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Amendments to customs legislation set to encumber anti-counterfeiting efforts

Following the amendments to the Customs Law and the Cabinet of Ministers’ Regulations Concerning Certain Types of Customs Control, noteworthy changes came into force as of 1 September 2021, determining, among other things, how customs control measures for the protection of IP rights will be carried out in Latvia moving forward.

One of the most significant changes introduced by the amendments is the separation of the competences when assessing whether an IP right has been infringed. The State Revenue Service will no longer be responsible for issuing decisions assigning detained goods for destruction in situations where the goods in question have a declared value exceeding €1,000 or a net weight exceeding 1,000 kg, provided that the declarant or the holder of the detained goods has objected to the destruction.

If the foregoing conditions are met, and if the parties whose IP rights have been infringed want the infringing goods to be destroyed, the matter must be taken before the court. IP rights holders will have 10 working days to proceed accordingly, counted from the date on which the customs authorities have been notified of the objection to the destruction.

The fact that court proceedings must be brought in certain customs matters presents several problems from a practical standpoint. Moreover, this change may also have other negative implications, including regarding the willingness of IP rights holders to take action against counterfeit goods in Latvia.

One noteworthy aspect when considering litigation in Latvia is that legal representatives must show to the court that they have proper authorization to act on behalf of their clients. In most cases, this means presenting a duly signed and notarised power of attorney. However, in certain instances, a power of attorney certified with an apostille must also be presented. Fulfillment of these formalities often requires longer than the 10 working days provided. To mitigate the risks of not meeting this deadline, rights holders are advised to issue proper authorisation documents to their representatives in a timely manner, instead of waiting for an actual customs detention to take place.

Litigation also comes at an increased cost to IP rights holders. First, the state fee must be settled in order to bring a claim before the court. Second, due to the specifics associated with handling court proceedings, the legal representatives’ fees tend to be higher compared to resolving counterfeiting matters before the State Revenue Service. In addition, litigation takes significantly longer.

Finally, there is a concern that, in certain situations, IP rights holders will be less inclined to initiate litigation in counterfeiting matters. For instance, it is not an uncommon occurrence for counterfeit goods to be placed in so-called ‘consolidated shipments’ – meaning that, for example, different goods from various unrelated entities (among which only a fraction are counterfeit items) are placed in a single shipping container. Since the value and weight of goods will be determined based on the accompanying documents (eg, a consignment note or bill of lading) covering the entire shipment, it will be necessary to litigate in order to have the counterfeits destroyed – even though the counterfeit items as such do not meet the €1,000/1,000kg threshold. Unfortunately, some rights holders will be discouraged from pursuing such matters because the benet of destruction will not outweigh the costs involved.

It is still too early to draw conclusions on the impact that the new customs legislation will have on anti-counterfeiting efforts in Latvia. However, the stage is already set for a heated debate among legal professionals, and the ensuing litigations will undoubtedly be followed attentively.

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