Brexit should spur review of anti-counterfeiting strategies

Out-Law Analysis | 01 Oct 2020 | 1:59 pm | 5 min. read

Intellectual property (IP) rights holders should review and refine their anti-counterfeiting strategies ahead of the end of the Brexit transition period.

It is particularly important for rights holders to understand their IP rights and options around enforcement in Ireland, where there is potential for a heightened risk of counterfeiting activity due to the country's proximity to the UK.

Working with customs authorities and the police, and exercising rights through the courts, can help rights holders clampdown on fake goods. This action is important at this time given the likely disruption to rights holders' brand enforcement strategies as a consequence of changes to the existing regime around parallel imports set to take effect after the Brexit transition period ends on 31 December 2020.

Disruption to brand enforcement strategies

Currently, the EU-wide exhaustion regime provides that an IP rights holder has the exclusive right to first put goods on the market in the European Economic Area (EEA). In the context of trade marks, this means that a trade mark owner can rely on their trade mark rights to stop the sale of trade marked goods that are imported from outside the EEA and put on the market without their consent. Similarly, a trade mark owner can rely on their trade mark rights to stop the sale in, and movement through, the EEA of trade marked goods that have not initially been put on the EEA market by them or with their consent.

Henry Ann_Dec 2019

Ann Henry

Partner

IP rights in counterfeit products are never exhausted because, even if the products are already on the EEA market, it can never be said that the IP rights holder has in any way consented to the initial sale of those products

However, the trade mark owner’s rights to prevent onward circulation of trade marked goods is exhausted in circumstances where the trade mark owner itself has first put the goods on the EEA market, or provided its consent to others to do so. The goods then leave their control and may freely move around the EEA.

However, at the end of the transition period, the EU-wide exhaustion regime will change. In the UK, the Intellectual Property (Exhaustion of Rights) (EU Exit) Regulations 2019 will apply. These regulations provide that IP rights in goods put on the EEA market by the rights holder or with their consent will be exhausted in the UK. However, the position will not be mirrored by the EU, meaning that putting goods on the market in the UK will not exhaust the IP rights in the EEA. This position may yet change should the UK and EU determine otherwise as a part of a new free trade agreement.

Absent any such agreement, however, the practical result of this regime change will be that holders of IP rights in the EU will be able to rely on those rights to stop the parallel importation of goods from the UK, but UK IP rights holders will not be able to prevent the free flow into the UK of goods first put on the market in the EEA. This mismatch in regimes has the potential to disrupt brand enforcement strategies that have traditionally been in force across Europe.

The good news for rights holders is that it is unlikely to open up a new free-flowing channel of trade into the UK for counterfeiters – IP rights in counterfeit products are never exhausted because, even if the products are already on the EEA market, it can never be said that the IP rights holder has in any way consented to the initial sale of those products. This means that rights holders can use their IP rights to prevent importation and sale of those products in the UK. One of the most efficient and cost-effective ways of doing this is by partnering with customs authorities, enabling them to seize counterfeit goods at the port of entry.

From an EU perspective, the parallel imports regime has been tightened. Once goods legitimately put on the market in the UK could move freely into any part of the EU, but that will no longer be the case under the new regime. This may well help rights holders in the fight against counterfeits EU-wide. Once again, partnering with customs authorities across the EU, including Ireland, is crucial to success.

IP enforcement options in Ireland

There are a range of enforcement options available in Ireland to tackle counterfeits entering, or moving through, that jurisdiction.

Customs enforcement

One of the most efficient and cost-effective options for rights holders in the fight against counterfeits is customs enforcement. Through a simple administrative procedure, IP rights holders can put customs authorities on notice of their IP rights. Although customs authorities can always seize suspected counterfeit goods of their own initiative, submitting an official application for action (AFA) effectively jump starts the process, by requiring the border authorities to keep a watch for counterfeits entering their territory.

Customs authorities can seize and, in certain circumstances destroy, products suspected of being counterfeit. The benefit for rights holders is that the procedure can avoid the need for lengthy court proceedings and can adapt to changes in IP rights portfolios and the identity of counterfeit products. There is no fee payable by rights holders who wish to pursue this option.

Henry Ann_Dec 2019

Ann Henry

Partner

For the authorities to successfully stop counterfeiting and piracy, it is important that IP owners share relevant information with them

The procedure is most effective if rights holders work closely with the customs authorities as trusted partners, educating them on a regular basis on what to look out for, so that infringing products are accurately detected and effectively intercepted.

An AFA can be either be filed with customs authorities in Ireland, operating under The Office of the Revenue Commissioners, on a national basis or, if a rights holder has an EU unitary right, such as an EU trade mark, then an EU-wide customs application can be made instead.

Court orders

Another powerful and often under-utilised enforcement option for IP rights owners in Ireland is the ability to request the district court to grant certain orders where trade mark infringement is suspected.

One such order authorises a member of the Garda Síochána – the Irish police force – to seize goods, materials or articles suspected of infringing trade mark rights, without the need for a warrant.

The district court also has the power to grant a search warrant, if satisfied by information on oath that there are reasonable grounds for suspecting that infringing goods, material or articles are on any premises. The search warrant will authorise a member of the Garda Síochána, within 28 days from the date of issue, to enter and search the premises, using reasonable force where necessary, and to seize any suspected infringing goods. These orders get counterfeit goods off the market without delay, and are excellent evidence gathering tools if rights holders are contemplating trade mark infringement proceedings.

Similar court orders exist in Ireland in respect of copyright works.

Actions for rights holders

With the end of the Brexit transition period approaching, businesses should take steps to understand what IP they hold, the rights subsisting in that property, and their options for enforcing those rights.

In our experience, early and regular engagement with Irish customs authorities, and the Garda Síochána which has its own dedicated intellectual property unit, can maximise the protection of rights holders' IP. For the authorities to successfully stop counterfeiting and piracy, it is important that IP owners share relevant information with them.

It is also worth rights holders considering using an experienced private investigator familiar with brand protection and/or an experienced test purchaser as a means of gathering reliable information in relation to infringement and the various players involved. Investing in intelligence on counterfeiting can help businesses decide whether to proceed with a civil action for IP infringement or, if the matter is more serious, whether you want to involve the customs authorities or the Garda Síochána.

Rights holders should also make sure they optimise their chances of enforcing their IP rights through the courts efficiently. Cases involving IP infringement can be entered into the Commercial List of the Irish High Court. This is a fast-tracked case managed court which can efficiently deal with complex IP disputes.

Co-written by Aoibheann Duffy and Anna Harley of Pinsent Masons. A version of this article was first published by Intellectual Property Magazine in July 2020.