IURIS Advocates partner Sarah Galea and senior associate Caterina Galati provide advice on how to effectively work with customs officials at Maltese border points and ports. They explore the frontline of brand protection in Malta, providing a guide on how to most successfully monitor for – and enforce against – counterfeit and grey market goods.
Can rights holders record trademark and brand-related IP information with customs and, if so, how?
The Industrial Property Registration Directorate (IPRD) within the Commerce Department is responsible for the:
- registration of trademarks, certification marks, collective marks and designs;
- patenting of inventions;
- issuing of supplementary protection certificates in respect of pharmaceutical products and plant protection products; and
- recording of transfers, cancellations, amendments and renewals relating to the aforementioned IP rights.
However, the Malta Customs Intellectual Property Rights Enforcement Unit plays an essential role in protecting Intellectual Property rights within the Maltese territory. In order to operate in the fight against counterfeiting and piracy, Customs need rightsholders’ cooperation and the most effective tool at the rightsholders’ disposal is to seek Customs protection in defending their rights against counterfeiting by filing an application in writing, known as the Application for Action (‘AFA’) with the Comptroller of Customs. Such application consists of:
- a detailed description of the goods enabling their recognition by Customs;
- proof that the applicant is the IPR holder; and
- proof that at face value the goods infringe upon the IPR of the holder.
Rightsholders’ may decide to either file a national AFA for the Maltese territory directly with the Malta Customs or file a European wide AFA including Malta as one of the territories covered by such AFA. Such AFAs are nowadays directly uploaded on IP Enforcement Portal (‘IPEP’) of the EUIPO.
Any updates of the information provided in the AFA can be done at any time on the IP Enforcement Portal (‘IPEP’). Further, AFAs need to be renewed on an annual basis.
Enforcing rightsholders’ rights involves no administrative charges as ithere is no fee/cost for the filing of such an application with Customs or on the IPEP system, the applicant shall still bear attorney fees and other costs connected with the preparation of such an application and documents related thereto.
As well as trademark registrations, are copyright registrations able to be registered with Customs?
Malta is a member of the Berne Convention for the Protection of Literary and Artistic Works of 1964; hence, foreign authors are granted the same rights and privileges to copyrighted material as domestic authors in any country being a signatory to the Convention.
Moreover, Malta has fully incorporated the EU and WTO rules regarding intellectual property into its national law and therefore, while patent and trademarks are granted on a first-to-file basis, copyrighted works, even those created in the United States, will automatically be protected in Malta from the moment of creation or publication according to international agreements.
Copyright and related rights may be included in the Application for Action (AFA) mentioned above in the same manner as per other rights.
Can brand owners send customs officials a product information guide or any additional materials to assist them in identifying genuine products? If so, what information would you recommend such materials include, and what formats are most valuable?
As explained above, when lodging the Application for Action, rightsholders are expected to provide customs a detailed description of the goods enabling their recognition by Customs. Hence, rightsholders may provide Customs, together with the AFA or at any time in cases of updates, their brochures/product information manuals which set out genuine and counterfeit product indicators and all relevant information. PDF documents are recommended.
What is the typical process for confiscation or further investigation in the event that customs officials identify potentially counterfeit goods?
In Malta, the law which primarily caters for anti-counterfeiting matters is the Intellectual Property Rights (Cross-Border Measures) Act (Cap 414 of the Laws of Malta) (hereinafter referred to as the ‘Act’). As an EU jurisdiction, relevant EU laws such as Customs Regulation (EU) No 608/2013 concerning customs actions against goods suspected of infringing certain IPR and measures thereto also apply in Malta.
Customs detain any goods that are considered to be counterfeit or unauthorised to prevent them from entering the market and shall preserve them as evidence in cases of suspected infringement through all possible means including photos, recordings, witnesses, testimonials, samples and so on.
The Act permits Malta Customs to act on its own initiative, that is ex officio, in circumstances where throughout its checks, Customs suspect that any goods found are in violation of a third party’s IPRs. In such cases, a suspension order may be issued delaying the release of the goods and subsequently, notify the holder of the IPRs and granting a five (5) working day period within which to lodge an Application for Action to be taken by the Comptroller of Customs.
The type of action taken will depend on whether the goods are intended for the local market or are in transit destined to another EU country or a Third Country.
In cases of local consignments, where the simplified procedure is applied, such goods may either be destroyed or released depending on the course of action taken by the applicant. However, when the simplified procedure is not applied, civil judicial proceedings will need to be initiated within ten (10) working days from notification unless an out of court settlement is reached with the importer/consignee. These 10 working days may be extended to a further period of 10 working days.
If the goods are detained in transit, the same time periods and procedures apply. There is the possibility of reaching an out-of-court settlement with the consignee, in default of which judicial proceedings will need to be filed for a declaration by the court to confirm the goods to be counterfeit as well as to order their destruction. Where recourse is made to the courts, the courts may eventually order the destruction of such goods or their disposal out of commercial channels, in principle ensuring that any person involved with circulating such goods do not take any economic benefits to the prejudice of the IPR holders. Recuperation of damages or costs for such actions tends to be challenging especially in cases of an absent defendant where the consignee is an unreachable sham company. In such cases, the rightsholders shall be responsible for all costs in relation with such procedures.
How will brand owners typically be contacted when suspicious or counterfeit goods are identified? What actions can/should brand owners take when these goods are intercepted by customs officials?
As from 13 December 2021 with the coming into force of the new IP Enforcement Portal (IPEP), all customs applications for actions are filed and managed electronically. The platform permits rightsholders to enter information related to their products, which will make it easier for enforcers to recognise originals from fake goods (on the basis of information such as packaging, identifiers, logistics) as well as contact the rightsholders through the Portal if needed and take the necessary actions. The local representative of the rightsholder will also communicate by email directly with the Customs officers in question on a ongoing basis in regard to such notifications.
On the other hand, enforcers include data on detentions of articles that are suspected of infringing intellectual property at borders and in the internal market while rightsholders are given the possibility to include information on the procedures chosen to enforce these cases.
Are there any time-sensitive considerations that brand owners should be aware of when dealing with customs-related IP enforcement?
When Malta Customs detains a consignment suspected to contain infringing goods, it informs the IP holder of the detention and rightsholders are to communicate within 10 working days whether they intend to take legal or any other action. However, in terms of Art 12 of Regulation (EU) No. 608/2013, on the expiry of the first 10 working days from notification, rightsholders are given the option to ask customs to extend that period to another 10 working days.
In the meantime, samples of the detained items are being kept at Customs office for examination, should the rightsholder wish to do so.
What are the potential costs involved in working with customs officials to protect a brand’s intellectual property, and how can these costs be managed effectively?
As explained above, there are no filing costs in terms of the AFAs. However, in case of any enforcement cases, rightholders’ shall be responsible for costs in regard to such cases which include tallying, haulage, storage, etc.
For in transit procedures, rightsholders first try to settle the matter with the infringer by reaching an out of court settlement. In such instances, rightsholders may ask infringers to bear all fees and costs in relation to the detention and destruction of the goods. If no out of court settlement is reached, rightsholders will have no option but to file civil judicial proceedings for a decision to confirm the goods to be counterfeit as well as for a destruction order. In such cases, should the case be filed against an absent defendant, the rightsholder will have to bear all legal, judicial and third-parties related costs. Such third-party related costs will include the Customs fees for attendance during the tallying and destructions, storage, haulage as well as final destructions costs.
It is difficult to manage these costs effectively especially if for example, in the case of container transhipments, there is only one brand involved in the detention and so that rightsholder will be solely responsible for the totality of costs if the consignee is not found. In the case where the container contains counterfeits from different brands, rightsholders may join forces should they so wish and file joint actions thereby splitting the court costs between them. Such costs are usually calculated on the quantities detained per brand.
Can you provide examples of successful collaborations between international companies and customs authorities that have resulted in tangible results?
2019 saw the destruction of 505 boxes containing 96,960 tubes of toothpastes bearing the trademarks of Aquafresh, as described in this article. The goods were not destined for the Maltese market, but traversed Malta on their way to Tunis upon the entry into the Maltese freeport, the area designated for goods passing through Malta, the customs authorities informed the rightsholders’ representative about the entry into the freeport of goods bearing their trademarks. This prompted the immediate reaction of the rightsholder, and a request was made to the customs authorities to seize the goods. The seizure was promptly followed by a request by the rightsholder to the Maltese Courts to order the destruction of the goods. The Maltese Courts confirmed the goods to be counterfeit and ordered the destruction of the said goods, which destruction was carried out through the Customs authorities.
IURIS acted as the agents of the rightsholders in this matter and represented them in Court proceedings obtaining a positive judgment ordering the destruction of the counterfeited goods.
What proactive strategies can brand owners employ to enhance their partnership with customs officials and improve their chances of intercepting counterfeit goods before they enter/exit the market?
The best way to ensure that customs will take action at the border is to submit an AFA containing all the necessary information on how best to identify genuine products. Ensuring that customs is kept up to date with any product or label changes is of the utmost importance to the enforcement of IP owners’ rights, as is notifying customs of recent counterfeit trends in the market. Customs Training as well as regular meetings with Customs officials will enhance the partnership.
Brands are to educate consumers and staff on how to identify fake products on the national or EU market through the use of social media and other online tools. These are powerful ways to build brand awareness and cherish consumer loyalty.
Additionally, building strong relationship with suppliers, distributors and other business partners is a crucial way to prevent counterfeit or grey market goods from entering the national and EU market. And it is imperative that all of the business contracts include clauses that expressly protects owners’ intellectual property rights and also set out the way in which any dispute over those rights will be resolved.