Blomqvist v Rolex continued: Supreme Court issues remarks in counterfeit case

Denmark

Following its 2012 hearing in Blomqvist v Rolex (361/2011), the Supreme Court decided to refer preliminary questions to the European Court of Justice (ECJ). This matter attracted worldwide attention. On February 25 2013 the Supreme Court issued a document detailing these questions for reference. The court has also issued a number of remarks to the decision made in the appealed judgment.

Customs action against goods suspected of infringing certain IP rights is governed by the EU Customs Regulation (1383/2003), which aims to prevent counterfeit and pirated goods being brought into the market. Article 2(1) divides goods that infringe an IP right into:

  • 'counterfeit goods' - those that infringe a trademark right (Paragraph a); and
  • 'pirated goods' - those that infringe a copyright (Paragraph b).

Following a request from a rights holder, the customs authorities are entitled to suspend the release thereof or detain goods if they are under suspicion of violating an IP right (Article 9(1) of the regulation). The subsequent decision of whether a violation has taken place in Denmark is made by the ordinary courts (Article 9(2) and Section 4 of the Act on Pirate Copies (1047/2005)). If it is ascertained that the goods violate an IP right, they will be forfeited to the exchequer for destruction without compensation (Article 17 of the regulation and Sections 4 and 6 of the act, in line with the Executive Order on Trademarks (12/2006)).

Under Articles 10 and 13(1) of the regulation, the decision of whether a violation of intellectual property has occurred must be made on the basis of the national law of the member state in which the goods are located. According to the Supreme Court, this choice of law clause refers to the rules on intellectual property in the member state in question. The decision of whether a violation has occurred in the present case depended on the Danish rules on intellectual property, including Section 2 of the Act on Copyright and Section 4 of the Act on Trademarks. However, these rules must be interpreted in light of EU law.

In its December 1 2011 judgment in Philips and Nokia (Joined Cases C-446/09 and C-495/09), the ECJ refused to uphold an argument under which goods in customs bond or an external shipment that has been made subject to an application for action according to the regulation, are considered as manufactured in the member state in which the application has been made, even if it is uncontested that the manufacture has taken place in a third country (especially Premise 69).

Contrary to this argument, which appears to be the basis of the Maritime and Commercial Court judgment on the matter, the Supreme Court argued that the regulation (including Observation 8) does not imply that the Danish rules on intellectual property should be extended to include violations committed in other countries. Consequently, the Supreme Court argued that, in order for the regulation to apply, the violation must be of a copyright or a trademark right that is protected in Denmark and must have taken place in the country.

It was uncontested that Blomqvist bought the watch for private use and therefore did not violate the Act on Copyright or the Act on Trademarks. The question remained whether Fashion Watch Online violated Rolex's copyright or trademark right in Denmark.

The Supreme Court found that understanding of the term 'distribution to the public' - as mentioned in Article 4(1) of the EU Copyrights Directive (2001/29/EC) - gives rise to doubt, particularly as to whether it is a necessary condition that the seller direct its advertising for a product towards the public in the buyer's member state or simply for it to sell the product to a consumer in the member state and itself effectuate the shipment to the buyer.

On September 18 2012 the court therefore referred a number of preliminary questions to the ECJ.

Question 1 reads as follows:

"1. Should Article 4(1) of the [Copyrights Directive (2001/29/EC)]  be interpreted such that it must be presumed to imply 'distribution to the public’ in a member state of a copyright protected product that a business via a home page in a third country enters into an agreement on sale and shipment of that product to a private buyer with an address in the member state known to the seller where the item is copyright protected, receives payment for the product and effectuates the shipment to the buyer on the address agreed upon or is it in that situation also a condition that the item before the sale has been part of a sales offer or an advertisement aimed towards or shown on a homepage aimed at the consumers in that member state to which the item is delivered?"

The Supreme Court wished the ECJ to clarify whether 'distribution to the public' by cross-border sale of a product via an internet shop's homepage in a situation in which a shipment of the item to the buyer in the state in question has been effectuated by the seller itself, implies that the seller - apart from the fact that an agreement on sale has been made and that the seller has effectuated the shipment - has aimed its advertisement towards the public in the member state of the buyer. The question must be seen in the light of the recent ECJ judgments in Philips-Nokia (premise 79) and Donner (C-5/11, June 21 2012, premise 26-30).

Furthermore, the Supreme Court argued that understanding of the term 'the course of trade' - as mentioned in Article 5 of the Trademarks Directive (2008/95/EC) and Articles 9(1) and (2) of the Community Trademark Regulation (207/2009) - gives rise to a doubt as to whether it is a necessary condition that the seller aim its advertisement for a product provided with a trademark towards the public in the buyer's member state.

Questions 2 and 3 read as follows:

"2. Should Article 5, (1) and (3) in [the Trademarks Directive (2008/95/EC)] be interpreted such that it must be considered to be use in ‘the course of trade’ of a trademark in a member state that a business via a homepage in a third country enters into an agreement on sale and shipment of a product which has been provided with the trademark to a private buyer with an address in the member state where the trademark is registered known to the seller, receives payment for the product and effectuates the shipment to the buyer on the address agreed upon, or is it in this situation also a condition that the item before the sale has been part of a sales offer or an advertisement aimed towards or shown on a homepage aimed at the consumers in that member state?"

"3. Should Article 9, (1) and (2) in [the Community Trademark Regulation (207/2009)] be interpreted such that it must be considered to be ‘use in the course of trade’ of a trademark in a member state that a business via a homepage in a third country enters into agreement on sale and shipment of a product which has been provided with the EU trademark for a private buyer with an address known to the seller in a member state, receives payment for the product and effectuates shipment to the buyer at the address agreed upon, or is it in that situation also a condition that the product before the sale has been part of a sales offer or an advertisement aimed towards or shown on a homepage aimed at the consumers in that state?"

The Supreme Court wished the ECJ to clarify whether 'use in the course of trade' of a trademark in the cross-border sale of an item via the homepage of an internet shop pre-supposes that the seller has aimed its advertisement towards the public in the buyer's member state, even in a situation in which the shipment of the product to the buyer under the use of a trademark that enjoys protection in the relevant state has been effectuated by the seller, or whether it is sufficient that, for there to be 'use in the course of trade', an agreement of sale and delivery to the buyer's member state be made under use of the trademark.

The questions must be seen in the light of recent ECJ judgments in L'Oréal (C-324/2009, July 12 2011, premise 145) and Philips-Nokia (Premise 79).

Questions 4 and 5 read as follows:

"4. Should Article 2 (1) paragraph (b) in [the Customs Regulation (1383/2003)] be interpreted such that it is a condition for the use in a member state of the provisions on prevention of transition to free circulation and destruction of ‘pirated goods’ that ‘distribution to the public’ has taken place in the member state after the same criteria as stated in the reply to question 1?"

"5. Should article 2 (1) paragraph (a) in [the Customs Regulation (1383/2003)] be interpreted such that it is a condition for the use in a member state of the provisions on prevention of transition to free circulation and destruction of ‘counterfeit goods’ that ‘use in the course of trade’ has taken place in the member state after the same criteria as stated in the reply to questions 2 - 3?"

The Supreme Court argued that, in order for it to apply the rules in the Customs Regulation and deem goods to be pirated or counterfeit, 'distribution to the public' and 'use in the course of trade' must have taken place, as mentioned in Question 1 and Questions 2 and 3, respectively. With Questions 4 and 5, the court wishes the ECJ to clarify this matter.

Mads Marstrand-Jørgensen, MAQS Law Firm, Copenhagen

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