Counterfeit Goods in Transit:
Court confirms that counterfeits can be seized in Malta on the basis of Chapter 414 of the Laws of Malta
In its decision of the 24th February 2011, the First Hall of the Civil Court confirmed that counterfeit goods detained by Customs in transit can be seized on the basis of Chapter 414 ‘Intellectual Property Rights (Cross Border Measures) Act, 2000’ independent of EC Regulation 1383/2003 and ECJ jurisprudence. This decision clarifies the local legal position on the seizure of counterfeit goods in transit after the uncertainty created by a number of ECJ rulings (among which ‘Montex/ Diesel Case’, ‘Sisvel v Sosecal’ and the Opinion of the AG of the ECJ in the ‘Nokia vs HMRC’ (Case C495/09 - 03.02.11)) which held that counterfeit goods may only be seized in the EU if they are destined or suspected to be destined to the EU market. This is a very important ruling for the fight against counterfeit goods in Malta.
Application No: 1058/2009 RCP
Judge: Mr Justice Raymond C. Pace LL.D.
Names: Dr. Luigi Sansone as special mandatory of Pfizer Products Inc vs. Dr. Nicolai Vella Falzon as Deputy Curator appointed on behalf of consignee Tasharokiat Azzahra of Benghazi, Libya
Date of Decision: 24th February 2011
In October 2009, the Comptroller of Customs in terms of Chapter 414 of the Laws of Malta detained Container No IRSU 4873313 which contained a number of blue diamond shaped pills which Customs suspected to be counterfeit. The container in question was destined for Benghazi, Libya and was detained at the Malta Freeport whilst in transit. From further verification and analysis by the rightholder, Pfizer Products Inc, these pills resulted to be counterfeit VIAGRA. The rightholder initiated civil judicial proceedings in Malta requesting the court: (1) to declare that the 3,144,000 pills detained by Customs were counterfeit VIAGRA pills thereby infringing the IP rights of the rightholder; (2) to order the Comptroller of Customs to dispose of these pills by ordering their destruction; (3) to order the defendants to suffer all the costs connected with this procedure.
The Curators appointed to represent the absent consignee pleaded that the claims put forth by the plaintiff nomine are unfounded at law due to the fact that the goods were not destined for the local market and, hence, no trademark infringement subsisted on the basis of Article 10 of the Trademarks Act. The Curators made reference to EC Regulation No 1383/2003 and the various ECJ cases decided on this matter.
The Court held that this case was based on article 4 of Chapter 414 which prohibits "the entry into Malta, export or re-export, release for free circulation, temporary importation, placing in a free zone or free warehouse of goods found to be goods infringing an intellectual property right". The Court confirmed that the Comptroller of Customs detained these goods whilst they were in a free zone area and that these same goods were coming from and were destined to third countries that do not form part of the EU. The Court concluded that such circumstances fell within the ambit of Chapter 414 and that Maltese law applied even when establishing whether the goods were counterfeit. Article 2(1)(a)(i) of Chapter 414 defines "counterfeit goods namely: (i) goods, including the packaging thereof, bearing without authorisation a 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 trademark, and which thereby infringes the rights of the holder of the trademark in question under Maltese law".
The Court declared that the provisions of Chapter 414 are applicable independent of Regulation EC 1383/2003. Article 10 of EC Regulation 1383/2003 clearly provides that "the law in force in the Member States ... shall apply when deciding whether an intellectual property has been infringed under national law." The Regulation also defines counterfeit goods as being those "goods ... which thereby infringes the trademark-holders' rights under Community law ... or the law of the Member State in which the application for action by the customs authorities is made".
The Court cited the parliamentary debates held in 1999/2000 when Chapter 414 was being discussed prior to its enactment. The legislator had held that “with the strength of this piece of legislation, Malta is guaranteeing, internationally, that what is being counterfeited outside of Malta will not be protected in our country, not even if a container with counterfeit merchandise stops in transit at the Malta Freeport to continue its destination to a third country since, even in these circumstances, the merchandise will be detained”.
The Court also quoted the position taken by the Maltese Attorney General’s Office with respect to Nokia’s preliminary reference before the ECJ. The AG’s position was: “The legal position under Maltese law is I believe quite clear.... However the local Act, and the manner in which it is implemented by the local customs authorities, is certainly not the subject of contention in these proceedings which concern exclusively the manner in which the UK customs authorities are interpreting and enforcing Regulation 1383/2003. ... whether or not the ECJ rules in favour of Nokia it will ultimately not affect the local position, or compel Malta (and other MS having a similar legal position) to amend its laws. This is because ... Article 10 of the Reg. 1383/2003 provides that "the law in force in the Member States ... shall apply when deciding whether an intellectual property right has been infringed under national law" and defines counterfeit goods as being those "goods ... which thereby infringes the trademark-holders' rights under Community law... or the law of the Member State in which the application for action by the customs authorities is made. Therefore, whatever the outcome of these proceedings, Malta is in any case entitled to interpret and apply the provisions of this Regulation so as to include counterfeit goods in transit.” (Court’s emphasis)
The Court concluded that the arguments put forth in the ‘Opinion of the Advocate General of the ECJ in the Nokia Case (Case C495/09)’ do not impinge, in any manner, on that provided for by Chapter 414 of the Laws of Malta which was the basis for this action and, therefore, denied the pleas of the defendants by upholding plaintiff’s claims and ordering the destruction of the counterfeit VIAGRA pills seized by the Comptroller of Customs.