Procedures and strategies for anti-counterfeiting: Western Balkans
With a population of more than 20 million divided among seven jurisdictions, the Western Balkans has the potential to be a fertile ground for the production and distribution of counterfeit goods. Due to its geographical location, the Western Balkans is well connected to other regions and continents. Sitting at a junction of land and sea transport routes, the area is rapidly becoming a gateway to the EU market. The region includes Croatia, which became the newest EU member on 1 July 2013, as well as Albania, Bosnia and Herzegovina, Kosovo, Macedonia, Montenegro and Serbia, which all hope to accede to the European Union, but have not yet done so. However, they have all concluded stabilisation and association agreements with the European Union.
Local legislation in these countries is similar and is being continuously adjusted to conform to EU law. In turn, EU law is incrementally raising awareness of intellectual property in the region. However, issues still arise in fighting counterfeit goods due to a lack of resources and inaction on the part of the authorities, as well as the absence of mechanisms for implementing regulations.
The relevant legislation in Albania is:
- the Customs Code (102/2014), in particular Article 125(1) regarding customs supervision; and
- the Council of Ministers Decision 651 (10 November 2017) on the implementing provisions of the Customs Code (Chapter 5, Intellectual Property in Customs).
Bosnia and Herzegovina
The relevant legislation in Bosnia and Herzegovina is:
- the Decision on the Implementation of Customs Measures for the Protection of Patent Rights Holders (OG 41/2012);
- the Decision on the Implementation of Customs Measures for the Protection of Trademark Rights Holders (OG 41/2012);
- the Decision on the Implementation of Customs Measures for the Protection of Industrial Design Rights Holders (OG 41/2012);
- the Decision on the Implementation of Customs Measures for the Protection of Rights Holders of Indications of Geographical Origin (OG 41/2012); and
- the Decision on the Implementation of Customs Measures for the Protection of Copyright and Related Rights Holders (OG 41/2012).
The relevant legislation in Croatia is:
- the Act on Implementation of the Customs Surveillance Based on EU Legislation (OG 40/2016);
- EU Customs Regulation 608/2013; and
- EU Commission Implementing Regulation 582/2018 (12 April 2018), amending EU Commission Implementing Regulation 1352/2013 establishing the forms provided for in EU Regulation 608/2013 of the European Parliament and of the Council concerning customs enforcement of IP rights.
The relevant legislation in Kosovo is:
- the Act on Customs Measures for the Protection of Intellectual Property (Zakon Br 06/L-015); and
- the Administrative Guidance for the Application of the Act on Customs Measures for the Protection of Intellectual Property (UA Nr 53/2018).
The relevant legislation in Macedonia is the Act on Customs Measures for the Implementation of the Protection of Intellectual Property Rights (OG 88/2015, 154/2015, 192/2015 and 23/2016).
The relevant legislation in Montenegro is:
- the Customs Act (OG 7/02, 38/02, 72/02, 21/03, 31/03, 29/05, 66/06, 21/08, 1/11, 40/11, 28/12, 62/13 and 71/17); and
- the Regulation on Actions of the Customs Authorities in relation to Goods Suspected of Infringing IP Rights (OG 48/16).
The relevant legislation in Serbia is:
- the Customs Act (OG 18/2010, 111/2012, 29/2015, 108/2016);
- the Regulation on the Application of Measures for the Protection of Intellectual Property at Borders (OG 25/2015, 3/2018); and
- the Act on Special Authorisations for the Protection of Intellectual Property (OG 46/2006, 104/2009).
Other codes and acts also contribute to providing a broader legal framework for the protection of intellectual property in each country. These include the various trademark, patent, industrial design and copyright acts, and criminal and civil procedure codes, as well as criminal and civil codes.
There have been recent developments in Kosovo in terms of compliance with EU legislation. A new Act on Customs Measures for the Protection of Intellectual Property entered into force in May 2018. The main purpose is implementation of the EU Customs Regulation. In addition to the rights already covered, this new law covers trade names and semiconductor topographies. One important change is the abolition of official fees for border protection. Meanwhile, Albania, Serbia and Macedonia are implementing their recently amended legislation covering border protection. A new procedure was established for small consignments of counterfeit goods, which can now be destroyed even without explicit agreement from the rights holder. In the era of e-commerce and mass purchasing of goods via the Internet, a large percentage of counterfeit products are transported in small consignments; the control of such consignments thus represents a substantial challenge to local authorities. However, in practice, small consignment cases cannot yet be considered a success story. Unfortunately, the customs authorities in the region do not check a significant number of postal shipments, so results in this regard have yet to be seen. Technical hindrances are also present. For instance, in Serbia the online portal does not allow brand owners to apply electronically for protection in case of small consignments; to obtain protection in this respect as well, brand owners must submit an additional paper application.
New regulations in Albania, Serbia and Macedonia further require rights holders to provide more detailed information to customs authorities, including specific data on authentic goods, images and other supplementary information relevant for assessing the risk of IP infringement.
Border measures in all seven countries are similar in terms of formalities. The existence of registered rights is a prerequisite and customs applications must be filed with a power of attorney and an indemnity declaration. In most countries, the procedure stipulated is straightforward, giving rights holders the opportunity to prevent counterfeit goods from entering the market by applying a simplified procedure and (in the absence of objections from the infringer) permitting them to presume assent to the destruction of goods.
Unlike customs applications based on trademarks, those filed based on copyright are rare in the Western Balkan region. However, significant changes in practice occurred during 2018 – Montenegro and Kosovo granted the first border protection recordals in their history, and other countries in the region increased the number of these types of recordal.
Any type of registered right is acceptable (ie, national, EU and/or international), as long as it is valid in the relevant territory. However, special care should be taken in relation to Kosovo: as it is party to no international treaty, the designation of international registrations of IP rights is not possible. Where (as is not uncommon) a trademark application filed before the national IP office has not yet been processed, even if it was filed more than four years previously, only partial enforcement of IP rights and anti-counterfeiting actions is possible. In addition, when it comes to applying for border protection based on copyright, in most of the Western Balkan countries applicants must submit evidence of such right, which sometimes includes extensive documentation (eg, a chain of title showing copyright ownership). The notable exception to the rule is the Albanian Customs Office, where only printed promotional material that has been certified and legalised is required to file a customs application based on copyright. This regime is the most liberal in the region. However, it has developed over time: the Customs Office’s initial stance was that an applicant had to deposit its artwork with the Albanian IP Office. Further discussion of this issue, including the argument that such requirement would not be in line with the nature of copyright, resulted in the liberal approach now taken.
Ex officio seizures are relatively common. In such cases, local customs authorities will supply the necessary information to rights holders which are unaware of the existence of infringing goods. Most customs authorities in the area are vigilant when sending out notifications of ex officio seizures. This is especially true in Croatia, Kosovo and Macedonia. However, ex officio seizures provide a rather short deadline for undertaking all necessary steps. This means that the customs application usually needs to be set up within three to four business days of notification. Nevertheless, these seizures serve as a warning to rights holders that their goods, reputation and recognition on the market may be in jeopardy without them even being aware, and that proper border measures and strategies are therefore required.
Setting up protective measures at the border is the most effective and efficient tool for preventing counterfeit goods entering any market. It has been proven over the years that other measures (ie, civil actions, market inspection applications and/or police actions) are not remotely as efficient as border measures and are of limited effect in comparison. Nevertheless, market inspection applications are particularly efficient in Serbia and many rights holders use this tool in conjunction with border measures. It is not uncommon for the market inspectorate to organise raids throughout the entire market, which often result in several thousand seized counterfeit goods (labelled with marks owned by a single rights holder). This legal tool is also available in Montenegro, but further efforts are needed to increase its efficiency.
Market inspection applications based on copyright have not yet become common practice in Serbia, but the authorities have taken a major step towards change by regularly inviting market participants (ie, large brand holders) to file such applications. This applies mostly to the film and cartoon industries.
Police in the region regularly collect information relating to the infringement of IP rights and take various steps to curb such activity. This includes gathering the necessary information, documents and other evidence from individuals and corporations, as well as taking urgent investigative action (eg, searching premises or computers). However, this practice is not uniform across the region (or even within each jurisdiction), meaning that the police are more diligent in some cities than in others. In cases where there is a reasonable suspicion that a prosecutable criminal offence has occurred, police will file criminal charges with the State Attorney’s Office.
The State Attorney’s Office will undertake the necessary actions to detect crimes and find the perpetrators, as well as receiving criminal complaints, considering their content, collecting additional necessary information and rendering decisions. Apart from pecuniary penalties, imprisonment for a term of between three and eight years may apply, depending on the jurisdiction.
Courts are entitled to issue search warrants to obtain and preserve evidence until the final stage of a trial. They may also order the taking of samples and may temporarily seize goods until the verdict becomes final. Permanent seizure of counterfeit goods is possible if it is ordered by verdict. Compensation is available to rights holders if sought, although in some countries in the region this must occur in separate civil proceedings.
Criminal charges may be filed by legal or natural persons that have some knowledge of the offender and/or criminal offence, or by a person that has suffered as a result of the offence. Misdemeanour liability for the infringement of IP rights is prescribed by the particular statutes governing the relevant areas of IP law.
In practice, criminal prosecution is ineffective in all countries of the region, even if sensitive goods (eg, medical devices) are being counterfeited.
Most civil enforcement cases are brought on the basis of trademark infringement and are resolved through a simplified procedure before the customs authorities. If an alleged infringer files an objection before the customs authorities, the rights holder must file a civil action to prevent the goods from being released. Interim injunctions and provisional measures are available and may be requested at the pre-trial stage or when judgment is being passed. Where irreparable damage could occur, interim injunctions may be rendered ex parte. Such injunctions usually include:
- an order to the opposing party to cease or desist from the infringing acts (the court may also issue such an order against an intermediary whose services are being used by a third party to infringe a trademark); and
- an order for the seizure or removal from the market of the goods to which a trademark is unlawfully attached.
In addition, the court may order the seizure of movable and immovable property belonging to the opposing party that is not directly related to the infringement, including a freeze on its bank accounts and other assets.
In general, rights holders can make several claims against an infringer, although this may vary depending on the jurisdiction. Typical claims include requesting:
- proof of infringement and its cessation;
- seizure and destruction of the infringing goods;
- payment of damages, usual compensation and unfair profits;
- publication of the judgment; and
- provision of information.
Court proceedings in the Western Balkans are relatively inexpensive compared to the cost of IP infringement cases worldwide, but can be lengthy (from one to seven years, depending on the jurisdiction). Lengthy proceedings and the enforcement of final decisions are some of the major issues yet to be resolved in the region. Aside from anti-counterfeiting, there have been positive recent developments in Kosovo and Montenegro, where the first judgments were finally passed regarding parallel imports; brand owners can thus now organise their market presence with one fewer problem on their shoulders. This judgment will certainly have an impact on the reasoning of the courts in other countries of the region.
Several countries in the region have established special computer crime units within the police to facilitate the investigation of online counterfeit issues. The resources afforded to these units are still modest, but positive steps have been seen in cooperation between the private sector (eg, courier service providers, internet service providers (ISPs) and law firms) and the public sector.
In Serbia, for example, a special prosecutor for computer crime, together with the special computer crime unit within the police, deals with the most severe cases of counterfeiting (eg, several thousand counterfeit medicines were withdrawn from the market in one such action). In Croatia, special task units within the Ministry of Finance cooperate with the police to act on information provided against persons offering advertisements for counterfeit goods. When enforcing IP rights online, the general IP legislation is applied.
Unfortunately, the efficiency of anti-counterfeiting measures against online activities cannot be relied on. The police are unable to stop the trade of counterfeit goods on the Internet. Online advertisements are posted under pseudonyms and ISPs are not liable for the content of these advertisements. The most frequently counterfeited goods include drugs and medical products, food, machinery and spare parts, electronic products, luxury products, clothing and fashion accessories, entertainment products, software and toys.
Finally, in Serbia, Bosnia and Herzegovina and Croatia, local e-commerce and bidding portals have made efforts towards adopting good practices by supporting takedown notices and removing suspicious offers themselves if they suspect that the offered goods are counterfeit. Thousands of posts offering fake goods are removed this way each year. Local chambers of commerce and other similar forums strongly support this practice.
The key to setting up proper and effective preventive measures is to understand the territory and the people working in a particular environment. This primarily means that rights holders should be well informed of the particularities of the jurisdiction of interest, as well as the possible steps which should be taken and the various ways in which an issue may be resolved. This will ensure that rights holders properly protect their rights while keeping expectations in line with the local situation.
A proper legal framework has been set up in all of the Western Balkan states, but enforcement still needs focus. In Serbia and Macedonia, for example, a vast number of ex officio seizures of counterfeit goods are made, but rights holders are often not interested in enforcing their rights to the proper degree.
A more zealous approach on the part of rights holders would reinforce the anti-counterfeiting efforts being made by the authorities. On the other hand, in some other countries in the region, a more proactive approach by government bodies is required so that counterfeiting can be combated properly. In particular, local authorities should intensify efforts to combat online copyright infringement, particularly in relation to the software, film and music industries. The resolution of existing problems requires an efficient, systematic approach, and should include professional training of competent bodies, development of mutual cooperation strategies and strengthening of capacity.
A professional approach and communication between rights holders and local authorities are both highly recommended in matters of IP rights protection. Rights holders are advised to consider the available measures across the region. The implementation of a strategy that recognises the root of the problem and provides long-term solutions should be contemplated. The need for a swift response should be seen as an incentive rather than an obstacle to solving the problem of dealing with counterfeit goods. The proper approach is not to try to solve problems at a micro level (eg, focusing on only one shipment in Montenegro), but rather to implement a border strategy covering the wider region. The countries of the Western Balkans should be considered as a single region. In the end, cutting the problem off at the root is far more efficient than waiting for it to blossom.