In the Netherlands, the Anti-Piracy Regulation ("APR") has also been applied to in transito goods. This means that counterfeit or pirated goods merely transiting the Netherlands from one country outside the European Union ("EU") to another country outside the EU were detained by Dutch customs authorities. This has proven to be controversial. In fact, seizures of generic medicines in transit by Dutch customs set off a worldwide debate. A UK court recently declined this broad view on the scope of the APR, although it did recognise that its conclusion was not satisfactory.

Following questions referred by the Antwerp Court of First Instance (case C-446/09 Philips/Lucheng ⦣8364;" electric shavers) and the UK Court of Appeal (case C-495/09 Nokia/HMRC ⦣8364;" mobile phones), the Court of Justice ("CJ") of the European Union rendered its decision on 1 December 2011 whether or not customs are rightfully detaining goods in transito with the APR as legal basis.

Legal background and scope of the APR

The APR that is currently in force, Regulation (EC) 1383/2003, is the fourth APR. Under the provisions of the APR, national customs authorities have the right to detain or suspend the release of goods if the goods are suspected of infringing an IP right. Customs can take action based on an application by the right holder or ex officio.

The current APR covers almost all intellectual property (IP) rights, including patent, trademark and design rights as well as copyright. Furthermore, customs authorities can take action against all movements of goods, including import, export and trans-shipment. Two important exceptions apply: goods moving within the EU and legitimate parallel imports are not covered by the APR. 

APR also for goods in transit? Manufacturing Fiction dismissed.

In the Netherlands, as upheld by the Dutch Supreme Court, the APR was applied to in transito goods on the basis of a "manufacturing fiction". This means that in transito goods were assumed to be produced in the Netherlands for the purpose of establishing IP infringement. The CJ now dismissed the manufacturing fiction as posing unjustified restrictions on international trade: goods coming from a non-member State which are imitations of goods protected in the EU by certain IP rights cannot be classified as "counterfeit goods" or "pirated goods" within the meaning of the APR merely based on the fact that they are, in short, in transit in EU customs territory.

CJ: APR also for goods in transit under certain conditions

Goods in transit can, however, be qualified as "counterfeit goods" or "pirated goods" within the meaning of the APR when it is proven that the potentially infringing goods are intended to be put on the EU market. Such evidence may include:

  • the existence of a sale of goods to a customer in the EU
  • an offer for sale or advertising to customers in the EU
  • documents or correspondence concerning the goods in question showing that diversion of those goods to EU consumers is envisaged.

In order for the relevant authorities to be able to establish whether such proof exists, the customs authorities must suspend the release of or detain those goods as soon as there are indications giving ground for suspecting that such an infringement exists. Those indications may include, inter alia

  • the fact that the destination of the goods is not declared (whereas the suspensive procedure requires such declaration)
  • the lack of precise or reliable information regarding the identity or address of the manufacturer or consignor of the goods
  • a lack of cooperation with the customs authorities
  • the discovery of documents or correspondence concerning the goods in question suggesting that there is liable to be a diversion of those goods to EU customers. 

Consequences for your company?

Consequently, whether goods in transit can be qualified as counterfeit or pirated goods will depend very much on the facts of the case. Regarding the IP rights involved, it is clear that the CJ decision concerns trade mark, copyright, a related right or a design as they are specifically mentioned. Whether it also applies to patent rights is not immediately obvious, but this is to be expected.

We are more than happy to discuss with you the possible impact of this decision on your IP enforcement strategies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.