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Tackling the importation of counterfeit goods - new simplified Customs procedure

16 April 2010

A new, simplified procedure for HMRC officers dealing with goods suspected of infringing an intellectual property (IP) right will come into effect today, 16 April 2010. The new procedure will help IP rights holders to avoid bringing full infringement proceedings, even when a response is not received from the importer.

In June 2009, HM Revenue & Customs (HMRC) changed the mechanism by which they deal with suspected counterfeit goods detained at the border. This revised procedure was introduced following the case of Her Majestys Revenue and Customs v Penbrook Enterprises Ltd [2008] NIMag2). Regrettably, the practical consequence of this new approach was that, in many cases, absent co-operation from the importer meant rights holders had no choice but to either allow HMRC to release the detained goods or to bring full infringement proceedings against the importer in the High Court or Patents County Court.

Historically, HMRC had been prepared to seize items in reliance on a short witness statement from the rights holder, confirming that the detained goods were in breach of the IP rights. If the importer objected to their destruction, HMRC would launch condemnation proceedings in the local magistrates court for a determination on whether the goods had, in fact, breached the IP rights. This provided rights holders with an effective and cost efficient anti-counterfeiting tool.

However, following a detailed analysis of this policy in Penbrook, the court took the view that existing HRMC practices did not comply with the EU Customs Regulation: specifically, the burden of proof should be on the rights holder to confirm the infringing nature of the goods by taking legal proceedings.

So what has changed?

In view of the deficiencies in this regime, Parliament introduced The Goods Infringing Intellectual Property Rights (Customs) (Amendments) (No. 2) Regulations 2010, which establish a new simplified procedure, so that if the importer does not specifically oppose the destruction of the detained goods within the time limit, HMRC may treat the detained goods as abandoned for destruction.

How can we help?

The new simplified procedure will be applicable to all goods detained on or after 16 April 2010. Browne Jacobson offers a fixed cost anti-counterfeiting protocol which has been enhanced to reflect the new procedure.

Protocol for responding to notification that suspected infringing/counterfeit goods have been detained by HMRC

  • Notification by HMRC that suspect goods have been detained ("Notification Date"). Via this notification the rights holder will be provided with information about the consignor and importer and details of the suspected counterfeit goods (which may include samples or photographs). These details should be sufficient to enable us to assess whether the goods are, indeed, counterfeit.
  • Within two working days of receiving the above notification, we will send a letter to the importer asserting the clients intellectual property rights, notifying it of the infringement and inviting it to confirm, within ten working days of the Notification Date, that HMRC may dispose of the goods. At the same time, we will provide HMRC with a copy of this correspondence and request an additional ten working days by which to notify HMRC of initiated proceedings.
  • If the importer fails to object to destruction of the goods within ten working days of the Notification Date, we will confirm to HMRC that none of the interested parties have specifically opposed the destruction of the goods within the specified period. Typically, HMRC will then treat the goods as abandoned under the new simplified procedure and they will be destroyed (at the rights holders cost).
  • In the unlikely event that we receive a response from the importer claiming that the goods are authentic, we will issue proceedings in the Patents County Court for trade mark infringement seeking, amongst other things, a declaration that the items are counterfeit and that the HMRC be directed to destroy the goods detained. We will then send a witness statement to HMRC confirming that proceedings have been issued (who will continue to detain the goods pending determination of the proceedings) and, once processed, serve a copy of the sealed claim form on the defendant.
  • Once served with formal proceedings, the defendant will have 14 days to acknowledge service and (assuming service is acknowledged) a further 14 days to file a defence. We anticipate that, in the majority of cases, no acknowledgement will be filed and it will be possible for us to apply to court for Judgment to be entered in default (essentially a purely administrative process). If a defence is filed, we will advise as to how proceedings may be best (and most economically) resolved, which may include an application that judgment be entered summarily.

If the claim is defended, which we anticipate will be the exception rather than the norm as importers of counterfeit goods are unlikely to wish to be drawn into court proceedings, it will be necessary to take those proceedings forward in the usual way outside the terms of this protocol.

It has been our experience in applying the protocol since July 2009 that in most cases the importer has responded to our letter before action within the timescales and voluntarily forfeited the detained goods. However, this new simplified procedure will now avoid clients having to issue proceedings even when a response is not received.

If you feel that you might benefit from having a similar protocol in place, we would welcome the opportunity to work with you to ensure that your rights are adequately protected. For further information on tackling the importation of counterfeit goods or infringement of intellectual property rights, please contact our team.

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