Leg. Dev.: Counterfeit and Pirated Goods

1 Colum. J. Eur. L. 549 (1995)

Christopher W. Kirkham. J.D./M.I.A. candidate, Columbia University School of Law and School of Int’l and Public Affairs.

Determined to strengthen European policies against trade in pirated and counterfeit goods, the Council has adopted Council Regulation 3295/94 of December 22, 1994 laying down measures to prohibit the release for free circulation, export, re-export or entry for a suspensive procedure of counterfeit and pirated goods (1994 O.J. (L 341)). The Regulation, adopted under Article 113 of the EC Treaty, is intended to improve the system established under Regulation 3842/86, a measure aimed particularly at trade mark infringements through imports. The new regulation extends protection to goods in transit and to exports, while expanding intellectual property rights generally.

The Regulation protects most intellectual property rights against commercial trade in counterfeit and pirated goods. The Regulation specifies the circumstances under which national customs authorities may act on suspicions that goods in trade are counterfeit or pirated, and it prescribes the measures these authorities shall take when such suspicions are confirmed. By its own terms, the Regulation does not apply when goods are manufactured under agreement with the holder of a right, even under circumstances in which the agreement has not been respected (Article 1(4)). Nor does it apply to goods of a non-commercial nature, such as those carried in a traveler’s luggage (Article 10). Finally, in spite of industry requests, the Commission excluded patent rights from the scope of protection, thus relieving customs authorities from an additional burden.

Under the Regulation, the holder of a right who suspects that pirated or counterfeit goods are being exported or have entered into free circulation may lodge an application for action with the customs authority (Article 3). Alternatively, the customs authority may notify the holder of the possible infringement if it “appears evident” during a routine check that goods are pirated or counterfeit. In that event, the authority may detain the goods for up to three working days to allow the holder of a right to file an application for action (Article 4). In either case, upon granting the application, Member States may require a security from the holder to cover costs and any liability arising from an unsuccessful or improper action (Article 3(6)).

If the customs authority grants the application and identifies the goods in question, it must suspend their release or detain them (Article 6(1)). The applicant then has ten days (renewable) in which to request the appropriate national authority to make a substantive decision on the merits of the case (Article 7(1)). If the authority ultimately determines that the goods are counterfeit or pirated, the customs authority must destroy them or otherwise dispose of them outside of commercial channels (Article 8(1)). Traders in pirated or counterfeit goods will receive no compensation for actions under the Regulation. Member States must impose penalties, additional to any civil liability, for infractions under the measure (Article 11). The legislation, which repeals Regulation 3842/86 (Article 16), applies from July 1, 1995 (Article 17).

Reaction against accelerating growth in the international trade of pirated and counterfeit goods requires a strong coordinated approach to protecting intellectual property rights. The TRIPS agreement emerging from the Uruguay Round of GATT talks sought precisely to bolster such protection. This new regulation addresses copyright and associated rights protection required under TRIPS. At the same time it extends the scope of protection to rights over designs and models closely resembling, but not constituting, commercial trade marks. Procedurally the new regime provides the means for suspending the release of goods suspected to be counterfeit or pirated until the proper authorities have made a decision on the merits.

In June 1995, the Commission adopted Commission Regulation 1367/95 laying down provisions for the implementation of Council Regulation 3295/94 laying down measures to prohibit the release for free circulation, export, re-export or entry for a suspensive procedure of counterfeit and pirated goods (1995 O.J. (L 133)). The Regulation amends Regulation 3295/94 (supra) to clarify the definition of a “holder of a right” for these purposes. A “holder” may thus include “. . . a collecting society which has as its sole purpose the management or administration of copyrights . . . .” (Article 1). The Regulation also specifies what “proof” and “pertinent information” is required in the application for action filed by a holder of a right or his representative (Articles 2-3). The Regulation entered into force July 1, 1995.