Since 1994, when EU Regulation 3295/94 (Customs Regulation 94) came into force, border measures by Customs authorities have been increasing throughout Europe. Since 1995, when the country became an EU member and the Customs Regulation became applicable law, Finland has been a gateway for a large amount of counterfeit and pirated goods aimed at the Russian market. The carriage of such goods has on many occasions been ended by the intervention of the Customs authorities and rights owners at the borders of Finland.
The Finnish Customs authorities have over the past 10 years caught a wide variety of counterfeit and pirated goods with praiseworthy efficiency. The majority of seizures based on Customs Regulation 94 have been for suspected trade mark or copyright infringement, even though the regulation also covers other IP rights, such as patents, designs and utility models.
Trade mark rights account for the most cases of Customs intervention because unlawful copies of goods bearing copies or imitations of well-known trade marks, as well as common piracy products such as movies and music CDs, are the easiest targets for Customs authorities to seize. This will continue to be the case in the future despite the wider power of the Customs authorities under the new Customs Regulation.
The new EU Customs rules
The new EU Customs Regulation 1383/2003 came into force on July 1 2004 and replaced the former Regulation 3295/94. It expands coverage to new IP rights, including geographical indications, designations of origin and plant variety rights.
In order to improve the working of the Customs system regarding detention of goods that infringe IP rights, the new regulation harmonizes and specifies the Customs actions and the measures to be taken by the competent authorities when IP rights are found or suspected to be infringed.
In Finland, however, the new regulation does not necessarily change the main procedural aspects as applied under the previous Customs regulation. In some respects the new regulation may even make the position of right owners somewhat weaker.
Customs estoppels in practice
From the point of view of right owners, the practice under the old regulation has been quite flexible and has worked relatively well - especially in two respects. First, in most cases rights owners have not been liable for storage and associated costs even when the procedure has been prolonged and the costs have grown to a remarkably high level. Second, destruction of the goods has not required full length legal proceedings but has been possible if the right owner and the dispatcher involved agreed on such a procedure. In most of the cases even the destruction costs have been borne by the dispatcher who has had a real interest to get rid of the goods to avoid considerable costs of storage. In some cases these kinds of costs might have finally been covered by the dispatcher's insurance.
Naturally, it has been the dispatcher's concern to deal with its own contractual partners and ensure that destruction of goods will not cause any compensation claims or other consequences for them. In his turn the right owner has, or at least should have, remained an uninvolved third party in that relationship so that no question of the right owner's liabilities could have arisen.
With the new Customs Regulation and its Implementation Regulation, only a few of the established Customs procedures have so far changed. An obvious change is the requirement for right owners to issue an undertaking pursuant to Article 6 of the Regulation to cover the costs incurred in keeping the goods under Customs control and eventually destroying them.
The former practice applied by the Finnish customs authorities did not require such an undertaking or a guarantee of any kind from the rights owners. The relevance of such an undertaking can however appear to be quite limited, since in most cases it is quite obvious that the goods seized are counterfeits. Also, if it turns out that the goods were not counterfeits, the liability of the right owner for costs is in most cases limited to the quite short period of time the Customs held the goods.
The new Regulation and especially the Implementation Regulation mean that the Customs procedure has become more structured due to the new application forms for Customs actions. These forms, applicable throughout the EU, are also an important measure in harmonizing procedures. In Finland these new application procedures abolish the previous fee of €175 collected by Customs by approval of such applications. However, the loss of this fee should not stop Customs continuing effective action against counterfeits in collaboration with rights owners.
The until now very flexible Customs procedure in Finland might become somewhat more inflexible with the new Regulation. Nevertheless, so far the practices have continued to work as flexibly as earlier.
Enforcement and remedies available
The Enforcement Directive
In April 2004 the European Parliament adopted the proposal for a Directive on measures and procedures relating to enforcement of IP rights within the EU. This Enforcement Directive (Directive 2004/48/EC on the enforcement of intellectual property rights) is likely to strengthen the position of IP right owners throughout Europe.
In Finland the prevailing special legislation for various IP rights and certain directly related statutes, such as those relating to measures for preserving evidence and interlocutory injunctions, contain the main requirements for remedies and procedures called for by the Enforcement Directive.
However, there are some provisions that specifically need to be implemented with legislative actions by the implementation deadline April 2006 set forth in the Enforcement Directive.
One specific area to be covered, to be in line with the Directive, is the compensation of damages. Traditionally the Finnish courts grant compensation in many cases that is clearly less than what could reasonably be expected. However, in infringement cases relating to so-called border measures compensation of any kind is in practice hardly available for a right owner.
Another important area covered by the Enforcement Directive and still somewhat insufficiently covered in the national law relates to the claimant's right to information. In Customs cases, however, the rights owners and their representatives normally have sufficient access to the relevant and accessible information including the type and quantity of the goods seized, and information on the consignee and the consignor appearing from commercial documents of the cargo.
Criminal procedures
As regards criminal sanctions under the national law, there are sufficient remedies available to deal with counterfeiters. In addition to actual criminal punishment the remedies include compensation of damages, which can be sought as a part of a criminal procedure. However, in most border measure cases the criminal sanctions and procedures do not lead to a full trial or conviction, because the infringers are often situated in China or somewhere else where they cannot easily be reached for trial.
Therefore, the requirement to bring the infringer himself before a court to face the prosecution would be most inconvenient and harmful for the rights owner in these cases.
Fortunately, conviction of infringers is not necessary to have the counterfeits or piracy products destroyed, which is one of the main goals of the right owners. It is sufficient, for the purposes of keeping goods seized and in order to get them destroyed later on, that a report of an offence is made to a competent judicial authority.
In most cases, commencement of criminal procedures, meaning in practice reporting of the offence, is the action chosen by the right owners, unless and until an amicable solution can be reached.
An advantage of criminal procedures is the obvious saving in costs compared to civil procedures. Furthermore, the eventual precautionary measures are much more convenient for rights owners under the criminal procedure compared with measures taken in civil cases. An example of the difference between these procedures is that in criminal precautionary measures the injured party does not have to set a guarantee upon enforcement, whereas in the latter case the claimant is under such a duty.
Civil procedures
As regards civil procedures and remedies, the various specific laws contain sufficient remedies in the light of the Enforcement Directive.
From the point of view of a full trial the same lack of involved parties as in criminal cases prevents the right owners from getting a trial started in practice. In some cases, however, a judgment by default is available. Even if a judgment by default is received where the defendant is enjoined to pay compensation to the right owner, its execution and collection is not practically possible.
The only assets owned by the eventual infringer in custody are the counterfeits and these are of no use when compensation is considered. On the contrary getting these goods destroyed usually means costs for the right holder, in addition to the costs already incurred by the court procedure.
However, the main goal for the right owners is usually to get the goods destroyed with minimum costs. For this purpose civil procedures are not recommended in Customs cases. Instead, reporting the offence to a competent judicial authority is the recommended course of action.
Petri Eskola |
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Petri Eskola graduated in 1992 from the University of Helsinki and trained on the bench with the Helsinki District Court between 1996 and 1997. He has wide experience and frequently advises clients on all IP matters and represents them in related litigation. In addition, he advises in all major areas of business law including contracts, corporate, distributorship and competition. Eskola joined Backström & Co in 1998 and is a partner of the firm. He was admitted to the Finnish Bar in 2001. His working languages are Finnish, Swedish and English. |
