Important Brexit fallout for EU Customs enforcement – the Commission states its position

By Ewan Grist

06-2018

The EU Customs enforcement regime

Having secured the appropriate intellectual property right protection in the EU, often the front line in the battle against counterfeit and copycat products flooding into the EU, often from China, is Customs enforcement. EC Regulation 608/2013 (the “Customs Regulation”) allows an IP right holder to apply to Customs authorities throughout the EU asking that they search for and detain goods entering (or indeed leaving) the EU which are suspected of infringing the rights holder’s trade marks, designs, copyright or patents. In the event that a detention is made, the party responsible for the detained goods will very often consent to their destruction (or such consent will be assumed), meaning that the issue is resolved quickly and inexpensively. Only if the party objects to destruction will court proceedings be needed to determine infringement. Because of this, Customs enforcement offers the rights holder a cost effective means of stopping large quantities of infringing goods from ever getting on to the market in the EU in the first place.

The application for action under the Customs Regulation, or AFA, can be of two types: (i) a national AFA, effective only in the member state in which it is made and used where the AFA is based on national rights (i.e. national/EP patents, national trade marks and designs); or (ii) a Union AFA which can designate action be taken in any or all EU member states and used where the AFA is based on unitary EU-wide rights (i.e. EUTMs, Community designs and, in due course, unitary patents). When filing a Union AFA seeking action in more than one EU member state, the rights holder has a choice of which country’s Customs authority it wishes to apply through. A UK company seeking Customs action throughout the EU would typically choose to file the Union AFA through UK Customs (HM Revenue and Customs) simply as a matter of convenience, even though it could equally be filed through Customs in any other EU member state instead. 

The impact of Brexit of ongoing EU Customs enforcement

Given the importance of Customs enforcement to rights holders in the UK and the rest of the EU, the impact of Brexit on this area has received surprisingly little attention. One explanation for this is that until there is agreement as to what will happen with the underlying EU IP rights following Brexit, considering the enforcement mechanisms for these rights may be seen as putting the cart before the horse. 

There is however now an update from the Commission on its intentions for Customs enforcement following Brexit, in the form of a Notice to Stakeholders dated 4 June 2018 -  https://ec.europa.eu/taxation_customs/sites/taxation/files/notice-to-stakeholdersI-brexit-ip-enforcement-final_en.pdf. Whilst not a model of clear drafting, the key points appear to be:

  • As of the UK’s withdrawal from the EU, Union AFAs can no longer be submitted to UK Customs. This of course was to be expected - having left the EU, the UK would no longer be part of the EU Customs regime set out up by the Customs Regulation.
  • After the date of withdrawal, a Union AFA submitted to Customs in one of the EU27 member states will remain valid in the EU27, even if it also designates the UK. Likewise, a Union AFA already granted by Customs in one the EU27 at the date of withdrawal will remain valid in the EU 27, even if it also designates the UK.
  • However,  more controversially, it appears that as of the withdrawal date, Union AFAs previously granted by UK Customs will no longer be valid in the EU27. This seems to mean that if the Union AFA has been filed through UK Customs (which will be the case for almost all those filed by UK companies and also many filed by non-EU companies as well), then if that rights holder wishes to continue to have Customs enforcement in the EU27 after the UK’s withdrawal, it will need to file a new Union AFA with Customs in one of the EU27.  If this is the correct interpretation of the Commission’s intention, its rationale is unclear. It would appear to be a more straightforward and business friendly solution simply to allow the Union AFA, despite having been filed through UK Customs (which was simply an administrative election by the rights holder), to continue to be valid in the EU27, even though it would cease to have effect in the UK itself (not least because the Union AFA would be based on EU rights which would themselves ceased to have effect in the UK). This would prevent the need to re-file in the EU27 following the UK's withdrawal.

The impact of Brexit of ongoing UK Customs enforcement

What of continued Customs enforcement in the UK after withdrawal? That is of course outside the scope of the Commission’s Notice but, as mentioned above, any Union AFA designating the UK would (subject to any transitional arrangements) become ineffective in the UK following its withdrawal because the Customs Regulation (and the EU rights on which such a Union AFA are necessarily based) would cease to have effect in the UK.

One possibility for addressing this would be for the UK government to treat Union AFAs in force at the withdrawal date akin to what is proposed for EUTMs and registered Community designs which (almost certainly) will automatically give rise to an equivalent ‘sister’ UK mark or design, alongside the existing EUTM/RCD. There seems no obvious reason why a similar scheme could not be implemented for Union AFAs: upon withdrawal, they automatically give rise to an equivalent national UK AFA (provided for by national UK legislation) based on the equivalent sister mark/design to the EUTM/RCD in the Union AFA. It remains to be seen however what the UK will do in this regard.

Practical Implications

In the meantime though, it would appear that if Customs enforcement is sought in the EU27 after the UK’s withdrawal, it will be necessary to file the Union AFA through a non-UK Customs authority. For Union AFAs already filed and granted through UK Customs, whilst they remain effective for now, they will need to be re-filed in the EU27 upon the UK's withdrawal. Rather than waiting for the withdrawal date, some rights holders may prefer to just get on with it, withdraw their existing Union AFA filed through the UK and re-file it somewhere in the EU27.

For further information, please contact Ewan Grist.

 

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