Amendments to the rules on transit of counterfeit goods | In Principle

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Amendments to the rules on transit of counterfeit goods

The amendment to the Industrial Property Law extended the rights of trademark proprietors. From 16 March 2019, on the basis of domestic regulations, they may prevent transit of counterfeit goods.

Counterfeit goods often have to travel a long way. China remains the principal producer of counterfeit goods entering the EU market, which means that these goods must cross the borders of the European Union during transport.

Due to Poland’s geographical location, the customs and tax services pay attention to inspections of goods coming from outside the EU and entering the EU, also in terms of infringement of intellectual property rights. There are reasons why they must be particularly vigilant. Traders in counterfeit goods use various measures to reduce the risk of detection. Declaration of goods in transit is one of the methods. The assumption is that goods under this procedure are only transported through the territory of a given country and are not placed on the market there.

Reports published by EUIPO and Europol confirm the use of the transit procedure, among other ruses, to create complex trade routes camouflaging the place of origin of the goods (e.g. 2017 Situation Report on Counterfeiting and Piracy in the European Union). There are also confirmed cases where goods declared under the transit procedure have never left Poland.

A long way to changes

Originally, goods in transit were treated as “invisible” to the European Union market. The Court of Justice of the European Union took the view that a trademark is not infringed if goods are not released for free circulation in the EU, including when there is no evidence that they are intended for this market. Evidence that goods in transit are in fact destined for the EU market could be provided by documents proving the likelihood of the goods being addressed to EU consumers.

However, the proprietor of the trademark could only prohibit the transit if the goods were subjected to measures intending to place them on the market. The theoretical risk of such placement was considered insufficient (e.g. CJEU judgments in C-281/05 Montex Holdings and joined cases C-446/09 Koninklijke Philips Electronics NV and C-495/09 Nokia Corp.) However, over time, it has been noticed that goods from such transports are not irrelevant to the EU market and may appear on that market.

In view of numerous demands to strengthen trademark protection and combat counterfeits more effectively, the work on amending EU trademark law also covered the issue of transit. The experience of member states with regard to the detention of counterfeit goods at the borders where the transit procedure was declared confirmed that changes were necessary. This is why the changes were assessed positively both during the preparation stage and after their entry into force.

This work was completed in December 2015. The package of amendments included the EU Trademark Regulation (formerly the Community trademark) and a directive to approximate the laws of the member states relating to trademarks. For both of these legal acts, twin provisions are foreseen in the part relating to transit. However, the regulation has direct effect, and thus from 23 March 2016, when it entered into force, EU trademark owners could apply for a transit ban. On the other hand, the changes introduced by the directive were to be individually incorporated by each member state into its legal order.

Poland has transposed these requirements through the amendment of 20 February 2019 to the Industrial Property Law, and the change entered into force on 16 March 2019. Currently, a national trademark owner may prevent a third party from bringing goods in the course of trade into the territory of Poland, bearing the trademark without authorisation, which are in transit and come from a third country. This provision also applies to other customs procedures which do not lead to the release of goods for free circulation, including temporary storage.

However, in court proceedings, the defendant can still defend himself by proving that the trademark is not protected in the country of destination. In such a case, the trademark owner cannot effectively prevent the transit of counterfeit goods.

When are the provisions on preventing transit applicable?

The right to prevent transit applies to goods bearing a sign:

  • Identical to the registered trademark, or
  • Similar to the registered trademark, i.e. one that cannot be distinguished in terms of its essential aspects from the registered mark.

An identical mark is to be understood as a mark that reproduces, without any alterations or additions, all the elements that make up the given protected trademark, or a mark that, taken as a whole, contains differences so slight that the average consumer may not perceive them (C-291/00, LTJ Diffusion SA). On the other hand, a similar mark is one used on goods which cannot be distinguished from a registered mark.

Practice of implementation of the transit rules

Every year, the Polish customs and tax services discover and detain counterfeit goods declared under the transit procedure. Often, such transports arrive in Poland by land from Ukraine or by sea from China. The recent amendment will not fundamentally change anything in the practice of the customs and tax offices. On the other hand, it will strengthen the position of trademark proprietors, giving them broader rights in enforcing protection.

Under EU trademark law, such cases have already been brought in Poland before the Court for EU Trademarks and Community Designs (i.e. Division XXII of the Warsaw Regional Court). As mentioned, such a possibility for EU trademarks arose from March 2016. In one such case, the court had no doubts and, at the request of the EU trademark owner, granted an interim injunction to secure the claim to prevent transit in EU territory, including by seizure of goods detained by customs officers (Warsaw Regional Court order of 30 June 2016, Case XXII GWo 62/16). Thus it may be assumed that in the near future, not only cases relating to transit of EU trademarked goods, but also goods with national trademarks, will be considered by Polish courts.

The changes increase the level of trademark protection and give holders a new tool in the fight against counterfeits. However, it is already being pointed out that these rules are not perfect and have loopholes. For example, what should happen if the documents do not make it clear which country is the country of destination for a given transport? In such a situation, it may not be certain that there are grounds for banning the transit. Notwithstanding these loopholes, the changes should have a real impact on reducing the number of counterfeit goods in the European Union.

Ewa Górnisiewicz-Kaczor, adwokat, Intellectual Property practice, Wardyński & Partners