AG Cruz Villalón: customs authorities can rule on infringement - if the law lets them

European Union

Advocate General Cruz Villalón has delivered his opinion in Sintax Trading OÜ v Maksu- ja Tolliameti Põhja maksu- ja tollikeskus (Case C-583/12, January 28 2014), a request to the Court of Justice of the European Union (ECJ) for a preliminary ruling from the Riigikohus, the Estonian Supreme Court.

OÜ Acerra, the owner of an Estonian registered industrial design for a bottle, informed the Estonian Tax and Customs Office (the Maksu-ja Tolliamet or MTA) that Sintax Trading OÜ was attempting to supply a product in Estonia in bottles embodying the registered design.

In December 2010 the MTA carried out a supplementary examination of a shipment of 63,700 bottles sent to Sintax by a Ukrainian company. Concluding that the bottles were sufficiently similar to the registered design for it to suspect infringement of IP rights, the MTA detained the suspected goods in a customs warehouse. At the same time, the MTA notified Acerra and asked it for an evaluation of the goods detained. In January 2011 Acerra submitted the requested evaluation to the MTA, claiming that the imported bottles did infringe its IP rights.

Sintax asked the MTA to release the goods. Then, in February 2011, it brought an action against Acerra before the Harju Maakohus (Harju District Court) in which it challenged the validity of Acerra’s industrial design registration.

The MTA refused to release the goods, reminding Sintax that Acerra, having evaluated the bottles, considered them to be identical to its registered design. Accordingly, under the Customs Regulation (1383/2003), the MTA could not release the goods since they were infringing a local IP right and the MTA had no competence to decide whether that IP right was valid.

In March 2011, having asked the MTA again to release the bottles and having received the same response, Sintax brought an action before the Tallinna Halduskohus (Tallinn Administrative Court) to obtain their release. In June 2011 the court ordered the MTA to release them. The MTA appealed to the Tallinna Ringkonnakohus (Tallinn Regional Court), which dismissed the appeal in January 2012. The MTA appealed again, this time to the Riigikohus.

Meanwhile, Sintax’s challenge to the validity of the industrial design was dismissed in December 2011, while the appeal in the proceedings against MTA was pending. That judgment has become final so that the registration of the design is valid.

In December 2012 the Riigikohus stayed the proceedings and referred the following questions to the ECJ for a preliminary ruling:

(1) May the ‘proceedings… to determine whether an intellectual property right has been infringed’ referred to in Article 13(1) of Regulation 1383/2003 also be conducted within the customs department or must ‘the authority competent to decide on the case’ dealt with in Chapter III of the regulation be separate from the customs?

(2) Recital 2 in the preamble to Regulation 1383/2003 mentions as one of the objectives of the regulation the protection of consumers, and according to recital 3 in the preamble, a procedure should be set up to enable the customs authorities to enforce as effectively as possible the prohibition of the introduction into the Community customs territory of goods infringing an intellectual property right, without impeding the freedom of legitimate trade in accordance with recital 2 in the preamble to the regulation and recital 1 in the preamble to implementing regulation 1891/2004.

Is it compatible with those objectives if the measures laid down in Article 17 of Regulation 1383/2003 can be applied only if the right holder initiates the procedure mentioned in Article 13(1) of the regulation for determination of an infringement of an intellectual property right, or must it also be possible, for the effective pursuit of those objectives, for the customs authorities to initiate the corresponding procedure?

The Czech Republic, the Republic of Estonia and the European Commission submitted written observations. No hearing was however requested and none was held.

The advocate general's advice to the ECJ was clear:

"Article 13(1)... has to be interpreted in such a way that it does not exclude member states from empowering customs authorities to conduct the proceedings mentioned in the provision, on condition that the said power is provided for explicitly in national law, the customs authorities act in a manner that ensures their independence and impartiality, the right to be heard is respected and the opportunity for judicial review is granted.

Article 13(1)... has to be interpreted in such a way that it does not exclude member states from providing for the possibility that the customs authorities also formally initiate the proceedings mentioned in the provision themselves."

The reasoning of the courts, in ordering the MTA to release the goods, was not detailed in the advocate general's opinion. Arguably, it is undesirable that a court should be able to order the release of goods which infringe a registered design right (or any other IP right) into the market. The order of the release in one set of proceedings before the validity of the right is determined in other proceedings is another unfortunate example of bifurcation which does nothing to make that doctrine more greatly respected.

Jeremy Phillips, IP consultant to Olswang LLP, London

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