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 fertile ground for the manufacture 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, an EU member state since 1 July 2013, as well as Albania, Bosnia and Herzegovina, Kosovo, North Macedonia, Montenegro and Serbia, all yet to accede to the European Union.
Legislation across these countries is very similar and is being continuously modified in order to comply with EU legislation. In turn, EU legislation has had an incremental affect in raising awareness of IP rights across the region. Despite a strong legislative framework, issues still arise when it comes to dealing with counterfeit goods, due to the lack of resources and lethargy of state authorities, as well as the lack of efficient mechanisms for implementing regulations.
The relevant legislation in Albania is:
- the Customs Code (102/2014), in particular Article 10(2) regarding the powers of the customs authorities and 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 Republic of North Macedonia
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), which is expected to be amended, particularly the sections pertaining to IP rights protection (such amendments are expected to have an impact on the Regulation on Actions of the Customs Authorities in relation to Goods Suspected of infringing IP Rights); 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 95/2018);
- the Regulation on the Application of Measures for the Protection of Intellectual Property at Borders (OG 25/2015, 3/201838/2019); and
- the Act on Special Competence for the Protection of Intellectual Property Rights (OG 46/2006, 104/2009).
Other specific codes and acts also contribute to providing a broader legal framework for the protection of IP rights in each of these countries, including the various trademark, patent, industrial design and copyright acts, as well as criminal and civil codes.
The most recent developments regarding compliance with EU legislation are from 2018 when a new Kosovo Act on Customs Measures for the Protection of Intellectual Property entered into force. The act largely incorporated the EU Customs Regulation, which resulted in extended coverage of IP rights. Consequently, in addition to the rights already covered, this new act now also covers trade names and semi-conductor topographies and has abolished official fees for border protection.
Recently amended legislation in Albania, Serbia and Macedonia pertaining to more efficient protection at state borders allows for new measures regarding small consignments of counterfeit goods, meaning that such small consignments can now be destroyed automatically (ie, without the explicit agreement of the rights holder). In the e-commerce era, the mass purchasing of goods online has led to a significant percentage of counterfeit products being transported in small consignments. Control of such consignments represents a substantial challenge to local authorities. Nevertheless, it should not necessarily be considered a counterfeit success story, even though postal shipments remain largely overlooked by customs authorities in the region. Technical issues are present – for example, Serbia’s online portal does not allow brand owners to apply electronically for the protection of small consignments. The protection of such small consignments is available via a traditional paper application only.
New regulation in Albania, Serbia and Macedonia also requires rights holders to provide more detailed information to customs authorities, including specific data on authentic goods, images and other ancillary information relevant for the risk assessment of IP infringement.
Formalities required for the initiation of border measures are substantially similar in all seven countries of the Western Balkans region. The existence of registered rights is a prerequisite, proof of which must be filed in the customs applications, along with a power of attorney and an indemnity declaration. The customs protection procedure is relatively straightforward, allowing the rights holders to prevent counterfeit goods from entering the market by applying for the simplified procedure and (where there is no objection from the infringer) for the presumption of assent to the destruction of goods.
Any type of registered right is acceptable when filing an application (ie, national, EU and international), as long as it holds validity in the relevant territory. However, special attention should be paid to Kosovo. As Kosovo is not a party to any international treaty, the designation of Kosovo for international registrations of IP rights is consequently not possible. For national registrations, when a trademark application has been filed before the national IP office but has yet to be processed, even if it was filed four years earlier, only a partial enforcement of IP rights and anti-counterfeiting actions is possible.
Further, contrary to the majority of cases where customs applications are filed based on prior trademarks, those filed based on copyright remain scarce throughout the region. In 2018 Montenegro and Kosovo Customs granted their first copyright protection recordals. Meanwhile, the other Western Balkan countries have increased the number of such recordals; however, the overall number in the region remains relatively low.
In addition, when dealing with these types of application, applicants must provide evidence of IP rights, which may entail providing of extensive documentation (eg, chain of title). A notable exception can be found with the Albanian Customs Office, where only copyright applications filed by any contracting party to the Berne Convention, as well as printed promotional material that has been certified and legalised, are required to file a customs application. This regime is the most liberal in the region, but it did not happen overnight. Albania’s initial stance was that an applicant had to deposit its artwork with the Albanian Copyright Directorate. However, further discussion of the issue, including the argument that such a requirement is not in line with the nature of copyright, resulted in the present liberal approach.
Ex officio seizures are also relatively common across the region. In such cases, local customs authorities will supply the necessary information to the 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 the actions of the rights holders. Namely, the customs application usually needs to be set up within three to four business days as of the date of the initial customs notification. Nevertheless, ex officio seizures serve as a warning to rights holders that their goods, reputation and recognition on the market may be in jeopardy without them 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 from entering any of the markets. It has been proven over the years that other measures (eg, civil or police action and market inspection) are not as efficient as border measures and have limited effect. Nevertheless, market inspection applications are particularly current in Serbia, as 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 internal market on behalf of a single rights holder and end up with thousands of seized counterfeit goods bearing the marks of that one holder. This legal tool is also available in Montenegro, but further efforts need to be made towards increasing its efficiency.
Market inspection applications based on copyrights are not yet common practice, but the authorities have been taking major steps towards altering this by regularly inviting market participants (ie, large brand holders) to file such applications.
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 necessary actions in order to detect crimes and find the perpetrators, and, depending on the claim, collect additional information and render 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 based on the 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 damage 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, and in addition to pecuniary penalties, may result in prison terms of three to five years, depending on the jurisdiction.
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 initiate a civil action in order 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 the judgment is being passed. Where there is a threat of irreparable damage, 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 when infringing 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 freezing 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 may include:
- 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 elsewhere in the world, but they can be lengthy (ranging 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 recent positive developments in Kosovo and Montenegro, where first judgments were finally passed regarding parallel imports, thus allowing brand owners to establish their presence on those markets with one problem fewer on their shoulders. These judgments 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 cybercrime units within the police in order to facilitate the investigation of online counterfeiting. The resources allocated to these units are still modest, but positive steps have been taken in cooperation between the private sector (eg, courier service providers, internet service providers (ISPs) and law firms) and the public sector.
In Serbia, for instance, a special prosecutor for cybercrime, alongside the special cybercrime unit within the police, deals with most severe counterfeiting cases (eg, the withdrawal of several thousand counterfeit medicines from the market). In Croatia, special task units within the Ministry of Finance cooperate with the police in order to act on information provided against persons offering advertisements of counterfeit goods. When enforcing IP rights online, general IP legislation also applies.
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 such advertisements. The most frequently counterfeited goods include medicine and medical devices, food, machinery and spare parts, electronic products, luxury products, clothing and fashion accessories, entertainment products, software and toys.
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 when 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 understanding 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, along with various ways in which an issue may be resolved. This will allow the rights holders to properly protect their rights while keeping their expectations in line with the situation in the field.
Although a proper legal framework has been set up in all of the Western Balkan states, enforcement still needs improvement. 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 level.
A more zealous approach on the part of rights holders would reinforce the anti-counterfeiting efforts being made by the authorities. Further, in some countries in the region, a more proactive approach by government bodies would be required in order to properly tackle counterfeiting. One of the desirable measures would be for local authorities to intensify efforts when dealing with online copyright infringement of software, film and music.
The resolution of existing problems requires an efficient, systematic approach, and should include professional training of relevant state actors, 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 all 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 much 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 always far more effective than waiting for it to blossom.