The fight against counterfeiting and piracy

Have you ever stopped to think of the importance of your brand to your business? In the case of many businesses (eg Microsoft, Coca-Cola, Guinness), their brand is arguably their most valuable asset. Millions of euros are lost by business owners each year through the sale of counterfeit and pirated goods. Many efforts have been made over the years to counteract counterfeiting, the latest being a new European Regulation designed to improve the protection available against counterfeit and other goods infringing intellectual property rights. The regulation came into force on 1 July 2004, replacing the European Communities (Counterfeit and Pirated Goods) Regulations, 1996.

The Regulation allows any owner of a trademark, copyright or patent to make an application to customs officials requiring them to look out for any counterfeit or pirated versions of their products being imported into Ireland and to seize these products at the point of entry into the country. Clothing manufacturers were the first to avail of the provision and are using this new process as a filter to reduce the evergrowing range of counterfeit branded clothes. The benefits of the regulation are far reaching and are applicable to almost every business which has a name or a product to protect.

So how do you make a customs application to protect your intellectual property rights?
Firstly, you must qualify as a “right-holder”. This means that you must be the holder of a trademark, patent, copyright or related right. Once you qualify, you have the right to request action by the customs authorities in any or all of the European Union Member States.

The application should be made in writing to the relevant customs department who will give you a prescribed form. You will be required to provide some very particular information that will be used to identify the goods in question. It is very important to be aware that you will also be asked to make a declaration accepting liability in the event that the action is discontinued or the goods are not actually infringing your rights.

One of the benefits of this procedure is that there is no fee for lodging the application. More importantly, you may be asked to indemnify customs for any costs, including storage costs if applicable.

Once the application is accepted by customs, they will specify the period over which they will monitor imported products for any possible counterfeit or pirated version of your product. It will probably not exceed one year, however it may then be extended by the right-holder.

If infringing/suspicious goods are detected, the importer of the goods and you (as the right-holder) will both be notified by customs. You will most likely receive information from customs relating to the nature and quantity of the goods and you may also be informed of the identity of the importer for the purpose of investigating any infringement.

You then have ten days (or three days in the case of perishable goods) to inspect the goods held by customs, or a sample of them, and confirm in writing to them that the goods are counterfeit.

If the importer accepts that the goods are counterfeit, or does not deny the allegation within 10 days of notification, the goods are destroyed by customs at your expense (which in almost all cases will be minimal in terms of the loss of profit that you have just saved) and this will be the end of the matter without any further expenditure incurred.

However, the importer may contest the allegation and object to the destruction of the goods. If this occurs you must (within the 10 days (or 3 days) above) have initiated legal proceedings to determine that your right has been infringed. Customs must be notified that you have initiated proceedings within this time. In such a case, the goods will not automatically be destroyed, but will be stored pending the outcome of the legal proceedings.

During this time, it is possible for the importer to obtain release of the goods on provision of security that will protect you should the goods turn out to be infringing. However, before releasing the goods to the importer, customs must have received notification from you that proceedings have been initiated to determine whether there is infringement under national law.

Even if you have not submitted an application, if customs have sufficient grounds for suspecting that a consignment of goods infringes intellectual property rights, the goods may be detained for a period of 3 working days to enable the right-holder to submit an application for action by customs. If you are notified by customs that a consignment is being held which may be infringing your rights, you must submit an application in the manner outlined above within that time.

This Regulation may prove to be the most significant development yet in the battle against counterfeiting and piracy. As a result, all brand owners now have in their possession a simple, economical and effective instrument to prevent them suffering any further loss of profit and even reputation at the hands of cheap imitations. Consider lodging an application now to put a stop to the problems before they start.

David Phelan: dphelan@hayes-solicitors.ie
Therese Gunning: tgunning@hayes-solicitors.ie December 2004