COMMISSION STAFF WORKING PAPER SUMMARY OF THE IMPACT ASSESSMENT  COMMISSION STAFF WORKING PAPER SUMMARY OF THE IMPACT ASSESSMENT
Date: 2011-05-24
Institutions: European Commission
Subjects: customs inspection, frontier, intellectual property, surveillance concerning imports

EUROPEAN COMMISSION 

Brussels, 24.5.2011 
SEC(2011) 598 final 

COMMISSION STAFF WORKING PAPER 

SUMMARY OF THE IMPACT ASSESSMENT 

Accompanying document to the 

Proposal for a 
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

concerning customs enforcement of intellectual property rights 

{COM(2011) 285 final} 
{SEC(2011) 597 final} 

 
 
 
 
  
 
1. 

BACKGROUND 

A  fundamental  component  of  the  EU  system  to  enforce  intellectual  property  rights 
(IPR) is Council Regulation (EC) No 1383/2003 of 22 July 2003, concerning customs 
action  against  goods  suspected  of  infringing  certain  intellectual  property  rights  and 
the measures to be taken against goods found to have infringed such rights1 (hereafter, 
“the Regulation”).  

The  Regulation  implements  the  border  enforcement  measures  contained  within  the 
Agreement  on  Trade  Related  aspects  of  Intellectual  Property  Rights  (TRIPS).  The 
TRIPS Agreement was approved by the EU Council in 1994 as part of the multilateral 
negotiations  of  the  Uruguay  Round  and  concluded  in  the  framework  of  the  World 
Trade  Organisation.  In  fact,  the  Regulation  goes  further  in  terms  of  border 
enforcement  than  the  basic  requirements  in  TRIPS,  thereby  reflecting  the  EU’s 
commitment to high protection of IPR. 

Under  the  Regulation,  EU  customs  authorities  are  able  to  take  action  against  goods 
suspected  of  infringing  certain  intellectual  property  rights  which  are  under  customs 
supervision.  The  mechanism  envisaged  is  that  once  suspected  goods  have  been 
detained  by  customs,  customs  authorities  notify  the  right-holder  of  their  action  and 
provide him with a short period to initiate legal proceedings (standard procedure) or, 
if  the  simplified  procedure  has  been  implemented  by  the  Member  State  where  the 
goods have been detained, to reach an agreement with the other concerned parties to 
have the goods abandoned for destruction under customs supervision. 

The  EU  and  other  developed  economies  represent  attractive  markets  for  IPR 
infringing goods and customs have identified a steady increase in the quantity of such 
goods over the last 10 years. In September 2008 the Council invited the Commission 
and the Member States to review the Regulation and to develop a new customs action 
plan  to  combat  IPR  infringements  for  the  years  2009-2012.  This  Action  Plan2, 
prepared  by  the  Commission  and  endorsed  by  the  Council,  was  developed  to  tackle 
four main challenges: dangerous counterfeit goods, organised crime, globalisation of 
counterfeiting  and  the  sale  of  counterfeits  over  the  internet.  The  review  of  the 
Regulation was incorporated into the plan and was carried out by the Commission, in 
close  collaboration  with  the  Member  States  through  an  expert  group  under  the 
Customs 2013 Programme. 

The  Commission  also  carried  out  a  public  consultation  to  give  all  stakeholders  an 
opportunity  to  contribute  to  the  review.  The  period  of  the  consultation  was  from  25 
March, 2010 to 7 June 2010 and the Commission received 89 contributions. Of these, 
43  were  from  organisations  and  enterprises  registered  in  the  register  of  interest 
representatives  of  the  European  Commission,  42  from  non-registered  organizations, 
companies and citizens and 4 from national public authorities.  

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2 

OJ L 196, 2.8.2003, p. 7–14. 
Council  Resolution  of  16  March  2009  on  the  EU  Customs  Action  Plan  to  combat  IPR 
infringements for the years 2009 to 2012 (OJ C 71, 25.3.2009, p. 1). 

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Certain  instances  of  detentions  by  customs  authorities  of  shipments  of  medicines  in 
transit  through  the  EU,  which  occurred  at  the  end  of  2008,  gave  rise  to  concerns 
among  certain  Members  of  the  WTO,  Members  of  the  European  Parliament,  NGOs 
and the civil society. It was claimed that such measures could hamper legitimate trade 
in generic medicines, thus contradicting the EU commitment to facilitating access to 
medicines  in  the  developing  world.  On  11  and  12  May  2010  India  and  Brazil 
respectively  requested  consultations  with  the  EU  at  the  WTO  in  that  regard.  The 
concerns  raised  by  India  and  Brazil  during  the  WTO  consultations,  as  well  as  the 
incidents  of  detentions  have  shown  that  the  relevant  EU  legislation  for  intellectual 
property  enforcement  by  customs  authorities  could  benefit  from  further  clarification 
to increase legal certainty. 

2. 

PROBLEM DEFINITION 

The  above  mentioned  Action  Plan  detailed  several  elements  of  the  Regulation  that 
should  be  examined.  These  elements  included  provisions  related  to  simplified 
procedures,  small  consignments,  destruction,  costs  and  storage  and  a  potential 
extension of the scope of the Regulation, all of which were examined in the course of 
the review. Three main issues were identified in the review, in relation to combating 
IPR infringing goods.  

- Problem I - Some IPRs are not enforced by customs at the EU border. The current 
Regulation  provides  for  the  enforcement  of  a  broad  range  of  IPR  established  under 
EU or national law, including trademarks, copyrights, patents, plant variety rights and 
geographical indications, but the list does not cover all types of IPR. Topographies of 
semiconductor  products  for  example  are  not  covered.  Furthermore,  other  types  of 
infringements are also  currently  excluded from  the  scope  of  the  Regulation,  notably 
with regard to parallel trade and overruns. 

-  Problem  II  -  Administrative  procedures  to  enforce  IPR  are  considered  to  be 
burdensome to customs and right-holders, especially in relation to small consignments 
resulting from internet sales.  

- Problem III - Certain aspects of the administrative procedures could be interpreted in 
a  manner  that  leads  to  an  unbalanced  approach  towards  different  legitimate 
stakeholders. Certain general legal principles as developed and interpreted through the 
jurisprudence of the Court of Justice of the EU are not presently codified sufficiently 
in  the  Regulation  (e.g.  right  to  be  heard  or  liability  of  customs  authorities).  These 
principles  emerge  from  the  EU’s  international  obligations  in  the  framework  of  the 
WTO,  as  well  as  the  Lisbon  Treaty  and  in  particular,  the  Charter  of  Fundamental 
Rights. 

3. 

THE RIGHT OF THE EU TO ACT 

The  European  Union  has  exclusive  competence  in  the  area  of  common  commercial 
policy,  as  provided  for  in  the  Treaty  on  the  Functioning  of  the  European  Union 
(TFEU). The TFEU defines common commercial policy and the commercial aspects 
of intellectual property are expressly included within this definition.  

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4. 

OBJECTIVES 

The general objective is to ensure that customs measures and procedures concerning 
border  enforcement  of  IPR  are  effective  and  consistent  with  all  relevant  legal 
obligations. The policy shall in particular pursue the following specific objectives: 

(i) improve IPR enforcement at the border.  

(ii)  limit  administrative  and  economic  burdens  on  customs  and  right-holders, 
especially small and medium enterprises.  

(iii)  clarify  and  revisit  any  provision  which  may  be  perceived  as  imbalances  in 
administrative procedures.  

5. 

POLICY OPTIONS 

Three main options emerge as those most realistic and feasible:  

i) Policy option A – Baseline scenario, where no action is taken. 

ii) Policy option B – Use of non-legislative instruments, such as training, guidelines, 
explanatory notes, exchange of best practices, regular contacts with the stakeholders. 

iii)  Policy  option  C  –  Amendment  of  the  Regulation,  where  the  existing  legal 
framework  would  be  modified.  Different  options  could  be  available  for  each  of  the 
different identified problems. Amendments to all or some of the following provisions 
could be envisaged: 

-  with  regard  to  problem  I,  concerning  the  extension  of  the  scope  of  customs 
enforcement,  two  sub-options  could  be  taken  into  consideration:  (i)  the  first  sub-
option would be to extend the scope of IPR infringements to cover all infringements 
of the types of IPR already included in the Regulation, and (ii) the second sub-option 
would  be  to  include,  in  addition  to  the  extension  proposed  in  the  first  sub-option, 
goods infringing IPRs not already covered by the Regulation; 

-  with  regard  to  problem  II,  the  introduction  of  a  mandatory  system  for  simplified 
destruction  of  IPR-infringing  goods,  subject  to  clarified  conditions  and  adequate 
safeguards  and  the  introduction  of  a  specific  simplified  procedure  for  small 
consignments; 

- with regards to problem III, the introduction of further clarity concerning goods that 
are  merely  transiting  the  EU  and  not  destined  for,  nor  pose  a  risk  of  being  diverted 
onto the EU internal market and the introduction of further clarity in the procedures, 
to increase legal certainty for all legitimate stakeholders. 

Such amendments should not preclude additional support measures. 

However, it is not the intention of the assessment to compare the likely merits of those 
three options, with a view to deciding solely to maintain the baseline scenario, or to 
introduce non-legislative instruments, or to make a legislative proposal. The aim is to 

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consider  each  specific  problem  against  relevant  criteria,  with  a  view  to  finding  the 
appropriate mix of possible solutions. 

6. 

ASSESSMENT OF IMPACTS OF OPTIONS 

6.1. 

Introduction 

There is consensus across the board that there is a lack of credible data in this field. 
The main source of information is the annual report3 on EU customs enforcement of 
IPR. However, there is little credible information on illicit activities and the absence 
of data on the volume of EU external trade in goods infringing IPR or of the situation 
on  the  internal  market  renders  an  assessment  of  the  possible  impact  of  any  option 
difficult. In addition, it is not possible to determine to what extent customs authorities 
would  identify  and  act  upon  these  infringing  goods,  as  the  success  of  the  measures 
does  not  solely  depend  on  the  decision  to  modify  the  legislation.  In  these 
circumstances, only a quality assessment is possible. 

The  assessment  considers  the  impacts  of  addressing  the  three  general  problems 
identified  in  the  review,  which  may  require  amendments  to  the  Regulation.  These 
technical  problems  are  not  necessarily  closely  inter-linked,  therefore  policy  options 
for each separate problem were drawn up and assessed with specific criteria.  

6.2. 

Problem I: Some IPRs are not enforced by customs at the EU border 

The  level  of  IPR  enforcement  in  the  EU  territory  would  be  slightly  improved  by 
extending the current scope of the Regulation in terms of IPR infringements covered. 
The main focus for customs control has been on counterfeit products; in 2009, 90% of 
the  articles  detained  by  customs  allegedly  infringing  IPR  were  counterfeit  products. 
This  seems  to  indicate  that  customs  authorities  are  mainly  finding  those  IPR 
infringements, which are more visible and easier to identify. In principle, one would 
not expect that the simple amendment of the Regulation to include within its scope, 
goods involving more complex IPR infringements could lead to a radical shift in the 
type of customs interceptions.  

Nevertheless,  a  relatively  significant  impact  from  the  introduction  of  provisions 
enabling customs to act on confusingly similar trademarks and illicit parallel trade, in 
particular  with  regards  to  trademarks  should  not  be  discarded,  even  though  it  is  not 
possible to measure the effect in advance.  

There would be an impact in terms of costs for customs authorities, international trade 
service providers and right-holders. As the level of trade in these infringing goods is 
unknown, it is not possible to estimate the costs, though the cost of enforcing IPR at 
the  border  to  an  equivalent  level  in  the  internal  market  would  be  lower  as  the  right 
holder would need to initiate less legal proceedings, since the shipment of infringing 
goods would not have been disaggregated and delivered to retailers.  

3 

The reports on statistics can be found at 
http://ec.europa.eu/taxation_customs/customs/customs_controls/counterfeit_piracy/statistics/i
ndex_en.htm 

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The  risk  of  hindering  legitimate  trade  by  enforcing  IPR  at  the  border  would  be 
increased.  It  might  be  difficult  for  customs  authorities  to  assess  some  of  the  IPR 
infringements  that  could  be  added,  thus  introducing  an  added  risk  that  decisions  to 
detain goods might be unfounded.  

The enforcement of new IPR at the border is not expected to have a significant social 
and environmental impact.  

6.3. 

Problem II: Administrative procedures to enforce IPR are burdensome 
to customs and right-holders 

6.3.1.  Lack of implementation of the simplified procedure in some Member States  

Currently,  the  simplified  procedure,  whereby  goods  may  be  abandoned  for 
destruction, is provided for in the Regulation on an optional basis and in consequence 
has not  been implemented in all Member States.  Introducing  mandatory  rules  in  the 
Regulation  providing  for  a  simplified  procedure  would  harmonise  the  customs 
enforcement  of  IPR  in  the  EU  and  would  reduce  the  administrative  burdens  of 
detentions  relating  to  IPR  enforcement,  for  all  parties  concerned,  in  those  Member 
States, where this has not been implemented. 

6.3.2.  Sales of IPR infringing goods on the internet 

the  standard,  as  well  as 

Significant quantities of small shipments containing suspected IPR infringing goods, 
are sent by post or courier and relate to goods being ordered or sold via the internet. 
The  application  of 
is 
disproportionate in relation to the amount and value of the infringing goods, as far as 
small  consignments  are  concerned  (baseline  scenario).  Amending  the  Regulation  by 
providing the parties with the possibility to abandon the goods in certain cases where 
the infringement appears to be clear, without the right-holders being involved, would 
reduce significantly the burden for right-holders and customs. This would increase the 
effectiveness of customs to stop goods sold via internet. 

the  simplified  procedure, 

Some non-legislative measures could be adopted in an attempt to tackle the increasing 
flow  of  small  parcels,  but  new  administrative  procedures  could  not  be  introduced 
without making legislative changes to the procedures as described in the Regulation.  

6.3.3.  Social and environmental impacts 

All  measures  on  administrative  procedures  are  proposed  in  order  to  lower  the 
administrative burden for government and business. 

The  introduction  of  a  special  administrative  procedure  for  small  consignments 
(legislative  measures  option)  to  fight  the  increasing  number  of  goods  ordered  and 
shipped following a sale via the internet will have an effect on consumers in the sense 
that these infringing goods will not reach them. The Commission’s most recent report 
on  EU  customs  enforcement  of  intellectual  property,  concerning  2009,  noted  that 
more  and  more  potentially  dangerous  items,  used  by  European  consumers  in  their 
daily  lives,  were  now  being  detained  by  customs  (baseline  scenario  and  non 
legislative instruments).  

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No environmental impacts were identified with this problem. 

6.4. 

Problem III: Certain aspects of the administrative procedures could be 
interpreted in a manner that leads to an unbalanced approach towards 
different legitimate stakeholders 

The application by EU customs authorities of provisions on restrictive or prohibitive 
measures to international trade, such as those related to the enforcement of IPR, must 
respect  international  obligations  and  commitments,  as  well  as  the  principles  of  EU 
law.  Such  measures,  insofar  they  belong  to  the  area  of  the  common  commercial 
policy, must be applied in a uniform way. In addition, those measures must be applied 
in a balanced manner, taking into consideration, on the one hand, the need to enforce 
the measures  effectively  and  on the other hand, the facilitation  as well  as respect of 
legitimate business. To that end and to avoid unfounded action, the provisions must 
provide legal certainty.  

The  legislative  option  would  provide  legal  certainty  on  the  application  of  the 
Regulation, uniformity of application throughout the EU and would avoid the risk of 
unfounded detentions with regard to the identified problems. 

Non-legislative  options  could  address  some  of  the  identified  problems  by  clarifying 
the interpretation of the Regulation in the light of the EU's international obligations in 
the WTO and in light of the relevant basic principles of EU law, as established and 
interpreted by the Court of Justice of the EU. However, the risk of misinterpretation 
of the Regulation would remain. 

6.4.1.  Social and Environmental impacts 

The  clarification,  via  non-legislative  measures  or  legislative  measures,  on  certain 
aspects of the administrative procedures could have a positive impact on consumers in 
cases  where  they  are  involved  in  the  process,  for  example  as  recipients  of 
consignments  ordered  via  the  internet.  The  right  to  be  heard  and  the  question  of 
customs'  liability,  give  consumers  the  possibility  to  object  or  seek  compensation 
against any decision by customs authorities that might adversely affect them.  

The clarification of the Regulation concerning the issue of transit of shipments across 
the EU territory towards third countries, particularly with regard to medicines, could 
have a positive impact on consumers in those third countries. The likelihood of delays 
in the delivery of such medicines would thus be reduced. 

No environmental impacts were identified with these administrative procedures. 

6.5. 

Administrative burdens 

6.5.1.  Administrative burdens on business 

EU  customs  IPR  enforcement  is  based  on  an  application  for  action  having  been 
submitted  by  the  IP  right-holder.  It  is  for  the  offended  persons  to  initiate  legal 
proceedings  to  enforce  their  IPR.  Since  the  submission  of  an  application  is  not 
compulsory, the system and the proposed new options do not place any extra cost and 
obligations on right-holders, when compared to the current features of the Regulation, 

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which  already  encourages  right-holders  to  lodge  applications  electronically  when 
electronic data interchange system exists.  

In principle, whichever policy option is chosen with regard to the problems addressed 
in this assessment, the features presently associated with an administrative burden for 
right-holders  would  remain  to  a  certain  extent.  Introducing  a  specific  simplified 
procedure for small consignments containing counterfeit and pirated products, where 
the  goods  might  be  destroyed  without  the  involvement  of  the  right-holder,  would 
considerably reduce this burden.  

6.5.2.  Administrative burdens on customs administrations 

It  is  not  possible  to  analyse  the  impacts  of  the  different  options  in  relation  to  the 
different problems on administrative costs. Customs authorities perform their duty at 
the  border  of  the  Union  and  officers  will  control  a  broad  variety  of  laws  covering 
different  policy  areas.  Each  law  contains  specific  rules  related  to  the  protection  of 
intellectual  property  rights,  cash  controls,  safety,  health,  and  security  provisions, 
control  on  tax  issues  and  tariff  matters.  It  is  not  possible  to  measure  which  part  of 
each  control  is  dedicated  to  a  particular  policy,  so  data  concerning  administrative 
costs solely related to IPR enforcement is not available.  

The procedures to detain goods involving certain IPR infringements are in place in the 
EU since the 1st of January 1988. The extension of the scope of the Regulation would 
not therefore create a need to reorganise customs administrations. 

The  simplification  of  procedures  for  small  consignments  is  expected  to  reduce  the 
procedural steps and therefore the time spent on the treatment of each detention file. 
This  is  expected  to  counter-balance  the  possible  increase  of  destruction  costs  for 
customs as a result of more efficient procedures.  

7. 

THE PREFERRED OPTION 

The  legislative  option  offers  the  best  suitable  solution  to  address  the  problems  that 
emerged from the implementation of the present Regulation, such as non-harmonised 
or burdensome procedures, or those resulting from shortcomings, such as IP rights not 
covered  by  the  Regulation.  Introducing  procedural  clarifications  into  the  Regulation 
would  also  provide  the  maximum  legal  certainty  on  the  treatment  of  generic 
medicines in transit, when it comes to patent law. A Commission proposal to amend 
the present Regulation should preferably respond to all the problems addressed in this 
Impact Assessment, to ensure a balanced outcome in terms of benefits and constraints 
for all categories of affected persons.  

Non-legislative  measures  would  only  partially  address  the  identified  problems. 
Explanatory  notes  or  guidelines  could  help  clarify  the  applicable  procedure 
concerning  the  situation  of  transit  through  the  EU,  or  how  to  apply  the  general 
principles  of  law,  such  as  the  right  to  be  heard,  in  the  context  of  the  present 
Regulation.  However,  non-legislative  measures  cannot  address  the  objective  of 
widening the scope of IPRs to be enforced by customs.  

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In  some  instances,  a  combination  of  legislative  and  non-legislative  measures  should 
be  envisaged  to  support  the  implementation  of  the  new  Regulation.  However, 
retaining  the  status  quo  should  be  excluded  if  the  Commission  is  to  respond 
adequately  to  the  Council's  request  to  review  the  legislation,  and  to  the  concerns 
expressed by stakeholders during that process. 

8. 

LESSON LEARNED: THE NEED TO IMPROVE KNOWLEDGE ABOUT THE SCALE 
AND IMPACTS OF TRADE IN IPR INFRINGING GOODS 

One of the main constraints in assessing the impacts of any policy option in the field 
of  IPR  enforcement  is  the  lack  of  reliable  data.  Existing  data  on  the  trade  in  IPR 
infringing  goods  is  fragmented  and  not  comparable,  thus  making  it  difficult  to 
estimate  the  overall  scale  and  scope  of  the  problem,  the  impact  on  the  EU  and  the 
impact of any policy measures put in place to tackle that problem. 

To respond to this data shortage, the European Observatory on Counterfeit and Piracy 
has assumed, as one of its priority objectives, the aim of improving the collection and 
use of information and data. The Observatory was launched in 2009 and comprises of 
over  40  private  stakeholder  representatives,  the  27  Member  States  and  the 
Commission. 

The  Commission  identified  specific  issues  that  require  urgent  action.  For  example, 
while numerous studies have concluded that the international trade in counterfeit and 
pirated goods has  grown  steadily over the last decade, they are often challenged for 
not  being  comprehensive  or  for  using  incomparable  figures  resulting  from  different 
methodologies.  There  is  an  urgent  need  to  improve  this  situation  by  developing  a 
common  methodology,  for  use  by  private  and  public  sector  bodies,  so  that  robust 
reports can be produced, which outline the true scope and scale of the problem. Such 
reports  would  be  the  basis  for  more  evidence-based  policy  decisions  and  more 
focussed enforcement strategies. 

As a result a tender was launched for experts to assess the scope, scale and impact of 
counterfeiting  and  piracy  in  the  internal  market,  through  a  defined  methodology  for 
collecting,  analysing  and  comparing  data.  The  methodology  proposed  by  the 
contractor  should  result  in  key  indicators  that  would  be  applicable  throughout  all 
Member  States  and  sectors  and  which  could  be  used  in  future  studies  and  analysis. 
The  contractor  began  work  in  December  2010  and  will  firstly  identify  and  compile 
existing  studies  and  methodologies.  Secondly  on  the  basis  of  the  research,  the 
contractor will propose a preferred methodology, which will be used to quantify the 
scope  and  scale  of  counterfeiting  and  piracy  in  the  internal  market,  in  particular 
focusing  on  its  implications  on  various  areas,  like  innovation,  growth  and 
competitiveness,  creativity  and  culture,  public  health  and  safety,  employment, 
environment, tax revenues, crime. 

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