Tackling counterfeit alongside Customs in Ukraine. Digest # 02, 2022

Alexander Fomenko
Trademark Counsel for IPR GROUP

Nikolay Burak
Trademark Counsel for IPR GROUP

Manufacturing and sales of counterfeit goods remains a serious problem and challenge in the global economy.

According to Europol information, imports of counterfeit and pirated goods reached EUR 119 billion in 2019, accounting for 5.8 % of all goods entering the European Union.

According to Forbes in 2018, counterfeiting was the largest criminal enterprise in the world. Sales of counterfeit and pirated goods totals $1.7 trillion per year and was expected to grow to $2.8 trillion and cost 5.4 million jobs by 2022.

Perfumes, clothes, shoes, accessories, software, car accessories, pharmaceuticals and many other fields of industries are often exposed to counterfeiting.

There is also the traffic of counterfeit goods through Ukraine, as over other countries, especially due to its geographical location and many key logistic routes of national and international importance passing through its territory, which negatively affect the fame and trade turnover of the original brands in the Ukrainian market.

This often results in right holders seeking possibilities to prevent either the manufacture or import of counterfeit products to the market of one or another country.

Ukraine has in general, amended its national legislation to correspond with standards and practices of the EU in the sphere of customs procedures, including those related to the protection of IP rights. Moreover, in 2022 the legislative and law enforcement improvements in this sphere considerably accelerated, despite the current situation in the country.

The legislative improvements in Ukraine do not hinder the legitimate import-export of authentic goods, as the parallel import of authentic goods is not prohibited,  as the legislation at the same time provides effective counteraction measures against the cross-border movement of goods manufactured upon the infringement of IP rights, such as counterfeit.

Presently, the Customs Register of IP objects is effectively functioning in Ukraine, and  the recordal of registered trademarks in the Customs Register could be considered as the most efficient method  of preventing the cross-border movement of counterfeit goods in Ukraine.

If the Customs office notifies the holder of a trademark on the suspension of import clearance of infringing goods (confirmed by the right holder of original products), the following options could be considered in such a case:

  • to initiate a simplified procedure of the destruction of the counterfeit goods under customs control;
  • to file a lawsuit on the protection of intellectual property rights to the trademark and to request the destruction of the counterfeit goods in the ongoing lawsuit.

In order to briefly describe one of the above-mentioned options, we would like to share a recent case on behalf of our esteemed client, LORO PIANA S.p.A., Italian manufacturer of luxurious clothing, shoes and accessories.

In line with the client’s instructions, TM LORO PIANA was recorded in the Customs Register of IP objects of Ukraine.

Shortly after, the client was faced with several attempts of third parties to import counterfeit goods marked by TM LORA PIANA into the territory of Ukraine.

One of the recent attempts was to import a significant number of shoes marked by TM LORA PIANA, which turned out to be counterfeit goods.

In this case the client opted to initiate the simple procedure of destroying the suspended counterfeit goods.

We should note that this procedure may be applied only if, upon receipt of the notice on the suspension of the customs clearance, the right holder informs the customs authority in writing, that the goods in question infringe on his IP rights and provides the customs authority with written consent from the owner of the goods for said destruction.

In the resulting extended negotiation with the owner of the goods, under the pressure of unfavorable legal circumstances, the risk of having to reimburse the legal fees to the plaintiff as well as the costs for storage of the goods, the latter was persuaded and consent was given to destroy the counterfeit goods under customs control, which enabled the execution of this procedure.

It should be noted that for the actual destruction of goods it is necessary to engage the appropriate organization, licensed by the Customs authorities, which has industrial facilities capable to deal with the destruction of a particular type of goods.

Accordingly, our Attorneys hired the customs broker and appropriate licensed organization. The counterfeit goods were relocated from the customs warehouse to the facilities of the said organization, upon which they were successfully destroyed under the customs’ control.

The described situation is only one of a considerable number of counterfeit cases handled by Trademark Attorneys of IPR Group with efficient assistance of the Customs authorities in Ukraine.

As always, our Attorneys are ready to assist clients to register a trademark in the Customs Register in order to enforce their IP rights and tackle counterfeiting in Ukraine, despite the challenging situation.