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16 December 2019

The Parliament of Ukraine has changed IP rights protection rules at the customs border of Ukraine

The Law of Ukraine “On Amendments to the Customs Code of Ukraine on Protection of Intellectual Property Rights during the Move of Goods across the Customs Border of Ukraine” was adopted 17 October 2019 and came into force from 14 November 2019 (hereinafter – the “Law”).

The Law aims to improve the protection of IP rights at customs by amending the Customs Code of Ukraine (hereinafter – the “CCU”).

With respect to your time and interests, we have prepared this legal alert regarding the general amendments reflected in the Law.

New definition of Counterfeit and Pirated Goods for the purpose of IP rights protection on the customs border of Ukraine

The Law clarifies the definition of counterfeit and pirated goods.

According to the Law:

Counterfeit goods:
– goods that contain either TM or designation similar to a protected TM which infringe the IP rights of the owner.
– goods that infringe rights to geographical identification (GI);
– any packaging, label, sticker, brochure, instruction manual, warranty or other documents that infringe TM or GI rights.

Pirated goods – goods that infringe copyright and/or related rights or intellectual property rights for a registered industrial design in Ukraine.

IP Object – copyright and related rights, inventions, industrial designs, trademarks, geographical indications, plant varieties, layout of semiconductor products.

Based on the above, these amendments aim to minimize the risks when the customs authority may not determine whether goods are subject to IP rights protection or not.

Green light to grey import or export operations of original goods

In the previous formulation of CCU, customs authorities were obliged to check and suspend customs clearance of goods labelled with TM which are registered in the Customs Register of IP objects (whether the goods were original or not) if these goods are imported by a non-authorized importer.

In accordance with the Law, customs authorities are no longer entitled to suspend customs clearance proceeding of original goods (goods manufactured by an authorized entity). Such amendments will allow customs authorities to concentrate on counterfeit (including look-a-like goods).
However, the current legislation stipulates requirements regarding the labelling of goods. There are reasonable doubts that “grey imported goods” will be encounter such requirements (e.g. conformance mark for technical products). Besides, the IP rights owner is entitled to forbid selling goods, particularly if the condition of such goods is changed or deteriorated after introduction into civil circulation.

However, despite the fact that the previous formulation of CCU featured an absence of any exceptions regarding the customs clearance suspending of original goods (grey import), IP rights owners faced problems with grey imports as well. This was connected with misunderstandings within the CCU. Indeed, customs authorities were entitled to suspend customs clearance of such goods, but IP rights owners had to prove that the goods were counterfeit.

In order to mitigate the risk of grey imports, this required the development of a legal mechanism which remains relevant so far, even despite amendments to the Law.

Limits of customs suspension of time-sensitive goods

Pursuant to art. 398 of the CCU, the customs authority applies measures regarding IP rights protection after registration IP object in the Customs Register of IP objects (hereinafter – “CRIP”).

Customs authorities have to check the goods containing IP objects in case such objects are registered in the CRIP (art. 399 of the CCU). If such goods bear the marks of counterfeit, customs clearance should be suspended.

The new Law sets forth limits regarding suspension of customs clearance at the customs authority’s own discretion (art. 400 of CCU).

Indeed, customs authorities as before are entitled to suspend customs goods clearance at their own discretion (ex officio) as well. However, according to the Law, this provision may not be applied regarding time-sensitive goods (e.g., foodstuffs, medical goods, plants). Whereas such limits do not extend to the suspension of customs clearance which is carried out according to the CRIP.

Therefore, in order to mitigate the risks of supplying counterfeit (including look-a-like) time-sensitive goods into the Ukrainian market, it is highly encouraged to register IP objects in the CRIP.

New regime of Counterfeit goods destruction

It should be pointed out that, as in the previous formulation of the Customs Code of Ukraine, expenses regarding storage and destruction of counterfeit goods shall be borne by the IP rights owner.

The new Law stipulates the improved procedure for the destruction of counterfeit goods at the IP rights owner’s request. According to the procedure, the IP rights owner is entitled to request the destruction of counterfeit goods for which customs clearance is suspended. The declarant (goods owner) may provide customs authorities with its objection regarding destruction. On the consideration of the request and objection (if provided), the customs authority issues an appropriate decision. In case the request on the destruction of goods is approved, the goods’ owner is obliged to utilize the goods by placing under a customs regime of destruction.
Additionally, the Law stipulates the possibility to destroy goods outside of the customs authority’s territory.

The above mentioned changes give IP rights owners additional arguments for negotiations and guarantees that infringing goods will be destroyed.

Suspending customs clearance and destruction of a small parcel of goods sent via post

The Law provides new procedures (art. 401-1 of CCU) for suspending customs clearance and destroying small parcels of goods which are sent via post (hereinafter – the “SP”).

Under the notion of SP come goods which are sent in one dispatch from one sender in international postal items, in one cargo of express carrier from one sender in international express deliveries, in the amount of not more than three units for each commodity of subcategory according to UCG FEA or a total gross weight of which is not more than two kilograms.

Besides, for the destruction of SP, the SP has to meet the following requirements:

– it is suspected that the SP contains counterfeit (including look-a-like) or pirated goods;
– goods are not time-sensitive;
– the protected IP object is registered in the CRIP.

The procedure of suspending customs clearance and destruction of the SP is as follows:

– in case the customs authority finds counterfeit goods in the SP, the customs clearance of goods is suspended;
– the customs authority notifies the declarant (goods owner) of goods about suspension of customs clearance and that the goods may be destroyed;
– the declarant has 10 days for providing the customs authority with its objection or confirmation regarding the destruction of goods;
– if neither confirmation is provided nor objection is lodged in 10 banking days, the customs authority takes a decision on goods destruction;
– if the declarant provides the customs authority with its objections regarding the destruction of goods, the customs authority notifies the IP rights owner regarding suspending of goods;
– the IP rights owner has 10 days to provide the customs authority with a cautionary judgment, otherwise the customs clearance of goods proceeds.

Therefore, this is one more argument to register your IP rights in the CRIP.

Based on the above, the Law gives brand owners more instruments to protect IP rights at the customs border of Ukraine.

For any further details please contact the SK IP practice team.

Information contained in this legal alert is for general information purposes only, does not constitute legal or other professional advice, and should not be relied upon as a substitute for specific professional advice tailored to particular circumstances.

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