06 December 2019

Counterfeits are increasingly traded online. More and more, counterfeits are imported in very small quantities. As a defence against such imports, trademark owners in Switzerland can request assistance from the Swiss Federal Customs Administration. Depending on the circumstances of the individual case, it may also be advisable to take private and/or criminal action against the importer. Various pitfalls must be taken into account.

The Increase in Capillary Imports through Online Trading

The online trade in counterfeits (of trademark protected goods) is flourishing – the internet is now the primary distribution channel for counterfeits (see also our article from the series "Online Enforcement"). Counterfeits are increasingly offered for sale in closed networks (such as closed groups of social networks). More and more, the counterfeits are ordered online and then imported in very small quantities (so-called capillary imports). The majority of these imports remains under the radar of the customs authorities, i.e. undetected by them, especially as they carry out their inspections on a random basis only (see OECD/EUIPO, Misuse of Small Parcels for Trade in Counterfeit Goods – Facts and Trends, Paris 2018).

Although capillary imports relate to very small quantities, they are of considerable importance as a whole. They cause lasting damage not only to the respective trademark owners, but also to the whole economy. They also entail a risk of deception for consumers to whom such importers ultimately resell the counterfeits.

Especially the often ridiculously low unit prices lead to numerous imports of counterfeits into Switzerland from typical countries of origin such as China. Another important factor here is that China is still considered a developing country in terms of postage rates based on the regulations of the Universal Postal Union and as such benefits from a massively reduced postal tariff. Chinese suppliers can therefore charge their customers negligible costs for shipping small quantities of goods (including counterfeits) to Switzerland. This creates an incentive for customers to place various small orders with Chinese suppliers. More and more, Swiss importers are trying to exploit this by claiming private use under the guise of "capillary import" (and thus trying to evade prosecution at least to a certain extent, see Pitfall No. 4 below), but are in fact starting a piracy business by repeatedly importing particular items.

Assistance provided by the Swiss Federal Customs Administration (FCA) under art. 70 ff. TmPA in conjunction with art. 55 ff. TmPO

If a trademark owner has clear indications that an import of counterfeits into Switzerland is imminent, he can file a so-called application for assistance with the Swiss Federal Customs Administration (FCA) (specifically Directorate General of Customs) (art. 71 para. 1 TmPA in conjunction with art. 55 para. 1 TmPO). This allows the trademark owner to request that the FCA refuses to release goods when crossing the border into Switzerland, i.e. to retain the goods concerned if there is a suspicion that they infringe the trademark rights of the applicant. This application is generally valid for two years and can be renewed (art. 55 para. 2 TmPO).

A similar instrument also exists at European level (EU-wide and at individual EU Member State level).

Application for Assistance from the FCA

The trademark owner's application must contain all the information available to him which is necessary for the identification/appropriation of counterfeits by the FCA, namely a precise description of the (original) goods concerned (art. 71 para. 2 TmPA).

In order to enable the FCA to identify counterfeits, the trademark owner must provide it with as precise guidelines as possible, such as the characteristics of the original products, typical characteristics of counterfeits and any possible counterfeiting methods. If the trademark owner knows typical suppliers, exporters, importers or recipients of counterfeits, he should also name them in his application.

In his application for assistance, the trademark owner may also request that the retained goods be destroyed after expiry of the retention period (intervention period, see Pitfall No. 2 below) (art. 72c para. 1 TmPA). He may also request that samples, specimens and/or photographs of the retained goods be sent to him automatically (art. 72a para. 1 TmPA in conjunction with art. 56a TmPO). Finally, the trademark owner may request that the FCA (based on art. 13 para. 2bis TmPA in conjunction with art. 13 para. 2 letter TmPA) also retains suspect goods intended for private use in tourism travel.

In order to cover any claims for damages by third parties, the trademark owner must submit a declaration of liability to the FCA or pay a security (art. 72h para. 1 TmPA).

Pitfall No. 1: Reference to Trade Secrets

The application for assistance from the FCA regularly contains trade secrets of the trademark owner, such as authenticity features built into goods. The importer may be tempted to request access to the application and thereby learn from these trade secrets.

In its judgment of 16 May 2017 (B-7949/2015 - in German), the Swiss Federal Administrative Court granted an importer access to an application for assistance. It held that the importer had an interest worthy of protection which was a prerequisite for his claim. According to his own statements, the importer was considering claiming damages from the trademark owner as a result of the retention of goods. The Swiss Federal Administrative Court had instructed the Directorate General of Customs to give the trademark owner (subsequently) the opportunity to name any trade secrets contained in the application for assistance.

In order to create a clear situation from the outset, the trademark owner should expressly indicate his interest in protecting any trade secrets already in his application to the FCA.

Pitfall No. 2: The Deadlines to be observed

If, on the basis of an application for assistance, the FCA in the course of its random import inspection has reasonable grounds to suspect that a product intended for import into Switzerland infringes trademark rights, it will inform the trademark owner (applicant) as well as the importer of the goods (art. 72 para. 1 TmPA). In this case, the FCA retains the suspect goods for a maximum of 20 working days from the notification of the retention (retention period, art. 72 para. 2 and 3 TmPA). The trademark owner should use this time to request samples or specimens pursuant to art. 72a TmPA or corresponding photographs of the suspect goods from the FCA pursuant to art. 56a para. 1 TmPO (if he has not already requested this automatically anyway, see introduction above). On this basis, he should carry out various investigations, such as in particular on the question of whether the retained goods are actually counterfeits.

If the trademark owner has also requested the destruction of the retained goods (see introduction above) and the importer expressly opposes this destruction within the retention period, the FCA in principle releases the goods to the importer (arts 72 paras 2 and 3 TmPA in conjunction with art. 72d para. 2 TmPA e contrario). If the trademark owner wishes to prevent such release, he must obtain further retention by legal means by way of preliminary (superprovisional) measures.

Pitfall No. 3: Impending Release of the Retained Goods / Preliminary (Superprovisional) Measures

Depending on whether or not the importer opposes the destruction of the retained goods within the retention period, preliminary (superprovisional, i.e. without hearing the importer) measures to further retain the goods may be necessary for the trademark owner. There are three different scenarios:

Bildschirmfoto 2019-12-06 um 14.01.02

While there is no need for superprovisional measures in scenario 1, the trademark owner must seek such measures in scenario 2.

Since the trademark owner must expect in scenario 3 that the importer of the goods will still explicitly oppose the destruction within the retention period, the trademark owner must – to be on the safe side – also seek superprovisional measures in this case (before the expiry of the retention period). Otherwise, there is the risk that the FCA will not destroy the goods concerned, but release them to the importer as a result of his opposition to the destruction and that the goods will thus be placed on the market. The only remedy here – avoiding also unnecessary civil proceedings – would be to eliminate this "synchronisation of the deadlines" of the trademark owner and the importer in new legislation. Specifically, art. 72d para. 2 TmPA should no longer refer to arts 72 paras 2 and 3 TmPA, but only to art. 72 para. 2 TmPA.

Pitfall No. 4: Private Use versus Commercial Use

According to art. 13 para. 2 letter d TmPA (in conjunction with art. 55 para. 1 letter a TmPA), the trademark owner may prohibit the importer of counterfeits (if there is a risk of first infringement or a risk of repetition) from further importing such goods. The trademark owner is also entitled to this right if the goods in question are imported for private purposes (art. 13 para. 2bis TmPA).

In the case of an import for commercial purposes, the trademark owner has further prohibition rights against the importer (where there is a risk of first infringement or a risk of repetition) pursuant to art. 13 para. 2 TmPA (in conjunction with Art. 55 para. 1 letter a TmPA), such as the prohibition of the offer, the placing on the market and the storage of such goods. In this case, depending on the circumstances of the individual case, filing a criminal complaint against the importer may also be advisable.

The distinction between private use and commercial may be difficult to make in practice, not least as there is a lack of case law on this subject (at least in the area of private law).

In general, under private law any use aimed at an economic activity is deemed to be commercial use, whereby neither remuneration nor intention to make a profit are prerequisites. This includes any use which is inclined towards the market, i.e. any use of a trademark which is perceived or at least perceptible on the market. The threshold for commercial use is low – in the case of private individuals, commercial use is generally assumed if their actions "exceed what is customary in the private sphere".

The circumstances of the individual case will determine whether an import is privately or commercially motivated and what action should be taken against the importer on this basis.

We recommend trademark owners who are confronted with imports of counterfeits to consider submitting an application for assistance to the FCA and to familiarise themselves with the pitfalls mentioned above in order to react appropriately in each individual case.

Our intellectual property team will be pleased to support you in this respect and also in the enforcement of your rights in individual cases.

Author: Jonas D. Gassmann

Further information:

Topics: Intellectual PropertyMedia & MarketingEnforcementPiracyCounterfeits


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