Fight against counterfeiting: new destruction procedure of handling fake goods in the customs

Author: Mykolas Jakutis, Senior Lawyer, Assistant Attorney-at-Law at METIDA

  • Simplified procedure of destroying fake goods in Europe
  • New laws make customs officers free to act
  • A step towards more efficient fight against counterfeiting

As the number of infringements upon intellectual property rights keeps growing each year, the statistics of fake goods remains shocking and calls for more efficient combating of counterfeiting. Both customs officers of the Republic of Lithuania and owners of intellectual property rights or their representatives are in constant search for new ways and methods of reinforcing control over copying and counterfeiting of goods.

screenOn 28 July last year, the Chief Customs Officer of the Customs Department of the Republic of Lithuania passed an order regarding approval of the rules for organising destruction of goods controlled by the customs in the customs offices of the Republic of Lithuania, which gave more freedom to customs officers to organise procedures of destruction of counterfeit goods more effectively, which prompted trade mark owners to take more active steps in cooperation with the customs.

According to previously effective rules for destruction of goods controlled by the customs, if during inspection of shipments officers suspected that goods might be fake, they were detained. Customs officers used to inform the trade mark owner or a representative indicated by them about the detained goods and if the owner confirmed that the detained goods were really fake and expressed a wish to start their destruction procedure, the representative appointed by the trade mark owner had to submit a request for destruction of goods under the simplified procedure and, upon satisfaction of the request, to organise the destruction procedure. Such a procedure often used to deter trade mark owners from taking of active actions towards destruction of goods, as most counterfeit goods were marked by trade marks owned by foreign companies. Taking that into account, trade mark owners were forced to appoint their representatives in Lithuania, i.e. to hire law firms in order that lawyers from such law firms would make requests to the customs on behalf of the trade mark owners and would initiate and organise destructions of goods. It is obvious that such destruction of goods was very expensive for the owners and no losses were compensated. It is all the more so that most goods were detained in very small quantities, therefore owners refused to initiate destructions of goods and customs officers, having no confirmation from the trade mark owner that the goods were fake, did not have the right to destroy such goods on their own initiative. Therefore, in such cases, customs officers had to return these fake goods to owners of the goods, i.e. recipients of the goods.

For example, owners of GUCCI, LACOSTE, NINA RICCI, MOSCHINO, PACO RABANNE and CAROLINA HERRERA trade marks very often refuse to take actions towards destruction of goods if it is only one or several bottles of perfume or items of clothing that are detained, as it simply does not pay off to trade mark owners to invest into destruction of such small quantities of goods. Of course, there are exceptions. For example, the owner of trade mark ROLEX always, even if only one item with this trade mark is detained, initiates destruction of the goods. Much depends also on the type and value of the detained goods, because if several gloves or scarves are detained, it is hardly probable that the trade mark owners will undertake anything, but if car wheel rims, watches, cell phones, etc. are detained, it is highly probable that the trade mark owners will want such goods to be destroyed, tough only one or several items are detained.

However, the above-mentioned new rules for destruction of goods facilitated the goods destruction procedure both for customs officers and for trade mark owners. Currently, according to the new rules, when the customs detains suspicious goods, it is enough for customs officers to have only a confirmation of the trade mark owner that the goods are fake and their wish that such goods be destroyed. If the owner confirms that the goods are fake, customs officers themselves initiate destruction of the goods and destroy them. Therefore, the trade mark owners become subject only to the obligation to compensate for expenses related to the destruction of the goods, which, taking into account that the customs officers destroy goods after collecting a fairly big quantity of counterfeit goods, are minimal.

On the other hand, after counterfeit goods are destroyed under the simplified procedure, owners of counterfeit goods remain unpunished and successfully continue trying to order the same goods again as the customs officers are not capable of examining absolutely all shipments, therefore often counterfeit goods get into the country unnoticed. Even if the goods are detained and then destroyed, the recipient of the goods loses only the goods themselves, but remains unpunished for the committed intellectual property infringement. On the other hand, currently, there is a trend that some trade mark owners no longer put up with such behaviour of infringers and seek not only destruction of counterfeit goods but also that infringers are held liable. Upon detention of counterfeit goods, such trade mark owners do not wish destruction of such goods in the customs office, they immediately go to court for defence of trade mark owner’s rights. In such cases, court is requested not only to order the infringer to destroy the goods at their own expense and compensate for all expenses in connection with storage or transportation of the goods, but also to award damages and litigation costs. In addition, court is requested to prohibit such a person from selling, supplying to the market, importing, exporting, accumulating and using any products or their parts, which are marked with trade marks without authorisation by their owner. The case law on this issue is always unfavourable for the recipient of counterfeit goods.

If customs officers detained goods ordered by you and the trade mark owner initiates a lawsuit regarding counterfeit trade marks, the fake goods may in some cases cost you over 100 times more than you paid for them. For example, if one attempts to have a shipment of a fake item, which cost EUR 10, and it turns out to be fake, after the lawsuit the infringer not only loses the very item but, in addition, court orders to compensate for litigation costs which may amount to over EUR 1,000. The trade mark owner may also claim damages, in which case the infringer’s expenses increase even more. Of course, such a person will think twice next time before ordering a cheap item with a well-known trade mark.

In such cases, counterfeit goods, though destroyed, may become many times more expensive for the consumer than an analogous original product.

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