Can counterfeits be legally imported for private use?

In Insights, Uncategorized

22 May, 2012

“…He wanted a genuine Rolex but they are expensive. So he wanted to make sure that he actually enjoyed wearing one before making the investment. In order to find out he bought the counterfeit watch…”

This very moving quote is from the questioning of the defendant in a recent case in the Maritime and Commercial High Court of Denmark.

As an IP-advisor, one of the tools I urge my clients to use is customs surveillance. It is cheap and easy and often ensures that counterfeit goods do not enter into circulation on the market. Contrary to many other EU-countries, Denmark allows copies if they are for private use. You are, for example, allowed to personally bring home counterfeit goods from a copy market abroad. However, you are not allowed to resell or redistribute the goods.

While the fairness of this rule may be debatable it poses significant difficulties in practice: when is an imported counterfeit for private use? And how many items may you import?

In this case the defendant had purchased a Rolex GMT-Master II watch knowing perfectly well it was a fake. The price of € 8,000 for the genuine article is modest; the fake is around € 450.

Despite the quite accessible rules in the EU-regulation on Customs surveillance it is obvious that the enforcement of the IP-rules requests that there is an actual infringement. On the face of it the Regulation gives Customs the right to bar the delivery of a shipment. No particular size of the shipment is required; in principle any size will do. How does this compare with the Danish rules on the right of private people to own counterfeits? Or purchase these abroad?

Obviously, in this case the Rolex watch is counterfeit and the importer knew this, the shipper did not give any impression that the watch was genuine and the price corroborated this. All parties and the Court agreed on this. So, could the defendant claim that this was exempt due to the right for individuals to own counterfeits for private use? And were Customs correct in seizing a shipment of just one item? A shipment that was obviously for private use.

With a steady hand the Maritime and Commercial Court passed a ruling that this counterfeit product should not be released to the importer, that Customs were right in seizing the shipment and that the defendant had infringed Rolex’s rights.

This is a novelty in Danish Law; the court’s decision is based on the rule on hypothetical manufacture, i.e. could the goods legally be manufactured in Denmark (even though they are not). The court explicitly stated that the exception does not extend to shipments from countries outside the EU. 

This ruling means that there is no longer any difference between shipments for businesses or private individuals. The contents of the exemption are now that this only applies to personal, physical import in you travelling luggage. And provided it is strictly and evidently for private personal use.

This is a significant strengthening of the rights of the brand owners – no question about that. And a consequence of this will also be that legal goods, imported legally but not intended for the Danish market can be barred. This is significant and a break with legal tradition in this field.

The case has been appealed to the Supreme Court and it will be very interesting to see if the Supreme Court agrees to this new principle on hypothetical manufacture or not. Should the Supreme Court follow the appealed ruling, this will be a novelty in Danish Law and a significant strengthening of IP-protection. I shall not fail, dear readers, to follow this case and duly report it when the Supreme Court rules on this.

Thorbjørn Swanstrøm, Attorney at Law

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