Nokia Corporation v Revenue & Customs

Goods in transit through the Community, and subject to suspensive customs procedures, are not “counterfeit goods” for the purposes of the Counterfeit Goods Regulation merely because they are fake. They must infringe a trade mark in the relevant territory. Transit alone does not involve use of the mark in the course of trade or placing goods on the market.

The exception arises where a third party acts on the goods in a way which necessarily entails their being put on the Community market. The trade mark proprietor bears the burden of establishing that circumstance. A mere risk of diversion is insufficient. The Regulation does not create a new criterion for determining trade mark infringement, and recital (8) does not establish a manufacturing fiction.

Nokia sought judicial review of HMRC’s decision not to seize or continue detaining a consignment of approximately 400 counterfeit mobile phones and accessories travelling from Hong Kong to Colombia through Heathrow.

HMRC’s policy was not to target or detain suspected infringing goods in transit absent evidence of likely diversion onto the UK or wider Community market. The goods remained in a Queen’s Warehouse following an order for disclosure and non-release. The central issue was whether the definition of “counterfeit goods” in the Counterfeit Goods Regulation covered fake goods in transit under suspensive customs procedures where there was no real prospect of release onto the Community market.

1. Application refused. Nokia’s judicial review application failed because it proceeded on an interpretation of the Counterfeit Goods Regulation which the court rejected.
2. The definition of “counterfeit goods” in article 2.1(a)(i) was tied to goods bearing an unauthorised mark and thereby infringing the trade mark proprietor’s rights under the Community Trade Mark Regulation or national law. The Regulation did not extend the substantive rights conferred by trade mark legislation.
3. Under the principles identified in Rioglass and Transremar, [2003] ECR I-12705, and Class International BV v Colgate Palmolive Co and Ors, [2005] ECR I-8735, goods in transit or under a suspensive customs procedure were not, without more, put on the Community market. Mere physical introduction into the customs territory did not constitute importing or use of the mark in the course of trade.
4. The court applied the Montex exception stated in Montex Holdings v Diesel, [2006] ECR I-10881. A trade mark proprietor could restrain transit where the goods were subject to a third-party act which necessarily entailed their being put on the market in the Member State. The burden of proving that circumstance rested on the proprietor. A mere risk of diversion was insufficient.
5. The Counterfeit Goods Regulation had not introduced a new criterion for establishing trade mark infringement. Article 10 required the question of infringement to be determined under the law in force in the relevant Member State. Recital (8) did not create a manufacturing fiction, and such a fiction would substantially extend trade mark rights and produce unacceptable consequences for goods lawfully made and intended for lawful use elsewhere.
6. There was no evidence of a real prospect that the consignment would be diverted onto the Community market. Nokia accepted that it did not rely on the Montex exception. The application was therefore refused.

This was a first-instance application for judicial review. Permission was granted by Arnold J on 1 May 2009, and the matter had previously been transferred from the Queen’s Bench Division Administrative Court to the Chancery Division by order dated 29 January 2009.