Feature By Adam Smith

Enforcement Directive divides opinion

Five years since EU member states agreed to the Luxembourg laws currently in force; others will have to be harmonize IP enforcement, WTR reassesses the adjusted, or be made applicable to all IP rights.” While Luxembourg misguidedly blamed its failure to implement project in a major survey of corporate counsel on the tardiness of other jurisdictions, Greece’s problems are purely and private practitioners internal. The country is replacing its entire trademark law, a process stalled by political predicaments. “The relevant Green Paper was originally expected to be completed by July 1 2008,” explains Eleni Lappa, of Greek firm Dr Helen G Papaconstantinou John V Filias & Associates. “Thereafter the deadline was extended to the end of A pan- effort to enforce IP rights was always going to November 30 2008. Unfortunately, however, the long-awaited Green be difficult. But the European Union forged ahead admirably, Paper for the new trademark law is not yet completed. As soon as publishing the EU IP Rights Enforcement Directive (2004/48/EC) on the new trademark law is passed, the provisions of the enforcement April 29 2004. The directive aims to harmonize the rules across the directive will be implemented.” The government was even forced to European Union regarding evidence, interlocutory measures, seizures, respond to a recent parliamentary question regarding the injunctions, and damages and costs, thus requiring all member states implementation. Sweden suffered similar political setbacks, to apply effective measures to combat counterfeiting and piracy. according to Adam Weissbach, associate at Vinge in Sweden. “The Almost three years since the April 2006 deadline for transposing Swedish legislative process has been left trailing,” says Weissbach. the directive into national law, implementation is still proving “But the bill for the implementation of the directive was voted on in tricky. Private practitioners are asking for further clarification. the Swedish Parliament on February 25 2009. The intention is that it Customs authorities are apparently just as powerless as before. And will enter into force on April 1 2009.” corporate counsel are frustrated by the lack of harmonization Weissbach sounds confident that Sweden will finally enact the achieved. WTR spoke to a practitioner from every EU jurisdiction and directive – albeit three years after the deadline, and five years since surveyed a number of in-house counsel for their assessments of it was originally published. But Sweden, Greece and Luxembourg are working with the new regime. far from alone in their tardiness: the Netherlands was a year late when it finally enacted the relevant legislative changes in May 2007. Delayed reactions France followed the Dutch in October 2007, while Germany did not According to the most up-to-date research Greece, Luxembourg and implement it until September 2008. Sweden have still not implemented the directive. In early 2008, Although most countries have officially implemented the Luxembourg scored an own goal at the European Court of Justice directive, a bird’s-eye view reveals worrying discrepancies between (ECJ), which ruled in Commission des Communautés européennes v the 27 member states. “Almost every country says it has been ‘fully Grand-Duché de Luxembourg (Case C-328/07, February 21 2008), that implemented’, but when you look at the details you’ll see that this is the state had failed to adopt the relevant changes. Luxembourg had not the case,” says Astrid Gérard, co-leader of the International argued that its transposing law could not be devised without the Trademark Association (INTA) taskforce that is compiling a report context of French and Belgian laws, which significantly influence its for INTA members on the implementation of the directive. Having legislation. The ECJ disagreed, explaining that a member state spoken to stakeholders in every member state, Gérard has cannot invoke its internal practices for justifying ignorance of the encountered problems resulting from the directive’s vague clauses. obligations and time periods set in the directive. “France, “It’s a directive not a regulation,” she says. “So many of the clauses meanwhile, has implemented the directive, by way of the Decree of are optional. The Netherlands, for example, does not list the persons June 27 2008,” says Stefan Wieser of Dennemeyer & Co in who are entitled to seek protection and does not offer witness Luxembourg. “And Belgium effected implementation of the protection or pecuniary compensation for the rights holder if there directive through its laws of May 9 and 10 2007, so it is now is no accountability on the side of the infringer.” expected that Luxembourg will adopt its legislation in early 2009.” Wieser does not predict this to be a difficult process. He says: “The Major problems majority of measures the directive prescribes already exist under It may have taken some time for countries to implement the

50 World Trademark Review April/May 2009 www.WorldTrademarkReview.com Although most countries have officially implemented Finland the directive, a bird’s-eye view reveals worrying discrepancies between the 27 Sweden Estonia member states Latvia

Denmark Lithuania

Ireland

Netherlands Poland United Kingdom Germany Belgium Czech Republic Luxembourg Slovakia

France Austria Hungary Romania Slovenia

Bulgaria

Italy Portugal

Spain

Greece

Cyprus Malta

directive but opinions are already forming over its effectiveness. becomes apparent that the provision has tight restrictions. “You However, WTR has uncovered diversity in evaluations of the directive have to know what exists before you can get it,” he explains. “You’ve from private practitioners and corporate counsel alike. Some in- got to know the actual location; if you know an infringer that has house teams even noted no change. Gerhard Bauer, head of several offices, you have to identify which office contains the trademarks design patents, domains and IP contracts at Daimler, says document.” Martin Broden, a leading member of the in-house IP that his practice remains largely the same. “I’ve seen few changes,” he team at Inter-IKEA, agrees with Gerber that the law is in essence a told WTR. “Many countries already had legislation in place which good thing. But he suggests that the French and Belgian systems of covered the major provisions of the directive anyway.” But those that saisie-contrefaçon are the most effective seizure procedures in the have noticed the change describe it as positive. “I think the law is European Union, and should have been replicated in the directive. good,” commented Barry Gerber, European trademark counsel at “The saisie-contrefaçon is a good, effective instrument,” he says, Coca-Cola. “I’m very happy with the fact that we now have access to adding that claimants do have to be careful not to abuse the system. certain new provisions which didn’t exist before.” “There must be checks and balances and guarantees. And a bailiff One major new provision permits the seizure of documentary must be present to carry out the seizure. In those circumstances evidence related to suspected infringement. Although many you’d really hope that the judge has thought thoroughly about it jurisdictions already had such laws in place, the directive introduced and about any damages that you may incur. There must be new methods. However, according to Gerber, this provision “has not safeguards so that defendants receive compensation.” However, such lived up to the hype”. Once proceedings begin, he explains, it laws, while favourable to the brand owner, are regularly criticized for www.WorldTrademarkReview.com April/May 2009 World Trademark Review 51 Feature: Enforcement Directive divides opinion

Enforcement Directive in summary

Jurisdiction Implemented? Year of Opinion Contributor implementation

Austria Y 2006 Although most of the specifications of the Elke Dichlberger, directive have been implemented there is a Sattler & Schanda Rechtsanwälte, lack of clarity with respect to the following Vienna issues: disclosure of banking, financial or [email protected] commercial documents; description of provisional measures; protection of confidential information; and publication of judicial decisions. Belgium Y 2007 Beyond merely implementing the directive, Sophie Lens, Altius, Brussels the new laws also created specialized IP courts [email protected] by limiting the number of courts with competence to hear IP disputes. Bulgaria Y 2007 The directive was implemented in Bulgaria through amendment of the Copyright Law, the Patent Law, the Trademark Law and the Design Law. Cyprus Y 2006 Patent and trademark right owners are Phivi Tramountanelli, protected by the customs authorities in the Michael Kyprianou & Co, Nicosia main. It is not currently possible to impose [email protected] criminal sanctions or penalties in relation to infringing goods that have been seized within the market. Czech Y 2006 Act 221/2006 (Enforcement of Industrial Magdalena Hrdlickova, Republic Property Rights Act) directly incorporates the DLA Piper, Prague respective regulations of the directive and [email protected] regulates the legal remedies relating to the enforcement of IP rights. Denmark Y 2005 See box “Denmark” Estonia Y 2006 The main change expected was the possibility Mari Must, to request interlocutory injunctions to prevent Raidla Lejins & Norcous, Tallinn alleged infringement of IP rights. This change [email protected] has indeed taken place – the courts now issue interlocutory injunctions stopping alleged infringement and seizure of goods within four to five days. Finland Y 2006 The possibility to publish decisions was Sanna af Ursin, greeted with mixed emotions as it was seen as Berggren Oy Ab, Helsinki an unwanted public humiliation of the [email protected] infringer. France Y 2007 The main difficulty practitioners are Gerard Gabriel Lamoureux, encountering is that of knowing whether the Cabinet Hirsch & Associés, Paris provisions of the new law are immediately [email protected] applicable to current lawsuits where the facts occurred before implementation of the new law. Germany Y 2008 The law gives no guidance as to how the Anna Sophie Steinmeister infringer’s profit may be calculated and and Peter Munzinger, whether the calculation of the infringer’s profit Bardehle Pagenberg Dost Altenburg is a separate method when determining the Geissler, Munich amount of damages. The relevant provision is [email protected] widely considered as being too vague. [email protected] Greece N 2009? See box “Greece” Hungary Y 2006 One advantage of the regulation is that it is Gabriella Sasvari, SBG & K Patent and now possible to bring to account a wider circle Law Office, Budapest of people (eg, those who provided services to [email protected] infringers). Ireland Y 2006 See box “Ireland”

52 World Trademark Review April/May 2009 www.WorldTrademarkReview.com Jurisdiction Implemented? Year of Opinion Contributor implementation

Italy Y 2006 We have attempted to use the new provisions Julia Holden relating to right of information introduced Trevisan & Cuonzo Avvocati, Milan introduced under the directive (Article 121bis [email protected] of the Italian IP Code), but to date we have not seen judges willing to grant this order. Latvia Y 2006 In practice, preliminary measures work only Valentina Sergeyeva, together with the main claim and solely in Strahlberg & Partners, Riga cases where infringed goods have actually [email protected] been used. Lithuania Y 2006 The state has not shown that it will require trade Otilija Klimaitiene and professional associations/organizations to AAA Legal Services, Vilnius comply with codes of conduct relating to the [email protected] protection of IP rights at EU level. Luxembourg N Early 2009? The main changes will be with regard to the Stefan Wieser following: the obligation to disclose the origin Dennemeyer, Luxembourg and distribution channels of infringing goods; [email protected] claims for damages; measures to secure evidence; the destruction of counterfeit goods; and the designation of the competent court for nullity proceedings and patent infringement actions. Malta Y 2006 The fact that (subject to certain conditions) Austin Summat the opposing party may now be obliged to Ganado Sammut, Valletta produce evidence which is in its control is [email protected] contrary to the general procedural rule that ‘the burden of proving a fact shall, in all cases, rest on the party alleging it’. Netherlands Y 2007 The most significant change for Dutch IP Paul Reeskamp practice is the possibility of having attorney Allen & Overy LLP, Amsterdam fees reimbursed by the losing party. [email protected] Poland Y 2007 The implementation of the directive created a Slawomira Piotrowska better protection regime for copyright than for Patpol – Patent & Trademark trademarks. The directive removed a number Attorneys, Warsaw of remedies previously existing under Polish slawomira.piotrowska law. Therefore, a new legislative initiative is @patpol.com.pl necessary to reinstate the status quo. Portugal Y 2008 See box “Portugal” Romania Y 2005 Romania transposed the directive through Delia Mihaela Belciu Government Ordinance 100/2005 regarding Nestor Nestor Diculescu Kingston the enforcement of industrial property rights Petersen, Bucharest before joining the European Union on January [email protected] 1 2007. Slovakia Y 2007 The courts now seem to have a better Adriana Tomanova understanding of dealing with IP right issues, Bianchi Malach Tomanova, Bratislava leading to better quality enforcement. [email protected] Slovenia Y 2006 The most promising changes were as follows: Gregor Macek relaxing the conditions for temporary Item doo, Ljubljana injunctions; the introduction of the licence [email protected] analogy for awarding damages; and the possibility for courts to order the infringer to present evidence in its possession. Spain Y 2006 The Spanish Act 19/2006 has not clarified if Leticia Lloret the holder of an IP right has to prove actual Grau & Angulo, Barcelona damage, which would have been really useful, [email protected] since Spanish case law regarding this issue is contradictory. Sweden N April 2009? The bill for the implementation of the Adam Weissbach, Advokatfirman directive was voted on in the Swedish Vinge, Stockholm Parliament on February 25 2009. The [email protected] intention is that it will enter into force on April 1 2009. United Y 2006 The provisions allowing actions to be brought Joel Smith Kingdom by representative associations (for instance Herbert Smith LLP, London trade bodies on behalf of rights holders) were [email protected] not enacted. This is still the subject of lobbying and consultation with the Ministry of Justice.

www.WorldTrademarkReview.com April/May 2009 World Trademark Review 53 Crime and punishment Feature: Enforcement Directive divides opinion

The European Union is slowly becoming accustomed to the IP Rights Enforcement Directive. But the draft directive on criminal measures aimed at ensuring the enforcement of IP rights is still looming on the horizon. “The institutions are deadlocked,” says Chehrazade Denmark Chemcham, an associate at Fulbright & Jaworski. “But it doesn’t mean the private sector cannot continue to engage in discussion and raising the importance of this issue for brand owners, consumers and The IP Rights Enforcement Directive was implemented relatively enforcement authorities.” Chemcham has led an International quickly by Law 1047 of October 20 2005. The directive does not change Trademark Association (INTA) taskforce comprising members of the EU Danish legislation concerning counterfeit goods materially. However, subcommittee of the Anti-counterfeiting and Enforcement Committee the legislation provides penalties in the form of a fine or imprisonment to keep the debate moving. “There’s no definite timeline,” says Candice for importing IP-protected goods. The law specifies that the customs Li, INTA’s external relations manager for anti-counterfeiting. “So at this authorities, by proper identification and without the order of a court, point the only thing we can do is to keep the dialogue open.” can be granted admission to the premises of the importer. Indeed INTA has led the debate since 2005. “We have encouraged The directive has simplified procedures so that the customs the European Union to limit the directive to trademark counterfeiting authorities can destroy counterfeit goods under their control. In and copyright piracy because these are the most serious types of IP addition, Danish Customs now has the power to seize samples infringement,” says Li. “The scope of the directive risks criminalizing IP without compensation and to hand them over to the IP rights right disputes that are essentially civil in nature.” The Dutch holder. The Danish customs authorities’ track record on seizure Parliament is also concerned by the scope of the directive. In 2006 it actions is good, thanks to a flexible, cooperative taskforce. However, wrote to the to argue that “the present Customs still has difficulties finding counterfeit goods transported proposal falls outside the powers of the European Union”. by lorry. It might be worthwhile considering whether Customs Criminalizing IP infringement certainly ignites passions. “It is a great should be allowed to obtain control consignment notes in cases challenge because we’re not talking about only ,” where reasonable suspicion is obtained. Chemcham explains. “Here we’re talking about national criminal law.” That means that every stakeholder has had plenty to say on the matter. Christian Levin Nielsen, Zacco Denmark AS, Copenhagen The taskforce has collected all these opinions and is writing a report it [email protected] will deliver to all INTA members before the end of the year. “Brand owners within INTA are strongly in favour of criminal sanctions,” observes Chemcham, so they have been looking at the Greece draft directive closely to see if it addresses their concerns. “One of the biggest challenges is lack of interest from prosecutors. They also cite the lack of harmonization and the difficulties in identifying The directive has not yet been fully implemented. Legislation with defendants and setting minimum penalties as other major issues.” respect to IP rights, primarily relating to copyright law has been The directive obviously hopes to alleviate these problems – but are harmonized in national legislation (the relevant legislation relating brand owners happy with the draft? The taskforce’s initial research has to copyright came into force by way of Law 3524 of January 26 2007). found a reassuring level of parity among reactions to the draft. “It does The implementation of the IP Rights Enforcement Directive was not seem that the current text of the directive would be incompatible delayed because the current Greek Trademark Law (22389/1994) is with national laws,” says Chemcham cautiously. But she does admit expected to be replaced. The relevant Green Paper was originally that there will be a major problem with ensuring the directive can sit expected to be completed by July 1 2008, and thereafter the deadline beside the procedures within national criminal laws. “This covers not was extended to November 30 2008. However, the long-awaited just intellectual property but also the moral values that societies have Green Paper for the new trademark law was not yet completed at the in place,” she explains. Indeed, although most jurisdictions do regard time of writing. As soon as the new trademark law is passed, the trademark counterfeiting as a crime, Cyprus and Luxembourg do not. provisions of the IP Enforcement Directive will be implemented. It is “The legislators in Europe have to come up with the minimum noteworthy that a parliamentary question was recently posed to the provisions to send a strong message that counterfeiting and piracy are government on the progress of the implementation of this directive. crimes,” says Chemcham. The results of her research, although not yet finalized, confirm that brand owners consider the draft directive a good Eleni Lappa, Dr Helen G Papaconstantinou John V Filias & start. “But the process takes a long time,” says Li. “The only thing we can Associates, Athens do is take that in our stride and work with the governments.” [email protected] inviting unfocused attempts to uncover evidence. “People can go on damages] is widely considered as being too vague,” they told WTR. “The fishing expeditions in the United Kingdom,” notes Gerber. “But at law gives no guidance as to how the infringer’s profit may be calculated the same time the laws work and they do benefit rights holders.” and whether the calculation of the infringer’s profit is a separate Brand owners also enjoy the potential to recoup damages under the method when determining the amount of damages or whether the new directive. But practitioners across the European Union are infringer’s profit shall be taken into account when calculation is made suggesting the rules need further clarification. Gabriella Sasvari, on the basis of lost profit.” attorney-at-law with SBG & K Patent and Law Office in Hungary, points out that while non-financial damages in a trademark infringement or Strong foundations counterfeiting case can be significant, they are difficult to measure in So there remain some problems with the new laws – although one practice. Under the new laws, implemented in Hungary in 2006, “the has to bear in mind that the directive is designed to provide the basic trademark owner is compelled to furnish proof of the damage suffered legislative foundations upon which jurisdictions are expected to item by item,” Sasvari explains. “However, in trademark infringement build robust domestic enforcement procedures. “It sets out a or counterfeiting matters, this is nearly impossible. In such cases, mark minimum level of protection that might not have existed before,” owners cannot enforce their claim for violation of their interests, or for admits Gerber. “There are still major variations in the national laws.” their good reputation, as damages cannot be measured precisely.” Anna Broden considers that further EU legislation building on the directive Sophie Steinmeister and Peter Munzinger at German firm Bardehle is a “good idea”. He suggests analyzing particularly successful Pagenberg Dost Altenberg Geissler agree. “Article 13 [which addresses legislative tools in each jurisdiction and considering applying them

54 World Trademark Review April/May 2009 www.WorldTrademarkReview.com Ireland across the region. “Why not look at the way the saisie-contrefaçon is applied in France?” he says. “Maybe use it as a prototype.” Broden adds that if the legislators hoped the directive would The IP Rights Enforcement Directive was transposed into Irish law harmonize European law, their job is far from done. “There are still on July 5 2006 as the European Communities (Enforcement of big discrepancies,” he observes. “In some jurisdictions, seizure of Intellectual Property Right) Regulations 2006. The minister for evidence is much more effective than in others. The measures have enterprise, trade and commerce (as he was at that time) noted that not been harmonized; their effectiveness depends on the the novel aspects which are specifically provided for in addition to jurisdiction.” This problem is seen most blatantly in court. Gerber relief measures already available in Ireland are: explains that when he recently applied for an action on an ex parte • the right for a claimant to seek a court order for disclosure of basis, the judge had obviously had very little experience in the information from persons involved in infringing acts to allow relevant field. “It is clear that the law has moved on, but perhaps the full investigation of the transaction chain; people making the decisions have not necessarily kept pace,” he • the ability for the claimant to seek a court order to have goods says. “Perhaps there’s a need for more training within a few member recalled or destroyed at the expense of the infringer; and states as to what the provisions mean, ensuring that they can be • the possibility for the claimant to seek a court order to publish enacted correctly.” Bauer takes a wider, more patient view. “We’re still at the defendant’s expense the court judgment in the case. in a stage of transition,” he says.

There is little or no evidence to date to suggest that the Time for change provisions of the regulations have been used to any great extent Some critics suggest that relying on jurisdictions to construct their own before the Irish courts. Indeed, one High Court judge noted in a legislation on top of the directive is not enough, instead calling for recent decision that, in his view, the regulations confer no wider further European legislation. WTR heard from several practitioners who powers on an Irish court in ordering disclosure of documents than assert that the provisions overlook the needs of customs authorities – the existing discovery provisions of the Rules of the Superior Courts. and that only new laws can address this omission. In Cyprus, the He went on to state that the regulations do not establish a procedure customs department is not authorized to disclose information on the more favourable to the rights holder than those already in existence. suppliers and producers of counterfeit goods. Instead, it must endure a He also referred to the fact that the directive was transposed into lengthy procedure to attain a court order. The authorities thus need the Irish law outside of the date fixed by the terms of Articles 20 and 21 power to stop infringers and their products “efficiently, quickly and of the directive and indeed, in his opinion, perhaps also transposed methodically”, suggests Phivi Tramountanelli, of Michael Kyprianou & incorrectly. Similar views have also been expressed by those at the Co in Cyprus. “It’s very important that customs authorities can take Department of Enterprise, Trade and Employment, the department action not only when goods are counterfeit but also authentic,” says responsible for the legislation implementing the directive. Gerber, adding that customs authorities need tighter coordination. “We had goods intercepted at two ports in the same country, but each Brian McElligott, DFMG Solicitors, Dublin port gave us different information and deadlines and had different [email protected] requirements of us.” Denmark’s customs authorities “function well”, says Christian Levin Nielsen of Danish firm Zacco. However, he admits that “it is still Portugal a major problem for the customs authorities to find counterfeit goods transported by lorry”. Brand owners are increasingly frustrated that many customs authorities remain toothless. According to Gérard, a The directive has been implemented through Law 16/2008, which brand owner may be able to make a perfect case against counterfeit was unanimously approved by Parliament. Until now, only the goods, but the ECJ will often rule in favour of free trade regulations, music and software industries have filed for search orders. The rejecting all the work of the customs department. “This directive has results are good, but the courts still do not seem to understand the nothing to do with customs,” says Gérard. “It just provides for the exact technicalities of the new measures provided by Law 16/2008. measures, it’s procedural: what measures a rights holder can take in The law’s main achievement is the introduction of a new set of order to preserve its rights. It says nothing about what you can do with rules on damages. Previously, penalties for infringement were a counterfeit product.” To Tramountanelli, there is only one solution. extremely low in Portugal. Although the new law does not provide “What we need,” she explains, “is a directive providing a simplified for punitive damages, it sets out criteria to help the courts grant mechanism of obtaining information on the suppliers, producers and more realistic compensation for damages. Only a few decisions have manufacturers of counterfeit goods through customs authorities.” been issued so far on the basis of Law 16/2008. However, it seems Most practitioners – in-house or in private practice – agree that that the courts are starting to understand that it is time to change it is still too early to give a full assessment. And far too soon to be their approach to compensation for damages. planning further legislation. “The European Commission should This law represents a very important step in Portugal as it is the focus first on getting this directive understood and working well first statute to be dedicated to the enforcement of IP rights. The before it makes changes,” advises Gerber. Shrewd advice, considering problem in this country is not statutory law, though – it is the length of time it took to agree on the directive and then enforcement. However, judges and lawyers can work together to implement it. (Though some countries have yet to implement, of improve the situation. course.) Lengthy bureaucracy is merely the nature of European legislation, comments Broden. “I know that there has been a lot of Manuel Lopes Rocha, PLMJ – AM Pereira, Sáragga Leal, Oliveira criticism of the directive,” he says. “As always, a product of political Martins, Júdice e Associados, Sociedade de Advogados RL, Lisbon compromises is not always the best solution.” WTR [email protected] Adam Smith, World Trademark Review, London www.WorldTrademarkReview.com April/May 2009 World Trademark Review 55