Analytics, EU – Baltic States, Legislation, Taxation

Background

As the EU 2020 Strategy underlines, the protection of IPR is a cornerstone of the EU economy and a key driver for its further growth in areas such as research, innovation and employment. Effective IPR enforcement is also essential for health and safety, as certain counterfeited products (such as foodstuffs, body-care articles and children’s toys) which are produced in an unregulated environment can pose a serious threat to citizens.

Customs authorities in the EU play a crucial role in stopping products which are suspected of violating intellectual property rights from entering the EU's territory. Since 2000, the Commission has been publishing annual reports on customs’ activities in relation to enforcing intellectual property rights. These reports, based on data transmitted by national customs administrations to the Commission, are a valuable input to the analysis of IPR infringement in the EU by customs and by EU institutions like the Observatory on infringements of intellectual property rights.

The tables in the present report show that counterfeiting afflicts all products and that customs authorities do a good job intercepting fakes.  

Algirdas Šemeta, Commissioner for Taxation, Customs, Anti-fraud and Audit commenting on the new report underlined that “innovation and creativity is where Europe creates value; hence protecting intellectual property is not only important for health and safety of European consumers; it also supports growth and job creation in the EU”.

Reference: European Commission, IP/14/890 “Protecting Intellectual Property Rights: Customs authorities detain nearly 36 million fake goods at EU borders in 2013”, 31/07/2014, In: 

http://europa.eu/rapid/press-release_IP-14-890_en.htm

Origin of fake products

Clothing (12% of all articles detained) and medicines (10%) are among the top categories of goods detained. Postal and courier packages accounted for around 70% of customs interventions in 2013, with 19% of the detentions in postal traffic concerning medicines.

Around 90% of all detained goods were either destroyed or a court case was initiated to determine the infringement.

China continues being the main source of fake products with 66% of all products detained coming from China and 13% coming from Hong Kong. Other countries, however, were the top source for specific product categories, such as Turkey for perfumes and cosmetics and Egypt for foodstuffs.

Legal rules protecting IPR: strategic objectives

In June 2013, a new Regulation on IPR enforcement at customs was adopted (see MEMO/11/332 and MEMO/13/527), which reinforced the rules for customs authorities to enforce intellectual property rights.

On 10 December 2012, the EU Customs Action Plan was adopted by the EU Council of Ministers to combat intellectual property right infringements for the years 2013-17 (see MEMO/12/967).

• The strategic objectives of this Action Plan are the following:
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• Effectively implementing and monitoring the new EU legislation on customs enforcement of IPR.
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• Tackling trade of IPR infringing goods throughout the international supply chain.
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• Tackling major trends in trade of IPR infringing goods.
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• Strengthening cooperation with the European Observatory on infringements of IPRs and law enforcement authorities.
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More on the issue:

See also: MEMO/14/501;

• For the full report, see:
  http://ec.europa.eu/taxation_customs/customs/customs_controls/counterfeit_piracy/statistics/index_en.htm
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• Stock-shots are available on EbS:
  http://ec.europa.eu/avservices/video/player.cfm?ref=I074051
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• For a specific example, see the recent operation carried out by Polish Customs authorities: http://ec.europa.eu/anti_fraud/media-corner/press-releases/press-releases/2014/20140731_01_en.htm
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• Homepage of Commissioner Algirdas Šemeta, EU Taxation and Customs Union, Audit and Anti-fraud Commissioner:
  http://ec.europa.eu/commission_2010-2014/semeta/index_en.htm

Commission’s thorough explanation on IPR

As the EU’s 2020 Strategy underlines, the protection of IPRs is key to the EU economy. By giving people the incentive to be creative and innovative, IPRs foster economic growth, creating and protecting millions of jobs.

Since 2003 EU rules lay down the provisions for customs actions to protect and enforce intellectual property rights and since 2004 specific provisions provide for the submission by Member States of information on the detentions made and applications for action lodged by IPR holders.

The new Regulation of June 2013 concerning customs enforcement of intellectual property rights has become applicable on 1st of January 2014 (see MEMO/13/526 and MEMO/13/527).

EU customs authorities are coordinating their activities via the EU Customs Action Plan to combat IPR infringements for the years 2013 to 2017 (see MEMO/12/967).

Customs’ role in protection IPRs

Right-holders can ask for customs action to protect their rights at the border. When they have a suspicion of an infringement, customs can detain the goods or suspend their release and inform the right-holder accordingly. The right-holder is given the opportunity to initiate court proceedings to determine the infringement, while the goods remain under customs control.

Customs administrations are the controlling bodies at the external frontiers of the EU.

In most EU states, law enforcement authorities other than customs administrations are responsible for controlling IPR infringing goods within their territories, for example at open markets or production sites.

Industry's role in protecting IPRs

For customs to take action, right-holders must submit an application for action to the customs authorities.

The identification and grounds for suspicion of an infringement rely on the information provided by industry in the application for action (such as the type of IPR infringing goods, information on production and means of transport, physical characteristics of original goods, etc.).

The European Commission, together with the member states has established a manual for right holders for lodging and processing applications for action. Right holders may lodge an application, requesting customs to take action even when they do not have a concrete suspicion that their IPRs are infringed.

Evidence of the close cooperation between customs and the private sector is shown in the evolution of the numbers of applications for action submitted to customs. Since 2007 the number of applications for action made in the Member States has increased from 10 260 to 26 865 in 2013.  

Table: Number of applications 2007-13

Source: Report on EU customs enforcement of intellectual property rights at EU border, 2013

In case goods are detained by customs, in over 90 % of detentions, the goods are either destroyed or a court case is initiated to determine the infringement.

In almost 8 % of cases, the goods were released because they appeared to be non-infringing original goods or no action was undertaken by the right-holder after receiving the notification by the customs authorities.   

Customs’ cooperation on IPRs with non-EU countries

In addition to EU controls at points of entry into EU territory, it is necessary to act at the source of the problem by stopping the export of IPR infringing goods and, where possible, by shutting down the production. This requires international cooperation.

For example, the EU is cooperating with China in the framework of the newly signed EU-China customs action plan on IPR enforcement (MEMO/14/353). The new plan concentrates on 5 key areas, namely the exchange of statistical information, the creation of a network of customs experts in key ports, promoting cooperation with other enforcement agencies and authorities, development of partnerships with business communities and exchange of knowledge and experience of each other's IPR enforcement policies and practices.

 Statistics on customs detentions

In comparison to 2012, the number of items detained has decreased from 40 million in 2012 to 36 million in 2013. The number of cases is also a little less at nearly 87.000 compared to 90.000. Fluctuations in the number of detained articles have always taken place over the past years. For categories like cigarettes, medicines or labels one shipment can contain several millions of articles and therefore cause these fluctuations very easily. The number of cases remained stable because of the high number of small parcels, probably resulting from internet sales.

Major trends

During four last years, customs have seen a shift towards small packages of IPR infringing goods coming into the EU via post and couriers. This is most probably due to the more widespread use of the internet and the possibilities consumers have to buy goods via the internet and have them delivered directly at their home. Nevertheless, selling and shipping goods to the EU that infringe an intellectual property right such as a trademark or a patent is illegal.

Difference between cases and articles

A case represents an interception by customs. Each case covers a number of individual items that can vary from one to several million and can relate to different types of goods.

The total number of cases in 2013 reached 86 854, slightly less than in 2012, but showing an increase of 100% over the past five years.

Table: Number of registered cases

Frequently detained articles

In terms of numbers of detained articles, the top three categories are clothing (12.33%); other goods such as insecticides, shoe polish, lights bulbs, glue, batteries, air refreshers, washing powder (11.13%); and medicines (10.10%).

Medicines detained

As in previous years, the most popular counterfeited medicines are life-style medicines such as diet pills or Viagra type pills.

However, medicines such as aspirin, diuretics or antibiotics were also found as counterfeited medicines. Furthermore this category of products also contained some large quantities of fake condoms.

Countries with suspected IPR-infringement  

China remained the primary country where suspected IPR-infringing goods were sent from.

For certain product sectors other countries were the main source e.g. Egypt for foodstuff, Turkey for perfumes and cosmetics and Hong Kong, China for other body care items, mobile phones, memory cards and sticks, ink cartridges and electrical household appliances.

Transport used to import suspected IPR-infringing goods into the EU

The largest number of cases were detained through postal and express carrier transport (72%), followed by air transport (17%).

Source: European Commission, MEMO/14/501 “Report on EU customs enforcement of intellectual property rights at EU border, 2013. Customs action to tackle goods infringing Intellectual Property Rights- frequently asked questions”, 31/07/2014, In: 

http://europa.eu/rapid/press-release_MEMO-14-501_en.htm