World's largest haul of counterfeit goods seized

German customs authorities in Hamburg have seized what could be the world's largest haul of counterfeit merchandise, amounting to 117 shipping containers of products. "Based on the overall value and the number of counterfeit items seized in the 117 containers, this could be the largest counterfeit seizure worldwide," a Customs statement said.

Nearly 950,000 pairs of fake Nike sports shoes (contained in 101 shipping containers) and over 76,000 counterfeit watches as well as roughly 1,500 fake toys add up to a genuine brand equivalent value of over €380 million or $490 million, according to a statement issued by Customs.

Hamburg Customs has already begun shredding the estimated 1,500 tons of shoes and textiles. The destruction procedure is based upon Section 18 of the German Trademark Act (providing for the right of the trademark holder to have unauthorized reproductions destroyed). However, there are a number of challenging legal requirements to meet before the destruction of counterfeit goods can be allowed.

First, the trademark owner receives a so-called notice of 'suspension of delivery' (Aussetzung der Überlassung), a form issued by Customs. The right owners can subsequently apply for samples of the counterfeit goods to assess whether they are, in fact, fakes. They then have a window of 10 days (extendable by an additional term of 10 days) pursuant to Article 13 of Council Regulation 1383/2003 in which to act.

In order to facilitate destruction, consent of the owner of the merchandise or a court order replacing such consent is required. Trademark owners can thus either try to reach an out-of-court agreement with the merchandise owner or seek a decision in court.

Customs authorities are entitled to surrender the goods to the merchandise owner if no proof of consent or proof of a court action initiated by the trademark owner has been filed with Customs within 10 days (or 20, if the deadline is extended).

However, bringing an action in court does not automatically entitle the trademark owner to have Customs destroy the goods, since this can only be granted in the final decision handed down by a court. That said, trademark owners could consider applying for a preliminary injunction against the owner of the goods. The injunction, which can be granted within one or two days and, under certain circumstances, on an ex parte basis, cannot be the sole basis for destruction, since preliminary relief under German law will only extend to surrendering the goods to the custody of the marshal of the court (Gerichtsvollzieher). However, a solution favourable from a practical viewpoint would be to have the owner of the goods sign a so-called 'final declaration', which acknowledges the preliminary decision as final and waives, among other things, the right to appeal the injunction. This declaration finally entitles the right holders to destruction of the counterfeited goods.

Border seizures are an effective tool in combating counterfeiting, yet they remain legally challenging and mandate timely and well-considered action by trademark owners.

Peter Ruess and Frauke Dirksen, Freshfields Bruckhaus Deringer, Dusseldorf