CUSTOM SEIZURES

TRIPS ("TRIPs Agreement", or more simply "TRIPs", an acronym which stands for "Agreement on Trade-Related Aspects of Intellectual Property Right, including trade in Counterfeit Goods"), the content of which was incorporated into Italian legislation by the legislative decree n° 198 (19 March 1998), was approved in Marrakech in 1994 and includes articles 51 to 60 in section 4 - "Special provisions concerning border measures" - and article 61 in section 5 - "Penal procedures".
These norms introduce into Italian legislation operational features which give further protection to industries besides that provided by civil law and penal law, and it is a very efficacious protection. Italian norms have been largely taken from Community law regarding "customs seizure" as per the EC Regulation n° 3295/94 of the Council dated 22 December 1994 (reported in the Official Gazette n° 209 dated 7 September 1995), as modified by the EC Regulation n° 241/99; as per EC Regulation n° 1367/95 (16 June 1995) as modified by the EC Regulation 2549/99; Internal Regulatory Circular n° 31 (2 February 1993) - Customs Department - Instructions concerning the measures intended to prohibit the release for free circulation of counterfeit goods and to discourage the international market thereof; Ministerial Circular 12 July 1995 n° 188/D, Customs dept. - Customs fees - New measures intended to prohibit the release for free circulation, export, re-export and entry for a suspensive procedure of counterfeit and pirated goods - Instructions - and Ministerial Circular 12 January 2000, n° 10/D - Customs Department - Instructions concerning the new measures intended to prohibit the release for free circulation, export, re-export and entry for a suspensive procedure of counterfeit and pirated goods.
When foreign goods are acquired through customs clearance, according to Presidential decree n° 43 of 23 January 1973, which was the only text of the legislative provisions regarding Customs, it is said that a definitive importation has occurred.
On the contrary, the Community Customs Code - EEC Regulations 2913/92 - uses different terminology since it takes into account the differences existing inside the European Community until the process of harmonization leads, as far as possible, to unification. The Community Customs Code is applied, without prejudice to the specific provisions adopted in other fields:

• to trade between the Community and third countries;
• to goods covered by one of the Treaties establishing, respectively, the European Coal and Steel Community, the European Economic Community and the European Atomic Energy Community.

The Community Code states that to release goods for free circulation into the Community customs territory means making it equivalent to Community goods, and thus release it from other formalities, including customs formalities, without however attributing Community origin to said goods.
The customs territory of the Community includes:

• the territory of the Kingdom of Belgium,
• the territory of the Kingdom of Denmark, except the Faroe Islands and Greenland,
• the territory of the Federal Republic of Germany, except the Island of Heligoland and the territory of Büsingen (Treaty of 23 November 1964 between the Federal Republic of Germany and the Swiss Confederation) including the Austrian territories of Jungholz and Mittelberg, as are defined in the following treaties:
• for Jungholz: treaty of 3 May 1868 (Bayerisches Regierungsblatt 1868, page 1245);
• for Mittelberg: treaty of 2 December 1890 (Reichsgesetzblatt 1891, page 59);
• the territory of the Kingdom of Spain, except Ceuta and Melilla,
• the territory of the Hellenic Republic,
• the territory of the French Republic, except the overseas territories and 'collectivités territoriales', including the territory of the Principality of Monaco, as is defined in the Customs convention concluded in Paris on 18 May 1963 (Official Gazette 27 September 1963, page 8679);
• the territory of Ireland,
• the territory of the Italian Republic, except the municipalities of Livigno and Campione d'Italia and the national waters of Lake Lugano which are between the bank and the political frontier of the area between Ponte Tresa and Porto Ceresio, including the territory of the Republic of San Marino, as is defined in the convention concluded on 31 March 1939 (Law n° 1220 of 6 June 1939);
• the territory of the Grand Duchy of Luxembourg,
• the territory of the Kingdom of the Netherlands in Europe,
• the territory of the Portuguese Republic,
• the territory of the United Kingdom of Great Britain and Northern Ireland and of the Channel Islands and the Isle of Man.

In the Customs Code it says that "release for free circulation shall confer on non-Community goods the customs status of Community goods.
It shall entail application of commercial policy measures, completion of the other formalities laid down in respect of the importation of goods and the charging of any duties legally due."
Among other things the following elements can be inferred from the Customs Code:
i) the object

1. the goods must arrive, directly or indirectly, from a Country outside the Community, also by means of a previous suspensive system (external transit, customs warehousing, inward processing in the form of a suspension, processing under Customs control, temporary importation);
2. the goods must be classifiable in the commodity description according to the Community Customs tariff, excluding professional services and other services including software;
3. the goods have to physically enter the Community Customs territory to be used for their economic purposes.

i) Formalities:

1. application of the decisions of the Community's commercial policy, and the derogation of the restrictions and management of quotas;
2. application of health measures, measures for the protection of animal and vegetable species and the protection of the cultural patrimony, etc.;
3. application of the duties due, considering the suspensions, maximum limits and quotas;
4. the procedures which regulate the relations with bodies to obtain availability of the goods.

Article 67 of the Regulations defines the date of acceptance of the declaration by the customs authorities as the date to be considered for applying the provisions governing the customs procedure for which the goods are declared.
Acceptance is the deed with which, having controlled that the SAD (Single Administrative Document), the prescribed commercial and administrative documentation (invoice, transport papers, certificate of origin, any other possible specific administrative documentation, etc.) are all correct, the Customs authority accepts the declaration and transforms it from a private deed to a public deed.
The codes found in the box "Declaration" on the SAD distinguish release for free circulation from release for consumption, and are as follows:

• IM 0 = release for free circulation from a third country, without preferential tariff treatment;
• IM 4 = release for consumption from a third country, without preferential tariff treatment;
• EU 0 = release for free circulation from a third country, with preferential tariff treatment
• EU 4 = release for consumption from a third country, with preferential tariff treatment.

The date of acceptance determines the moment from which the obligatory content of the procedures operating on the goods is applied, and also defines the exchange rate of the values expressed in foreign currency and the rate of duty applicable. By way of derogation from art. 67, in particular circumstances and before the goods are released, the declarant may request application of a more favorable rate. The goods released for free circulation which enjoy a reduced or zero rate of import duty, because they are used for particular ends, remain subject to customs supervision, which ends when the conditions laid down for granting the reduced or zero rate of duty cease to apply.
Art. 83 provides that the goods released for free circulation shall lose their customs status as Community goods:

1. when the declaration for release for free circulation is invalidated after release, or
2. when the imported duties payable on those goods are repaid or remitted:
   1. under the inward processing procedure in the form of the drawback system, or
   2. in respect of defective goods or goods which do not comply with the terms of the contract, pursuant to Article 238; or
   3. in situations of the type referred to in Article 239 where repayment or remission is conditional upon the goods being exported or re-exported or being assigned an equivalent customs-approved treatment or use.

Art. 238 states that import duties shall be repaid or remitted when it is ascertained that the goods placed under the customs procedure in question are rejected by the importer because at the moment of acceptance they were defective or did not comply with the terms of the contract on the basis of which they were imported. Goods damaged before release are equal to defective goods.
The conditions on which repayment or remission of import duties shall be obtained are:

1. the goods must never have been used, provided that it was not necessary to begin to use them in order to ascertain that they were defective or did not comply with the terms of the contract;
2. the goods must be exported from the customs territory of the Community.

The person concerned can obtain from the customs authorities, instead of having the goods exported, to have the goods destroyed or placed, for the purposes of their re-exportation, under the external transit procedure or the customs warehousing procedure or in a free zone or free warehouse: in this case, the goods are considered non-Community goods. The request for repayment or remission shall be made to the appropriate customs office where the application was made, within twelve months from the date on which the amount of the duties was communicated to the debtor. The repayment or remission of the duties may be made ex officio. Other situations are laid down which allow the repayment or remission of the import duties on request presented to the appropriate customs office within twelve months of the date on which the amount was communicated to the debtor.
If at the same time that the goods are released for free circulation, which entails the application of import duties, the national taxes are determined, this is a release for consumption which renders the goods nationalized or equivalent to national goods. For the purposes of VAT, art. 1 of the Presidential Decree 633/1972 includes imports made by whomsoever among operations subject to VAT.
In the afore-said EC Regulation n° 3295/94 and subsequent modifications, measures were laid down "concerning the entry into the Community, the export and re-export from the Community of goods that infringe certain rights of intellectual property", which not only cause considerable injury to the manufacturers, traders and other subjects in the field in question who operate correctly, but also deceive the good faith of the consumers.
The afore-said Regulation, as a basic norm regarding in particular the measures to be adopted at the external border, forms part of the agreement, negotiated in the framework of GATT, to reinforce the safeguard of rights on intellectual property and counterfeit goods in the field of illegal trade on an international level.
With the extension of the system laid down in the (EC) Regulation to "goods that infringe an intellectual property right" and to customs procedures other than the release for free circulation, the field in which the customs authorities can intervene has been greatly increased, so as to contrast effectively, at the outer borders of the EU, the fraudulent phenomena described.
It is worth remembering that the intervention mechanism in the field in question has become useful and necessary, at the outer frontiers of the European Union, following the difficulties found by the owners of trademarks and rights on intellectual property in enforcing their rights once the goods relating to the cited fields were introduced and distributed in the commercial circuit of a particular country. During the distribution of a product of the type considered, the injury has already occurred so that, according to the experience acquired, it is extremely difficult to proceed a posteriori to eliminate said injury and compensate the damage caused.
The purpose of this norm is to block at the frontier the material which infringes the rights of intellectual property: trademark, patent of invention, patent for utility model, registration of designs and models, copyright.
"Trademark" here means both an Italian trademark and also an international trademark valid in Italy, and also a Community trademark. "Patent of invention" and "patent for utility model" here mean an Italian patent or a European patent valid in Italy.
"Design and model" here means an Italian registration, an international registration valid in Italy, and also a Community registration.

Procedure

According to Chapter 1, art. 1.1.of the EC Regulation n° 3295/94, the holder of one of said rights who has valid reasons to suspect that goods which infringe his intellectual property right might be imported, can present to the competent authorities a written request with the aim of obtaining a suspension of the release of the goods which he suspects might infringe said right.
For the purposes of Chapter 1, art. 1.2 of the EC Regulation n° 3295/94. there are the following definitions:

1. "goods which infringe an intellectual property right";
   1. counterfeit goods, that is to say:
      1. goods, including the packaging thereof, bearing without authorization a merchandise or product trademark which is identical to the trademark validly registered in respect of the same type of goods, or which cannot be distinguished in its essential aspects from such merchandise or product trademark, and which thereby infringes the rights of the holder of the trademark in question under Community law or the law of the Member State in which the application for action by the customs authorities is made;
      2. any distinctive sign (logo, label, sticker, brochure, instructions for use or guarantee document) whether presented separately or not, in the same circumstances as the goods referred to in the first indent,
      3. packaging materials bearing the trademarks of counterfeit goods, presented separately in the same circumstances as the goods referred to in the first indent;
1. "pirated goods", that is to say: goods which are or embody copies made without the consent of the holder of the copyright or connected rights, or of the holder of the right to a design or model, whether registered under national law or not, or of a person duly authorized by the holder in the country of production, where the making of those copies infringes the right in question under Community law or the law of the Member State in which the application for action by the customs authorities is made;
2. goods which, in the Member State in which the application for action by the customs authorities is made, infringe rights relating to a patent under the law of such member State or a complementary protection certificate as laid down by the EEC Regulation n° 1768/92 of the Council or the EEC Regulation n° 1610/96 of the European Parliament and the Council.
   Any mould or matrix which is specifically designed or adapted for the manufacture of a counterfeit trademark or of goods bearing such a trademark, for the manufacture goods which harm rights relating to a patent or a certificate, or for the manufacture of pirated goods, shall be treated as the aforesaid goods which infringe an intellectual property right, as appropriate, (chapter 1, art. 3 of the Regulation cited above), provided that the use of such moulds or matrices infringes the rights of the holder of a right under Community law or the law of the Member State in which the application for action by the customs authorities is made.
2. "holder of the right": the holder of a merchandise or product trademark, a patent or a certificate and/or one of the rights as referred to in (a), or any other person authorized to use the trademark, patent, certificate and/or rights, or their representative;
3. "Community trademark": the trademark defined by article 1 of the EEC Regulation n° 40/94;
4. "certificate": the complementary protective certificate under the EEC Regulation n° 1768/92 or n° 1610/96."

Again in Chapter 1, art. 1.4 of the EC Regulation n° 3295/94 states that:
"This Regulation shall not apply to goods which bear a merchandise or product trademark with the consent of the holder of that trademark or which are protected by a patent, a certificate, a copyright or connected right or a right relating to a design or model and which have been manufactured with the consent of the holder of the right but are placed in one of the situations referred to in paragraph 1 (a) without the latter's consent.
Nor shall it apply to goods referred to in the first subparagraph which have been manufactured or bear a trademark under conditions other than those agreed with the holders of the rights in question".
The purpose of these provisions is to exclude from Community procedures any possible disputes of private rights between the holder of the right and the operator - and more precisely - so-called parallel sales or "grey market sales", similar to those suspected of damaging the rights on intellectual property. Essentially they are sales of products with authentic trademarks made by distributors which are located outside the official distribution circuit as laid down by the manufacturers in order to protect their commercial interests.
Chapter II, art. 2 of the EC Regulation n° 3295/94 clarifies that:
"It is prohibited to introduce into the Community, release for free circulation, export, re-export or place under a suspensive procedure and introduce into a free zone or free warehouse any goods recognized as goods as per article 1, paragraph 2, letter a) according to the procedure provided for in article 6."
Art. 6, as laid down in Chapter IV of the EC Regulation n° 3295/94, says:

1. Where a customs office to which the decision granting an application by the holder of a right has been forwarded pursuant to Article 5 ascertains, possibly after consulting the holder, that some goods found in situations referred to in Article 1, paragraph 1, letter a) correspond to the description of the goods which infringe an intellectual property right contained in that decision, it shall suspend release of the goods or detain them.
   The customs office shall immediately inform the service which dealt with the application in accordance with Article 3. That service or the customs office, shall forthwith inform the declarant and the person who applied for action to be taken. In accordance with national provisions on the protection of personal data, commercial and industrial secrecy and professional and administrative confidentiality, the customs office or the service which dealt with the application shall notify the holder of the right, at his request, of the name and address of the declarant and, if known, of those of the consignee so as to enable the holder of the right to ask the competent authorities to take a decision regarding the case. The customs office shall afford the applicant and the persons involved in any of the operations referred to in Article 1, paragraph 1, letter a) the opportunity to inspect the goods whose release has been suspended or which have been detained.
   When examining the goods the customs office may take samples in order to expedite the procedure.
2. The law in force in the Member State within the territory of which the goods are placed in one of the situations referred to in Article 1, paragraph 1, letter a) shall apply:
   1. to have recourse to the authority competent to take a substantive decision and to immediately notify the customs service or office referred to in paragraph 1, unless that service or office itself take action;
   2. to adopt the decision to be taken by that authority. In the absence of Community rules in this regard, the criteria to be used in reaching that decision shall be the same as those used to determine whether goods produced in the Member State concerned infringe the rights of the holder. Reasons shall be given for decisions adopted by the competent authority.

The person allowed to present the request is the holder of the right who can present an appropriate application to obtain from the Customs Authority the suspension of the release of the goods which he suspects might infringe an intellectual property right (counterfeit goods, pirated goods, etc.).
The procedure of customs protection has also been extended to the Community trademark and to the complementary protective certificate.
Among the juridical persons authorized to present a request for action are companies with collective management whose exclusive purpose, or one of the main purposes, is to manage or administer copyright or connected rights; this is according to art. 1 of the application EC Regulation n° 1367/95, as modified by EC Regulation n° 2549/99.
According to chapter III, art. 3.1 of the EC Regulation n° 3295/94, the request must be presented to the competent Customs service.
In Italy, the application must be presented to the Customs and Indirect Taxes Department - Central Management of the Customs Services - Central Manager's Office - Central Fraud Unit - Rome.
According to Chapter III, art. 3.2 of the EC Regulation n° 3295/94, the application must contain sufficient elements to prove that there is a prima facie infringement of the applicant's right, and he must present a sufficiently detailed description of the goods to allow the Customs Authorities to recognize them immediately.
The application must be founded on a valid right and the applicant must clarify in the application, or in another way, if the right claimed is or is not still in force.
The applicant must also indicate, with sufficient accuracy:

• the place where the goods are situated or the intended destination;
• the number identifying the consignment or packages;
• the scheduled date of arrival and departure of the goods;
• the means of transport used;
• the identity of the importer, exporter or holder;
• the period during which the intervention of the competent Customs Authority is requested.

The competent authorities (Chapter III, art. 6 of the EC Regulation n° 3295/94) may require the applicant to leave a deposit or equivalent security sufficient to protect the accused and the competent authorities, and also to prevent possible abuses.
If the application is rejected, this must be motivated clearly and completely and the applicant is free to appeal against the non-acceptance of his request.
Within ten plus ten working days from the date when the applicant was informed of the suspension, the applicant must:
i) have obtained from the Magistrates a precautionary measure,
ii) or started the relative lawsuit.
According to Chapter V, art. 8.1, should the Magistrates confirm the infringement, the customs must adopt all those measures proper and necessary to prevent said goods from being introduced onto the market, for example destroy them, remove them and prevent them from being re-exported.
Should the applicant propose an unfounded application, he shall be required to pay the importer, the consignee and the proprietor of the goods an adequate compensation for any injury done to them by the unjustified detention of the goods, or the detention of released goods It must be pointed out that, according to Chapter III, art. 4 of the EC Regulation n° 3295/94, the customs authority has its own autonomy to act so that, "should it appear evident to the customs office that goods are counterfeit or pirated, according to art. 1, subparagraph 2, letter a), the customs authority may, in accordance with the rules in force in the Member States concerned, notify the holder of the right, where known, of a possible infringement thereof. In this case the customs authority shall be authorized to suspend release of the goods or detain them for a period of three working days to enable the holder of the right to lodge an application for action … omissis…"
It should be noted that Chapter VI, art. 10 of the EC Regulation n° 3295/94 establishes that small quantities of goods of a non-commercial nature contained in the travelers' personal luggage or sent in small consignments are not subject to the norms of customs seizure. This article is very problematic since it does not take into account the fact that there are goods which have a commercial value, even considering only a single piece, which is extremely high (for example a jewel, a brand name watch, etc.) and therefore it is not so much the quantity which we should be concerned with, but rather the bearer or the consignee/consignor who should be considered.
It is therefore on the basis of this consideration that the customs authority should decide whether or not to proceed pursuant to art. 4 of the EC Regulation n° 3295/94 as modified. But the wording of said art. 10 makes it difficult to intervene, even when damage is evident.
An important novelty was introduced by the EC Regulation n° 241/99, which establishes that it is possible to act by invoking a patent too. Therefore, not only is it possible to act by invoking a design and a model, but also by invoking a patent of invention or a patent for a utility model. This extension however poses complex and articulated problems which only practice will show how to solve.
First of all, the patent title invoked must be valid in Italy, or in the State where the request for suspension is proposed. But a patent granted in Italy is supported only by an assumption of validity since it is granted without undergoing an examination with regard to merit. And therefore how are the Customs to operate?
The proof which the applicant has to provide, in our opinion, must unequivocally show that the title invoked is valid in substance and not only in theory; but who, in the Customs, is equipped to effect an evaluation on the merit thereof if, for example, the proof is supplied by means of an official search of the prior art?
Or how can the Customs evaluate a European patent granted if, for example, the nine months during which third parties can present an opposition have not yet passed?
If it is an Italian patent title, which is valid according to the assumptions of law but in fact is granted without any substantive examination as to the merit thereof, the documentation regarding the filing of the patent application will certainly not be sufficient, and even less will the certificate attesting the grant of the patent be so.
If it is an application for a European patent (made valid in the State according to precise procedures) it will be necessary to present at least the standard search report for prior art, but who will judge it?
Likewise, if a PCT application is invoked (the so-called international patent which in fact is a unified procedure for filing a patent application), the problems will be even greater.
Moreover, one must ask how the authority will behave if the infringement is not apparent from a philological reading of the main claim, but derives for example from adopting simple and obvious mechanical equivalents, or in the case of a partial infringement, or again in the case where the infringement derives from a normal reformulation of the claims as granted.
These are only some of the problems which arise during the actuation stage of this innovation. As a result of the objective difficulties which the Customs will have to face, it is only in the case of a literal infringement of the main claim of a granted European patent which has overcome the opposition period, that objectively the competent authority does not need to be unduly concerned.