Klaus Haft, Partner, Reimann Osterrieth Köhler Haft Germany Border measures and goods in transit...

Klaus Haft, Partner,

Reimann Osterrieth Köhler Haft

Germany

Border measures and goods in transit

AIPPI 2011 – Forum Workshop VIII

http://www.rokh-ip.com/home.html

Content

A. Introduction

B. Overview on proceedings

C. Details on customs seizures

D. Particularities concerning trade fairs

E.Defences and remedies

F.Conclusion

Priviledged and Confidential 2


A. IntroductionI. General

- Customs seizures provide effective measure in protecting IP rights

- Traditionally strong background in enforcement of trademarks

- In recent years growing number of applications based on patents

- In the EU 43 % of all detained articles found to infringe patents in 2008



A. IntroductionII. Legal basis - Europe

- Under European Community law, intervention of customs authorities governed by Council Regulation (EC) No 1383/2003 concerning customs action against goods suspected of infringing certain intellectual property rights and the measures to be taken against goods found to have infringed such rights (hereinafter referred to as the 1383 Regulation)

- Provisions for implementation laid out in Council Regulation (EC) No. 1891/2004

- Amended by Council Regulation (EC) No. 1172/2007



A. IntroductionII. Legal basis – Europe (cont’d)

• Regulation (EC) No 1383/2003 applies to entry, export and re-export into/from EC (Art. 4, 1, 2) of the following:

• Counterfeit (trademarks) and pirated (copyright, design) goods

• Patent / supplementary protection certificate infringing goods• National or Community plant variety rights infringing goods• Designations of origin or geographical indications infringing

goods



A. IntroductionII. Legal basis – German national law

• Additional national implementation provisions found in individual laws concerning protection of intellectual property rights

• National laws (theoretically) apply on:• Goods in free circulation (in the European Union

moving between Member States)• Non registered trade marks• Utility models and protected semiconductor

products



A. Overview on proceedingsI. European Law

Proceedings following the 1383 Regulation twofold:

- ex officio measures (w/o formal request)

- measures upon application



B. Overview on proceedingsI. European law (cont‘d)

• Suspension of release / detention of goods without formal request of IPR owner (Art. 4 EC) - by customs authorities - upon their discretion prior to application of right-

holder- if sufficient ground for suspicion of infringement - for 3 working days- little relevance for patents



B. Overview on proceedingsI. European law (cont‘d)

• Application for action to central customs authority of Member state (Art. 5 (1), (4) EC; Zentralstelle Gewerblicher Rechtsschutz OFD Nürnberg, located in Munich)

– Use EC-wide standardized application forms (Art. 5(5)): Information regarding the protected right, holder, contact persons (e.g. lawyers); no administrative charges

– Sign declaration re: liabilities and costs if IPR are not infringed (Art. 6)



B. Overview on proceedingsII. German proceedings

• Basic proceeding parallel to 1383 Regulation• 3 Steps: application, seizure, release or destruction:

- application filed with central customs authority

- seizure / detention of goods in import / export situations

- based on „evident / obvious“ infringement

- applicant is given opportunity for inspection of detained goods

- importer may oppose within two weeks following notifictaion

- in case of opposition, applicant must iniate national proceedings



B. Overview on proceedingsIII. Relation of proceedings

• Community law provisions in their area of application take precedence over the national provisions

• National protective provisions only apply:- when mere national action is required and EU

law leaves room, e.g. utility models, unregistered trademark rights

- to the extent that controls take place in internal trade



C. Details on customs seizuresI. Application phase

• Application usually accepted for maximum period of one year (Art. 8 (1))

• Announcement to all local authorities where the goods supposedly cross the border (Art. 8 (2)) by means of Customs Intranet

• Seizure by local customs authority



C. Details on customs seizuresI. Application phase (cont‘d)

• Application for seizure in several or all Member states, Art. 5 (4), if:

• Community Trademark• Registered Community Design• Community Plant Variety Right• Protected Designation of Origin or • Protected Geographical Indication




• Advantage of Art. 5 (4): – Apply for action by customs authorities of

several or all Member states by only one request

– Request is valid for 1 year and renewable– Good experiences according to customs

authorities in Germany, France, UK, Spain, Italy, Netherlands, Poland, Finland, Austria




• Application must contain all relevant information needed to enable the goods in question to be readily recognised, Art. 5 (5)

• Customs do not conduct legal assessment regarding patent infringement; detention/seizure on suspicion alone

• Thus, provision of detailed information (e.g.charac- teristics of original vs. counterfeit product, info on trade channels, means of transportation, specific shipment etc.) essential




• Sole description of product may be sufficient (e.g. SISVEL: all mp3-players)

• Black and white lists very helpful (e.g. all shipments from one known infringer; none of known licensees)

• Customs maintain Intranet database with infor-mation provided

• Customs authorities generally accept training from IP-right holder



C. Details on customs seizureII. Seizure phase

1. General practice– If goods suspected to infringe IPR are identified, right-

holder is informed on kind and amount of such goods (Art. 9), as well as – upon request - addresses of sender, recipient, declarant, holder, owner, origin of goods etc.

– Then: obligation • Of IPR owner to initiate legal procedure• (or of good owner to agree on destruction of goods; however,

corresponding fast track procedure not reduced to practice in Germany)

within 10 (20) working days (Art. 13) (perishable goods : 3 working days)



C. Details on customs seizureII. Seizure phase (cont‘d)

2. Level of evidence

- Following Art. 5 application, customs take action if suspicion established that IP right is infringed by particular goods; sufficient precondition

„predominant likelihood“ of infringement

- German proceedings following sec. 142a Patents Act require higher level: obvious property right

infringement

- As corrective for low standard, the1383 Regulation requires IP right holder to accept liability in case no IPR is infringed by signing declaration, Art. 6




3. Seizure scenarios- (EC) No.1383/2003 applies to any type of entry, export and re-export into/from European Union

- Transit of goods generally not deemed a patent infringement according to German case law (e.g. Federal Court of Justice (BGH), GRUR, 1957, 321 – Taeschner/Pertusin)

- Position subject to criticism: Transit also bears danger that goods, in contrast to initial purpose, are being introduced to national market

- European Court of Justice (ECJ) ruled in re Polo Ralph Lauren/Dwidua and Rolex that transit of pirated trademark material constitutes infringement

- Hamburg District Court adopted ECJ rule for patents; German Appelate Courts do not follow




4. Main proceedings

- regarding main infringement proceedings, Art. 10 of the 1383 Regulation refers to

national law of the Member States

- Standard procedure: initiation of patent infringement proceedings with the competent national courts for establishment of infringement, Art. 13




- However, unclear whether application for preliminary injunction qualifies for such proceedings

- Wording of provision open, leaves room for either interpretation

- Criticism: Preliminary injunction proceedings insufficient; destined to safeguard position not rule out case

- Issue not clarified by case law



C. Details on customs seizureIII. Release of goods

1. Release of goods on provision of security (Art. 14) overview:

- IPR: design right, patent, supplementary protection certificate or plant variety

- Legal procedure initiated within 10 days- Customs formalities completed- Provision of security (sufficient to protect

interests of right-holder)



C. Details on customs seizureIII. Release of goods (cont‘d)

2. Release of goods (Art. 13):- Within 10 (20) days of receipt of notification

of seizure- No legal procedure started- No right-holder‘s agreement to destruction of

goods according to simplified procedure- Completion of all customs formalities



C. Details on customs seizureIV. Criticism

- Complexity of patents makes dissatisfactory that suspension/detention is undertaken on grounds of suspicions/obviousness

- Compensation for easy suspension/detention necessary

- Two possibel approaches:

1. possible encroachment for potential infringer should be accounted (e.g. are goods presumably trade fair goods and will detention put fair attendance at risk?)

2. release for security quick (within hours) without further requirements



C. Details on customs seizureIV. Criticism (cont‘d)

• Customs seizures regime should be amended

• Currently danger of misuse due to lack of substantial infringement control

• Establishment of suspected property right infringement should be left to specialised courts



C. Details on customs seizureV. Damages / unjustified seizures

• The 1383 Regulation does not specifically provide regime for damages

• Art. 6 of the Regulation requires applicant to sign declaration accepting liability for the event that:

– Procedure iniated pursuant Art. 9 (1) is discontinued owing to an act or ommission of the right-holder,

– the goods in question are subsequently found not to infringe IPR



C. Details on customs seizureV. Damages / unjustified seizures

(cont‘d)• Art. 19 (3) of the 1383 Regulation stipulates that liability

of applicant / right-holder shall be governed by law of individual member states

• In Germany unjustified detention and possibel destruction of goods triggers claim to compensation

• Compensation regurlarly is restitution; monetary damages also possible

• The latter may include attorney‘s fees and other expenses associated with unjustified detention



C. Details on customs seizureVI. Licensing negotiations

• Border Seizures may be (and are) used for creation of leverage for licensing negotiations or settlement of pending proceedings

• Of particular relevance in case of standard related IPR where FRAND/antitrust law based claims would otherwise help to lower royalty rates



D. Particularities concerning trade fairsI. Ex ante measures

• Create clear position for evidence by registering IP-right• Application for border measures with the Central Customs

Office • Additionally, helpful to contact local Customs Office

responsible for trade fair• Provide detailed information with application; submit original

product• Appropriate evidence is necessary for showing

infringement; bring evidence to trade fair:– Submission of original documents or certified copies of certificates

for patent, trademark, registered design or utility model is necessary



D. Particularities concerning trade fairsII. Measures taken at fair

• If IPR is infringed right-holder may typically request signing of cease and desist letter or request a court order for preliminary injunction

• Above measures often unsatisfactory, e. g. time consuming, not effective, too slow



D. Particularities concerning trade fairsII. Measures taken at fair (cont‘d)

• Border Seizure Procedures are particularly useful for measures on trade fairs

• Customs may collect all suspicious goods for inspection by IPR owner (including catalogues) before opening of the fair

• Significantly higher efficiency than just relying on preliminary injunction proceedings




1.Former approach:- before fair opened, customs allowed for inspection of

goods at customs‘ premises, provided Art. 5 application

was filed

- upon notice of IP right-holders seizure was undertaken

- practice now abandonded because assembly of fair booths

was significantly aggravated / delayed




2.Current approach:- Local Customs Offices offer inspection of fair (including

individual booths) before opening; Prosecution authorities

not involved

- Such inspection not governed by statutes; discretion of local

Customs Office (e.g. Düsseldorf reluctant, Frankfurt apt to)

- Reserved to IP right-holders who had filed Art. 5 application

- Seizure undertaken upon notice of applicant in order to gain

evidence for criminal proceedings




2.Current approach:- Seizure comprehensive; including catalogues but not booth

- If such seizure is undertaken, applicant must initiate criminal

proceedings

- Approx. 2 days after seizure, follow-up inspection

- New approach proves succesful: attenuation of

consequences for aggrieved party, avoidance of undesired

publicity



D. Particularities concerning trade fairsIII. Example case

• DRUPA 2008 example– DRUPA world’s largest printing equipment exhibition

every 4 years in Düsseldorf– X and Y, two non EU companies producing printing

machines, engaged in several patent litigations – Ex ante: Y filed Art. 5 application for parts of printing

machine which X wanted to exhibit at the DRUPA




• DRUPA 2008 example (c’ted)– At fair: infringing parts of X’s printing machine were

confiscated by customs at DRUPA before opening– Customs rejected X’s motion to immediately release

machine parts; release date set was after end of DRUPA

– X then applied for interlocutory injunction obligating Y to consent to release of detained machine parts

– court turned down motion




• DRUPA 2008 example (c’ted)– Y in turn obtained interlocutory injunction prohibiting X

exhibition of machine parts; in addition court ordered for machine parts to be handed out to bailiff acting as sequestrator

– Customs authorities gave machine parts to the sequestrator

– X could not exhibit machine parts at DRUPA; proceedings on the merits confirmed infringement



E. Defences and remediesI. For the applicant

Appeal according to national law- Regulation (EC) No 2913/1992 establishing the

Community Customs Code: - Appeal (Art. 243)- Procedure determined by Member States (Art. 245)- No suspensive effect (Art. 244)

- In Germany:- Sec. 347 German Fiscal Code- Objection within 1 month- No suspensive effect

- Without practical relevance



E. Defences and remediesII. For declarant, holder or owner

• No defence or remedy against application for customs action; before action is taken, no need for legal relief on behalf of declarant, holder or owner of goods

• Following suspension / detention declarant, holder or owner may appeal

• Appeal can only be based on procedural errors

• Establishment of IPR infringement reserved to main proceedings according Art. 10 of the Regulation

• No interest for legal relief before expiration of Art. 13 period

• After expiration, declarant probably will easier achieve release against security than by way of preliminary injunction



F. Conclusion

• Effective, strong and cheap means for IPR-holders “sharp blade”

• Release for security options need to be enhanced for patent seizures

• Appeal means need to be enhanced



Priviledged and Confidential

Thank You!

41


Klaus Haft, Partner, Reimann Osterrieth Köhler Haft Germany Border measures and goods in transit...

Documents

Transcript of Klaus Haft, Partner, Reimann Osterrieth Köhler Haft Germany Border measures and goods in transit...