Customs Seizure for IP Infringement in Practice

IP infringement is not a national phenomenon. Often infringing goods are produced abroad and imported into the European Union and into Germany, and often the owners of IP rights know neither about the infringers nor about the infringing action beforehand. Seizure of infringing goods by customs authorities is thus a powerful tool for IP right holders to stop infringing products from entering European markets.

However, it is necessary to understand the proceedings in order to determine the best strategy and to take the right decisions. And for trading companies whose goods are seized by customs for alleged IP infringement, knowing their rights and how to exercise them is vital to avoid loss of goods and business, in particular in case of misunderstandings and unjustified seizures. In this article we will therefore explain what both IP owners and traders should know about customs seizure for alleged IP right infringement.

A. EU and National Customs Seizure Procedures

The procedure for customs action allows rightsholders, intellectual property collective management bodies, professional defense organizations, groups of producers and, to some extent, licensees to submit applications if they suspect goods are infringing on their intellectual property rights (IP rights).

1. IP Rights subject to Customs Action

There are basically two types of customs seizure applications – Union applications and national applications. The key distinction between Union and national applications lies in their scope, both from a territorial perspective and concerning the IP rights and specific situations that may be subject to the application.

A national application is submitted within a single member state, seeking action from customs authorities solely in that state. Conversely, a Union application based on EU Regulation No. 608/2013 (hence force short “Regulation 608/2013”) is submitted in one-member state but requests customs authorities to act in that member state and at least one additional member state to take action in their respective member state. Union applications under the Regulation are possible only for IP rights based on Union law producing effects throughout the EU (Article 4).

For national IP rights, the laws of the member states provide additional national legal provisions. In Germany, national IP rights can be enforced through customs seizure on the basis of § 142a of the Patent Act (Patentgesetz), § 25a of the Utility Model Act (Gebrauchsmustergesetz), § 146 et seq of the Trademark Act (Markengesetz), § 111b Copyright Act (Gesetz über Urheberrecht und verwandte Schutzrechte), § 55 et seq of the Design Act (Designgesetz) and § 40a of the Plant Variety Act (Sortenschutzgesetz).

The following table shows which IP rights may be enforced in customs as Union applications or as national applications (either under the Regulation or based on national aw) only:

2. What may trigger Customs Seizures?

Under Regulation 608/2013, customs may seize goods that are suspected to infringe IP rights when they are declared for release for free circulation, export or re-export, when these goods enter or leave the customs territory of the EU or when they are placed under a suspensive procedure or in a free zone or free warehouse (Article 1 of the Regulation). Customs may act either on the basis of an application by the IP right owner or even without such application “ex officio”.

Contrary to customs action under Regulation 608/2013, seizure of infringing goods under German enforcement laws is only possible following a respective application by the IP right owner (no “ex officio” action) and, moreover, only if the infringement is obvious.

The latter is one of the most important differences between the EU and the national German seizure procedure in practice: While a mere suspicion of infringement is sufficient under Regulation 608/2013, the requirement of obviousness of IP right infringement under the national German customs enforcement laws is much harder to fulfill and often not considered to be met under the stricter German laws.

3. What happens once infringing Goods have been seized?

Both under Regulation 608/2013 and German enforcement laws, customs authorities will inform the declarant or holder of the goods (the person importing, exporting or in possession of the goods) and the IP right owner once goods are seized for IP right infringement. The notification details the suspension of customs release, information on the procedures for destruction and contains further information on the type and quantity of the seized goods as well as available images. Under Regulation 608/2013, this notification must be given within one working day; under national German laws, the notification must be made without any undue delay.

4. What can or should a person or company whose goods are seized do?

a) Rights and Options of the Declarant / Holder of the Goods under Regulation 608/2013

The declarant or holder of the goods has the right to inspect the detained goods (Article 19 (1)). He then needs to decide whether to consent to the destruction of the seized goods or to oppose it.

• If the declarant agrees to the destruction of the goods, the declarant must confirm this in writing within 10 working days (or 3 days for perishable goods).
• In the alternative, the declarant can also oppose the destruction.
• The declarant may also request the early release of goods in cases where proceedings have been initiated to determine infringement of specific intellectual property rights. However, early release is contingent on provision of a sufficient guarantee to protect the interests of the IP right holder, and on the absence of precautionary measures imposed by the relevant authority (Article 24 (2)).
• Remaining silent or ignoring the notification is usually not a good option. If no response is received within the 10 working days deadline (or 3 days for perishable goods), agreement to destruction is presumed, and the goods may be destroyed under customs supervision (Article 23 No. 1 (c) sentence 2). 

In particular due to Article 23 No. 1 (c) sentence 2 of the Regulation, it is highly recommended that the declarant or holder of the goods reviews the seizure immediately once notified by the customs authorities. Any lack of reaction within the 10 business days deadline will otherwise almost certainly result in the destruction of the goods by customs.

b) Rights and Options of the Declarant / Holder of the Goods under German laws

Similar to Regulation 608/2013, the customs authorities will inform the declarant or holder of the goods and the IP right owner of the seizure when acting under German national enforcement laws. The deadline for the declarant or holder of the goods to decide about consent or opposition is two weeks (which is similar, but not necessarily identical to the 10 working day deadline under Regulation 608/2013). Consent will lead to confiscation of the seized goods.

The declarant or holder of the goods may also apply for a court decision on the seizure under Sec. 67 of the German Administrative Offenses Act (Ordnungswidrigkeitengesetz) if he believes that the seizure is not justified.

5. What can or should the IP right owner do?

a) Rights and Options of the IP right owner under Regulation 608/2013

Once notified about the seizure, the IP right owner may request detailed information about the detained goods, including the consignor, consignee, and intended destination. Right holders are allowed to inspect the goods and obtain samples for analysis (Article 17(4)). Any information received from customs, including the nature or samples of the goods, must be used exclusively for initiating infringement proceedings, supporting criminal investigations, seeking compensation, agreeing on the destruction of goods, or determining guarantee amounts.

The further options of the IP right owner depend on how the declarant or holder of the goods has reacted to the seizure:

• If the declarant or holder of the goods has consented to the destruction or such consent is deemed to be given due to lack of response (see 4.a) above), the IP right owner must confirm in writing, within 10 working days (or 3 working days for perishable goods), to the customs authorities whether the goods are actually infringing and that he agrees with the destruction. If such confirmation is made, the customs authorities will destroy the seized goods accordingly. Failure to provide such confirmation within the stipulated timeline will lead to the release of the goods.
• If the declarant or holder of the goods has opposed the destruction, the IP right owner has 10 working days (or 3 days in case of perishable goods) after notification of the opposition to initiate court proceedings to determine infringement, and to notify the customs authorities of the initiation of these proceedings. Failure to notify customs of such proceedings within this time frame may result in the release of the goods.

Therefore, also the IP right owner should always keep track of the seizure proceedings and should act quickly because failure to adhere to the deadlines applying to the IP right owner may result in the (unintended) release of the goods.

In any case, in the event of a seizure the IP right owner must inform the competent customs authority if the IP rights covered by the application or decision have ceased to have effect in the meantime, if he has lost the right to make the application, or if any information provided in the application has changed. Failure to provide such updates, as required under Article 15, may result in the suspension of customs actions.

Finally, the IP right owner must exercise caution to avoid liability towards the declarant or the holder of the goods. Liability may arise if the IP right owner discontinues proceedings due to his own acts or omissions, fails to return or damages provided samples, or if the goods are later determined not to infringe IP rights, as stipulated in Article 28.

b) Rights and Options of the IP right owner under German laws

If the declarant opposes the seizure, the IP right owner must either withdraw the seizure application or provide a court decision confirming the seizure within two weeks after notification of the opposition. If the IP right owner can demonstrate within this deadline that he has applied for a court decision, but has not received the decision yet, the deadline will be extended by another two weeks in which the IP right owner must then produce the confirming court decision. These short deadlines can typically only be met with fast applications in interlocutory injunction proceedings. Any failure of the IP right owner to adhere to these requirements and deadlines in case of an opposition will result in the release of the seized goods.

6. Special Procedures for Goods in small Consignments under the Regulation

For goods transported in small consignments, a modified procedure applies under the Regulation. These goods must meet specific conditions: they must be suspected of infringement, must not be perishable, and must be covered by a decision granting an application. Additionally, the right holder must have requested this small consignment procedure expressly in his application (Article 26 of the Regulation).

7. What applies to goods in transit?

The same procedures outlined above generally also apply to goods in transit in Germany or in another EU member state if there is a suspicion of infringement of IP rights by these goods and the customs authorities have reason to believe that the goods declared to be in transit are actually intended to remain in the EU or to be reimported into the EU after transit. In case of trademark infringement, goods may even be seized in pure transit cases, i.e. even without any suspicion that they will remain in the internal market or will be reimported into the EU.

In addition, the Commission and customs authorities may share specific data and information with relevant authorities in third countries. This exchange may include details such as the nature and quantity of goods suspected of infringing IP rights, information on the IP rights potentially violated, and transport specifics, including vessel names, container numbers, freight documents, and transhipment locations, to facilitate tracking the movement of goods.

B. Preparing and Filing Customs Seizure Applications

1. Who can file applications?

At both the national and Union levels, eligible applicants include rightsholders, intellectual property collective management bodies, professional defense bodies, and groups of producers, as defined under point (2) of Article 3 of Regulation 608/2013 and Article 49 (1) of Regulation No. 115/2012.

For national applications, the right to initiate proceedings extends to persons or entities authorized by the rightsholder to use the intellectual property and act on their behalf, in particular licensees. For Union applications by licensees, stricter rules apply: Union applications can only be submitted by exclusive licensees whereas the license must cover the entire territory of at least two member states.

2. What must an application contain?

Applications for customs seizure due to infringement of IP rights can be filed with the relevant customs authorities, as outlined in Article 3 of the Regulation. In Germany, this is the “Zentralstelle Gewerblicher Rechtsschutz” (ZGR) of the German customs authorities (“Zoll”), also for national applications.

The filing is made electronically in a standardized form via “ZGR online”. The application must specify the IP rights to be enforced. Furthermore, the applicant must include details about the applicant’s identity, their status under Article 3 of the Regulation or the respective national rules and evidence of their entitlement to file the application. If the application is submitted via a representative, it must include information about the representative and evidence of the representative’s authority to act on the applicant’s behalf. For Union applications, applicants must identify the member states where customs action is requested.

In order to be successful in practice, the application should also indicate the relevant type of goods, technical or design data for identifying both original and counterfeit goods and a risk analysis. Since customs authorities can only make a summary assessment when examining goods, these data should be as precise and helpful in such summary assessment as possible. For example, features clearly identifying genuine products as well as typical features of fake products should be described in detail. Photos and other explanatory images can help customs staff to identify infringing products with their naturally limited examination possibilities as well. If the IP right owner is aware of certain known infringers, a specific origin of fake products or traders of infringing products, it is also advisable to pass this information on to the customs authorities.

In cases where goods have been detained without a pre-existing application under the Regulation, in particular because customs authorities suspect IP infringement by themselves, the rightsholder is required to file a valid application within four working days after being notified by customs. The competent customs authority will then decide on the application within two working days (Article 9 of the Regulation). Seizure without prior application, however, is only possible based on the Regulation, not on the basis of national German laws.

If an application is submitted after customs authorities have suspended the release or detain goods under Article 18 (3) and lacks specific information required under Article 6 (3) (g), (h), or (i), the application will only cover the suspension or detention of those goods. However, the missing information must be provided within 10 working days of the notification to expand the application’s scope. 

3. What are the further Proceedings after an Application is filed?

The customs authority has 30 working days to approve or reject applications under the Regulation.

If an application is incomplete, the competent customs authority is required to notify the applicant within 10 working days. This notification halts the 30-day timeframe for the authority’s decision until the missing information is provided. If the applicant fails to supply the required information within 10 working days, the application will be rejected.

Decisions granting customs action are valid for one year from the date on which the decision takes effect and may be renewed for an additional year if requested at least 30 working days before the initial period expires. To qualify for an extension, the rightsholder must ensure that any outstanding debts related to the decision are resolved (Article 12 of the Regulation). An IP right owner whose application has been granted is also called the “holder of the decision” by the Regulation.

In the case of rejection, the authority is obligated to provide a reason. The rejection is subject to legal review by competent courts.

Applicants must also undertake to notify customs authorities of any relevant changes, such as e.g. the expiration of their IP rights or amendments to their entitlement, assume liability as specified in Article 28, and bear costs as outlined in Article 29. They must agree to the processing of their data by the Commission and member states. If opting for procedures under Article 26, they must also agree to cover costs associated with the destruction of goods. The competent customs authorities may amend a decision to include additional intellectual property rights upon the request of the decision holder, provided the request includes the necessary information specified in Article 6 (3), and for Union applications, the additions are limited to rights covered by Article 4.

However, in cases where the IP right ceases to be effective or the applicant loses his entitlement to submit an application, customs authorities will no longer take action. The decision granting the application will then be revoked or amended by the competent customs authorities.

Applications under German national law are treated very similarly, with the difference that there are no specific timelines set forth in the law for the processing of applications. Decisions granted under German national law are also valid for one year and may be renewed. Rejections by customs authorities can be subject to legal remedies to the competent courts as well.

C. Conclusion

Both IP right owners and traders – irrespective of the nature of the goods – should acquaint themselves with at least the basic procedures of customs seizure for suspected IP right infringement. For IP right owners these procedures can be a very powerful and efficient tool to stop infringing goods from entering the EU or specific EU countries. And for traders it is important to be aware of their rights and in particular of the short deadlines and necessary reactions in order to avoid unwanted consequences of customs action, such as e.g. destruction of goods because a seizure has not been opposed within the short 10 working day deadline on the one hand, or unintended legal disputes about infringement on the other hand caused by unjustified oppositions in case of clear infringements. If in doubt about the details, it is therefore highly recommendable to seek expert legal advice in a timely manner.