A fake ‘Rolex’ sold from a website in China is delivered to Denmark
The case began in January 2010 when Danish resident Mr. Blomqvist purchased a ‘Rolex’ watch from a Chinese online shopping site. The order and payment were made through an English version of the website. The seller dispatched the watch from Hong Kong. When the package arrived in Denmark, the customs authority seized it suspecting counterfeit. Mr. Blomqvist opposed the destruction of the watch, arguing that he purchased it legally for personal use. Rolex’s legal action followed and the case ultimately reached the Danish Supreme Court. The Danish Court could not establish IP infringement by Mr. Blomqvist, but referred a question to the European Court of Justice (CJEU) about whether the sale was sufficient for “border measures” (such as seizure and destruction) against suspected IP-infringing goods to be taken under the EU’s Customs Regulation (No 1383/2003).
Will a sale of counterfeit goods from a non-EU country trigger EU border measures?
The CJEU’s short answer was ‘yes’ in its Blomqvist/Rolex ruling of 6 January 2014: Under the Customs Regulation, IP owners are protected from suspected IP-infringing goods sold to a resident of an EU country through a website in a non-EU country at the point those goods enter the territory of that EU country. IP owners (in this case, Rolex) don’t need to prove that the suspected goods were advertised or offered in a manner that targeted consumers in that EU country.
The CJEU followed its previous decision in a case involving Philips/Nokia. In that case, the CJEU held that IP rights may be infringed even before the arrival of suspected goods from a non-EU country if they are the subject of a commercial act directed at EU consumers such as a sale, offer for sale or advertising. So, where knockoff goods from a non-EU country have been advertised or offered to consumers in the EU, they can be classified as ‘counterfeits’ or ‘pirated goods’, triggering enforcement action at the border.
In the Blomqvist/Rolex case, the CJEU focused on the fact that the fake watch had already ‘sold’ to a consumer in the EU at the point of entering the Danish border. Because of the sale, the CJEU found that Rolex was entitled to the protection under the Customs Regulation without having to show further evidence that the Chinese website was targeting EU consumers. This ruling certainly takes some of the burden off a brand owner’s shoulders when seeking to protect IP at the EU’s borders.
What does the ruling tell us about brand enforcement in Europe?
The fake watch seized at the Danish border is just one of nearly 40 million items that the EU customs authorities confiscate every year. (See our previous post on the latest EU customs enforcement report.) What does the Blomqvist/Rolex ruling mean for brand enforcement strategy in Europe?
Some takeaways for brands businesses:
- Counterfeits can be stopped at the EU border even if the sale took place on a website in a non-EU country.
- If brand owners cannot prove sale from a website in a non-EU country, they will need to show that the foreign website is ‘targeting’ EU consumers. A national court will assess the existence of ‘targeting’ on a case-by-case basis. The CJEU in L’Oréal/eBay held that mere web accessibility is not enough; country-specific domain names, keywords, and details on the geographic reach that the seller is willing to deliver are all likely to be considered.
- Why not go after the website selling knockoff goods? In this case, Chinese rules on an online intermediary’s liability need to be considered because the website was located in China. But it is worth noting that online platforms in Europe are under stricter obligations compared to those in the United States or China. Online platforms have no general obligation to monitor illegal activity under the EU’s E-Commerce Directive. However, according to L’Oréal/eBay, this exemption does not apply if an online platform plays an ‘active’ role making it aware of infringing behavior by the platform users. Even if an online platform does not play an active role, the platform is not entitled to the exemption if it had knowledge of ‘facts or circumstances from which illegal activity or information is apparent’ and failed to act on it expeditiously. (By contrast, in the United States the Tiffany v. eBay case has ruled that an online platform is not under an affirmative duty in the absence of ‘specific’ knowledge of potential infringement. China requires online platforms to timely honor brand owners’ notice and take-down requests.)