Product piracy has for many years been a threat for the holders of intellectual property ("IP") rights throughout the world. In Europe, the EU first sought to use customs authorities to help combat product piracy back in 1986 when it introduced a regulation to allow seizure of pirated goods on import into the EU. Although originally limited to combating product piracy, the legislation has been revised on three occasions and now also covers goods infringing patents, whether pirated or not. This provides a powerful weapon for IP rights' owners who are facing either pirated goods or goods infringing their patents, and one which, particularly for patent owners, has remained, surprisingly, relatively unknown and unused.
Product Piracy: An Important Issue
Product piracy relates to counterfeit goods, pirated goods and in a more general sense copycat products. The marketing of those goods creates considerable damage not only to right holders, but also to law-abiding manufacturers and traders—the economy as a whole suffers by lost taxes or employment, for example. Further, those goods in some cases can endanger the health and safety of the consumers (if, for example, pharmaceutical products do not contain their relevant effective ingredients, or if spare parts for automobiles or aircrafts do not work properly).
Counterfeiters and pirates have an unfair advantage over the manufacturers and distributors of the goods they copy because they can avoid much of the costs of research, product development and advertising.
The problem of product piracy is a very significant one. Whilst it is impossible to tell the size of the market in Europe in product piracy, the scale of the problem is evident from the amount of goods that customs seize. Statistics show that EU customs offices in 2008 reported they had detained more than 49,000 cases of goods on suspicion of infringing IP rights, totalling 178 million articles, of which about 20 million were potentially dangerous to the health and safety of consumers.1
It is unsurprising therefore that combating product piracy is a high ranking political aim in the EU, and indeed the EU is currently conducting a consultation on the existing law with a view to updating it again.
How Product Piracy Happens
The influx of pirated goods into economic circulation into the EU follows two main routes:
Professional dealers in counterfeit goods order high volumes of pirated goods and try to place them into usual channels of commerce, such as retail shops. End-consumers are attracted by the low prices offered on the internet at traders' sites (such as www.alibaba.com, www.dhgate.com, etc.) and order goods in limited quantities either for their own use or to make some money by re-selling these goods at, for example, online auctions. Records from seizures show that most of the pirated goods originate from China. Other source countries include Thailand, Hong Kong, India, Turkey, and Vietnam and even countries with highly developed IP protection, such as the USA.
The Existing Legal Framework
Today, the primary legislation is Council Regulation (EC) No. 1383/2003 of July 22, 2003, titled "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" ("CR (EC) No. 1383/2003"),2 which provides for uniform measures throughout the EU, handled by national customs authorities. Besides those pan-EU provisions, national IP law in any of the 27 Member States of the EU may provide for additional measures, although most countries rely on just CR (EC) No. 1383/2003.
CR (EC) No. 1383/2003 is effective in cases where counterfeit goods originate in or come from countries outside the EU. When such goods enter the EU, they are subject to a customs check and are subject to the measures laid out in the regulation. Action can also be taken against infringing goods in the process of being exported, re-exported or leaving the EU (Art. 1 (1) CR (EC) No. 1383/2003).
The enforcement is...