Supreme Court applies ECJ’s decision in Blomqvist v Rolex

In Blomqvist v Rolex SA (Case 361/2011, May 15 2014), the Danish Supreme Court (Højesteret) has rendered a decision regarding the importation of a single counterfeit watch from China. The Supreme Court ruled in favour of Rolex SA and Manufacture des Montres Rolex SA (Rolex).

On January 27 2010 Martin Blomqvist deliberately bought a fake and counterfeit Rolex watch from a Chinese website. The order was placed and paid for through the website, and the watch was sent to Blomqvist from Hong Kong by ordinary mail. Upon arrival in Denmark, the package was inspected by the Danish customs authorities, which suspected that the watch was a fake Rolex. The customs clearance of the watch was suspended, and Blomqvist and Rolex were informed of the decision.

After having established that the watch was indeed fake and counterfeit, Rolex requested a continuation of the suspension and asked Blomqvist to consent to the destruction of the watch. Blomqvist refused, claiming that the watch had been bought legally since it was for personal use.

Rolex then decided to bring an action before the Maritime and Commercial Court in Copenhagen (High Court level) seeking a court order that Blomqvist should recognise that the suspension by the Danish customs authorities was legal and that the watch could be destroyed without payment of compensation. On November 8 2011 the Maritime and Commercial Court ruled in favour of Rolex.

Blomqvist appealed the judgment to the Danish Supreme Court. The court raised the question of whether an IP right had actually been infringed, as required for the implementation of the Customs Regulation (1383/2003), given that:

1. there must be a breach of an IP right protected in Denmark; and
2. the alleged breach must take place in a member state.

Since Blomqvist had bought the watch for personal use and had not breached Danish legislation, the relevant question was whether the seller infringed Danish legislation (ie, the copyright directive, the trademark directive and/or the trademark regulation). Against this background, the Danish Supreme Court decided to stay the proceedings following the trial proceedings on September 4 2014 and to refer questions to the Court of Justice of the European Union (ECJ) for a preliminary ruling.

In essence, the Supreme Court sought clarification as to whether:

1. counterfeit goods purchased from a non-EU website could be seized and destroyed by Customs in the light of the Customs Regulation requiring an infringement of an IP right within the member state concerned - that is, whether such purchase is considered as a form of distribution to the public or as constituting use in the course of trade; and
2. the goods, prior to the sale, must have been subject of an offer for sale or advertising targeting consumers in the same member state.

On February 6 2014 the ECJ ruled that distribution to the public must be considered proven where a contract of sale and dispatch has been concluded. The ECJ stated that Rolex would have been entitled to claim infringement of its rights if counterfeit watches had been offered for sale by a trader established in a member state. However, Rolex’ rights could also be infringed - even before the goods arrived in the territory covered by that protection - if it was proven that the goods were intended to be put on sale in the European Union, such proof being provided, among other things, where it turned out that the goods had been sold to a customer in the European Union or offered for sale or advertised to consumers in the European Union.

Consequently, the ECJ held that the Customs Regulation must be interpreted as meaning that the holder of an IP 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 the Customs Regulation at the time when those goods entered the territory of that member state, merely by virtue of the acquisition of those goods.

Further, the ECJ stated that it was not necessary for the goods at issue to have been the subject, prior to the sale, of an offer for sale or advertising targeting consumers within the relevant member state.

Following the preliminary ruling by the ECJ, the Danish Supreme Court noted that it was not contested that Blomqvist had bought his watch for his own use. Thus, he had infringed neither the Danish copyright law nor the Danish trademark law. Since Blomqvist had not violated Danish legislation, the relevant question was whether the seller infringed Danish legislation.

In compliance with the ECJ's ruling, the Danish Supreme Court stated that, at the time when the fake and counterfeit Rolex watch arrived in Denmark, Rolex – as copyright and trademark holder – was entitled to protection pursuant to the Customs Regulation. The seller had thus violated Rolex’ copyright and trademark rights in Denmark by selling the watch through an online sales website in a non-member state to Blomqvist as the latter was residing in the territory of a member state. As a result, the suspension of the watch was lawful and destruction of the watch without payment of compensation to Blomqvist was permitted.

Nina Ringen, Rønne & Lundgren, Copenhagen