Rights owners may prohibit transit of goods under EU Customs Regulation

In Sisvel SpA v Sosecal (311378/KG ZA 08-617, July 18 2008), the District Court of The Hague has held that a patentee may oppose the transit of infringing goods which have been detained by the customs authorities under the EU Customs Regulation (1383/2003). Following the decision of the European Court of Justice (ECJ) in Montex Holdings Ltd v Diesel SpA (Case C-281/05), it had been questioned whether it was still possible to prohibit the transit of infringing goods under the regulation.

 

In the present case, Sisvel SpA, acting on behalf of Philips Electronics NV, seized approximately 6,000 MP3 and MP4 players which were detained by the Dutch Customs. Sosecal, a Brazilian company, filed a civil action before the District Court of The Hague in order to lift the seizure. According to Sosecal, the MP3 and MP4 players were manufactured in China and were intended to be shipped to Brazil via Schiphol Airport (Amsterdam). Sosecal argued that, under Montex, an IP rights owner cannot seize infringing goods during the course of their transit to another country. In Montex, the ECJ had held that, in principle, a trademark owner cannot invoke its trademark rights to take action against goods in transit. Since the goods in Montex (jeans bearing the DIESEL trademark) had been detained under the regulation, certain commentators had concluded that IP rights owners could no longer rely on the regulation in the case of goods in transit.

 

However, the District Court of The Hague disagreed with this conclusion. According to the court, the regulation creates the legal fiction that the goods have been manufactured in the country of detention. Therefore, if the IP rights owner has a cause of action under the IP laws of the country of detention, the owner also has a cause of action where the goods in transit have first been detained by the customs authorities under the regulation. Since, under the Dutch Patent Act, a patentee can oppose the manufacture of infringing goods on the Dutch territory (regardless of whether the goods are intended for export), the court held that Sisvel was entitled to seize the infringing MP3 and MP4 players regardless of whether they were on transit to Brazil.

 

The court pointed out that, to a large extent, the regulation would be deprived of its purpose if it could no longer be relied on in the case of goods in transit. The court deemed it unlikely that this had been the intention of the ECJ in Montex.

 

The decision is significant in that it confirms that IP rights owners may rely on the regulation in order to take action against infringing goods in transit. It should be noted that the decision was rendered in the course of preliminary injunction proceedings and thus illustrates only the preliminary views of the courts. However, as the motives of the decision were very detailed, it is expected that the court will reach the same conclusion on the merits.