Rolex ruling-CJEU gives good news to EU rights holders

This article was first published on Lexis®PSL IP & IT on 13 February 2014 and is in a Q&A format with Kate Beaumont.

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IP & IT analysis: What happens when goods purchased from a non-EU website by EU residents in-fringe intellectual property rights within the EU? Jeremy Drew, partner and head of IP & Technology at Reynolds Porter Chamberlain, advises that the ruling in Blomqvist v Rolex is a boost for brand owners in their battle against counterfeit goods.

Original news

Blomqvist v Rolex SA and another company C-98/13 [2014] All ER (D) 101 (Feb)

The Court of Justice of the European (CJEU) was asked to give a preliminary ruling on the interpretation of Council Regulation (EC) 1383/2003 focussing on the protection offered to rights owners when suspected counterfeit goods were imported into the EU. The CJEU considered the surrounding legislation and decided that the rights holder should be afforded protection against any infringing product at the point at which it enters the territory of a member state.

What is the background to this case?

Mr Blomqvist, a resident of Denmark, ordered a watch described as a Rolex from a Chinese online shop. The order was placed and paid for through the English website of the seller. The seller sent the watch from Hong Kong by post.

The parcel was inspected by the customs authorities on arrival in Denmark. Using their powers under Council Regulation (EC) 1383/2003, art 9(1) (the Customs Regulation) they suspended the customs clearance of the watch, suspecting that it was a counterfeit version of the original Rolex watch and that there had been a breach of copyright over the model concerned. They informed Rolex and Mr Blomqvist of this.

In accordance with the procedure laid down by the Customs Regulation, Rolex then requested the continued suspension of customs clearance, having established that the watch was in fact counterfeit, and asked Mr Blomqvist to consent to the destruction of the watch by the customs authorities, which Mr Blomqvist refused to give.

Rolex then brought an action before the Danish Maritime and Commercial Court seeking an order that Mr Blomqvist allow the suspension of release and the destruction of the watch without compensation. That court granted Rolex's claim.

Mr Blomqvist brought an appeal before the Danish Supreme Court. Since it was established that Mr Blomqvist bought his watch for personal use and did not breach Danish law on copyright and trademarks, the question arose as to whether the seller infringed copyright or trade mark law in Denmark, as required for the Customs Regulation to apply. Consequently the court asked whether there was any distribution to the public, within the meaning of Directive 2001/29/EC (the Copyright Directive), or any use in the course of trade, within the meaning of Directive 2008/95/EC (the Trade Mark Directive) and Council Regulation (EC) 207/2009 (the Community Trade Mark Regulation).

Five detailed questions were referred to the CJEU, the substance of which was a clarification of the meaning of art 4(1) (the 'distribution right') of the Copyright Directive, and art 5(1), (3) (use in the course of trade) of the Trade Mark Directive and art 9(1), (2) (use in the course of trade) of the Community Trade Mark Regulation, in order to assess, in the main proceedings, whether there was any infringement of an intellectual property right and whether this was a condition for the right of customs authorities to suspend release or destroy counterfeit or pirated goods under the Customs Regulation. Specifically the referring court asked whether it was a condition under the distribution right or use in the course of trade that the goods must have been the subject, prior to the sale, of an offer for sale or an advertisement targeted at, or shown on a website intended for, consumers in the state in question.

How did the CJEU address the questions from the referring court?

The CJEU noted that, in line with the previous authority in Montex Holdings Ltd v Diesel SpA : C-281/05, [2006] All ER (D) 105 (Nov), the Customs Regulation introduces no new criterion for the purposes of ascertaining the existence of an infringement of intellectual property rights. It is therefore necessary for an infringement of intellectual property under the Copyright Directive, the Trade Mark Directive or the Community trade mark regulation to exist, for action by the customs authorities to be taken under the Customs Regulation.

The CJEU noted that, following L'Oréal SA v eBay International AG : C-324/09 [2012] All ER (EC) 501, the mere fact that a website is accessible from the territory covered by the trade mark is not a sufficient basis for concluding that the offers for sale displayed there are targeted at consumers in that territory. However, following Koninklijke Philips Electronics NV: C-446/09, there may be infringement where, even before their arrival in the territory covered by that protection, goods coming from non-member states are the subject of a commercial act, such as a sale to a customer in a member state, or an offer for sale or advertising directed to a member state.

Consequently, goods coming from a non-member state which are imitations of goods protected in the European by a trade mark right or copyright, a related right or a design can be classified as counterfeit goods or pirated goods under the Customs Regulation where it is proven that they are intended to be put on sale in the European . One way such proof is established is where goods have been sold to a customer in the European or offered for sale or advertised to consumers in the European .

The CJEU concluded that the Customs Regulation: 'must be interpreted as meaning that the holder of an intellectual property right over goods sold to a person residing in the territory of a member state through an online sales website in a non-member country enjoys the protection afforded to that holder by that regulation at the time when those goods enter the territory of that member state merely by virtue of the acquisition of those goods. It is not necessary, in addition, for the goods at issue to have been the subject, prior to the sale, of an offer for sale or advertising targeting consumers of that state'.

What does this ruling mean for EU residents privately importing counterfeit goods for personal use from outside the EU?

If goods purchased on an online sales website in a non-member country by EU residents infringe intellectual property rights within the EU, those goods may be seized and eventually destroyed by EU customs authorities, regardless of whether that website targets consumers in the EU member state of the purchaser.

Was any significance attached to the fact that the goods in question were not directly aimed at or advertised to consumers of an EU member state?

Following L'Oréal, the CJEU placed no significance on the fact that the goods in question were not directly aimed at or advertised to consumers of an EU member state. Rather, it was sufficient that goods were the subject of a sale to a consumer in an EU member state.

Is this ruling a boost for brand owners in their battle against counterfeit goods?

Yes. It confirms that the mere fact that the sale was made from an online sales website in a non-member state cannot have the effect of depriving the holder of an intellectual property right of the protection granted by the Customs Regulation. It is not necessary, in addition, for the goods at issue to have been the subject, prior to the sale, of an offer for sale or advertising targeting consumers of that state.