Last month, the European Parliament passed legislation and the European Court of Justice (CJEU) handed down a ruling that expands trade-related intellectual property (IP) protections in the European Union (EU) and beyond. Particularly, the European Parliament passed laws granting EU customs officials the ability to detain trademark counterfeit transshipments transiting the EU, while the CJEU ruled that EU customs authorities can seize counterfeit goods in the EU that were purchased for personal use from sellers outside the EU. Although these are positive developments that provide IP rights holders the ability to stem the flow of infringing goods, and ultimately better enforce their IP rights across borders, they also have important requirements and limitations that need to be understood.
Counterfeit Transshipments. On February 25th, the European Parliament approved amendments to the EU’s main trademark act (Council Regulation (EC) 207/2009) that will permit EU customs authorities to seize suspected trademark counterfeit goods that are being transshipped through the EU. According to reports, these reforms follow previous limitations on customs seizures that were handed down in recent CJEU decisions. Particularly, a joint 2011 CJEU decision (Koninklijke Philips Electronics NV v. Lucheng Meijing Industrial Co. Ltd. (C-446/09) and Nokia Corporation v. HMRC (C-495/09)) held that copyright and trademark counterfeit goods could only be seized by EU customs officials if they were intended for sale in the EU, and not merely transiting through EU territory.
The new Directive (T7-0118/2014) is an attempt to reverse (in part) the 2011 joint CJEU ruling by granting EU trademark owners expanded rights to legal action. According to the legislative text, a EU trademark owner will have the right to prevent others from bringing non-circulated goods into the EU that bear the owner’s trademark without authorization. This includes the “right to request national customs authorities to take action in respect of goods which allegedly infringe the [IP rights holder’s] rights.”
Beyond giving IP rights holders valuable protection against the flow of counterfeit goods into the EU, the Directive also has IP protection implications beyond Europe. According to the latest statistics available from the World Shipping Council, eight of the 50 largest container ports in the world are located in the EU. The Directive thereby gives IP rights holders the ability to stop counterfeit goods leaving a substantial number of the world’s major transshipment points, thereby limiting the global dissemination of goods infringing their marks.
Although the reforms are a welcomed enhancement of cross-border protections for IP rights holders, there are a few considerations and limitations IP rights holders should be aware of:
Trademarks Only. The Directive only applies to trademarks. Although an IP rights holder can register their EU trademarks, copyright, patents and geographical indications for monitoring by EU customs officials, the Directive’s transshipment protections only apply to trademark counterfeit goods. Similar measures may be soon adopted to prevent transshipments of counterfeit copyright goods through the EU as the European Commission is currently evaluating copyright reforms. Yet, the Directive’s exclusion of copyright counterfeit goods is particularly problematic as copyright counterfeit goods constitute a substantial amount of counterfeit goods being transshipped through the EU and other major markets.
Community Trademark Registration Required. To qualify for transshipment counterfeit protections under the Directive, a trademark owner would likely need to register their mark on a community-wide (EU) level with the Office of Harmonization for the Internal Market (OHIM). Each EU member state maintains their own trademark offices, granting a registered mark exclusive protection in their state respectively. Yet, a trademark owner would likely need a community trademark registration to qualify for the Directive’s transshipment protections as the Directive’s text only identifies “European Union trademarks” as qualifying for such protections. Fortunately, qualifying foreign IP rights holders may be able to more easily (and cheaply) obtain community registration(s) through registering their trademark(s) through the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol). However, requiring a community trademark registration to qualify for the Directive’s new protections puts EU member state trademark owners at a disadvantage compared to community trademark owners.
Customs Recordation Required. A trademark owner or rights holder would need to record their community trademark registration with EU customs authorities to qualify for the Directive’s new transshipment protections. Although customs recordation is not a specific requirement under the Directive to qualify for the enhanced transshipment protections, it is required to ensure EU customs officials are made aware of a community mark owner’s or right holder’s registration.
Directive Has Yet to be Enacted. Lastly, it is important to note that the Directive has yet to be enacted in EU member states and it remains to be seen how it will be implemented. EU member states have 30 months to implement the new Directive into their national laws, and although they are obligated to adopt the laws effectively and in the spirit of the Directive, the member states’ implementing legislation may have specific divergences.
Counterfeits for Personal Use. On February 6, 2014, CJEU ruled in Blomqvist v. Rolex SA (C‑98/13) that EU customs officials could seize and destroy non-EU originating counterfeit goods in the EU that were purchased by EU citizens for personal use. In Blomqvist, a Danish citizen bought a fake Rolex watch from a Chinese online seller. When the watch entered Denmark, Danish customs reported the suspected counterfeit to Rolex’s IP rights holder, who in turn demanded the destruction of the counterfeit watch. Danish courts found that because the counterfeit watch was purchased from a non-EU seller who was not directly selling or advertising to EU consumers, and because the watch was purchased for personal use, such a purchase did not constitute trademark or copyright infringement by the purchaser under Danish law.
The CJEU in Blomqvist reversed and found that Rolex’s copyright and trademarks were infringed, and that a EU IP rights holder does not have to prove that a non-EU seller was directly trying to sell or advertise counterfeit goods for personal use in the EU in order for EU customs officials to seize imports of the counterfeit goods. Under the EU’s previous customs regulations (Council Regulation 1383/2003), a EU trademark or copyright owner would have to prove that the counterfeit seller was directly trying to market their counterfeit goods to EU consumers in order for the personal purchase to be subject to infringement and seizure. As reported by commentators, the Blomqvist Court differed from the Council Regulation by establishing that an IP rights holder is entitled to protection of their EU trademark or copyright whenever an infringement of the same occurs in EU territory, and that counterfeit goods can be seized whenever such infringing goods enter EU territory.
Although the Blomqvist ruling gives IP rights holders stronger protections against foreign counterfeit sellers, like the Directive, there are considerations and limitations IP rights holders should be aware of:
EU IP Protection and Customs Recordation Required. Like the Directive, a trademark or copyright owner would need to ensure that their IP qualifies for protection in the EU and that they have recorded such IP with EU customs authorities in order to qualify for protections under Blomqvist.
Additional Investigation Suggested. Qualifying IP rights owners will likely need to investigate and track suspected non-EU counterfeit sellers to determine when and to whom they are selling personal counterfeit goods to ensure effective protection under Blomqvist. Rolex was fortunate in Blomqvist that a single counterfeit of their watch was detected by EU customs authorities. Unfortunately, not all brands are as well known as Rolex. A similar counterfeit personal purchase shipment for a lesser known brand may not have been as easily identified by EU customs authorities. These circumstances mean that an IP rights holder may need to perform their own monitoring to effectively detect personal shipments of counterfeit goods entering the EU. Unfortunately, this can be an expensive service that many IP rights owners do not have the resources to obtain.
What’s The Takeaway? These recent EU counterfeit enforcement reforms show that the EU is serious about preventing the cross-border flow of counterfeit goods. IP rights owners who have had problems with IP enforcement in the EU or through transshipments originating in the EU, now (or will soon) have enhanced means to protect their IP against counterfeits. Despite these advancements, IP rights holders should work closely with their counsel to ensure they understand and comply with the requirements and limitations of these recent reforms.
Over the last week, the Office of the U.S. Trade Representative (USTR) and the International Intellectual Property Alliance (IIPA) released reports on the current state of intellectual property (IP) protections for U.S. businesses abroad. These reports provide updated insights on foreign countries and foreign retail markets (both physical and online) that have recently caused U.S. businesses the most IP protection difficulties.
Here is a summary of the reports:
IIPA 2014 Special 301 Report Submission
On February 8th, the IIPA submitted their 2014 Special 301 Report Submission to the USTR. As one of the largest U.S. lobbying groups for the copyright-based industries, the IIPA’s submission identifies the foreign countries the IIPA believes provides the most ineffective IP legal protections for U.S. businesses. The USTR’s final Special 301 Report (released annually April-May) provides reporting to the U.S. government and the general public on the countries that, according to the Omnibus Trade and Competitiveness Act (19 U.S.C. § 2242(a)), deny “adequate and effective protection of [IP] rights” or “fair and equitable market access to United States persons that rely upon [IP] protection.”
Although the U.S. government rarely imposes trade sanctions based on the Special 301 Report, a country’s listing in the final report often impacts the U.S.’ trade relations with that country and the degree to which the U.S. government initiates trade promotional activities with the same. From both a private sector and practical standpoint, the Report also represents a review of the markets that U.S. businesses have had the most IP protection challenges.
What countries did the IIPA recommend for inclusion in the 2014 Special 301 Report?
Priority Foreign Countries. For a second year in a row, the IIPA has identified Ukraine as being a “Priority Foreign Country.” This is the least favorable designation available under the Special 301 reporting system. Specifically, it identifies that country as one with the “most onerous or egregious acts, policies, or practices” that “have the greatest adverse impact (actual or potential) on the relevant [U.S.] products” without making efforts to ameliorate their status. 19 U.S.C. § 2242(b)(1)). Ukraine’s designation as a Priority Foreign Country was based on a number of factors, most notably the absence of effective online copyright enforcement, and unfair and non-transparent royalty society collections. Shockingly, the classification was also based on reports of widespread software pirating by Ukrainian government agencies.
Priority Watch List and Watch List Countries. The IIPA’s Special 301 Report Submission lists Argentina, Chile, China, Costa Rica, India, Indonesia, Russia, Thailand and Vietnam on the “Priority Watch List,” and Belarus, Brazil, Bulgaria, Canada, Ecuador, Greece, Israel, Kazakhstan, Kuwait, Mexico, Romania, Saudi Arabia, Switzerland, Taiwan, Tajikistan, Turkey, Turkmenistan, United Arab Emirates and Uzbekistan as “Watch List” countries. Although not as a severe rating as a Priority Foreign Country, being listed as a country on the Priority Watch List or simply Watch List means that a country has potential IP protection deficiencies that require varying levels of USTR monitoring.
Newly Non-Listed Countries. It is also important to note that the IIPA has recommended removing a number of countries from the final 2014 Special 301 Report due to their improvements in IP protection. These countries include Barbados, Bolivia, Colombia, Dominican Republic, Egypt, Finland, Guatemala, Jamaica, Lebanon, Pakistan, Paraguay, Peru, Trinidad and Tobago, and Venezuela.
Out-of-Cycle Review of Notorious Markets
Also, on Wednesday, the USTR released an Out-of-Cycle Review of Notorious Markets that identified physical and online markets reported by U.S. businesses and industry organizations as being engaged in substantial IP piracy and counterfeiting. The Review includes particular social media and file transferring sites hosted abroad, including sites hosted in Antigua and Barbuda, Bulgaria, Canada, China, Czech Republic, Finland (possibly), Netherlands, Poland, Russian Federation, Spain, Sweden, Ukraine, United Kingdom and Vietnam. Specific physical markets in Argentina, China, Colombia, Ecuador, India, Indonesia, Mexico, Paraguay, Spain, Thailand and Ukraine were also deemed notorious.
What’s The Takeaway? Every foreign market has its own IP protection challenges. U.S. businesses that are exploring expansion into new markets should consider the IIPA’s Special 301 Report Submission (as well as the USTR’s Final Special 301 Report due out later this year), and the USTR’s Out-of-Cycle Review of Notorious Markets to help evaluate the IP risks associated with such markets. Doing so can help to ensure that such businesses can better protect their IP assets as they expand.
Late last month, the European Commission approved for publication (pre-registration) a geographical indication (GI) application for the Danish cheese HAVARTI. This raised concern amongst interested industry groups, and should cause concern amongst all export-focused businesses. Similar to trademarks, and particularly certification marks, GIs are legal protection granting producers of a particular type of product from a specific geographical region the exclusive right to use the geographical region’s name (or a regionally-known name) on their products and in related promotions. Being an exclusive right, GIs exclude producers from other regions from labeling and marketing similar or identical products under the same GI name. This means, for example, that a U.S. sparkling wine can never be sold as CHAMPAGNE in the EU, or a Kenyan tea as DARJEELING in India. If registered, the EU HAVARTI GI would exclude non-Danish cheese producers from labeling and promoting their Havarti cheeses in the EU as HAVARTI.
So what’s concerning about the potential EU HAVARTI GI registration for non-dairy businesses? Well, industry groups such as the Consortium for Common Food Names (CCFN) argue that allowing the EU HAVARTI GI application to be registered would contravene international standards by prohibiting non-Danish cheese producers from labeling and promoting their own Havarti cheeses in the EU as HAVARTI, even if they meet recognized international Havarti cheese production standards. From an intellectual property perspective, the registration would arguably expand EU GI protections to common (generic) named products. Commonly named GIs such as DIJON for mustard and CHEDDAR for cheese have traditionally been restricted from GI protection due to their common vernacular usage. HAVARTI is a widely known cheese variety this is arguably as generic as these other excluded food names. By allowing HARVARTI’s potential GI registration, the European Commission could possibly allow other generic named products to be registered as GIs, thereby hindering the promotional efforts, and ultimately success of many foreign goods in the EU.
Although the potential HAVARTI EU GI registration only directly impacts the global dairy industry and the EU market, it does underscore general issues all export-focused businesses should be aware of concerning GIs. Many businesses are unfamiliar with GIs, much less the extent to which GIs can impact their expansion and success in new foreign markets. GIs are granted legal protections in multiple countries for a wide array of goods, and can significantly impact a business’ foreign operations.
Below are some GI issues businesses should consider when entering new foreign markets:
Know the Practical Differences Between GIs and Trademarks. Before understanding what GIs restrictions a business may face in a foreign market, a business needs to recognize how GIs and trademarks differ. Unlike trademarks, GIs do not indicate or represent a individual business or their goods and services. They instead represent protections for the local conditions—natural or human-made (depending on the country)—that give products from a region their qualities and reputation. Based on these localized and natural characteristics, GIs cannot be extended, shared, or transferred to producers outside the region, and cannot be cancelled once registered. Further, in many countries that grant GIs legal protection such as the EU, member state governments, not individual producers or businesses, prosecute GI infringement claims. This means a foreign business can be assured that their unauthorized use of a registered GI in a foreign market will more likely subject them to a greater risk of legal action in that country compared to the threat of a lawsuit from a individual trademark owner.
The bottom line is that GIs prohibit exporting businesses from promoting and selling their goods in a particular country under a registered GI without much recourse.
Determine if an Export Market Recognize GIs—and to What Degree. After understanding the important differences between GIs and trademarks, businesses need to then evaluate whether the markets they wish to export to have GI protections and the extent of such protections. Nearly all countries recognize GIs for wines and alcoholic beverages through their World Trade Organization (WTO) commitments. Under Articles 22 and 23 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), WTO member states are required to extend specific GI protections for wines and alcoholic beverages, and to a reduced degree other agricultural and natural products. Most common law jurisdictions (U.S., Australia, and Japan, etc.) generally only extend GI protections to wines and alcohol beverages based on their WTO commitments. Yet, many countries, including several substantial markets, have gone beyond TRIPS’ minimum standards by providing enhanced GI protections to non-wine and alcohol agricultural products, and even non-agricultural products. The EU, China, India, and Russia, among others, extend the same level of legal protection to all agricultural and natural product GIs. Brazil, China, India, Russia, and Switzerland even extend GI protections to human made goods such as handcrafts and textiles.
Determine if There are Existing GI Registrations for Your Goods. Once a business determines whether the market(s) they wish to export their goods possess GI protections, they must evaluate whether the names of the goods they wish to use on their goods and related promotions are registered GIs. To do so, businesses must examine national GI registers in such export market(s).
Below are GI registers for some of the world’s major GI jurisdictions.
National GI Register
|National Institute of Industrial Property (Instituto Nacional da Propriedade Industrial -INPI)|
|General Administration of Quality Supervision, Inspection and Quarantine|
|The Controller General of Patents, Designs, and Trade Marks|
|Federal Institute of Industrial Property|
Photo courtesy of Abdallah Iskandarani.
Earlier this month, I received a message from WordPress notifying me of the one year anniversary of The IP Exporter. As blogging on cross-border and trade-related IP issues over the past year has had results that I never imagined, I thought I would take this opportunity to take a look back at some of my impressions over the past year.
The outpouring of support and feedback I have received from other legal practitioners and those with an interest in the ever-changing world of cross-border IP protection has been the most remarkable aspect of blogging for The IP Exporter. Attorneys and IP specialists from all over the world have not only read my blog (which is a shock in itself!) and shared it with friends and colleagues, but they actually commented on it and told me that it helped in their research and the actual legal issues they were facing. As a relatively young attorney, I have been heartened by this positive feedback. Also, such communication has led to a number of guest writing and professional legal opportunities that I would not have had without blogging.
Another amazing thing I have found about blogging for the The IP Exporter has been seeing which cross-border IP issues have struck accord with my readers. Each time I blog, I am unsure whether an issue I think is interesting is relevant or important to my readers. Some postings I have made on issues that I think are not earth shattering, such as whether to register a trademark in India under the Madrid Protocol or directly through India’s trademark office (The Controller General of Patents Designs and Trademarks), have been the most read postings I have written.
Lastly, the ability to connect with people throughout the world has made blogging an amazing experience. I never thought people from so many different countries would read The IP Exporter. To date, readers from over 90 countries have read The IP Exporter, and much of my readership comes from places I never expected, such as India, Malaysia and Russia. I am also continually amazed about what I blog or tweet about, much of which takes place in countries on the other side of the globe, have resulted in direct feedback from those in such countries. For instance, when I tweeted in July this year about a story on how a hair salon in Dubai, United Arab Emirates was using promotional materials that were alleged to be confusingly similar to Facebook’s protected branding, I received the above photo soon thereafter by a local resident who found it on his car. Although, it is not a complete surprise that I would receive such feedback in this globalized age, I still find it remarkable.
What’s The Takeaway? Blogging over the past year has been an amazing experience. It has made me grow as a writer and as a legal practitioner. More than personal and professional growth, it has made me realize how large a need there is for people to know more about cross-border and trade-related IP issues. The culmination of these experiences has energized me and my efforts to blog on these topics.
What cross-border or trade-related IP issues are you facing?
The Canadian Parliament reintroduced proposed legislation late last month that will dramatically impact how foreign copyright and trademark owners can protect their rights in Canada, and ultimately around the world. Reported to be enacted by the end of this year, the Combatting Counterfeit Products Act (Bill C-56; CCPA) proposes specific amendments to Canada’s Copyright Act and the Trade-marks Act that will allow foreign rights owners to better control the cross-border flow of counterfeit goods in Canada. The CCPA provides several notable reforms, including the expansion of registerable trademarks and new claims of recovery for trademark counterfeit goods. However, I believe its most important proposed reform is the establishment of a system allowing rights owners to register their copyrighted works and trademarks with Canadian authorities—while gaining help in detaining counterfeit shipments entering and leaving Canada.
The CCPA’s proposed request and detention system is an expansion of legal protections against counterfeit goods under current Canadian law because it introduces non-judicial measures rights owners can use to prevent the import and export of counterfeit goods in Canada. Currently, rights owners must obtain a Canadian court order to halt infringing imports and exports of counterfeit goods in and out of Canada. The CCPA addresses these limitations by allowing copyright and trademark owners to file a request for assistance with the Ministry of Public Safety and Emergency Preparedness (Ministry). This allows Canada’s border authority, the Canadian Border Services Agency (CBSA), to monitor inbound and outbound shipments of counterfeit products for a two-year period, and temporarily detain counterfeit good shipments to allow further investigation.
Although rights owners will be required to provide a security deposit and fees for a detention, the request and detention system will provide a more expedient, inexpensive and overall more effective means for foreign rights owners to prevent the dissemination of counterfeit products, both in Canada and beyond. Filing a request for assistance with the Ministry is a faster and relatively less expensive procedure that seeking a court order. It also allows the CBSA to assist in policing shipments, complementing any monitoring activities conducted by foreign rights owners, and ultimately improving a foreign right owner’s overall global IP enforcement efforts.
Despite these benefits, the proposed request and detention system also has limitations:
Goods for Personal Use: The CCPA’s system does not cover counterfeit goods for personal use, such as those in personal baggage.
Parallel Importation: The system excludes copyright grey goods, namely copies of copyright-protected works made in a country outside of Canada where the copies were authorized to be made.
Transshipment: The CCPA’s system does not apply to transshipments. This means that foreign rights owners’ requests to the Ministry will not assist in detaining shipments of counterfeit goods that are only intermediately transiting Canada.
National Treatment: A foreign rights owner’s access to the request and detention system may also be limited depending on the type of IP they wish to enforce. A foreign copyright rights owner can likely access the system regardless if they are Canadian or if their work was created in Canada due to the legal protections provided in the Berne Convention for the Protection of Literary and Artistic Works (Berne Convention). The Berne Convention allows a work from a Berne Convention country (Berne Convention countries) to qualify for protection in another Berne Convention country when it becomes attached. Attachment requires that the author of the work be a national of a Berne Convention country, the author is a habitual resident of a Berne Convention country, that the work is first published in a Berne Convention country, or that the work is published in a Berne Convention country within 30 days after an initial publishing in a non-Berne Convention country.
If a work is attached through any of these means, it is treated as if the work originated in each Berne Convention country, and is then subject to each Berne Convention country’s copyright protection requirements in order to qualify for copyright protection in that specific country. This means that if a foreign work becomes attached, and qualifies for protection under Canada’s Copyright Act, a copyright rights owner will have copyright protection for their work in Canada and may utilize the CCPA’s request and detention procedures once the CCPA is enacted.
Trademark rights owners will not be as easily able to utilize the CCPA’s system. Unlike copyrights, trademarks are generally territorial, meaning that a trademark or service mark registration only grants its owner rights in the mark in the territory of the registering country. This means that a trademark owner must generally have registered their mark in Canada in order for them to utilize the CCPA’s trademark request and detention system. Further, as Canada is not a member to the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (aka the Madrid Protocol), foreign trademark owners need to obtain a Canadian trademark attorney to register their marks in Canada.
What’s The Takeaway?: The CCPA will give foreign copyright and trademark owners more effective and less expensive tools to protect their copyrighted works and trademarks in Canada and beyond. Its request and detention system does this by not only restricting imports of counterfeit goods, but also limiting their dissemination from Canada to other countries. Yet, the CCPA underscores the vigilance that foreign rights owners must have to ensure that they register and re-register requests for assistance for their works and marks. Only copyright and trademark owners (not authorized parties, e.g. licensees) can file requests with the Ministry to utilize the system’s full protections.
Further, the CCPA shows that foreign trademark owners who are serious about protecting their brands in Canada, and ultimately throughout the world, need to consider registering their marks in Canada in order to effectively utilize the CCPA’s request and detention system once it is enacted. Upon doing so, such owners can better insure protection for their marks in Canada and beyond.