EU Parliament adopts proposals for new customs regulation

On 24 May 2011, the European Commission published a proposal for a new customs enforcement regulation outlining revised procedures for EU customs authorities to use in order to detain and destroy goods infringing intellectual property rights (IPRs). This was as a result of a review by the Commission of the existing customs regulation Council Regulation (EC) No 1383/2003 which concluded that the current legal framework needed strengthening and that administrative procedures should be streamlined to safeguard the interests of legitimate traders, especially given the increase in the number of IPR infringements and cases of counterfeiting in recent years.

The proposals are still winding their way through the various stages in the European Parliament and on 29 February 2012, a meeting of MEPs was held to vote on a report setting out suggested amendments to the proposed new regulation. At the meeting, MEPs adopted the report which takes them one step closer to replacing the existing legislation, but further work is still required to finesse the revised provisions.

Substantive proposals

Scope of the regulation

The proposals to expand the scope of the regulation include the following:

1. Widening the regulations to include parallel imports (i.e. goods manufactured with the IPR owner's consent but distributed in the EEA without their consent). There has been some concern among industry bodies, however, that more resources would be needed to police this and that this may adversely affect customs' ability to act against those infringing activities that are perceived as being more problematic, such as counterfeiting. A press release after the recent meeting indicates that these concerns were echoed by some MEPs and as a result it is currently unclear whether the proposals will be included in the revised regulation.
   
2. Expanding the list of protected rights to include trade names, topographies of semi conductor products and utility models, among others. In practice, this would mean that customs would be able to take action against a wider range of goods.
   
3. Excluding personal baggage from the regulation's scope.  Although this was not endorsed by the report, MEPs agreed with the Commission that personal baggage should be excluded.

Small consignments

Small consignments are becoming more common as infringing goods are often sold via the internet and distributed by post or couriers. However, rights holders often choose not to take action in relation to such seizures because of the associated costs. The revised regulation proposes a new simplified procedure to deal with the destruction of 'small consignments' which aims to reduce the administrative burden and costs. This would allow goods to be destroyed without needing prior agreement from the IPR owner, provided the owner has 'opted-in' to the use of the procedure.

In order to avoid varying interpretations by different countries, the MEPs suggested that the revised regulation should incorporate a definition of 'small consignments' and, in particular, the thresholds that make up a small consignment should be clear. It was suggested that 'small consignments' should weigh less than two kilograms and contain fewer than three items.

Compulsory simplified procedure for destruction of goods

The current regulation provides a simplified procedure for the destruction of infringing goods by customs with the consent of the owner of the goods (which can be inferred by their silence), without the need to commence legal proceedings to establish whether there has been an infringement. However, the simplified procedure is not currently mandatory. Given how effective the procedure has been in the countries where it is available, the proposed regulation seeks to make the procedure compulsory for all Member States, leading to a more uniform approach.

Goods in transit

The Court of Justice of the European Union recently provided guidance in joint cases involving Nokia and Philips (C-446/09 and C-495/09) setting out the criteria for detaining goods in transit. Further commentary on this decision is set out here. The report proposed incorporating the criteria in the Nokia and Philips cases into the new regulations, thereby increasing the certainty over how customs should deal with goods in transit.  This was welcomed by MEPs.

Use of information obtained by customs

One of the problems faced by rights holders under the current regulation is the restriction on the use of information obtained by customs (e.g. names and addresses of consignee, consignor and holder of the goods, origin, provenance and destination of goods). At present such information can only be used for certain purposes, such as deciding whether an IPR has been infringed, utilising the simplified procedure and/or initiating proceedings.  The proposed regulations would enable such information to be used more widely, including to initiate criminal proceedings and/or to seek compensation from the infringer after destruction of the goods. The rights holder would also be entitled to forward that information to other enforcement authorities in third countries, in particular, in the countries of origin so that they can get to the root of the supply chain and attempt to deter infringing goods before they reach Europe. However the MEPs' view was that personal data should be strictly protected, so it will be interesting to see how widely such provision will be drafted in its final form.

Comments

While the Commission's proposed new regulation and the suggested amendments have been adopted by MEPs, it is clear that there is still further work to be done to iron out particular sticking points, such as whether to include parallel imports in the scope of the regulation and how rights holders will be entitled to use information obtained from customs. The European Parliament looks set to enter into further discussions on the proposals in May and July this year.

Lucy Nunn is a senior associate and Rebecca Pakenham-Walsh is a senior associate (PSL) in the IP Enforcement and Litigation Group at Fieldfisher.