Customs reports a trademark/design infringement – an AFA request?

This can be quite a shock. A letter from Customs stating that your goods have been intercepted and are being held. This is because a trademark, design or copyright holder considers your product to be an infringement. This concerns so-called intellectual property rights, IP or IPRs, which also include patents, trade names and geographical indications (‘made in…’) and “chips” (semiconductor topographies). I refer to them here as ‘IP rights holders’. Goods are imported on a large scale, often via the port of Rotterdam or Amsterdam Airport, but also elsewhere in the Netherlands. EU customs offers such trademark or design holders a powerful tool, which can often have major consequences for your logistics.

Anti-Counterfeiting Regulation (ACR)

The basis for this is the Anti-Counterfeiting Regulation (‘ACR’ – EC No. 608/2013). This has been in force since 1 January 2014 and is in line with international agreements against counterfeiting and piracy (TRIPS Agreement 1994). Such a regulation applies directly throughout the EU.

What does the APV regulate?

The APV gives the ‘IP rights holder’ the possibility to have Customs take action against suspected infringing goods, i.e. counterfeit goods. Customs selects containers and inspects them. The suspected IP right holder is informed so that they can inspect the goods. If an infringement is found, they can demand seizure, surrender and destruction. The APV is therefore a powerful enforcement tool.

Request for customs action

Anyone wishing to invoke the APV must submit a concise but reasoned request (Article 5(4) APV). There are two types of requests:

– A national request: action in one Member State (e.g. only in the Netherlands);

– A Union request: a single request for customs action in several Member States.

The condition is that the request must be specific and provide clear information about the goods themselves, but also, of course, the IP rights involved, the applicant, type numbers, models, etc. Requests that are too broadly formulated are likely to be rejected (Art. 6(3) APV).

Once granted, Customs must take action against the goods described in the decision for a period of one year; this period may be extended at any time. If the holder of the decision violates the rules (e.g. misuses information), the decision may be suspended or revoked.

It is important to note that the APV is not intended to block legal parallel trade – in this case between EU Member States. Article 1(5) excludes goods that have been manufactured with the consent of the right holder or produced within the permitted quantity. Abuse of the APV to thwart parallel imports may result in sanctions, although courts have ruled that such abuse alone is often not sufficient to immediately lift the seizure.

The procedure at Customs

Customs may also detain goods on its own initiative (ex officio). The holder of the decision and the declarant or holder of the goods are then informed and given the opportunity to inspect the goods. If the IP right holder establishes an infringement, they can take civil action to prevent the goods from entering free circulation in the EU. However, the importer can contest this.

The APV also provides for an accelerated destruction procedure (Article 23). If the right holder indicates within ten days that he is convinced of infringement and agrees to destruction, and the declarant/holder of the goods does not protest (in time), customs may destroy the goods without legal proceedings. In practice, this happens frequently and has a significant impact on the parties involved; sometimes the goods that are not counterfeit are retained by Customs because the importer – who may also be based outside the Netherlands – has to incur additional costs to collect the remainder.

Brand-name shoes

Suppose a brand owner such as Timberland has registered its brands and wants to combat counterfeiting. It can submit an APV request to Customs to detain shipments suspected of being counterfeit. If a consignment of shoes is detained, Timberland is allowed to inspect it. If an infringement is established, it can seize the goods and request their destruction, after release by Customs and, if necessary, after legal proceedings. With the accelerated procedure, the shoes can even be destroyed within ten days if the other party remains silent.

Risks and liability for shippers

Shippers – manufacturers, IP rights holders or importers – often experience the financial consequences of customs action directly. Chapter IV of the APV stipulates that the holder of the decision may be liable if:

– He does not continue proceedings;

– Samples are not returned or become unusable due to his actions;

– It subsequently transpires that the goods did not infringe any rights.

In such cases, the holder of the goods or the declarant may claim compensation (Article 28 of the APV). This risk is particularly high if the goods have already been destroyed. In addition, Article 30 of the APV obliges Member States to lay down penalties for non-compliance with the Regulation.

Transit goods

The APV primarily focuses on goods that are placed “on the EU market”. However, purely transit traffic, i.e. goods that are transported under customs supervision from one third country to another, is in principle outside the scope of the regulation. This is to avoid unnecessarily hindering international free trade. For example, a container can travel from Rotterdam to Italy and only be intercepted there. Article 22 of the APV creates the possibility for customs authorities to exchange information on goods flows, including transit. This makes it easier to detect goods that infringe intellectual property rights in third countries, without the APV itself applying directly to transit. Direct action in, for example, the port of Rotterdam (without transit travel) can still be intercepted in Rotterdam, but there must be concrete and substantiated suspicions that these transit goods will still be traded in the EU. The burden of proof for this lies with the IP right holder.

Conclusion

It is still worthwhile to object to the suspicion of infringement. Not every apparent infringement is an infringement. Therefore, the IP right holder who invokes the APV also faces legal and financial risks, especially if it later turns out that goods have been wrongly classified as infringing. The IP right holder sometimes only lodges an objection with Customs after inspection if more than a minimum number – e.g. 50 items – of, for example, Timberland shoes have been detected. So some counterfeit goods still seem to “escape the clutches of Customs”.

For IP rights holders / holders of intellectual property rights and for shippers in general, the APV is a powerful tool for combating counterfeiting at the EU border.

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