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Goods-in-transit: be careful what you wish for

James Nurton

The European Commission cunningly kept at least one card up its sleeve when it circulated the draft proposals for reforming the Trade Marks Directive and CTM Regulation last month

As we report today, the final version of the plans includes a significantly beefed-up provision to deal with goods-in transit. In summary, it wants to enable trade mark holders to prevent third parties from bringing into the EU goods bearing a trade mark that is “essentially identical” to the registered mark, regardless of whether or not those goods are released for circulation in the EU.

Nokia phones
Fake Nokia phones being shipped via London were at the centre of a landmark CJEU case

This is about the best result brand owners could have hoped for, after the disappointment of the Philips and Nokia cases and the failure to change previous legislation, such as the Customs Regulation, and suggests that the extensive lobbying that many trade mark groups engaged in over the past two years has been effective.

It’s certainly a neat solution to the problem of how to seize counterfeit goods that are being shipped via the EU between two other countries: notably, by putting the change into the trade marks legislation the Commission has dodged concerns that other IP rights will be affected (specifically, the shipment of generic pharmaceuticals). However, I doubt it will be implemented as drafted as it raises a number of problems.

First, there is the vagueness of that phrase “essentially identical” – not just “identical”. This seems to be more than identical, but rather less than similar/likely to confuse. If a counterfeiter is prepared to argue that their sign is not essentially identical, that could make for some interesting disputes. And would the same standard be applied to non-traditional marks, such as shapes? What is “essentially identical” to a Coke bottle?

Second, I expect that once critics of IP rights get to grips with this proposal they will object that it is a considerable extension of trade mark rights. And they will have a case: the European Commission seems to be proposing that trade mark owners can prevent the shipment of goods that infringe an EU trade mark even if the goods are not infringing in either the country of origin or the destination country. If implemented as drafted, that could hit not just counterfeiters but legitimate shippers in cases where different companies own the same mark in different territories (for example in the tobacco industry).

European ParliamentFor these reasons I would not be surprised if this plan is watered down in debate (remember that these proposals have to go through the European Parliament, pictured left). As even one supporter of the proposal put it to me, it would make more sense to require that the infringing sign be both the same as the registered mark in the EU and identical to a mark registered in either the country of origin or destination.

As it happens, I’m moderating a session on the EU proposals at the Fordham IP Conference in New York on Friday. Hopefully I’ll be able to report back on what the panellists think about this issue next week.


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