Border Seizure by Customs in Germany

The legal framework governing customs in Germany is built upon several critical pieces of legislation. Central to this framework is the German Customs Code, which outlines the regulations and procedures for importing, exporting, and transporting goods. Additionally, the European Union’s customs regulations play a significant role in shaping German customs law. These EU regulations ensure uniformity and cooperation across member states, making it crucial for businesses and individuals involved in cross-border activities to be aware of both national and EU laws.

The German customs authority (“Zoll”) is structured to manage and enforce customs regulations efficiently. Zoll operates under the Federal Ministry of Finance, and its primary role includes collecting customs duties, preventing smuggling, and enforcing trade regulations. Zoll officers have extensive powers to inspect goods, seize illegal items, and ensure compliance with customs laws. This structured and robust authority is essential for maintaining the integrity of Germany’s borders and facilitating legitimate trade.

Both European Union law and national legislation shape the legal framework governing border seizures in Germany. Understanding the interplay between these two legal regimes is crucial for effectively defending against accusations of German customs law violations.

National regulations come into play primarily in cases of intra-EU trade, parallel imports, and overruns. These scenarios involve the movement of goods within the EU, where different rules apply compared to imports from outside the EU.

1. Intra-EU Trade: National regulations address the movement of goods between EU member states. This includes enforcing intellectual property rights against goods that move across internal EU borders.
2. Parallel/Grey Imports: These involve genuine goods that have been lawfully manufactured and sold but are imported or exported without the right holder’s consent, bypassing designated distribution channels. National laws ensure that such imports, although legitimate, do not infringe contractual distribution agreements.
3. Overruns: Excess production beyond the authorized licensed quantity is another area regulated at the national level. Goods produced in excess can enter the market unauthorized, thereby infringing intellectual property rights.

Unlike the EU regulation, no single national regulation governs these procedures. Instead, several national laws encompass these aspects, including:

• The Patent Act (Patentgesetz)
• The Trademark Act (Markengesetz)
• The Copyright Act (Urheberrechtsgesetz)
• The Plant Variety Protection Act (Sortenschutzgesetz)

Despite the variety of laws, the core content and enforcement mechanisms across these regulations are consistent. They all aim to prevent the unauthorized distribution of goods and protect the intellectual property rights of legitimate rights holders.

The primary legal instrument at the European level is EU Regulation (EC) No 608/2013, which provides the basis for customs authorities to take action against goods suspected of infringing intellectual property rights. This regulation applies predominantly to importing goods from non-EU countries that are under customs supervision or located in free zones with customs control. It establishes a streamlined procedure for identifying and seizing infringing goods, ensuring that counterfeit and pirated products do not enter the EU market.

Key features of EU Regulation 608/2013 include:

• Application for Action (AFA): Right holders can file an AFA with customs authorities, requesting them to take action against suspected infringing goods.
• Detention of Goods: Customs authorities can detain goods for a specified period while determining whether they infringe intellectual property rights.
• Notification and Response: The right holder and the declarant or holder of the goods are notified of the detention, which allows them to respond and present their cases.

Understanding the distinctions between EU and national regulations is vital for businesses accused of breaching customs law. EU Regulation 608/2013 offers a clear and structured framework for addressing suspected intellectual property infringements on imports from non-EU countries. This regulation simplifies the process for right holders to initiate customs actions and provides a uniform procedure across all EU member states. By filing an Application for Action (AFA), right holders can request customs authorities to detain suspicious goods, allowing time for a thorough investigation. This regulatory clarity is essential for businesses to prepare and respond effectively to potential border seizures, minimising disruption and protecting their interests.

National laws, however, cover more nuanced scenarios within the EU, such as intra-EU trade, parallel imports, and overruns. Each of these situations requires a tailored approach, as the legal mechanisms and enforcement practices can vary significantly between member states. For example, parallel imports involve genuine products entering markets through unauthorised channels, potentially breaching distribution agreements. Similarly, overruns pertain to goods produced in excess of licensed quantities, posing distinct legal challenges. At Schlun & Elseven Rechtsanwälte, our extensive knowledge of both EU and national regulations enables us to develop comprehensive defence strategies. We work closely with our clients to ensure they are well-prepared to deal with the complexities of German customs law, effectively challenge wrongful seizures, and protect their business operations and reputation.

Individuals and businesses facing border seizures in Germany have specific legal rights under German law. Among these rights is the right to due process, ensuring fair treatment throughout the legal proceedings. This includes being informed of the reasons for the seizure, accessing legal representation, and the right to appeal any decisions made by customs authorities. The appeals process is crucial for addressing and rectifying any errors or injustices in the initial seizure.

Once an application for seizure is approved, customs authorities proceed to seize the goods and inform the involved parties about the nature and quantity of the seized items. If all parties agree to the seizure, the goods are confiscated and subsequently destroyed. However, if the owner objects within the specified timeframe, the right holder requesting the seizure must decide whether to uphold their initial request. Should they choose to proceed, they are required to initiate civil court proceedings where an interim injunction is sought. During this period, customs authorities retain custody of the goods.

Our lawyers employ various strategies tailored to each case’s specifics regarding legal defence. One common approach is to challenge the legality of the seizure itself, examining whether proper procedures were followed and whether the grounds for seizure were justified. Another strategy involves negotiating with German customs authorities to mitigate penalties or facilitate the return of seized goods.

Strict adherence to deadlines is crucial; failure to meet these deadlines results in the goods being returned to the owner. Conversely, if the legal proceedings are initiated within the stipulated timeframe and the court rules in favour of continued custody of the seized goods, the owner may consent to the confiscation and destruction of the goods. Alternatively, if the court determines no infringement occurred, customs authorities are required to lift the seizure.

The seizure process in Germany begins with customs authorities’ initial discovery of items. German customs officers employ various methods to detect and flag suspicious goods, including sniffer dogs and advanced technology such as X-ray scanners and chemical detectors. Intelligence gathering also plays a crucial role, with customs authorities analysing data and sharing information with international agencies to identify potential threats.

Once an item is flagged and seized, the affected individual or company is promptly notified. The notification process involves formal communication, often in the form of a written notice detailing the reasons for the seizure and the legal basis for the action. This notice is crucial as it outlines the immediate actions required, such as responding to the notification within a specified timeframe and providing any necessary documentation or explanations. Prompt and appropriate responses to these notifications are vital to prevent further legal complications and to begin the process of reclaiming the seized items.

After the initial seizure and notification, the administrative process begins. Customs authorities undertake several steps to manage the seized goods, including cataloguing and securely storing the items in designated facilities to prevent loss or damage. The administrative process also involves a detailed examination of the seized goods to gather evidence and assess the nature of the violation. German customs authorities may communicate with the accused throughout this process to gather additional information or clarification.

During the seizure process, several legal issues can arise. Defendants might face allegations of violating customs regulations, which could lead to criminal charges, financial penalties, and reputational damage. Understanding the seizure’s legal grounds is essential as it allows those impacted to scrutinise whether customs authorities have adhered to proper procedures. Errors or procedural lapses by customs officials can form the basis for legal challenges against the seizure.

Defendants should act swiftly and strategically during this time. Engaging legal counsel immediately can help with the complexities of customs law and protect your rights. Your lawyer can help you understand the specific allegations, gather necessary documentation, and formulate a robust response to the customs notification. Cooperating with customs authorities by providing requested information and maintaining clear communication can also be beneficial. However, avoiding self-incrimination or providing information that could be used against you without legal advice is crucial.

In both European Union and national procedures, initiating a border seizure requires the right holder to submit an Application for Action to the customs administration, a crucial first step in protecting intellectual property rights. This application must clearly outline the specific intellectual property rights alleged to have been infringed and specify the goods to be monitored, defining the scope of protection sought. It is essential to provide customs officials with sufficient evidence to support the suspicion of infringement without overwhelming them, ensuring clarity and effectiveness in enforcement actions.

Under EU law, the threshold for initiating a seizure is based on a suspicion of infringement, allowing for a proactive approach in preventing illicit goods from entering the market. Conversely, under national regulations, the criteria are more stringent, requiring the infringement to be “obvious,” indicating a higher probability of breach. This distinction underscores the need for thorough documentation and evidence in national procedures to meet the heightened obviousness standard. This approach mitigates the risk of unsuccessful seizures due to insufficient proof, thereby safeguarding the rights of both the right holder and the importer or authorised person.

Additionally, in procedures governed by national law, the applicant must furnish a private security deposit, typically ranging between EUR 10,000 and EUR 25,000. This security covers potential damages arising from an unjustified seizure and ensures accountability in the event of legal challenges. By understanding and meticulously adhering to these procedural nuances, right holders can optimise their efforts in combating intellectual property violations while maintaining compliance with regulatory requirements.

The issue of mixed quantities of goods can pose significant challenges, especially when an entire shipment, such as a shipping container, is seized due to alleged infringements of intellectual property rights. A notable case involves terminal building block figures, where the LEGO Group claimed infringement against certain figures originating from China. While the seizure was granted for these specific items, other goods within the same container were either uncontested or were attempted to be contested. This led to their release by customs to the German terminal block trader who ordered them.

From a legal standpoint, a seizure can only be maintained as long as the conditions for it exist. If an infringement is ruled out from the outset, not asserted, or sufficient suspicion of a violation ceases to exist later, the seized goods must be returned to the authorized person for disposal.

However, even temporary seizures can have profound economic consequences for the parties involved. During the seizure period, the owner—such as the terminal block trader in this case—is unable to sell or dispose of the goods. This lack of turnover can severely impact cash flow, making it challenging to meet financial obligations like paying employees. In the LEGO case, the small brick trader received financial support from the Chinese manufacturer of the disputed figures. Despite ongoing legal proceedings, the seized goods remain unavailable to the retailer, preventing them from replenishing stock or fulfilling customer orders until a resolution is reached.

Such situations highlight the significant financial implications for businesses caught in disputes over seized goods. Understanding these dynamics is crucial for dealing with the repercussions of temporary seizures and preparing effective legal strategies to mitigate economic losses.