-405/03) and Montex Holdings (C-281/05), it is accepted that the external transit procedure of non-Community goods does not infringe an intellectual or industrial property right valid within the EU if the counterfeit goods will not be put on the market in the European Union.

The right holder has the burden of proving that the goods at issue will be put on the market. Proof cannot consist of a mere presumption of parallel trade activities, nor of offers and sales among successive traders when these are not followed by the goods being put on the market in a European Member State.

In the case C-495/09, in which Advocate General Cruz Villalon delivered his Opinion on 3 February 2011, the company Nokia contested refusal by UK customs authorities (HMCR) to proceed with seizure of goods that they themselves had inspected and that Nokia had identified as infringing its trade marks. Nokia could not produce evidence that goods would be put on the market in the European Community, despite having the names and addresses of the consignor and consignee of the goods in question. The goods, originating from Hong Kong and bound for Columbia, could not be deemed counterfeit according to Article 2 §1 A of Customs regulation 1383/2003 concerning customs action against goods suspected of infringing certain intellectual property rights.

While upholding the principle that customs seizure cannot take place without proof that the goods are intended for the European Community, the Advocate General also recognised that the presence of prima facie evidence, such as an excessive duration of transit, the kind and number of means of transport used, an unspecified country of destination and difficulty identifying the shipper or addressee, is sufficient to support the conclusion that the counterfeit goods will be put on the market in the European Community.

Thus, the Advocate General advised the European Court to reply as follows:
“Non-Community goods bearing a Community trade mark which are subject to customs supervision in a Member State and in transit from a non-Member State to another non-Member state may be seized by customs authorities provided that there are sufficient grounds for suspecting that they are counterfeit goods and, particularly, that they will be put on the market in the EU, either in conformity with a customs procedure or by means of an illicit diversion.”

This resolution, if upheld, would be transposable to all intellectual property rights.

The same day, in another case C-446/09, this time concerning Philips and involving copyright and designs, the Advocate General rejected Philips’ pleading which proposed, due to the difficulty of proving the origin and the destination of goods outside the European Community, that the goods in transit should be treated as goods made in the given EU Member State. According to the Advocate General, this “production fiction” would be contrary to Customs regulations “that aim to avoid counterfeit goods being put on the market but not to ban their transit before even knowing their destination”. It is worth noting that on this occasion, in a somewhat unorthodox manner, the Advocate General refers to the notion of “use in commerce”, a notion applied to trade marks to indicate that transit alone does not constitute use.

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