The Court of Justice is Ruthless to Buyers Ordering Counterfeit Goods

Authors: Mykolas Jakutis, Assistant to Attorney-at-Law at METIDA, Inga Lukauskiene, Associated Partner, Attorney-at-Law, Patent Attorney at METIDA

Rolex_deepseaCounterfeit goods ordered online may never reach their buyers, since they may be seized and later destroyed by the customs. On 6 February, 2014 the General Court received a request for preliminary ruling for case Martin Blomqvist v Rolex SA, Manufacture des Montres Rolex SA regarding the destruction of the counterfeit watch which was bought online by M. Blomqvist from a Chinese online shop.

In 2010 M. Blomqvist, a resident of Denmark, ordered a watch online described as a Rolex from a Chinese online shop. The order was made and paid for through the seller’s online shop and the parcel was shipped from Hong Kong. When the parcel reached Denmark, it was inspected and its customs clearance was suspended suspecting that the watch was a counterfeit version of the Rolex and that there had been a breach of copyright over the concerned model.

The customs informed both Rolex SA and M. Blomqvist about this suspension. After having established the fact that the ordered watch was a fake, in accordance with the procedures set in the customs regulation Rolex SA requested the suspension of customs clearance and asked M. Blomqvist to consent to the destruction of the watch by the customs authorities. However, M. Blomqvist refused to consent to the destruction stating that he purchased the product legally. Consequently, Rolex SA brought an action before the Maritime and Commercial Court of Denmark (Handelsretten) requesting to oblige M. Blomqvist to agree on the suspension of release and the destruction of the counterfeit watch without compensation. The claim was granted, however, M. Blomqvist, filed an appeal before the Supreme Court of Denmark (Højesteret) disagreeing with the decision. The Court raised a question whether in this case any intellectual property had been infringed, as required for the implementation of the customs regulation. Specifically, in order for the regulation to apply, there must be a breach of copyright or a trademark right which is protected in Denmark where, in addition to this, the alleged breach must take place. Taking these circumstances into account, the court decided to suspense the proceedings of the case and referred some questions to the European Court of Justice for a preliminary ruling.

First of all, in their request for preliminary ruling, the Højesteret asked the Court of Justice to explain the concept of the ‘distribution to public’ and how it should be perceived in accordance with the copyright directive, trademark directive and the Community trademark regulation, as this allows to see whether in the case at issue the IP rights have been infringed.

According to the Court of Justice, goods coming from a third state which are imitations of goods protected in the European Union by trademark rights or copies of goods protected in the European Union by copyright, related rights or a design are categorised as ‘counterfeit goods’ and ‘pirated goods’, if they are proved to be specifically made for the sales in the EU. The fact that these goods have been sold to a customer in the EU as well as offered for sale and advertised to the EU consumers serves as this evidence.

The product in question was sold to the EU resident, hence, this situation can be compared neither to the one where the goods are being offered for sale in an ‘online  marketplace’  nor to the one where the goods are brought into the EU customs territory under a suspensive procedure. Therefore, the fact that the sale was made online through the website from the third country cannot have the effect on the holder’s intellectual property rights over the goods which were the subject of the sale of the protection afforded by the customs regulation. Also, it is not necessary to investigate whether these goods had been advertised and offered for sale to the EU consumers before they were sold.

Taking everything into account, the Court stated that the customs regulation must be interpreted in such way  that the proprietor of the intellectual property rights over the goods sold to the resident of the Member State through an online shop belonging to the third country is entitled to the protection afforded by this regulation at the time when those goods enter the territory of a Member State merely due to the acquisition of those goods. It is not necessary for the goods at issue to have been offered for sale or advertised to the EU consumers beforehand.

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