European Union Law and National Law
In practice, a seizure procedure under European Union law (EU Regulation (EC) 608/2013) occurs in most cases. This concerns importing non-EU goods under customs supervision or in a free zone with customs control.
On the other hand, national regulations apply in cases of intra-EU trade as well as parallel/grey imports (original goods that have been marked or licensed with your consent, but which are to be imported or exported without the permission of the right holder and thus bypassing contractually defined distribution channels) and so-called overruns (excess production above the authorised licensed quantity). However, no single regulation governs the procedure, but several regulations in the different laws, such as the Patent Act, the Trademark Act, the Copyright Protection Act, or the Plan Variety Protection Act. However, the content of these different regulations is identical.
Both in the procedure under European law and under national provisions, an application for action must be filed by the right holder concerned with the customs administration, which must be granted. In doing so, the right holder must specify the IP rights they believe have been infringed and the scope of goods to be monitored, determining the size of protection. It makes sense to provide the customs officials with information showing the potential infringement. At the same time, such an application should not be overloaded. Otherwise, it could quickly become confusing and could overburden the customs officers, negatively affecting them. Furthermore, in the case of a procedure under national regulations, the applicant must provide private security (bank guarantee), which in the past has been set at between EUR 10,000 and EUR 25,000. This serves to secure a liability to claim by the owner of the goods (the importer/authorised person) in the event of an unjustified seizure or, in addition, to cover any seizure costs.
Differences then arise about the requirements to be met by the potential infringement. In the case of an application under EU law, the suspicion of a violation is sufficient. Under national law, on the other hand, the infringement must be “obvious”, which can only be assumed if there is a high probability of a breach. This is a much higher hurdle, at which a seizure often fails in practice. To avoid this, the requesting right holder should attach sufficient information to the request on which obviousness can be based.
Measures and Legal Protection
If there is an approved application, the goods shall be seized, and the persons concerned shall be informed of the nature and quantity of the seized goods. If both agree to the seizure, the goods will be confiscated and destroyed. If, on the one hand, the owner files an objection within the time limit, the requesting right holder must decide whether they wish to maintain their original request. If this is the case, they must initiate civil court proceedings in which a provisional decision on the seizure must then be taken (interim injunction). The customs authority has to keep the goods in custody for this period.
Short deadlines apply and must be observed. If these are missed, the goods are returned to the owner. However, if the proceedings are filed within the time limit, and the court decides on the continued custody of the seized goods, the owner can agree to this within the consequence that the goods are confiscated and destroyed. Otherwise, proceedings on the merits of the case must be opened, in which the court must decide again. If it rejects an infringement of the law, the customs authority must lift the seizure. On the other hand, if it finds a violation, the goods are confiscated, and the persons concerned receive a confiscation order. This can, in turn, be accepted or rechallenged.
Problem: Mixed Quantities of Goods?
The situation can become problematic when a total quantity, for example, an entire shipping container, is confiscated, but the goods inside differ. This is what happened in the case that has become known in the meantime, at least among the relevant fan community, concerning some terminal building block figures. The LEGO group claimed an infringement of intellectual property rights about individual figures originating from and manufactured in China and applied for seizure, which was granted. However, other goods in the container were not objected to, or not for long. This led to the fact that these partial quantities of goods were then released by customs and handed over to the German terminal block trader who had ordered the goods. From a legal perspective, a seizure can only be maintained as long as its conditions exist. If an infringement is ruled out from the outset, if it is not asserted or if the sufficient suspicion of a violation (in the application of EU law) ceases to exist later, the seized goods must be handed over to the person authorised to dispose of them.
Nevertheless, even a temporary seizure can lead to considerable economic consequences for the person concerned. For the time of the seizure, the owner, in this case, the clamp brick trader, cannot dispose of the goods. Without sold goods, there is no turnover, and without a turnover, it becomes difficult to pay the employees – the consequences are apparent. In the LEGO case, the small brick trader was financially supported by the Chinese manufacture, whose figures LEGO believed infringed property rights. An out-of-court hearing has now been scheduled for the end of January 2022. For almost a year now, the remaining goods, which LEGO continues to consider infringements, have been confiscated and are therefore not available to the retailer. The retailer has also been unable to order the corresponding new goods, as it is very likely that the import of the new goods will either not even be approved or that they will also be confiscated when they are imported, as long as no final decision has been made on the infringement. Such further consequences, including their financial impacts, must also be considered.