Report from the Commission on the implementation of Council Regulation (EC) No 3295/94 of the 22 December 1994 as regards border controls on trade in goods which may be counterfeit or pirated
Date: 1998-01-28
Institutions: European Commission
Subjects: EU customs procedure, customs fraud, customs regulations, industrial counterfeiting, intellectual property

ix w  ix 

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ix 

COMMISSION  OF THE EUROPEAN  COMMUNITIES 

is  vV  £ 

Brussels,  28.01.1998 
COM(1998) 25  final 

98/0018 (ACC) 

REPORT FROM THE  COMMISSION 

on the implementation of Council Regulation (EC) No 3295/94 of 22 December  1994 as 
regards border controls on trade in goods which may be counterfeit  or pirated 

Proposal for a 
COUNCIL REGULATION  (EC) 

amending Regulation (EC) No 3295/94 laying down measures to prohibit 
the release for free circulation, export, re-export or entry for a 
suspensive procedure of counterfeit  and pirated goods 

(presented by the Commission) 

SUMMARY 

On 22 December  1994 the Council adopted Regulation (EC) No 3295/94 concerning the role of 
customs  in  combating  counterfeit  and  pirated  goods.  This  document  puts  into  effect  the 
provisions of the TRIPS Agreement  with regard to intellectual  property rights. This Agreement 
was  one  of  the  results  of  the  Uruguay  Round  and  represents  one  of  the  most  important 
international treaties in the  field. 

Operation of the system 

The  main  purpose  of  the  Regulation  is  to  allow  the  customs  authorities  to  suspend  customs 
operations  in  cases  where  the  goods  concerned  are  suspected  of  being  counterfeit  or  pirated 
goods covered by an intellectual  property right (brand  or trade mark, design right,  copyright  or 
neighbouring right) in respect of which the right holder has requested "customs protection". 

During the period of suspension, the right holder may petition the competent national  authorities 
(normally  the judiciary)  to  take  action  on  the  matter.  If there  is  no  referral  to  the  courts,  the 
goods are released. 

The  system  set  up by the  Regulation  has  produced  some  very  good  results  in the field. In  the 
two-year  period July  1995-June  1997 customs took  action  in 4  133 cases as compared  to  fewer 
than 2 000 during the seven and a half years (1 January  1988 to 30 June  1995) of application  of 
the previous Regulation. 

Operations  were  carried  out  on  freight,  passenger  and  postal  traffic  but  the  most  significant 
cases, in terms of counterfeit  goods seized, involved freight.  These mainly concerned  counterfeit 
trade  marks  but  a  growing  number  of  cases  has  involved  goods  which  infringed  copyright, 
neighbouring  rights  or  design  rights.  Although  checks  were  carried  out  mainly  on  imports 
(release for free circulation),  they have gradually  increased  in relation  to  export,  re-export  and 
transit  operations  to  the  point  that  they  are  now  producing  some  very  encouraging  results  in 
those fields too. 

The improvements  proposed  by the Commission 

Since the results have proved satisfactory,  the Commission now proposes to extend the scope of 
the Regulation  and modify  it to reflect  the development  of Community legislation on intellectual 
property rights. The improvements  envisaged  by the Commission  have already been  favourably 
received  by the  main  trade  associations  concerned  at  a  meeting  in Brussels  on  23  July  of  this 
year. 

The  Commission  would  therefore  like  to  introduce  amendments  in  relation  to  the  following 
aspects: 

* 

* 

extension  of  the  scope  of  the  Regulation  to  cover  a  new  intellectual  property  right, 
i.e. some patents; 

extension  of  the  customs  authorities'  scope  for  action  to  cover  free  zones  and  free 
warehouses  and  all  suspect  goods 
they  come  under 
from 
customs supervision; 

the  moment 

that 

updating  (simplifying)  the  Regulation  to  take  account  of  the  Community  trade  mark 
(fully operational since  1  April of 1996) through the introduction, for the benefit  of holders 
of such marks, of a single system for applying for "customs protection" which is valid in a 
number of Member States. 

TABLE OF CONTENTS 

1.  The content of Regulation  (EC) No 3295/94 

2.  The implementation  of Regulation (EC) No 3295/94 

3.  Statistics on the operation of the system 

4.  Trade flows detected  under Regulation (EC) No 3295/94 

5.  The economic and social impact of counterfeiting 

6.  Amendments and additions proposed by the Commission 

(a)  Extending the scope of the Regulation to patented  inventions 

(b)  Extending the scope of the Regulation to all customs statuses 

(c)  Updating the Regulation to take account of the Community trade mark 

7.  The demands of the trade associations concerned 

(a)  Non-commercial imports in travellers ' baggage 

(b)  Excluding parallel imports from  the scope of the Regulation 

(c)  Fees and guarantees 

(d)  The cost of destroying counterfeit or pirated  goods 

(e)  Access to samples 

if) 

Penalties 

8.  Conclusion 

Council  Regulation  (EC)  No  3295/94  of 22 December  1994 laying  down  measures  to  prohibit 
the  release  for  free  circulation,  export,  re-export  or  entry  for  a  suspensive  procedure  of 
counterfeit  and pirated goods has applied since  1  July  19951. 

the  Regulation  requires 

Article  15  of 
the 
European Parliament  and the  Commission  on the operation  of the  system,  and  in particular  the 
economic  and  social  consequences  of  counterfeiting,  and  to  propose,  within  two  years  of  the 
Regulation's  implementation,  any  amendments  or  additions  required.  This  communication 
accompanies the report drawn up by the Commission on this subject. 

to  report  regularly 

the  Commission 

to 

It takes stock of the first two years of application and contains a list of measures likely not only 
to  strengthen the part  played  by the Regulation  in countering  counterfeiting  and  pirating but  to 
streamline  the  administrative  procedures  necessary  for  its  implementation,  thereby  benefiting 
holders of certain intellectual property rights. 

1.  The content of Regulation (EC) No 3295/94 

1.1.  Council Regulation  (EC)  No  3295/94  of 22  December  1994  laying  down  measures 
to prohibit the release for free  circulation, export, re-export  or entry for  a suspensive 
procedure  of  counterfeit  and  pirated  goods  is intended  to  protect  the  Community's 
external  frontier  and  applies  solely  to  trade  with  third  countries.  It  complements 
national machinery for the protection of intellectual property rights. 

1.2. 

It repealed and replaced Council Regulation (EEC) No 3842/86 of  1  December  1986 
laying  down  measures  to  prohibit  the  release  for  free  circulation  of  counterfeit 
goods2 in order to: 

* 

* 

* 

extend the protection afforded  by customs to other intellectual property rights 
and customs procedures; 

enhance the effectiveness  of the system  of customs protection  provided  for in 
that Regulation; 

take  account  of  the  Agreement  establishing  the  World  Trade  Organization 
signed  in  Marrakesh  on  15  April  1994,  the  annexes  to  which  include  the 
Agreement  on  Trade-Related  Aspects  of  Intellectual  Property  Rights 
(TRIPS),  one  of  the  most  important  international  treaties  on  intellectual 
property3.  Part  III  of  the  TRIPS  Agreement  is  entitled  "Enforcement  of 
intellectual  property  rights"  and  contains  a  section  on  special  requirements 
related  to border  measures (Articles  51 to  60 of the  Agreement):  Regulation 
No 3295/94 is in conformity with this section. 

1  OJL341,  30.12.1994, p. 8. 
2  OJ L 357,  18.12.1986, p. 1. 
3  Annex  l C ; O JL  336, 23.12.1994, p. 213. 

1.3.  The  Regulation  entitles 

the  holders  of  certain 

intellectual  property  rights 
(trade marks or brands, copyright and related rights and designs), persons authorized 
to  exercise  such  rights  and  their  representatives  to  apply  to  customs  to  detain  or 
suspend  the  release  of  suspected  counterfeit  or  pirated  goods  for  a  fixed  period 
(normally  ten  days) to  give  the  applicant  time  to  petition  the  competent  authorities 
(normally  the  judiciary)  for  a  substantive  decision  on  whether  the  intellectual 
property  rights  in  question  have  indeed  been  infringed.  In  Germany,  where  the 
customs authorities themselves are competent to take substantive decisions, recourse 
to  the  judiciary  is  necessary  only  in  cases  where  the  importer  has  first  appealed 
against the detention measure. 

1.4.  Customs may also act  on their own initiative,  i.e.  without  a prior application,  where 
goods  are suspected  to be counterfeit  or  pirated.  In this case,  the  period  for  which 
release  may  be  suspended  or  goods  detained  is  shorter  (three  days),  simply 
permitting the right holder concerned to apply for customs protection. 

1.5.  The Regulation has the following  structure: 

Chapter  I  sets  out  the  scope  of  the  Regulation  and  the  definitions  necessary 
for its implementation. 

Chapter  II expressly prohibits the release for  free  circulation  (i.e. the import), 
export,  re-export  or  entry  for  a  suspensive  procedure  of  counterfeit  and 
pirated  goods  found  to  be  counterfeit  or  pirated  in  the  wake  of  action  by 
customs under the Regulation. 

Chapter  III  covers  the  triggering  of  the  mechanism  either  in  response  to 
an application  from  the  holder  of  a  right  or  on  the  customs  authorities' 
own initiative. 

Chapter  IV  lays  down  the  conditions  governing  action  by  the  customs 
authorities and the authority competent to take a substantive decision. 

Chapter  V  stipulates  what  is to  be  done  with  goods  found  to  be  counterfeit 
or pirated. 

Chapter  VI  (Final  provisions)  covers  such  aspects  as  liability,  excludes  from 
the  scope  of  the  Regulation  goods  of  a  non-commercial  nature  contained  in 
travellers' personal luggage within the limits laid down in respect of relief from 
customs duty (ECU  175) and binds the Member  States to  impose penalties in 
the event of breaches of the Regulation. It likewise obliges the Member  States 
to  communicate 
the 
the  Commission  all  relevant 
implementation  of  the  Regulation  and  requires  the  Commission,  within 
two years of the Regulation's implementation,  to  report  to Parliament  and the 
Council  on  the  operation  of  the  system  and  propose  any  amendments  or 
additions required.  Such is the purpose of this report. 

information  on 

to 

2.  The implementation  of Regulation  (EC) No 3295/94 

2.1.  The Commission has adopted  implementing measures under Commission  Regulation 

(EC) No  1367/95 of  16 June  19954. 

2.2.  Though  directly  applicable,  the Regulation  also  called  for  the  adoption  of a number 
of  measures  at  national  level,  including  the  appointment  of  a  national  authority 
competent to handle holders' applications for protection or the adoption of penalties. 
The Member  States were given six months from the publication  of the Regulation  to 
its entry into application. 

2.3. 

It  should be noted  that, although  the Regulation  is addressed  directly  to  the  national 
customs  authorities,  particularly  as  they  are  the  only  authorities  competent  to  deal 
the  meaning  of  the  Regulation,  collaboration  and 
with  applications  within 
cooperation  with other national administrative departments  has not  been  ruled  out in 
practice. 

2.4.  By  1 July  1995 most  Member  States had  adopted  the  national  measures  needed  for 
the  implementation  of  the  new  rules.  In  Belgium,  however,  though  an  authority 
competent  to  handle  right  holders'  applications  for  protection  was  appointed  early 
the 
on,  a  Royal  Decree  laying  down  the  national  measures  necessary  for 
implementation  of the Regulation  did  not  come into  force  until  14 December  1996. 
Though  this  delay  was  something  of  an  inconvenience  to  right  holders,  the 
Belgian authorities  nevertheless  performed  checks  and  obtained  some  significant 
results during the period in question. 

2.5.  There  are  still  problems  with  the  implementation  of  the  Regulation  by  some 

Member States. 

Belgium  (legislation  in  preparation)  and  Greece,  for  example,  have  still  to  comply 
with  the  obligation  to  adopt  effective,  proportionate  and  deterrent  penalties  to 
protect designs. 

Furthermore,  while  the  Regulation  does  not  preclude  a  Member  State  from 
appointing several authorities to handle applications for protection,  an application  is 
supposed  to  cover  the  entirety  of  the  national  territory  (single  application).  This  is 
not  currently  the  case  in  Greece  where  ten  competent  authorities  have  been 
appointed,  each  of them  dealing  with  a given  region.  Contrary  to  the  provisions  of 
the  Regulation,  a  right  holder  has  to  complete  ten  applications  to  obtain  customs 
protection throughout Greek territory. 

3.  Statistics on the opération of the system 

3.1.  The system introduced  by the Council provides for  the monitoring  of its  application 

in the Member States. 

3.2.  Data  for 

the  two-year  period  1  July  1995-30  June  1997  show 

that 

the 

Member States suspended release or detained goods in 4  133 cases. 

OJ L 133, 17.6.1995, p. 2. 

3.3.  This  figure  shows  that  the  system  introduced  by  the  Regulation  is  not  only 
operational  but  working  well.  Customs  have  intervened  far  more  often  in  the  two 
years  since Regulation  (EC)  No  3295/94  has applied  than  in the  entire  seven  and  a 
half years of Regulation (EC) No 3842/86 ( 1  842 cases in total). 

3.4.  The 4133 cases of action under the new Regulation can be broken down as follows: 

Germany: 
France: 
United Kingdom: 
Spain: 
Netherlands: 
Denmark: 
Belgium: 
Italy: 
Finland: 
Luxembourg: 
Sweden: 
Ireland: 

1 844 
527 
487 
459 
390 
139 
127 
71 
63 
18 
5 
3 

3.5.  The  Commission  has  received  no  statistics  concerning  the  other  Member  States. 
Austria says that it has so far  received  only three applications and that  no action had 
been taken prior to 30 June  1997.  Portugal  says that  it has taken no action  as it has 
received  only  one  application  for  protection.  However,  the  Commission  has  been 
unable to obtain  any information  concerning  Greece, where no action  would  appear 
to  have  been  taken  during  the  period  in  question.  Whatever  the  case  may  be,  the 
application  system  set  up  by  Greece  (described  in  2.5)  would  appear  to  have 
deterred holders. 

3.6.  A more detailed analysis of the reports submitted by the Member States can be found 

in Annex 2. 

4.  Trade flows detected under Regulation (EC) No 3295/94 

4.1.  As  the  statistics  communicated  by  the  Member  States  bear  out,  the  system  is 
working  well  and  producing  encouraging,  even  highly  satisfactory,  results.  It 
is  therefore  worth 
types  of 
movements concerned. 

looking  at 

terms  of 

figures 

these 

the 

in 

4.2. 

It  should  be  noted,  however,  that  the  rules  governing  the  single  market  mean  that 
this  customs  act  applies  only  to  goods  moving  between  third  countries  and  the 
Community.  The  Regulation,  by  its  very  nature,  precludes  the  detection  of 
counterfeit  or  pirated  goods  manufactured  inside  the  Community  or  circulating 
between  Member  States. Nevertheless,  comparable  provisions  (controls  carried  out 
by customs) exist in national law in some Member States. 

Moreover,  the Commission  is continuing to  follow  closely  questions  concerning  the 
fight  against  counterfeiting  and  pirating  within  the  Community.  This  action  is  of 
prime importance in achieving the eradication  of - or at  least  a substantial  reduction 
in - counterfeiting  and pirating. 

4.3.  Not  all Member  States  break  down  their  statistics  by  freight,  passenger  and  postal 
traffic.  Where  this  information  is  provided,  however,  it  is  very  interesting.  For 
instance,  of  the  657  cases  recorded  by  German  customs  in  the  first  six  months  of 
1997,  347  (52%)  concerned  travellers  and  only  twelve  goods  sent  by  post.  Of 
527 cases  reported  by  France,  265  (50%)  involved  travellers  and  22  the  post.  In 
Spain,  243  (53%)  out  of a total  459  cases  involved  travellers  and  two  the  post.  Of 
390  cases  in the  Netherlands,  161  (41%)  concerned  travellers  and  129 the  post.  In 
terms  of  the  quantities  seized,  however,  most  searches  of  travellers'  baggage 
revealed  fewer  than  ten  articles.  Thus,  in  terms  of  efficiency,  checks  on  freight 
operations obviously produce the best results, given that a single seizure may involve 
thousands  of  articles  of  various  kinds  (see  Annex  2  for  noteworthy  cases).  Postal 
checks  too  can  sometimes  yield  very  interesting  results.  The  customs  authorities  in 
the  Netherlands,  for  example,  were  able  to  seize  more  than  3 000  pirate  CDs 
originating  in  Bosnia-Herzegovina  as  the  result  of  an  operation  involving  a 
consignment  sent by post. 

4.4.  Most of the products seized are consumer goods (clothing and watches in the main). 
While articles bearing a prestigious label, be they clothes, watches or leather  goods5, 
remain  prone  to  counterfeiting,  there  is  increasing  counterfeiting  of  "in"  brands, 
particularly  in the field of  sports  (sportswear,  sports  shoes,  caps  with  the  logos  of 
leading  football  or  basketball  teams,  a  wide  range  of  objects  bearing  brands 
specializing  in  sports  goods),  articles  for  children  (clothing  and  gadgets  bearing 
targeted  at  children)  and  computer  products  and  video  games 
brands 
(microprocessors, CD-ROM's, consoles and games for  them). The brands  concerned 
are  mainly  European  or,  in  the  case  of  sports  goods,  articles  for  children  and 
computer products, American. 

4.5. 

In  addition  to  spare  parts  for  motor  vehicles  and  toys,  the  diverse  products 
concerned  include  sunglasses,  pens,  garden  gnomes,  garden  chairs,  playing  cards, 
biscuits, switches and pans. 

4.6.  Regulation  (EC)  No  3295/94  also  covers  "parts"  for  counterfeit  goods,  i.e.  trade 
mark  symbols  (logos,  labels,  stickers,  brochures,  instructions  for  use  or  guarantee 
documents)  or packaging  (even  empty), enabling customs to  deal  with  another  form 
of counterfeiting:  unlabelled  goods are imported  into the Community  in a number  of 
consignments while trade mark symbols such as labels or buttons are brought  in with 
a traveller's  luggage, the counterfeit  goods then being assembled  in the  Community. 
The  large  quantities  of  labels,  buttons  and  rivets  detected,  particularly  in  the 
United Kingdom (see Annex 2), show the scale of the problem and how important it 
is for customs to pay particular attention to trade mark symbols. 

Note that very few cases involved perfumes or toilet waters. 

4.7.  The statistics  provided  by the Member  States  also  show  that  the Regulation  is used 
mainly to seize goods at the point of release (70%» of cases), action at other stages of 
the  customs  process  being  far  less  frequent,  though  not  unknown.  Furthermore, 
some seizures in Finland in the course of export/re-export  show the benefits  of being 
able  to  act  at  a  stage  other  than  release.  In  ten  operations,  Finnish  customs 
intercepted  130 576 shoes,  104 316 shirts, 32 400 video games,  15 487 pairs of jeans 
and  13 650 coats, all of which were destined for Russia. 

4.8. 

In most cases customs acted against goods bearing a counterfeit  brand or trade mark 
(over  90%  of  cases).  This  is  not  surprising,  given  that  the  implementation  of 
Regulation  (EC) No 3842/86 provided  customs with some experience  of  counterfeit 
goods,  which  are  also  somewhat  easier  to  detect  than  abuses  of  other  forms  of 
intellectual property. 

4.9.  The results  in respect  of pirated  goods  are  encouraging  none the  less.  Customs  are 
increasingly  active  on  this  front.  One  intervention  in  ten  now  involves  goods 
protected  by  copyright.  There  is therefore  every  reason  to  believe  that  results  will 
continue  to  improve  in  spite  of  the  fact  that  it  is  far  harder  for  customs  to  detect 
breaches of copyright  or a related right than  offences  against  a brand  or  trade mark, 
which are far more visual. 

4.10.  Results on designs  have been  poorer,  though  not  negligible (5.8% of interventions). 
Apart from the  fact  that  this is a new  area  for  customs,  it  should  be borne  in mind 
that,  in most  cases, goods  seized  by customs  combine the  counterfeiting  of  a brand 
with the pirating of a design. In such cases, customs administrations usually prefer  to 
act on the basis of the counterfeiting,  which is far easier to detect. 

5.  The economic and social impact of counterfeiting 

5.1.  Since Regulation (EC) No 3295/94 only concerns specific trade flows  (import/export 
deals with third  countries),  it  is in no way  a  suitable tool  for  gauging the  economic 
and social impact of counterfeiting  in the Community. 

5.2. 

It  is  not  easy  to  discern  the  scale  of  the  counterfeiting  and  pirating  phenomenon. 
Numerous  professional  organizations  at  national,  European  or  international  level 
regularly  produce  estimates  of  counterfeiting  and  pirating.  These  do  give  a  better 
idea of the phenomenon, but still only a small insight. 

The  adverse  effects  of  counterfeiting  and  pirating  on  employment 
in  the 
Member States, on the collection of direct and indirect taxes and on product  quality, 
to  the  detriment  of  consumers,  are  incontestable.  However,  it  is  currently  not 
possible to put precise figures on these. 

6.  Amendments and additions proposed  by the Commission 

6.1.  Apart from a few  problems with implementation  in a certain Member  States (see 2), 
the  Commission  has  observed  no  particular  difficulties  regarding  the  application  of 
Regulation  (EC)  No  3295/94.  The  structural  problems  affecting  the  previous 
Regulation  (EEC)  No  3842/86  were  resolved  in  the  drafting  of  Regulation  (EC) 
No 3295/94, the system is now operational  and  its effectiveness  is hampered  neither 
by structural  problems nor by divergent interpretations of its provisions. 

10 

6.2.  The  Commission  therefore  proposes  to  go  further,  extending  the  system  to  cover 
another  intellectual  property  right  and  goods  with  other  customs  statuses  and 
adjusting  the Regulation to take account  of the Community trade mark. 

(a)  Extending the scope of the Regulation to patented  inventions 

6.3  Patents  are  a vital  aspect  of  intellectual  property  and  at  the  heart  of  the  machinery 
available  for  safeguarding  innovation.  They  allow  people  to  profit  from  their  own 
ideas and creativity. A patent protects an inventor from  competitors  seeking to  profit 
unfairly  from  his work.  It  legally  guarantees  a return  on  investment  in research  and 
development.  Protecting  patents  is  therefore  vital  to  the  Community:  safeguarding 
innovation  enables  European  products  to  develop  in  the  face  of  international 
competition and so helps the European economy hold its own  internationally. 

6.4.  The  inclusion  of  patents  was  discussed  during  the  drafting  of  Regulation  (EC) 
No 3295/94, but it was decided  at that time to reconsider the matter  later,  notably in 
the light of the results achieved in the matter of copyrights and designs. 

6.5. 

In  view  of the  statistics  supplied  by  the  Member  States,  it  now  seems  worth  a try. 
Admittedly,  it will not be easy for  customs officers  to  spot  goods  breaching a patent 
inasmuch  as the offence  is not  immediately  visible to  the  naked  eye and  may  require 
officials  to  examine  complex  scientific  documentation.  These  difficulties  must  not, 
however,  be  allowed  to  stand  in  the  way  of  the  experiment,  especially  one 
that reflects 
concerned. 
Moreover, while  the  TRIPS  Agreement  does  not  bind  contracting  parties  to  apply 
the  "border  measures"  in  Articles  51  to  61  to  goods  in  breach  of  patents,  it  does 
make provision for them to do so. 

associations 

requests 

frequent 

trade 

from 

the 

Nevertheless  it  seems  appropriate  to  limit  the  extension  of  the  scope  of  the 
Regulation  to  patents  on  products,  excluding  those  on  processes.  The  latter  do  not 
lend  themselves  easily  to  a  system  of  frontier-based  measures.  Of  course  there  is 
nothing  to  prevent  the  holder  of  a  patent  on  a  process  from  going  to  the  national 
courts when  he considers that  his patent  has been  improperly  used  and benefiting  in 
this content from  the "reversal of the burden of proof. 

On  the  other  hand,  supplementary  protection  certificates  (SPCs)  for  medicinal  and 
plant protection  products  should  be included.  In these  cases,  customs'  action  - and 
the information  the holder  must  provide  - is virtually  the  same  as for  a patent  on  a 
product.  Furthermore,  in the case of  SPCs,  counterfeiting  these  products  puts basic 
interests such as human or animal health at stake. 

(b)  Extending the scope of the Regulation to all customs statuses 

6.6.  Endorsing  the  request from both  the Member  States,  and  in particular  Belgium  and 
France,  and  certain  trade  associations,  the  Commission  believes  that  the  Regulation 
should  cover  all  counterfeit  or  pirated  goods,  whatever  their  customs  status. 
Customs  would  then  be  able  to  intervene  in  cases  other  than  release  for  free 
circulation, export, re-export or entry for a suspensive procedure. 

11 

6.7. 

In practice,  this extension  would  cover  the  following  specific  scenarios:  goods  in a 
free  zone  or  warehouse  and  goods  under  customs  supervision,  including  those  in 
temporary  storage,  i.e.  goods  that  have been  brought  into  the  Community  customs 
territory  and placed  in temporary  storage  areas or facilities  pending  assignment  to a 
customs-approved  treatment  or use (release for free circulation, export etc.)6. 

6.8.  Even  if  the  Regulation,  in  its  current  form,  permits  such  goods  to  be  intercepted 
when their status changes, customs nevertheless need to be able to act when or while 
goods  are  being  stored.  Customs  officials  often  discover  goods  likely  to  be 
counterfeit  or pirated  and find themselves having to wait  until the goods either  leave 
the free zone or warehouse or cease to be in temporary  storage (through  assignment 
to a customs-approved  treatment  or use). Yet the goods in question  might  very well 
be  spirited  away  in the  meantime,  especially  if the  culprit  has reason  to  believe that 
customs harbour suspicions about the goods. 

(c)  Updating the Regulation to take account of the Community trade mark 

6.9.  Council  Regulation  (EC) No  40/94  of 20 December  1993  on the  Community  trade 
mark7  provides  for  the  establishment  of  Community  arrangements  for  trade  marks 
whereby  undertakings  can  by  means  of  one  procedural  system  obtain  Community 
trade  marks  to  which  uniform  protection  is  given  and  which  produce  their  effects 
throughout  the entire area  of the Community.  The  Community  trade  mark  has been 
fully  operational since  1  April  1996. 

6.10  The Community  trade mark  is governed  by a single Community  regulation,  which is 
directly  applicable  in  all  Member  States.  It  constitutes  a  single  right  conferring 
uniform  protection  throughout  the  Community.  It  does  not,  however,  replace 
Member States' trade marks. 

6.11  In  order  to  let  the  Community  trade  mark  flourish,  the  Commission  intends  to 
simplify  the  administrative  side  of  protecting  the  Community  trade  mark  under 
Regulation (EC) No 3295/94 by allowing a single application for  customs  protection 
to  be  lodged  instead  of  the  fifteen  currently  required  to  cover  the  whole  of  the 
Community's territory. 

6.12  Though  retaining  the  option  of  using  the  current  system  and  lodging  a  series  of 
applications,  the  holder  of  a  Community  trade  mark  could  alternatively  apply  for 
action in a Member State of his choice and specify  the other Member States in which 
action is sought. 

6.13  The  application  would  be handled  by the  competent  authority  of the  Member  State 
concerned.  Acceptance  (or  rejection)  would  be  valid  for  all  the  Member  States 
specified;  it would be for  the competent  authority  of the  Member  State  in  which  the 
the  relevant  authorities  of  the  other 
application  has  been  lodged  to  notify 
Member States concerned of the decision taken. 

Goods may spend 45 days in temporary  storage if they arrive by sea and 20 days in all other cases. 
OJL  11, 14.1.1994, p. 1. 

12 

6.14  However,  in the  absence  of  a  unified  Community  customs  administration,  any  fees 
and guarantees required in the individual Member  States concerned by an application 
would continue to be dealt with nationally. 

6.15  A  uniform  period  of  protection  would  have  to  be  introduced  for  Community 
trademarks  together  with  standard  forms  for  applying  for  the  protection  of  a 
Community  trade  mark  and  for  the  processing  of  such  applications  by  the 
Member States. 

6.16  The  advantage  of  this  system  is  that  it  slots  easily  into  the  current  one  since  it 
requires  the  setting-up  neither  of  a  central  authority  nor  of  a  unified  guarantee 
system,  which  would  pose  insurmountable  legal  and  practical  problems.  It  would 
also  serve  as  an  example  and  a  precedent  once  a  Community  design8  has 
been created. 

7.  The demands of the trade associations concerned 

7.1.  The  Commission  has  had  several  meetings  with  trade  associations  working  in 
the  field  of  intellectual  property  and  right  holders  to  discuss  the  implementation 
and  operation  of  the  Regulation.  Their  comments  have  also  been  relayed  by 
the  Customs  Code  Committee-Counterfeit 
the  Member States'  delegates 
Goods Section. 

to 

7.2.  For  the  purposes  of  drafting  this  report  the  Commission  met  the  main  trade 
associations concerned on 23 July  1997 to give them an opportunity to make known 
their views and wishes. 

7.3.  At  this meeting  the  Commission's  representatives  outlined  the  three  ways  in  which 
they believed the Regulation could be amended (see 6). Apart from the objections  of 
one association  present  at  the  meeting  to  extending  the  scope  of the Regulation  to 
encompass  patents,  these  proposals  were  very  well  received  since  they  reflected 
demands that the associations had made or wished to make. 

7.4.  Various  other  issues  were  touched  on,  with  the  Commission  adopting  the 

following positions: 

(a)  Non-commercial imports in travellers' baggage 

7.5.  Business  circles  concerned  have  long  been  arguing  for  the  abolition  of  the 
exclusion in Article  10 of  Regulation  (EC)  No  3295/94.  This  clause  excludes  from 
the  scope  of  the  Regulation  goods  of  a  non-commercial  nature  contained  in 
travellers' personal baggage within the limits of the duty-free  allowance (ECU  175). 
This  "tolerance"  is  held  to  foster  small-scale  trafficking  and  send  inappropriate 
signals to travellers and tourists. 

7.6.  While acknowledging the existence of small-scale trafficking,  the Commission feels it 
does not alter the principle that intellectual  property rights are limited to  commercial 
transactions,  a  position  which  is,  moreover,  consistent  with  Article  60  of  the 
TRIPS Agreement.  Furthermore,  the  relatively  flexible  concept  of  "goods  of  a 

OJC 29, 31.1.1994, p. 20. 

13 

non-commercial  nature"  affords  customs  scope  for  handling  a  wide  range  of 
situations. The considerable number of seizures from travellers shown in the statistics 
provided by the Member  States (see 4 above and  Annex 2) should reassure business 
circles that customs' hands are not tied in this respect. 

7.7.  The  Commission  therefore  believes  that  Article  10  should  be  retained  in  its 

present wording. 

7.8. 

In  order  to  stay  the  fears  of  business  circles,  the  Member  States  should  adopt 
measures  to  publicise  the  rules  in  force  more  widely  and  raise  the  awareness  of 
travellers, particularly tourists. 

(b)  Excluding parallel imports from  the scope of the Regulation 

7.9.  Business circles have long been calling for  the  extension  of the Regulation  to  cover 
parallel  imports,  i.e.  goods  manufactured  with  the  right  holder's  consent  but 
imported without his consent. 

7.10.  The  Commission  has  always  opposed  this  demand.  In  the  case  of  parallel  imports, 
the goods  cannot  strictly  speaking be termed  counterfeit,  given that,  within the law 
of  the  exporting  country,  the  goods  have  used  an  intellectual  property  right. 
Furthermore,  the  holder  of  an  intellectual  property  right  in  the  Community  merely 
has the option of opposing their importation  into the Community,  not  an obligation. 
Moreover,  in  this  case  the  task  of  customs  officials  would  be  extremely  difficult, 
since  the  goods  are  physically  identical  to  approved  imports.  The  Commission 
therefore believes that the Regulation should not be amended in this respect. 

(c)  Fees and guarantees 

7.11.  The  Regulation  permits  Member  States  to  collect  a  fee  for  customs  protection  to 
cover  the  administrative  costs  incurred  through  handling  the  application  and  seek a 
guarantee to cover any liability for damage and/or storage costs. 

7.12.  In practice, the level of fees and guarantees differs  greatly from one Member State to 
another.  Some  business  circles  would  like  to  see  these  sums  harmonized.  The 
Commission  sees  no  need  for  this.  The  fact  that  these  sums  differ  from  one 
Member State to another in no way affects  the operation  of the system provided  for 
in the  Regulation.  Were  a  Member  State  to  set  these  amounts  at  a  level  deterring 
applications for customs protection, the Commission would obviously have to step in 
and deal with the Member State concerned. 

(d)  The cost of destroying counterfeit  or pirated  goods 

7.13.  Who  bears  the  cost  of  destroying  counterfeit  or  pirated  goods  varies  from  one 
Member State to another. Depending on the Member  State concerned,  the costs are 
borne by the perpetrator  of the offence,  the owner  of the goods, the right  holder  or 
the State itself.  In most cases, however,  it is for  the judge who rules that goods are 
counterfeit  or  pirated  to  determine  the  person  or  authority  liable  for  the  cost  of 
destroying them. Business circles are calling for  the Regulation to  resolve this point 
by specifying  who is to cover the costs in question. 

14 

. 

7.14.  The  Commission  believes  that  a  degree  of  flexibility  should  be  allowed  here  so 
that each  Member  State  can  adopt  the  solution  that  suits  it  the  best  as,  in  any 
event, goods  found 
from 
commercial channels. 

to  be  counterfeit  or  pirated  must  be  removed 

(e)  Access to samples 

7.15.  While goods  are detained  or their release suspended,  customs may take  samples  for 

the purposes of the procedure. 

7.16.  Several organizations representing right holders have asked for the Regulation  to be 
amended  to  allow  customs  to  send them  some of the  samples directly to  help them 
draw up their own reports. 

7.17.  The Commission  believes that  the Member  States  should  be allowed  some room  for 
manoeuvre  here  and  that  it  is  up  to  them,  under  their  own  national  legislation,  to 
assess the best  means, in view of time and  cost  constraints  in particular,  of allowing 
right  holders  to  inspect  goods  that  have  been  detained  or  whose  release  has  been 
suspended.  The Commission  therefore  considers that there are no grounds to amend 
the Regulation in this respect. 

(f)  Penalties 

7.18.  The Regulation  requires the Member  States to impose penalties where goods which 
have been detained  or whose release has been  suspended  prove to be  counterfeit  or 
pirated.  Under Article  5 of the EC  Treaty  and the  case law of the  Court  of Justice, 
these penalties must be effective,  proportionate and deterrent. 

7.19.  Some in the trade  have  called  for  the Regulation  to  include  guidelines  for  deciding 
between  administrative  and  criminal  penalties,  for  a  degree  of  harmonization 
concerning  the type  of criminal  penalties  applied  (imprisonment, fines, etc.)  and  for 
all Member States to make counterfeiting  and pirating a specific customs  offence. 

7.20.  As  regards  the  calls  concerning  criminal  penalties  as  such,  Article  113  of  the 
EC Treaty, the legal basis of the Regulation, is not an appropriate legal basis 

7.21.  As for administrative penalties, the Commission feels that they would not be useful in 
this  case  because  they  are  not  an  alternative  to  criminal  penalties,  if  only  because 
Article  61  of  the  TRIPS  Agreement  requires  contracting  parties  to  introduce 
criminal penalties. 

S.  Conclusion 

8.1.  While the initial statistics are very encouraging  and the improvements  to the  system 
set up under the previous Regulation (EEC) No 3842/86 mean that the system set up 
by  Regulation  (EC)  No  3295/94  is  operational,  the  system  should  nevertheless  be 
updated  to  take  account  of  developments  in  Community  rules  on  intellectual 
property  rights  (the  establishment  of  a  Community  trade  mark)  and  customs  given 
greater  scope  for  action  (extending  the  scope  of  the  Regulation  to  protect  patents 
and cover counterfeit  or pirated goods whatever their customs status). 

15 

8.2.  Such  amendments  will  help  step  up  action  against  fraud  at  the  Community's 
external frontiers,  ensure the effective  and  uniform  application  of Community  rules 
and  offer  the  Community's  citizens  and  traders  an  equivalent  level  of  protection 
throughout  the Community  customs territory, without  detriment  to the  throughflow 
necessary  for  international  trade.  These  objectives  figure  among  those  set  out  in 
Decision  No 210/97/EC  of  the  European  Parliament  and  of  the  Council  of 
19 December  1996  adopting  an  action  programme  for  customs  in  the  Community 
(Customs 2000)9. 

8.3.  The Commission  therefore  proposes that Regulation  (EC) No  3295/94 be  amended 

in the manner set out in Annex  1  to this report. 

OJL  33, 4.2.1997, p. 24. 

16 

ANNEX I 

Proposal for a 
COUNCIL REGULATION  (EC) 

amending Regulation (EC) No 3295/94 laying down measures to prohibit 
the release for free circulation, export, re-export or entry for a 
suspensive procedure of counterfeit and pirated goods 

17 

EXPLANATORY  MEMORANDUM 

Point  1 (Title) 

As the  proposal  involves  extending  the  scope  of  the  Regulation,  its  current  title  is  no  longer 
correct and needs to be changed. More general wording should be used. 

Point 2 (Article  1(1)) 

In order  to  improve  the  customs  authorities'  scope  for  action,  they  should  be  allowed  to  take 
advantage of the provisions of the Regulation either when the goods are placed in a free  zone or 
warehouse  or  as  soon  as  they  are  under  customs  supervision  within  the  meaning  of  the 
Community  Customs  Code,  i.e.  on  entry  into  the  Community.  This  will  enable  the  customs 
authorities to  seize suspect  goods,  in accordance  with  the Regulation,  when  they  are  placed  in 
temporary  storage  areas  or  facilities  pending  assignment  to  a  customs-approved  treatment  or 
use (release for free circulation, export, etc.). 

(ArtiçieJi2Xa)) 

In the light of the experience gained  by the customs authorities in their  efforts  to  stem the  flow 
of  goods  infringing  copyright  and  related  rights  or  design  rights,  the  scope  of  the  Regulation 
should  now  be  extended  to  the  protection  of  patents  on  products  and  of  supplementary 
protection  certificates  for  medicinal  products  and  plant  protection  products.  A  new  indent 
therefore  needs  to  be  inserted  in  this  paragraph  so  as  to  extend  the  definition  of  counterfeit 
goods,  for  the  purposes  of  this  Regulation  only,  to  include  goods  which  infringe  patents  on 
products or supplementary protection  certificates. 

(Article  l(2)(c)) 

The aim of this amendment is to adapt the definition  of the "holder of a right" to take account  of 
the extension of the scope of the Regulation to cover protection for  patents on products and  for 
supplementary  protection certificates for medicinal products and for  plant protection  products. 

(Article  l(2)(e)) 

One of the aims of the proposal is to establish a simplified  procedure which can be used to apply 
for action by holders of Community trade marks registered with the Office  for Harmonisation in 
the  Internal  Market  (trade  marks,  design  rights)  in  Alicante.  The  aim  of  this  new  point  is  to 
define the "Community trade mark" by reference to the Regulation which introduced it. 

(Article  1(2X0) 

To  facilitate  reading  of  the  text,  it  must  be  specified  that  the  term  "certificate"  used  in  the 
Regulation  means  supplementary  protection  certificates  for  medicinal  products  and  for  plant 
protection products. 

18 

(Article  1(3)) 

This amendment  takes  account  of the extension  of the Regulation's  scope  to the protection  of 
patents  on  products  and  of  supplementary  protection  certificates  and  indicates  that  moulds  or 
matrices  intended  for  the  manufacture  of  goods  which  infringe  a  patent  on  a  product  or  a 
supplementary  protection  certificate  are  also  deemed  to  be  counterfeit  goods  within  the 
meaning of the Regulation. 

(Article  1(4)) 

This  amendment  takes  account  of the extension  of the  Regulation's  scope  to the protection  of 
patents  on  products  and  of  supplementary  protection  certificates  by  specifying  that  the 
exclusion  from  its  scope  of  parallel  imports  in  particular  also  applies  to  goods  covered  by  a 
patent on a product or by a supplementary protection  certificate. 

Point 3 (Article 2) 

Goods  found  to be counterfeit  or pirated cannot be marketed.  Their entry  into the  Community, 
release  for  free  circulation,  export,  re-export  or  entry  for  a  suspensive  procedure  is  therefore 
prohibited. In so far as the customs authorities are allowed to act when goods are placed  in free 
zones  and  free  warehouses,  the  placing  of  goods  found  to  be  counterfeit  or  pirated  in  such 
zones or warehouses should be prohibited. 

Point 4 (Article 3(D) 

Council  Regulation  (EC)  No  40/94  of  20  December  1993  on  the  Community  trade  mark10  -
fully  operational  since  1  April  1996 - has enabled natural and legal persons to obtain, by means 
of  a  single  procedural  system,  Community  trade  marks  which  enjoy  uniform  protection  and 
produce their effects  throughout the entire area of the Community. 

The conclusions in relation to the customs protection  of such trade marks should now  therefore 
be drawn  and  a simplified  procedure  for  applying  for  action  introduced.  Under  such  a system, 
the holder of a Community  trade mark  should  be  able to make  a single  application  for  action, 
lodged in one Member State and valid in one or more Member States. 

(Article 3(3)) 

Since Community-wide  coverage  is not  systematically  required  and  as  fees  have  to be paid  in 
some  Member  States,  simplified  applications  for  action  (Community  trade  marks)  need  not 
automatically  cover  all  Member  States;  applicants  should  be  free  to  choose  the  Member 
State(s) in which protection  is required.  To facilitate  applications  relating to Community  trade 
marks,  standard  forms  should  be  introduced  based  on  a  specimen  form  laid  down  in  a 
Commission implementing regulation. 

OJL 11, 14.1.1994, p. 1. 

19 

(Article 3(4)) 

The Member  State  in which  the  application  for  action  is lodged  may request  the payment  of a 
fee  to cover the administrative  costs  arising  from  the processing  of the application.  In the case 
of  a  single  application  for  action  relating  to  Community  trade  marks,  the  Member  States  in 
which the application would  apply (other than the one in which it was lodged) would no longer 
be  able  to  charge  fees  despite  incurring  costs  when  putting  the  decision  to  take  action  into 
effect.  Provision  should  therefore  be  made  for  the  States  concerned  to  charge  a  fee  to  the 
applicant  or  the  applicant's  representative  so  as  to  cover  costs  incurred  in  implementing  a 
decision  approved  in another Member  State. The fees must not  in any case be  disproportionate 
to the service provided. 

(Article 3(5)) 

In the  interests  of  simplification,  decisions  to take  action  relating  to  a Community  trade  mark 
which  apply  in  several  Member  States  should  take  effect  for  the  same period  of  time  in  each 
Member  State  concerned.  In  order  to  take  account  of  the  variety  of  periods  of  validity 
which normally  apply  in  the  Member  States,  a  compromise  would  be  a  period  of  one  year, 
renewable once. 

(Article 3(9)) 

To  make  the  wording  clearer,  it  should  be  specified  that  applications  for  extension  should  be 
treated the same way as the original application for action. 

Point 5 (Article 5) 

To  avoid  the  lodging  and  processing  of  a  single  application  for  action  in  more  than  one 
Member State,  the  State  in  which  the  application  was  lodged  should  process  it  and  then 
forward  its decision to the competent  authorities of the other Member  States in which  customs 
protection  has  been  requested.  Those  States  would  then  be  bound  by  the  original  decision. 
However,  the  States  concerned  may  suspend  implementation  of  the  decision  until  any  fees  or 
securities they require have been paid or lodged. 

Point 6 (Article 7(2)) 

This amendment  follows  on  logically  from  the extension  of the  scope of the Regulation  to the 
protection  of  patents  on products  and  of  supplementary  protection  certificates,  by  specifying 
that,  in  certain  circumstances,  goods  suspected  of  infringing  a  patent  on  a  product  or  a 
supplementary  protection  certificate  may  be  released  or  their  detention  revoked  against 
provision  of  a  security.  It  also  specifies  the  terms  for  the  release  of  such  a  security.  These 
provisions  correspond  to  an obligation  laid  down  in the  Agreement  on Trade-Related  Aspects 
of Intellectual Property Rights (TRIPS)11. 

Annex  1  C; OJ L 336, 23.12.1994, p. 213. 

20 

Point  7 (Article 8(D) 

This amendment  follows  on from  the extension  of the scope of the Regulation to the  protection 
of patents on products and of supplementary  protection  certificates.  It  extends the rules already 
applicable to  other  counterfeit  or  pirated  goods to  goods  infringing  a patent  on  a product  or  a 
supplementary protection  certificate. 

Point 8 (Article 9(1)) 

The  rules  relating  to  compensation  for  the  right  holder  in  cases  where  counterfeit  or  pirated 
goods escape detection by a customs office,  even though  an application  for  customs  protection 
was made,  are a matter  for  the jurisdiction  of the Member  State in  which that  application  was 
made. The aim of this amendment is to ensure that, in cases where applications for  action relate 
to a Community trade mark and therefore  apply in several Member  States, the Member  State in 
which the goods escaped detection by a customs office  has jurisdiction in this respect. 

(Article 9(2)) 

The laws relating to responsibility in the event of damage caused by the competent  authorities in 
the  course  of  action  by  them  pursuant  to  this  Regulation  fall  within  the  jurisdiction  of  the 
Member  State in which the application  was made. The aim of this amendment  is to ensure  that, 
in cases where applications for  action  relate to  a Community  trade mark  and  therefore  apply in 
several  Member States, the Member  State in  which  the  damage  was  caused  has jurisdiction  in 
this respect. 

21 

Proposal  for a 
COUNCIL REGULATION  (EC) 

amending Regulation (EC) No 3295/94 laying down measures to prohibit 
the release for free circulation, export, re-export or entry for a 
suspensive procedure of counterfeit  and pirated  goods 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article  113 thereof, 

Having regard to the proposal from the Commission12, 

Having regard to the opinion of the European Parliament13, 

Having regard to the opinion of the Economic and Social Committee14, 

Whereas, pursuant to Article  15 of Council  Regulation  (EC) No 3295/9415, conclusions  should 
be drawn  from  the experience gained during the early years of its implementation  with  a view 
to improving the operation of the system it set up; 

Whereas  the  marketing  of  counterfeit  goods  infringing  patents  on  products  or,  where  they 
concern  patents  on  products,  supplementary  protection  certificates  for  medicinal  products  as 
provided  for  in  Council  Regulation  (EEC)  No  1768/92  of  18  June  1992  concerning  the 
creation of a supplementary  protection  certificate  for  medicinal products16,  as amended by the 
Act  of  Accession  of  Austria,  Finland  and  Sweden,  or  supplementary  protection  certificates 
for plant protection  products,  as  provided  for  in  Regulation  (EC)  No  1610/96  of  the 
European Parliament  and  of  the  Council  of  23  July  1996  concerning  the  creation  of  a 
supplementary  protection  certificate  for  plant  protection  products17  causes  serious  injury  to 
their  holders  and  constitutes  an  unfair  and  unlawful  business  activity;  whereas  such  goods 
should as far as possible be prevented  from being placed on the market and measures should be 
adopted to that end to deal effectively  with this unlawful  activity without  impeding the  freedom 
of  legitimate  trade;  whereas  this  objective  is  also  being  pursued  through  efforts  being  made 
along the same lines at international  level; 

Whereas, in order to guarantee  the integrity  of the Community's  external  frontier,  the  customs 
authorities  should be permitted  to take action  against counterfeit,  pirated  and  associated  goods 
whatever their customs status; whereas the release for  free  circulation  in the Community, entry 
for a suspensive procedure, re-export or placing in a free  zone or free  warehouse of such goods 
should therefore be prohibited; whereas moreover the customs authorities should be authorized 
to take action as soon as the said goods are brought into the Community; 

12  OJ 
13  OJ 
14  OJ 
15  OJL  341, 30.12.1994, p. 8. 
16  OJL  182, 2.7.1992, p. 1. 
17  OJL  198, 8.8.1996, p. 30. 

22 

Whereas,  as regards  suspensive  procedures,  free  zones  and  free  warehouses,  re-export  subject 
to  notification  and  temporary  storage,  the  customs  authorities  will  act  only  where  goods 
suspected to be counterfeit  or pirated are discovered during a check; 

Whereas  Council  Regulation  (EC)  No  40/94  of  20  December  1993  on  the  Community 
trade mark18, as amended by Regulation (EC) No 3288/9419, has established  a system whereby 
right  holders  can,  by  means  of  a  single  procedure,  obtain  Community  trade  marks  enjoying 
uniform  protection and producing their effects  throughout the Community; 

Whereas  to  enhance  the  Community  dimension  of  the  said  trade  mark  the  administrative 
procedure for obtaining customs protection should be  simplified; 

Whereas  trade  mark  holders  should  have  access  to  a system  whereby  the  granting  of  a single 
application  for  action  by  the  competent  authority  in  one  Member  State  can  bind  one  or  more 
other Member States as well; 

Whereas a single period  of validity  should be set  in the interests  of the uniform  application  of 
such decisions in the Member States concerned, 

HAS ADOPTED THIS REGULATION: 

Article 1 

Regulation (EC) No 3295/94 is hereby amended as follows: 

1. 

The title is replaced by the  following: 

"Council  Regulation  (EC)  No  3295/94  of  22  December  1994  laying  down  measures 
concerning  the  entry  into  the  Community  and  the  export  and  re-export  from  the 
Community of goods infringing  certain intellectual property  rights". 

2.  Article  1  is amended as follows: 

(a)  The second indent of paragraph  1(a) is replaced by the  following: 

"- 

found  in the course of checks on goods under customs supervision  within  the 
meaning  of  Article  37  of  Council  Regulation  (EEC)  No  2913/92  of 
12 October  1992 establishing the Community  Customs  Code  placed  under a 
suspensive  procedure  within  the  meaning  of  Article  84(1 )(a)  of  that 
Regulation, re-exported  subject  to notification  or placed in a free  zone or free 
warehouse within the meaning of Article  166 thereof; 

OJL  302,  19.10.1992, p. 1." 

18  OJL  11, 14.1.1994, p. 1. 
19  OJL  349, 31.12.1994, p. 83. 

23 

(b)  Paragraph 2 is amended as follows: 

(i) 

a fourth indent is added to point (a) as follows: 

"- 

goods  infringing,  in  the  Member  State  in  which  the  application  for 
action  by  the  customs  authorities  is  made,  a  patent  on  a  product 
under the  law  of  that  Member  State  or  a  supplementary  protection 
certificate  as provided  for by  Council  Regulation  (EEC) No  1768/92 
or Council Regulation (EC) No  1610/96** ; 

OJL  182, 2.7.1992, p. 1. 
OJL  198, 8.8.1996,p. 30." 

(ii)  Point (c) is replaced by the following: 

"(c)  "holder  of  a  right":  means  the  holder  of  a  trade  mark,  a  patent  on  a 
product  or  a  certificate,  as  referred  to  in  (a),  and/or  one  of  the  rights 
referred  to in (b), or any other person  authorized to use that trade mark, 
patent on a product, certificate  and/or right, or a representative  thereof. 

(iii)  The following points (e) and (f) are added: 

"(e)  "Community  trade mark" means the trade mark  defined  in Article  1 of 

Regulation (EC) No 40/94****. 

"certificate"  means  the  supplementary  protection  certificate  provided 
for  by  Regulation  (EEC)  No  1768/92  or  by  Regulation  (EC)  No 
1610/96." 

(f) 

nn 

OJL  11, 14.1.1994, p. 1." 

(c)  Paragraph 3 is replaced by the  following: 

"3.  Any  mould  or  matrix  which  is  specifically  designed  or  adapted  for  the 
manufacture  of  a  counterfeit  trade  mark  or  of  goods  bearing  such  a  trade 
mark,  of  goods  infringing  a patent  on  a product  or  a certificate  or of pirated 
goods  shall  be  treated  as  'counterfeit  or  pirated  goods',  as  the  case  may  be, 
provided  that  the  use  of. such  moulds  or  matrices  infringes  the  rights  of the 
holder  of  the  right  in  question  under  Community  law  or  the  law  of  the 
Member  State  in which  the  application  for  action by the  customs  authorities 
is made." 

(d)  The first subparagraph of paragraph 4 is replaced by the  following: 

"This Regulation shall not apply to goods which bear a trade mark with the consent 
of the holder of that trade mark or which are protected by a patent on a product or a 
certificate,  copyright  or  related  right  or  a  design  right  and  which  have  been 
manufactured  with the consent of the holder of the right but are placed  in one of the 
situations referred to in paragraph  1(a) without the latter's consent." 

24 

3.  Article 2 is replaced by the following. 

"Article 2 

The  entry  into  the  Community,  release  for  free  circulation,  export,  re-export,  placing 
under a suspensive procedure or placing in a free zone or free  warehouse  of goods  found 
to be counterfeit  or pirated on completion  of the procedure  provided  for  in Article 6 shall 
be prohibited." 

4.  Article 3 is amended as follows: 

(a)  The following  text is added as the second  subparagraph  of paragraph  1 : 

"Where  the  applicant  holds  a  Community  trade  mark,  the  application  may  seek 
action  not  only  by  the  customs  authorities  of  the  Member  State  in  which 
the application  is  lodged  but  by  the  customs  authorities  of  one  or  more  other 
Member States as well." 

(b)  Paragraphs 3 and 4 are replaced by the following: 

"3.  Save where the second subparagraph of paragraph  1 is applied, the application 
must specify  the length of the period during which the customs authorities  are 
requested to take action. 

Applications under  the  second  subparagraph  of paragraph  1 shall  indicate  the 
Member  State  or  States  in  which  the  customs  authorities  are  requested  to 
take action. 

4. 

The applicant may be charged  a fee to cover the administrative  costs  incurred 
in dealing with the application. 

The applicant  or  his representative  may  also  be  charged  a fee  in  each  of  the 
Member  States  where  the  decision  granting  the  application  is  effective  to 
cover the costs incurred in implementing the said decision. 

Such fees shall not be disproportionate to the service provided." 

(c)  The following third subparagraph shall be inserted into paragraph 5: 

"Where  an application  is  submitted  under  the  second  subparagraph  of  paragraph  1 
the said period shall be set at one year, but may be extended for a further  year, at the 
right holder's request, by the service which took  the original  decision". 

(d)  The following  paragraph  9 is added: 

"9.  The  provisions  of  paragraphs  1  to  8  shall  apply  mutatis  mutandis  to  the 

extension of the decision on the original application." 

25 

5.  Article 5 is replaced by the following: 

"Article 5 

1. 

The  decision  granting  the application by the  holder  of the  right  shall  be  forwarded 
immediately  to  the  customs  offices  of  the  Member  State  which  are  liable  to  be 
concerned with the goods alleged in the application to be counterfeit  or pirated. 

2.  Where  an  application  is  submitted  under  the  second  subparagraph  of  Article  3(1), 
the  first  indent  of  Article  250  of  Regulation  (EEC)  No  2913/92  shall  apply 
mutatis mutandis  to  the  decision  granting  the  said  application  and  the  decisions 
extending or repealing it. 

The service which adopted  those decisions  shall forward  certified  copies thereof  to 
the  relevant  service  of the  customs  authority  in the Member  State  or  States  where 
the applicant has requested that action be taken. 

The  Member  State  or  States  so  notified  shall  immediately  acknowledge  receipt  of 
the decisions referred  to in the first subparagraph. 

The  period  referred  to  in  the third  subparagraph  of Article  3(5)  shall  run  from  the 
date  on  which 
the  application  was  adopted  The 
Member States to which the said decision is addressed  may suspend  implementation 
until the fee referred  to in the second subparagraph of Article 3(4) has been paid and 
the security referred  to in Article 3(6) has been provided." 

the  decision  granting 

6.  Article 7(2) is replaced by the following: 

"2 

In  the  case  of  goods  suspected  of  infringing  patents  on  products,  certificates  or 
design rights, the owner, the importer or the consignee of the goods shall be able to 
have the goods in question released or their detention revoked  against provision of a 
security, provided that: 

the  customs  service  or  office  referred  to  in  Article  6(1)  has  been  informed, 
within  the  time  limit  referred  to  in  paragraph  I,  that  the  matter  has  been 
referred  to  the  authority  competent  to  take  a  substantive  decision  referred  to 
in the aforesaid  paragraph 1, 

on expiry of the time limit, the  authority  empowered  for this purpose has not 
imposed interim measures, and 

all the customs formalities have been completed. 

The security must be sufficient  to protect  the interests of the holder of the right. Payment 
of the  security  shall be without  prejudice  to  the other  remedies open to  the holder  of the 
right. Where the matter has been referred  to the authority competent to take a substantive 
decision other than on the initiative of the holder  of the patent  on a product,  certificate  or 
design  right,  the  security  shall  be  released  if  that  person  does  not  exercise  his  right  to 
institute  legal  proceedings  within  20  working  days of the  date  on  which  he  is notified  of 
the  suspension  of  release  or  detention.  Where  the  second  subparagraph  of  paragraph  1 
applies, this period may be extended to a maximum of 30 working days." 

26 

7. 

The introductory  wording of Article 8(1 ) is replaced by the  following: 

"Without  prejudice  to  the  other  forms  of  legal  recourse  open  to  the  right  holder, 
Member States shall adopt the measures necessary to allow the competent  authorities:" 

8. 

In Article 9, paragraphs  1  and 2 are replaced by the following. 

"1. 

2. 

Save  as  provided  by  the  law  of  the  Member  State  in  which  an  application  in 
accordance  with  Article  3(2)  is  lodged  or,  in  the  case  of  an  application  under  the 
second  subparagraph  of  Article  3(1),  in  which  counterfeit  or  pirated  goods  escape 
detection  by a customs  office,  the  acceptance  of an application  shall not  entitle  the 
holder of a right  to  compensation  where  such goods  are not  detected  by a customs 
office  and  are  released  or  no  action  is  taken  to  detain  them  in  accordance  with 
Article 6(1). 

Save as provided  by the law  of the Member  State  in  which  the  application  is made 
or,  in the  case  of  an  application  under  the  second  subparagraph  of  Article  3(1), in 
which  loss  or  damage  is incurred,  exercise  by  a  customs  office  or  by  another  duly 
empowered  authority  of  the  powers  conferred  on  them  in  regard  to  combating 
counterfeit  or  pirated  goods  shall  not  render  them  liable to  the  persons  involved  in 
the  operations  referred  to  in  Article  1(1 )(a)  or  Article  4,  in  the  event  of  their 
suffering  loss or damage as a result of their action." 

Article 2 

This Regulation shall enter into force on the twentieth day following that of its publication in the 
OffwialJournal of the European Communities. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels, 

For the Council 
The President 

27 

Number of cases since 1 July  1995 

ANNEX II 

Member State 

Latter half of 
1995 

First half of 
1996 

Latter half of 
1996 

First half of 
1997 

TOTAL 

Belgium 

17 

28 

40 

Denmark 

Germany 

Spain 

France 

42 

29 

127 

139 inc. 
69 P and 9 T 

39 inc. 
34 P and 0 T 

23 inc. 
17 P and 5 T 

48 inc. 
18 P and 4 T 

214 inc. 
11 P 

432 inc. 
34 P 

541 inc. 
20 P 

657 inc. 
12 P and 347 T 

1 844 inc. 
77 P and 347 T 

12 inc. 
2 P and  2 T 

61 inc. 
OP and  10 T 

219 inc. 
OP and  127 T 

167 inc. 
OP and  104 T 

459 inc. 
2 P and 243 T 

196 inc 
7Pand  159 1 

86 inc. 
4 P and 23 T 

105 inc. 
0  P and  23 T 

140 inc. 
11 P and 60 T 

527 inc. 
22 P and 265  I 

Ireland 

0 

Italy 

21 

3 

18 

0 

27 

Luxembourg 

3 

71 

18 

The  Netherlands 

NC 

117 inc. 
26 P and 54 T 

135 inc. 
40 P and 61 T 

138 inc. 
63 P and 46 T 

390 inc. 
129 P and  161 T 

Finland 

Sweden 

1 

16 

46 inc. 
1  P a n d l 2T 

63 inc. 
1 Pand  12 T 

United  Kingdom 

65 

137 

108 

177 

487 

TOTAL 

548 inc. 
54 Pand  161 T 

914 inc. 
81 Pand  92 T 

1 239 inc. 
78 Pand  215 T 

1 432 inc. 
87 P and 569 T 

4  133 inc. 
300 P and  1  037 T 

NC = Not  communicated 
P  = Postal  consignments 
T  = Travellers'  baggage 

28 

Number of cases by type of goods concerned since 1 July 1995 

Type of 
goods 

BE  DK  DE 

ES 

FR 

IR 

IT 

LU  NL  FI  SV  UK  Total 

Clothing 

51 

119 

1 215 

123 

305 

24 

195 

44 

330 E 413 

Footwear 

52 

26 

20 

20 

Watches 

12 

79 

234 

99 

49 

2S 

506 

Audio 
cassettes 

Logos, 
pendants, 
badges, 
emblems, 
labels, 
stickers 

Bags 

Motor 
vehicle parts 

0 

Sunglasses 
Toys 
Caps 
Video games 
Micro 
processors 

5 
3 
12 
6 
2 

CDs 
Video 
cassettes 

122 

13 

13 

18 

5 
47 
56 
34 
8 

2 
1 
0 
15 
0 

10 

12 

11 

0 

6 
0 
22 
2 
12 

13 

9 
4 
34 
3 
0 

19 
9 
19 
0 
0 

0 
6 
2 
10 
0 

127 

70 

57 

23 

48 
79 
155 
73 
25 

16 

22 

10 

79 

1 

15 

0 

21 

29 

BRIEF OVERVIEW 

1. 

4 133 cases were reported during the period in question (July  1995-June 1997) 

(44.6%) 
(12.7%) 
(11.7%) 
(11.1%) 
(9.4%) 
(3.3%) 
(3%) 
(1.7%) 
(1.5%) 

1 844 ^> 
5 2 7^ 
487 <^> 
459 O 
390 => 
139^> 
1270 
7 1* 
63 O 
1 8* 
50 
3* 

DE 
FR 
* 
UK 
•=> 
ES 
* 
NL 
DK 
* 
BE  O 
* 
IT 
* 
FI 
LU 
SV 
IR 

Type of  trafficking 

Of the 4  133 cases: 

300 
1 037 

* 
* 

postal consignments (7.2%) 
travellers' baggage (25%) 

Type of products 

Of the 4  133 cases: 

2 413 ^ 

clothing (mainly T-shirts, shirts, jeans and sportswear) (58.3%) 

5 0 6*  watches (12.2%) 
155* 
caps (3.7%) 
127 *  music cassettes (3%) 
120* 

footwear  (2.9%) 

NB: 

* 

* 

70  cases  involved  trade  mark  symbols  (logos,  labels,  sticker,  badges,  etc.) 
(an innovation  of Regulation  (EC)  No  3295/94).  Most  involved  considerable 
quantities. For instance, seizures in the UK included: 
20 400 "Lacoste" logos (7 May 1996) 
24 500 "Versace" logos (6 December  1995) 
60 000  "Nike",  "Ralph  Lauren"  and  "Yves  Saint-Laurent"  labels  from 
Pakistan ( 17 October  1996) 
75 000 "Levi's" logos, buttons and rivets (5 October  1995) 
75 000  "Ralph  Lauren"  and  "Yves  St-Laurent" 
(14 March  1997) 
79 900 "Calvin Klein", "Timberland Ltd", "Kickers" and "Ellesse" labels  from 
Pakistan (15 January  1997). 
79 cases involved toys (mainly scale models, balls, cuddly toys etc.). 

labels  from  Turkey 

30 

4. 

Noteworthy cases 

800 000 MBicM pens (15 November 1996, Belgium) 
483 000 "Clipper Flamagas" lighters from Hong Kong (27 May 1997, Spain) 
150 000 "Bic" pens from Hong Kong (12 February 1997, France) 
144 000 "Christian Dior" shirts (September1996, Belgium) 
More than 140 000 CDs have been seized in Luxembourg 
135 000 "Disney" badges from China (26 March 1997, France) 
129 000 caps counterfeiting a number of sports firms (6 May  1996, Belgium) 
100  000  "Christian  Dior"  shirts  destined  for  Russia  (12  November  1996, 
Finland) 
87 000 "Disney" scarves from Korea (22 July 1996, France) 
60  000  "Bugs  Bunny"  and  "Tweety  Pie"  key-rings  ("Warner  Bros") from 
China (26 September 1996, Germany) 
65 000 teddy bears from China ( 1  October  1996, France) 
60 000 "Armani" shirts destined for Russia (23 January 1997, Finland) 
58 000  "Nike",  "Armani",  "W.  Bros",  "Disney",  "Adidas",  "Boy  London", 
"Casio",  "Levi's",  "Guess",  "Coca"  and  "Ralph  Lauren"  watches  from 
Hong Kong (21 January  1997, France) 
55 000 "Walt Disney" cotton ensembles from China (29 April  1997, Spain) 
50 000 litres of "Newman" toilet water from Algeria (24 June  1996, France) 
58  000  "Nokia",  "Coca  Cola",  "Marlboro"  and  "Motorola"  lighters  from 
China (final quarter of 1996, Netherlands) 
42  000  "Versace"  women's  shoes  destined  for  Russia  (2  February  1997, 
Finland) 
41 000 "Armani" shirts destined for Russia (14 January 1997, Finland) 
37 000 "Nintendo" video games from Japan (date not reported, Netherlands) 
34 000 "Tweety" key-rings from China (second quarter of 1997, Netherlands) 
34 000 "Michael Jordan" sports shoes destined for Russia 
(14 March 1997, Finland) 
33 000 "Smurf ' garden gnomes from China destined for France 
(11 April 1997, Belgium) 
33 000 "Reebok" sports shoes destined for Russia (3 January 1997, Finland) 
33 000 pairs of "Calvin Klein" underwear from the USA (24 July 1996, Spain) 
32 000 "Nintendo" video games destined for Russia 
(21 February 1997, Finland) 
30 000 pairs of "Dunlop" socks from Turkey (25 January 1996, Germany) 
28 000 footballs from Pakistan (10 November 1996, Germany) 
27 000 CDs from Israel (first quarter of 1996, Italy) 
25 000  "Levi  Strauss"  and  "Calvin  Klein" 
(15 November 1996, Italy) 
24 000 CDs from the Czech Republic (22 April 1997,-Luxembourg) 
22 000 "Mattel" watches from Hong Kong (23 December 1996, France) 
22 000 "Walt Disney" rings from South Korea destined for Poland 
(26 May 1997, Germany) 
21 000 pairs of "Levi's" (23 August  1996, Belgium) 
21 000 "Happy Baron" pans (14 containers) (July  1996, Belgium) 
21 000 "Nintendo" video games from Hong Kong (January  1996, Belgium) 
20 000 watches and  10 000  caps ("Nike",  "Fila" et  "Boy London")  from the 
USA (June 1996, Belgium) 
20 000 T-shirts (various brands) from Thailand (June 1996, Belgium) 

from  China 

jeans 

v 

31 

* 
* 

* 
* 
* 
* 
* 
* 

* 
* 

* 

* 

* 

20 000 "Lewis" and "Diesel" sweatshirts (6 November  1996, Belgium) 
19 000 "Walt Disney" balls from the Czech Republic on  13 February  1996 and 
15 000 more on 24 September  1996 (Germany) 
19 000 "Peugeot" motor vehicle parts from  Taiwan (29 March  1996, France) 
18 000 pairs of "Levi's" jeans (30 April  1996, Belgium) 
16 700 "Walt Disney" balls from  Taiwan (21 May  1996, Spain) 
16 000 "Nintendo" video games (6 November  1996, Belgium) 
16 000 "FC Bayern" footballs from Pakistan (11 November  1996, Germany) 
15 000  pairs  of  "Calvin  Klein"  jeans  and  3000  shirts  destined  for  Russia 
(24 January  1997, Finland) 
15 000 pairs of "Ray Ban" sunglasses from  China (15 February  1996, France) 
15 000  pairs  of  "Ray  Ban",  "Sting"  and  "Police"  sunglasses  from  China 
(April  1996, Belgium) 
15  containers  of  pottery  "Walt  Disney"  characters  from  China  destined  for 
France (April-May  1997, Belgium) 
8 cases in Germany involved garden gnomes (175 items) (copyright  or  design 
rights, depending on the case) 
3 cases in Germany involved 2 200 litres of vodka from Latvia. 

5. 

The customs procedures and intellectual property rights concerned 

NB: 

Such  figures  are  available  only  for  Italy  from  1 July  1995,  Germany,  France  and 
Ireland  from  1  January  1996,  Belgium  from  1 January  1997  and  Denmark,  Spain 
and Finland from 1  April  1997. 

Of the 2  165 cases concerned: 

1 5 1 7* 
3 8 3* 
190* 
6 4* 
6* 
1 962 * 
206 * 
126 * 

release for free circulation (70%) 
unlawful  import (17.6%) 
re-export  (8.7%) 
placing under a suspensive procedure (2.9%) 
export  (0.2%) 
trade marks (90.6%) 
copyright and related rights (9.5%) 
design rights (5.8%) 

32 

6. 

Source of the counterfeit  goods 

Of the 4  133 cases: 

* 
Poland 
* 
Thailand 
* 
Turkey 
* 
USA 
* 
Hong Kong 
China 
* 
Czech Republic  * 
* 
South Korea 
* 
Indonesia 
* 
Taiwan 

17.9%) 
17.5%) 
12%) 
10.5%) 
5.8%) 
4.7%) 
3.6%) 
2.3%) 
1.2%) 
1.1%) 

* 
* 
* 
* 
* 

740 
724 
497 
438 
243 
195  * 
151  * 
98  * 
53  * 
46  * 

NB: 

In  Germany  most  cases  involved  products  arriving from Poland,  Turkey  and 
the Czech Republic. 

In Spain most cases involved products arriving from the United States. 

33 

ISSN 0254-1475 

COM(98) 25  final 

DOCUMENTS 

EN 

02  10  11 

Catalogue  number  :  CB-CO-98-028-EN-C 

ISBN 92-78-30270-8 

Office  for Official  Publications of the European  Communities 

L-2985  Luxembourg 

34