Explanatory Memorandum to COM(2003)20 - Customs action against goods suspected of infringing certain intellectual property rights and the measures to be taken against goods found to have infringed such rights - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2003)20 - Customs action against goods suspected of infringing certain intellectual property rights and the measures to be taken ... |
|---|---|
| source | COM(2003)20  |
| date | 20-01-2003 |
On 22 December 1994 the Council adopted Regulation (EC) No 3295/94 laying down the conditions for the intervention of the customs authorities and the measures to be taken by the competent authorities with regard to counterfeit or pirated goods. This act implemented provisions of the World Trade Organisation's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) pursuant to Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994). There has since been a steady escalation in such fraud. Over the four-year period 1998-2001 customs administrations saw the number of items infringing an intellectual property right they intercepted at the EU's external frontiers increase ninefold, from 10 million to 100 million items.
Both the nature of the products counterfeited and pirated and the methods used by organised international fraud gangs are evolving constantly. The statistics published by the Commission in its annual report on the action of the Community customs authorities against counterfeiting and pirating bear out this constant change and highlight two broad trends. The first is that counterfeiters are now more interested in quantity than quality. Organised fraudsters are no longer targeting articles with high value added, opting instead to produce a variety of household objects on a commercial scale. The second is the nature of the products concerned. By way of example, in 2001 seizures of counterfeit foodstuffs were up almost 75% on the year before, practically equalling clothes, while pirated or counterfeit CDs were up 15 300 % on 1999.
The increasingly active involvement of organised crime in large-scale international trafficking in counterfeit and pirated goods attests both to the lucrative nature of such activities and to an increasing professionalism.
Against this background, it is particularly important to develop legislation aimed at improving and harmonising customs action in tackling such intellectual property offences more effectively. In the interests of legal clarity, making the rules more accessible to right holders and designing a high-performance legislative instrument to deal more effectively with these kinds of fraud, Regulation (EC) No 3295/94 of 22 December 1994 should be repealed and replaced.
Contents
2.1 This Regulation defines the conditions on which the customs authorities can act when goods are suspected of infringing an intellectual property right and the measures that the competent authorities are to take when goods are found to infringe an intellectual property right covered by this Regulation. The main objective of this Regulation is to provide the single market and consumers with more effective protection in a bigger Community.
2.2 The particularly sensitive trend in these forms of fraud, which are now statistically quantifiable where customs action is concerned, calls for a reform of the law to guarantee consumer safety and protection, respect for holders' intellectual property rights and the financial interests of the Community in an economic area that is both competitive and open to free competition. Such a reform should serve to promote business innovation and competitiveness and safeguard jobs while protecting national economies.
2.3 Counterfeiting and pirating are increasingly damaging the economy, financial interests and employment and severely handicap economic operators. The proposed amendments will therefore step up the fight against fraud at the Community's external frontiers throughout the customs territory without unnecessarily impeding international trade. These objectives figure among those set out in Decision No 210/97/EC of the European Parliament and of the Council of 19 December 1996 adopting an action programme for customs in the Community.
2.4 This Regulation operates according to the same principles as the previous one: where goods are suspected of infringing an intellectual property right, the holder of that right can apply for action to the customs authorities, which will then detain the goods for a certain period. The Regulation also lays down the measures to be taken by the competent authorities when the goods are found to infringe an intellectual property right. The new draft does not affect the basic principles of the previous Regulation; it simply improves its working and extends its scope to new intellectual property rights.
2.5 The new Regulation takes account of the demands of professional organisations, the interests of small and medium-sized industries and enterprises (SMI/SMEs) and experience gained from the previous customs rules. Implementation has been made more user-friendly. When consulted, right holders welcomed a number of the proposed improvements. The Regulation proposes a number of measures:
- It extends the scope of the Regulation to new intellectual property rights: plant variety rights, geographical indications and designations of origin.
- It improves the quality of information provided to customs by right holders applying for action. It also harmonises the period of validity and the form of the application for action and encourages the lodging of applications by computer.
- If information provided by customs to the right holder is abused or used for purposes other than those laid down by the Regulation, the right holder's application for action may be suspended for the remainder of its period of validity and, in particularly serious cases, it may not be renewed.
- The fees and securities have been abolished to allow SMI/SMEs cost-free access to the Regulation. The security is now replaced by an undertaking from the right holder.
- The scope of the ex officio (own-initiative) procedure, which allows customs to act without a prior application for action, has been extended. Its use, especially in the interests of SMI/SME right holders, will thereby increase considerably.
- Right holders will receive more detailed and frequent information from customs.
- Right holders may be provided with samples for analysis in order to enable the procedure to continue.
- The fact that right holders are not obliged to await the outcome of substantive legal proceedings but can have goods infringing certain intellectual property rights destroyed with the agreement of the person holding the goods or the declarant should, under the new procedure, resolve certain storage problems.
- The article concerning non-commercial traffic in goods within the limits of duty-free allowances is of particular importance to business. Though this type of traffic was outside the scope of the previous rules, the new Regulation should tighten control over small-scale traffic to ensure that it does not conceal a larger-scale operation.
2.6 Successfully tackling counterfeiting and piracy requires close cooperation with right holders and a substantial increase in the number of applications for action.
2.7 To ensure the best possible use of this Regulation, there should be provision for any amendments and additions necessary to be made in the two years following its entry into force.
2.8 The Council is asked to adopt the proposal for a new Community Regulation laying down the conditions for action by the customs authorities when goods are suspected of infringing intellectual property rights and the measures to be taken by the competent authorities when goods are found to have infringed certain intellectual property rights.
Article 1
This Regulation sets out the conditions on which the customs authorities can act when goods are suspected of infringing an intellectual property right and the measures to be taken by the competent authorities when such goods are found to infringe an intellectual property right.
The 2001 report by the customs administrations on counterfeiting and piracy shows a major increase in the counterfeiting of food products, spirits and drinks (up 75% on the year before, some 4 million items ). Some of these products can be particularly dangerous to consumers. In view of the experience acquired by customs administrations in tackling counterfeiting and piracy, it therefore seems advisable to bring intellectual property rights relating to plant varieties, designations of origin and geographical indications within the scope of this Regulation.
These new types of rights therefore need to be defined for the purposes of this Regulation and included in the chapter 'Goods infringing an intellectual property right'. That chapter should also include Community designs.
This Regulation should not apply to goods bearing a protected designation of origin or a protected geographical indication which, though they are in a situation covered by this Regulation without the right holder's consent, have been manufactured with the right holder's consent.
Business representatives have always argued for the deletion of this exclusion clause, which they see as an unacceptable 'tolerance' in that it favours 'tourist trafficking'. This type of trafficking is, however, very difficult to combat by the detention procedure. Annual statistics on customs action against counterfeiting nevertheless show that passengers account for over 45% of the procedures initiated by customs.
Though this clause excludes from the scope of the Regulation goods of a non-commercial nature contained in travellers' personal baggage within the limits of the duty-free allowance (EUR175), it also sends an inappropriate message to travellers.
This type of traffic should be excluded from the scope of this Regulation only if it does not conceal trafficking on a larger scale.
Article 4 lays down the measures to be taken before an application for action is made to the customs authorities.
This Article recasting the conditions in which the customs authorities can intervene without a prior application for action should considerably extend the scope for using the own-initiative procedure. In order to give the customs authorities more scope for action and to give SMI/SMEs access to the facility, the customs services may, when they have sufficient grounds for suspecting that goods infringe an intellectual property right, detain suspect goods for three working days. During that period the right holder may lodge an application for action with the competent department.
This procedure enables customs to notify right holders who may not realise that their intellectual property rights can be infringed, and have therefore never before applied for action, that goods suspected of counterfeiting or pirating their rights have been intercepted.
Articles 5, 6 and 7 will govern the lodging and processing of applications for customs action:
The application for action, which is crucial to optimising customs action in that it provides particulars and a technical description of the potentially pirated or counterfeited products against which customs administrations are being asked to act, may be lodged with the appointed authorities by computer.
Some particulars will be mandatory for the acceptance and registration of the application. A sufficiently detailed technical description of the goods, detailed particulars of the type of fraud, if known, the name and address of the contact person appointed by the right holder and the document showing that the applicant holds the right for the goods concerned will all be required when applying for action. Other details likely to help the customs authorities in their search may be sent by way of information.
The customs department responsible for registering applications will have 30 working days in which to notify the applicant in writing of its decision.
The highly specialised nature of certain intellectual property rights, such as plant variety rights, may entitle the competent customs department grounds to demand specific information.
The guarantee necessary under Regulation (EC) No 3295/94, which in some Member States required the right holder to deposit a sum of money, is abolished. Instead right holders applying for action will provide a written undertaking covering their liability and guaranteeing payment of all costs arising from keeping the goods under customs control.
This Article sets out the principles governing the acceptance of the application for action. The application form will be harmonised and its period of validity fixed at no more than one year. Applications will be renewable annually.
This Article sets out the conditions for customs action and provides for customs to suspend the release of suspected counterfeit or pirated goods or to detain them.
It allows the right holder to be sent additional vital information, including the actual or supposed nature of the suspect goods and the actual or supposed quantity of goods seized. Such information may be sent in all cases and without any prior obligation. At the same time, and pursuant to national legal provisions for establishing whether an intellectual property right has been infringed, right holders may be sent such information as the origin or provenance of suspect products.
To facilitate analysis of suspect products, a representative sample of the goods may now be provided on certain conditions. It must be restored before the release of the goods or the end of the detention procedure.
To facilitate access to customs rules for SMI/SME right holders and to deprive those concerned effectively of the economic gains of trade in counterfeit and pirated goods, a simplified procedure has been introduced whereby goods can be destroyed at the right holder's request and under his responsibility where the customs authorities receive, within ten working days, written permission from the declarant or holder of the goods to destroy the goods.
This simplified procedure should resolve the problems of storage and the associated costs. Whereas, in the past, legal proceedings to obtain a substantive decision from the competent authorities were all too often abandoned because neither the consignor nor the consignee were on Community territory, it will now be possible to destroy goods infringing certain intellectual property rights in transit or transhipped on the Community customs territory. This procedure is not an alternative to that laid down in Article 13 of this Regulation, but it does allow fraudulent goods to be taken off the market in certain circumstances. Should the declarant or holder of the goods object, the procedure laid down in Article 13 will apply.
Though right holders now receive a considerable amount of new information, they cannot use it for purposes other than those laid down in Articles 8 and 10 of the Regulation. In the event of abuse, right holders could incur civil liability and see their application for action suspended for the remainder of its period of validity or, in particularly serious cases, not have it renewed.
In order to secure and uphold the rights of all parties under the Regulation, the customs authorities will release goods if they are not notified within ten working days that proceedings have been initiated to establish whether an intellectual property right has been infringed.
The perishable nature of certain products covered by intellectual property rights within the scope of this Regulation, for instance plant variety rights or geographical indications, requires detention or suspension of release to be limited to three working days.
Certain goods covered by specific intellectual property rights may be released on the lodging of a security and subject to certain conditions.
Article 14 takes over the wording of Article 7 i of Regulation (EC) No 3295/94.
Storage conditions during detention or suspension of release are determined by each Member State.
In order to give the customs authorities more scope for action, it is important that they be able to use the provisions of the Regulation when goods are leaving the Community customs territory.
Goods found to infringe an intellectual property right are normally to be destroyed, but they may also be forfeited to the Exchequer.
This Article sets out the liability of the customs authorities and the right holder.
This Article provides for the competent authorities to apply effective, proportionate and dissuasive penalties.
The Commission will report annually to Parliament and the Council on the application of this Regulation.