A new ruling in the High Court will open a floodgate for counterfeit handsets and accessories passing through the UK on transit, claimed trademark law firm Withers & Rogers.
The ruling, which was passed on July 27, highlights the loop hole in the current Counterfeit Goods Regulation which prevents HM Revenue & Customs (HMRC) from confiscating counterfeit goods if there is no evidence they will be sold on the EU market.
The ruling came about after counterfeit Nokia handsets and accessories, which were manufactured in Hong Kong and en route to Colombia via the UK, were seized by HMRC in July last year at Heathrow Airport.
Nokia obtained an order from HMRC to unearth who the counterfeiters were, but fake company names left them untraceable.
After a HMRC investigation, it was found the goods were not intended for sale in the UK and therefore not an infringement of Counterfeit Goods Regulation.
HMRC said an infringement of a trademark in the UK must involve use “in the course of trade” which means the goods must go for sale on the market.
Nokia requested a judicial review, claiming the ruling was a result of a “restrictive interpretation” of the Counterfeit Good Regulation, but the court rejected the request.
However, Mr Justice Kitchin’s judgment was apologetic and he argued a legal review should be made to close the legal loop hole.
Withers & Rogers said the ruling will make the UK a “safe passage” for counterfeiters.
It is expected that manufacturers will lobby the Government to alter the law.
A Nokia spokesperson said: “Nokia, like all other responsible brand owners, is reliant on UK Customs intercepting and seizing counterfeit goods in transit through the UK.
“Only UK Customs can police this type of activity. Nokia brought this action because it wants to protect all consumers from fake goods, whether or not those consumers are based in the EU.
“The UK Court granted Nokia permission to appeal and we are pursuing its appeal vigorously.”
Withers & Rogers trademark attorney Tania Clark said: “This decision places an extra burden on trademark owners to trace the ultimate destination of goods which are found to be counterfeit and requires them to liaise with all relevant authorities along the way.
“This is unreasonable and circumvents the spirit of the Counterfeit Goods Regulation and the European Commission should take immediate steps to clarify the law and include goods in transit within the definition of counterfeit goods.
“In addition, the ruling raises real concerns that the UK could be viewed as a ‘safe passage’ by counterfeiters seeking to transit Europe en route to their trading destination. Clearly, this poses a significant threat for trade mark owners globally. It’s a very onerous task to put on the owner of a trademark.
“The implications are worrying because the UK is seen as a weak link in transit. Manufacturers have to be more vigilant.”