UK: The Border Detention (Or Not?) Of Fake Goods In Transit

Last Updated: 7 May 2012
Article by Phil Carey

In December of last year, the Court of Justice of the EU ("CJEU") handed down its ruling in the joined cases of Philips (C446/09) and Nokia (C495/09)1.


The cases concerned the EU regime for the detention at the customs border of goods suspected of infringing intellectual properly rights, i.e. Regulation 1383/2003 and its predecessor, Regulation 3295/94 ("The Regulations").

In Nokia, a consignment of what appeared to be obviously fake Nokia mobile phones and accessories was discovered by customs at London Heathrow airport, en route to Columbia from Hong Kong. In Philips, Belgian customs officials discovered a shipment of electric shavers resembling the proprietary design of the Philips shavers. Here, the goods originated from China, but the final destination of the goods was not determined.

In both cases, the national courts had to grapple with the issue of whether goods in transit could infringe intellectual property rights in the EU and, therefore, fall within the scope of the Regulations.

Decision of the CJEU

The CJEU was asked to consider, effectively, the questions of:

  1. whether or not EU customs officers can detain goods which are suspected of being either imitations of goods protected in the EU by a trade mark registration, or copies of goods protected in the EU by copyright (or related rights) while such goods are under their supervision, even if the goods are not bound for the EU market (e.g. because they are en route to a third country outside the EU, or are being held awaiting confirmation of final destination); and
  2. if suspect goods are detained, when a competent court comes to assessing the substantive infringement issues, do such goods actually infringe the intellectual property rights relied upon? Relevant to this is the question of whether or not the "manufacturing fiction", where the goods are deemed to have been manufactured in the EU state of detention, may be applied?

In its decision, the CJEU made it clear that the EU border detention regime "deals only with combating the entry into the EU of goods which infringe intellectual property rights"2, and the measures adopted under the regime should not impede legitimate international trade. Accordingly, it was ruled that goods cannot be classified as counterfeit or pirated goods under the regime of the Regulation, merely on the basis of the fact that they are brought into the customs territory of the EU under a suspensive procedure (i.e. whilst under customs supervision). The "manufacturing fiction" concept has therefore been rejected.

However, goods under customs control (but not yet on the market) may, according to the CJEU, infringe the right in question where it is proven that they are intended to be put on sale in the EU. Such proof may be provided, inter alia, where it turns out the goods have been sold to a customer in the EU or offered for sale or advertised to consumers in the EU, or where it is apparent from documents or correspondence that diversion of the goods to the EU is envisaged.

Moreover, the CJEU also ruled that Customs can and should react as soon as there are indications giving grounds for suspecting that that an infringement exists. Here, the CJEU offered some examples of such indications: a failure to declare the final destination of the goods, a lack of precise or reliable information as to the identity or address of the consignor of the goods, a general lack of cooperation with the customs authorities and/or documents or correspondence suggesting that there is liable to be a diversion of the goods onto the EU market.


The decision of the CJEU will undoubtedly be a cause for great frustration amongst brand owners.

First, even blatantly fake goods will seemingly be able to pass through Europe (home to many of the major international transit hubs) entirely unencumbered as long as there are no indications of "fraudulent diversion" into the EU. While the CJEU mentions in its judgment that EU customs authorities are permitted to cooperate with their brethren in the non-EU country of destination in circumstances where it is suspected the goods will infringe intellectual property rights locally, it is wondered whether this is practically feasible.

Second, while the CJEU has given some indications as to what might constitute grounds for suspicion of diversion, they are not complete. The question remains as to, in any given circumstance, how much prima facie evidence the brand owner will have to supply to customs before they feel able or obliged to act, and how much evidence the brand owner will need to adduce before the national courts to make good the case that the suspect goods are, in fact, intended for the EU market.

We suggest that this might not always be a straightforward task for the brand owners, particularly as we are constantly being told how increasingly sophisticated the importers of counterfeit and pirated goods are becoming.

The debate therefore returns to whether the EU legal framework can, and should, be changed to allow the EU authorities to take a more effective and central role in policing against the international trade in counterfeits.

This raises complex questions; in particular, is there a "one size fits all" regime that provides the brand owners and customs authorities with the tools to fight the counterfeiters, yet protects the interests of legitimate international trade (having regard here to the controversy over the EU detentions of bona fide generic medicines en route to the developing world). Further, and as noted in our previous article on the implementation of ACTA, would any change in the regime whereby the EU becomes involved in enforcement on a global scale necessarily add another dimension to the territorial scope of intellectual property rights?


1 Koninklijke Philips Electronics NV v. Lucheng Meijing Industrial Company Ltd; Nokia Corporation v. HMRC

2 We would note here that, while the questions addressed by the CJEU were in the context of trade marks and copyright/designs, it would appear the CJEU contemplates its reasoning to apply to all intellectual property rights.

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.

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