The Court of Justice in the European Union (CJEU) recently reached its decision in the Nokia/Philips cases. The Court ruled that customs officials do not have the authority to detain and subsequently seize fake goods that originated in a non-EU member state and are in transit through an EU member state en route to another non-EU member state. Consequently, European customs officials have ceased the practice of stopping counterfeit goods in transit and now allow these counterfeits to pass through the EU to a destination country outside of the EU. This undermines the good work of law enforcement and customs officers, hurts local companies whose products are being counterfeited and exposes consumers living outside the EU to harmful counterfeit products. European consumers are also impacted by the same counterfeit goods when they are re-imported back into the local market.
An examination of the impact of this practice on Eastern Europe, conducted by the Anticounterfeiting Committee’s Eastern Europe & Central Asia Subcommittee, reached the following conclusions:
Most countries in Eastern Europe still stop goods in transit. Most countries have provisions in the national legislation affording customs officials the authority to stop and detain goods in transit. Such legislation either includes explicit provisions or implied powers under certain conditions. In the Russian Federation and Kazakhstan, for example, if there is no country of final destination on the bill of transit, customs officials are permitted to detain the goods. The only exceptions to the practice in Eastern Europe are Moldova, where laws make no mention of goods in transit, and Ukraine, where provisions in the law expressly forbid customs officials from acting with regard to goods in transit.
- The impact of the Nokia/Phillips decision is just starting to be felt in Eastern Europe. The EU’s release of the final Customs Regulation text that codifies the 2012 Nokia/Philips decision has already affected Eastern Europe. In Serbia, it used to be that customs officials would seize counterfeit goods in transit; in 2013 the Serbian trademark law was amended to allow counterfeit goods to pass through Serbian borders. Croatia, after becoming an EU member country this past summer, has also changed its practices in an effort to harmonize its laws with the EU.
Eastern Europe and Central Asia are important entry points to the EU market. Surveys conducted by Europol show that more than 50% of all articles seized in the EU are transported by sea and that more than 60% of all counterfeit goods that enter the Western Balkans and South Eastern Europe are in transit to the EU. Considering that these figures include only reported counterfeit goods, we can only assume that the actual number of counterfeit goods flowing into the EU via Eastern Europe and Central Asia is much higher.
The ability to stop goods in transit has served as an effective means to combat counterfeiting in Eastern Europe and Central Asia—a thoroughfare for counterfeit traffic. Currently, most countries in the region are still resisting the application of the Nokia/Philips decision, but it is only a matter of time until they will have to adapt their laws and practices accordingly. INTA believes counterfeits should be stopped wherever they are discovered – even when passing through the borders to another destination. The Anticounterfeiting Committee Eastern Europe & Central Asia Subcommittee will continue to advocate for this position and raise awareness of this issue in the region.