ECJ rules on imposition of penalties within simplified customs procedure

European Union
In Schenker SIA v Valsts ienemumu dienests (Case C-93/08, February 12 2009), a reference for a preliminary ruling by the Augstakas tiesas Senata Administrativo lietu departaments (Latvia), the European Court of Justice (ECJ) has held that the initiation, with the agreement of the IP rights owner and the importer, of the simplified procedure under Article 11 of the EU Customs Regulation (1383/2003) does not deprive the national authorities of the power to impose a ‘penalty’, within the meaning of Article 18 of the regulation, on the parties responsible for importing the goods.

Customs agent Schenker SIA, in its own name and on behalf of the consignee of the goods, Rovens SIA, released goods bearing the trademark NOKIA for free circulation. The Riga Customs Office had inspected and detained the goods on the suspicion that they were counterfeit. Nokia Corp, the owner of the trademark NOKIA, examined samples of the goods and confirmed to the customs authorities that the goods were counterfeit. Nokia and Rovens then reached an agreement with regard to the destruction of the goods at Rovens's expense under the simplified procedure set forth by Article 11 of the regulation. The agreement was also sent to the customs authorities.
Based on Nokia's opinion, the customs authorities decided that Schenker, in its role as 'declarant', had infringed Articles 9 and 16 of the regulation and committed an 'infringement' within the meaning of Article 201.12(2) of the Code of Administrative Offences. The customs authorities thus imposed a fine of Lats500 on Schenker. Having unsuccessfully challenged the decision before the tax authorities and the Administrative District Court, Schenker appealed to the Regional Court. The court held that Article 11 of the regulation was not applicable, as the agreement for the destruction of the goods was not reached until after the customs authorities had carried out the inspection. Schenker appealed on a point of law to the Supreme Court, which stayed the proceedings and referred a question to the ECJ for a preliminary ruling.
The ECJ held that since Article 18 of the regulation requires that the member states introduce penalties in case of infringement of the regulation, the initiation of the simplified procedure did not deprive the competent national authorities of the power to impose a penalty on the responsible parties. The ECJ took into account the objective of the simplified procedure, as set forth in Recital 9 to the preamble of the regulation - namely, that the procedure was introduced to make the application of the regulation easier for customs authorities and IP rights holders by allowing the destruction of the goods without there being any obligation to establish that an IP right had been infringed. The ECJ concluded that the destruction of the goods following an optional procedure which has been agreed by the trademark owner and the importer cannot be considered as a penalty within the meaning of Article 18 of the regulation.
The decision strengthens the position of IP rights holders in their fight against counterfeiting.
Frauke Bronsema and Florian Schwab, Boehmert & Boehmert, Munich

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