ECJ clarifies EU customs rules concerning counterfeit or fake goods sold online from a non-Member State

By Gabriele Accardo

On 6 February 2014 the European Court of Justice issued a preliminary ruling concerning the interpretation of the rules on customs action against goods sold to a resident of a Member State from a website based in a non-Member State that are suspected of infringing certain intellectual property rights and the measures to be taken against such goods.

The case originated from an action brought by Rolex SA and Manufacture des Montres Rolex SA (“Rolex”) against Mr. Blomqvist, a resident of Denmark, concerning the destruction without compensation of a counterfeit watch which Mr. Blomqvist had bought online through a Chinese website which was seized by the customs authorities. The order was placed and paid for through the English website of the seller. The seller shipped the watch from Hong Kong by post. The parcel was inspected by the customs authorities on arrival in Denmark. Based on suspicions that the watch was a counterfeit good, and that there had been a breach of copyright over the model concerned, the customs authorities suspended the customs clearance and informed Rolex and Mr. Blomqvist.

Rolex asked the Maritime and Commercial Court to issue an order seeking consent from Mr. Blomqvist for final seizure and destruction of the watch without compensation. The Court granted Rolex’s claim.

On appeal, the Supreme Court noted that in order for the Council Regulation (EC) No 1383/2003 of 22 July 2003 (the “customs regulation”) to take effect, first, there must have been a breach of a copyright or trade mark right protected in the Member State in which the goods were seized and, second, the alleged breach must take place in that same Member State. But the Supreme Court noted that Mr. Blomqvist had purchased the watch for personal use and thus had not himself breached Danish copyright or trade mark law.

Accordingly, in order to ascertain whether the seller infringed copyright or trade mark law in Denmark by selling and dispatching the watch to a private purchaser with an address in Denmark known to the vendor, the Supreme Court asked the ECJ whether that sale must be considered, in that Member State, as a form of “distribution to the public” or as constituting “use in the course of trade”. The Supreme Court also asked whether goods may be infringing merely by virtue of the sale or whether, prior to the sale, the watch must have been the subject of an offer for sale or advertising targeting consumers in the Member State in question.

In brief, the ECJ held that the customs regulation must be interpreted to mean that the holder of an intellectual property right over goods sold to a person residing in the territory of a Member State through an online sales website in a non-Member State enjoys the protection afforded to that holder by that regulation at the time when those goods enter the territory of that Member State merely by virtue of the acquisition of those goods, without being necessary for the goods at issue to also have been the subject, prior to the sale, of an offer for sale or advertising that targets consumers of that Member State.

The reasoning of the ECJ builds upon existing case law. In particular, the ECJ recalled that EU law requires that the sale be considered, in the territory of a Member State, to be a form of distribution to the public within the meaning of the copyright directive, or use in the course of trade within the meaning of the trade mark directive and the Community trade mark regulation, and distribution to the public must be considered proven where a contract of sale and dispatch has been concluded. The ECJ clarified that such a situation is not comparable to that of goods on offer in an online marketplace (see Newsletter 4-5/2011, p. 7, and Newsletter 6/2011, p. 7, for additional background).

While there was no doubt that Rolex would have been entitled to claim an infringement of its rights if the counterfeit watch had been offered for sale by a trader established in that Member State (i.e. Denmark), in the circumstances, the issue at stake was whether Rolex could claim the same protection for its rights where goods are sold from an online sales website in a non-Member State on whose territory that protection is not applicable.

In this respect, the ECJ recalled that the mere fact that a website is accessible from the territory covered by the trade mark is not a sufficient basis for concluding that the offers for sale displayed there are targeting consumers in that territory. Nonetheless, the intellectual property rights protected by EU law may be infringed where, even before their arrival in the territory covered by that protection, goods coming from non-member States are the subject of a commercial act directed at consumers in that territory, such as i) a sale, ii) offer for sale or iii) advertising.

Accordingly, goods coming from a non-Member State can be classified as “counterfeit good” or “pirated goods” where it is proven that they are intended to be put on sale in the EU, such proof being provided, inter alia, where it turns out that the goods have been sold to a customer in the EU or offered for sale or advertised to consumers in the EU.

Consequently, the ECJ held that the mere fact that the sale was made from an online sales website in a non-Member State cannot have the effect of depriving the holder of an intellectual property right over the goods which were the subject of the sale of the protection afforded by the customs regulation, without it being necessary to additionally verify whether such goods were, prior to that sale, the subject of an offer for sale or advertising targeting EU consumers.