Romania: Customs continues to tackle flow of counterfeits across non-EU borders

Legal framework

The following EU legislation applies to trademarks in Romania:

• EU Regulation 608/2013 (concerning customs enforcement of IP rights);
• the EU IP Rights Enforcement Directive (2004/48/EC);
• EU Regulation 2015/2424; and
• EU Directive 2015/2436 (to approximate the laws of member states relating to trademarks).

The following domestic legislation also applies:

• national laws on border measures, including Regulation 608/2013 and Law 344/2005 (establishing IP rights protection measures in clearance operations);
• Government Ordinance 100/2005 (transposing the EU IP Rights Enforcement Directive into national law);
• the Code of Civil Procedures and the Code of Penal Procedures;
• the Unfair Competition Law (11/1991); and
• the Trademark Law (84/1998), in force since 13 July 2020.

Border measures

Romania joined the European Union on 1 January 2007. Since then, the Romanian Customs authorities’ responsibility to protect the external border of the European Union has increased considerably, as Romania has a significant border with non-EU countries (eg, Serbia, Ukraine and Moldova).

Among the customs offices located on the EU border, that in Constanţa Sud-Agigea harbour is by far the most important when it comes to combating the trafficking of counterfeit goods by sea. Maritime shipping containers bring large quantities of goods into Romania and therefore into the European Union, and the Constanţa Sud-Agigea harbour customs office accordingly seizes the highest quantity of counterfeit goods.

Law 344/2005 does not supplement or affect in any way the provisions of Article 9(4) of the EU Trademark Regulation and Article 10(4) of Directive 2015/2436, or of the European Court of Justice (ECJ) ruling in Nokia/Philips, regarding goods in transit. Customs authorities currently seize goods in transit that are suspected of constituting an infringement of the IP rights relied upon, irrespective of the destination country based on Law 344/2005 applicable to all goods that:

(a) are placed in or out of the territory of Romania, inclusively from free area or free storage places; (b) are declared at Customs authorities for placing them under a suspended or definitive customs regime or for their re-export: (c) are placed under a suspended customs regime; or (d) are under customs supervising, in any other situations.

A notable difference between EU regulation and Romanian national law is the scope of application to customs regimes. National law applies not only to suspected counterfeit goods that are imported into or exported out of the EU territory but also to all goods seized in Romania by Customs or the police, regardless of the type of fraud committed (eg, failure to declare, abandonment or avoidance of customs or tax procedures). In practice, Customs seizes goods on entry into the European Union from non-EU countries and in-transit goods, while the police seize goods suspected of any type of fraud (eg, under excise legislation), whether at the EU border or warehouses within the country. Therefore, when conducting compliance checks of shipments under the excise provisions of the Customs Intervention Law at any entry point into Romania, Customs may verify the goods’ compliance with IP rights, either directly or at the request of the police.

Customs can act either on the trademark owner’s request or at its own discretion. Intervention on request is based on an application submitted to Customs at the national or EU level (the latter only for EU trademarks or designs). Customs intervenes on its own motion where it suspects that the goods may infringe IP rights. In both cases, Customs sends a notification (in English) of the seizure to the rights holder (or the rights holder’s appointed representative, where one is recorded at the Romanian Patent Office). In case of doubt as to the rightful recipient, Customs will send the same notification letter to various attorneys. Many attorneys regularly send lists to Customs setting out the IP rights they are empowered to defend.

Each notification gives basic information as to the seized goods and is accompanied by emails containing photographs of the goods. Rights holders may also visit customs offices to take additional photographs.

Where notifications are based on the suspicions of Customs and no intervention request has been filed, the rights holder has three working days to file such a request in response to the notification. A notification is also sent to the importer or holder of the goods. A typical notification includes:

• information on the actual or estimated quantity and the actual or presumed nature of the goods;
• the names and addresses of the consignee, the consignor and the declarant or holder of the goods;
• the customs procedure; and
• the origin, provenance and destination of the goods whose release has been suspended or that have been detained.

In some cases, not all details are included in the notification. Notifications are usually sent by email and accompanied by photographs. In cases where the local customs office is unable to take photographs, the representative may go to the place where the goods are stored to take photographs.

In most cases, the rights holder requests destruction and the holder of the goods does not oppose this; the goods are then destroyed by authorised companies. The costs of destruction are borne by the rights holder but are usually reasonable.

If the holder of the goods opposes destruction, the rights holder must file a civil or criminal complaint (or both) within 10 working days. The rights holder can extend this term by another 10 working days by filing a request before the expiry of the initial term. The same deadline applies where the rights holder wishes to sue the alleged counterfeiter for infringement instead of requesting destruction of the goods.

Customs is highly efficient in its operations and customs officers are very helpful when dealing with rights holders. They can easily be reached by phone for details, send additional photographs on request and in general do their best to ensure that the procedure goes as smoothly as possible.

Currently, the Customs infrastructure appears to be overloaded. Typical time frames for scheduling the destruction of seized goods can range from several months up to one or even two years from when the rights holder confirms that the goods are counterfeit.

Since 2017 customs offices have been sending the minutes concluded between them and the warehousing firms to rights holders. These minutes include the estimates of the costs for warehousing and the monetary value of the goods as declared by the counterfeiter. The real cost of the warehousing depends on the period of storage for the goods, starting with their seizure and ending with their destruction. If a penal file for counterfeiting is created concerning the seizure (either ex-officio or at the request of the trademark owner), the seized goods are stored until the end of investigations. This may be for up to four years, either at the firm’s warehousing or transferred to the police. It is uncertain whether this transfer is available for all cases.

Some rights holders are not interested in seizures of less than a certain number of items, owing to the relatively high costs involved in responding to Customs compared with the benefits gained from the destruction of the counterfeit goods. In such situations, according to current practice, rights holders frequently request Customs not to inform them about small seizures.

It is theoretically possible for seized counterfeit goods to be donated to the state authorities. However, there are no clear benefits for trademark owners in doing this in comparison to destruction, since national fiscal legislation incurs additional costs to the trademark owner to donate: fiscal tax for the import of the goods and the costs involved by the capitalization of the goods (eg, evaluation). Relevant provisions in this respect are found in the national fiscal legislation in Articles 14 and 15 paragraph 3 from the Government Decision no. 731/2007 and Article 1 paragraphs 2, 3, 5 and 7 of the Government Ordinance no. 14/2007.

Criminal prosecution

Counterfeiting is an offence punishable under criminal law. Two types of crime are stipulated: those that are considered to pose a threat to the public and those that are not. The penalties for the former are more severe.

Penal actions start with a penal investigation by the police, to check whether the counterfeiter’s action falls within the definition of a ‘criminal offence’. This is defined as ‘the act that represents a social danger, being carried out with guilt and is defined as such by specific laws’. Penal action is directed against a physical person or the legal representative of the company if the holder or declarant is a company. Counterfeiting of a trademark or design is defined as a criminal offence, both by the national Trademark Law and the Unfair Competition Law. Once the investigation is carried out, the police send the file to the prosecutor. If the prosecutor considers the action to be a criminal offence, the case is sent to the criminal section of the court. Unfortunately, in most cases, the prosecutor considers that the conditions for a criminal offence are not met and criminal complaints end without being sent to court.

Civil enforcement

Preliminary measures

Preliminary measures – such as sending cease and desist letters – are optional but often beneficial, as they can save the significant efforts and expenses of a lawsuit. Cease and desist letters may include an undertaking to be signed by the infringer (eg, a deadline for withdrawing the goods from the market) and a contractual penalty clause. In the absence of such an undertaking, the formal response of the infringer has the same value.

It is at the rights holder’s discretion as to whether they allow any existing infringing goods to remain on the market or insist that they be withdrawn or destroyed. Usually, rights holders request the withdrawal or destruction of the goods within a negotiated term from the date of serving the cease and desist letter.

Interim injunctions

In assessing a claim for an interim injunction, the court will determine whether all of the following conditions have been met:

• there is prima facie evidence of the claimant’s rights;
• the matter is urgent; and
• failure to grant the injunction would prejudice the claimant’s rights or cause it imminent and irreparable harm.

The law does not stipulate a specific time frame. In respect of irreparable harm, the claimant must cite evidence that the infringement has already taken place or is imminent.

The injunction may be granted without summoning the parties; however, the courts try to avoid doing so. The court will consider the urgency of the case and the magnitude of the irreparable harm in its decision. If granted, the interim injunction will remain in force during the main infringement proceedings. Interim injunctions cannot order the following:

• measures that can be ordered in the main infringement suit (eg, an order to permanently cease infringement or a damages award); and
• measures that, if enforced, would make reinstatement of the initial situation impossible (eg, destruction of the goods).

The court will issue an executory judgment. The defendant may appeal the injunction and request that execution of the decision be suspended pending the appeal. The appeal court will decide on the amount of security to be paid by the defendant to grant the request for suspension.

The decision on the interim injunction is not binding on the trial court – that is, there may be a finding of infringement in the interim injunction proceeding (if the injunction is granted), but the court hearing the substantive trial may conclude that no infringement occurred. Conversely, the judgment issued in the main proceedings is binding in respect of subsequent interim injunction proceedings.

Permanent injunctions

Permanent injunction claims filed by rights holders include specific requests (ie, sub-claims), the first of which is always the request for permanent cessation of non-authorised use of the relevant trademark. If granted, sub-claims constitute the remedies available under the IP Rights Enforcement Directive. Other sub-claims include:

• payment of damages;
• disclosure of information on the counterfeiting chain;
• destruction or recall of the goods; and
• publication of the decision in a newspaper.

Under certain conditions, a claim for summary proceedings can be converted into a claim for a permanent injunction.

Where an interim injunction request is filed before the claim on the merits, the court hearing the interim injunction case will stipulate in its decision a deadline by which the claimant must file the permanent injunction request. If the claimant fails to comply with this obligation, all provisional measures ordered by the court will cease. The following evidence is allowed in permanent injunction proceedings:

• documentary evidence;
• cross-examination;
• expert opinions; and
• witness declarations.

Requesting damages

There are two categories of monetary remedy: damages and reimbursement of trial costs. Damages are usually calculated as the lost profit of the claimant. In some cases, an accounts expert report is ordered by the judge for the calculation of the damages.

To claim damages, the claimant must pay a stamp fee, the value of which is roughly 1% of the value claimed. Reimbursement of trial costs usually refers to the charges of the lawyers and attorneys. In this respect, the claimant must, at the closing of proceedings, produce the lawyers’ invoices, as well as proof that the invoices have been paid. Judges are usually willing to decide to reimburse trial costs. When requesting damages, the claimant must pay a court fee; this varies in proportion to the amount claimed.

Damages are usually calculated as an estimate of the claimant’s lost profits due to the presence of the defendant’s products on the market. Damages and legal costs that are ordered by the court are not reimbursed ex officio. The successful party must notify the losing party to pay the amount ordered under the decision. If the losing party does not pay, the successful party can enforce the court decision through a court executor. Where the proceedings take many years to conclude, the losing party may become insolvent, in which case reimbursement of trial costs is subject to the general debt recovery procedure. In some cases, the court may require the rights holder to provide a financial guarantee if the measures it has requested are likely to prejudice the defendant.

Anti-counterfeiting online

No specific provisions apply to online counterfeiting, and the general rules apply. The number of such cases is increasing but remains small in comparison to the number of traditional counterfeiting cases being brought before the courts.

Cases relating to online counterfeiting pose problems regarding the provision of evidence, as websites can change rapidly, and it may be difficult to determine the infringer’s identity. However, online counterfeiting allows the claimant to file suit before any court where internet access is available.

Court actions can be combined into a single suit where a trademark is infringed through the use of a domain name that is identical to the trademark alongside other infringement activities. Such disputes can sometimes be resolved out of court by submitting the matter to the relevant domain name authorities.

Preventive measures/strategies

Rights holders should consider four strategic measures to prevent infringement of their rights.

First, they should ensure that their trademarks are in genuine use for the goods or services for which they are registered and that there is sufficient evidence of use. For national and international trademarks designating Romania, use must be within the Romanian territory. For European trademarks, use can be in any EU member state. However, in practice, enforcement in Romania is better managed when the mark is used within the Romanian territory. Use is not mandatory for new trademarks (less than five years from registration) but is highly advisable.

Second, rights holders should keep a close eye out for infringers on the market, in cooperation with distributors and licensees where direct monitoring and investigation is impossible. Sometimes it is necessary to monitor distributors and licensees themselves, as they may be infringers as well. This ensures that counterfeiting is detected as early as possible and that sufficient evidence is established.

Third, rights holders should appoint trustworthy local counsel as early as possible so that a customised strategy can be established from the outset. Such a strategy may include monitoring infringers’ registered rights and applications (where applicable), oppositions and invalidity actions.

Rights holders should involve authorities as much as possible – for example, by requesting customs intervention for their primary trademarks, notifying Customs of their appointed representative and submitting a list of their registered rights to Customs.

Repair clause

As far as the repair clause is concerned, Article 45 of the National Trademark Law restricts the owner of a registered trademark from prohibiting the use of that trademark for indicating the designation of a product, especially for accessories or spare parts (similar provisions are found in Article 14 of EU Regulation 2017/1001).

Registered designs or models are treated differently, however. Article 32c of the Designs Law reads as follows: ‘The rights conferred by a registered design or model cannot be exercised for the equipment on ships and aircraft registered in a third country, when these temporarily enter the territory of Romania or for the importation of spare parts and accessories for the purpose of repairing such craft or for the execution of repairs on such craft.’ This is also provided for EU states in Article 20(2) of EU Regulation 6/2002.

Another relevant provision of the Designs Law concerns the requirement that a design or model representing a component of a complex product remain visible during normal use of the product, except during maintenance or repair (see also Article 4 of EU Regulation 6/2002), as grounds for refusing the registration or cancellation of a registered design.

A landmark decision of 2019 involved a case concerning vehicle spare parts. Company A sold vehicle spare parts and, along with its own trademark, placed labels on its products to indicate compatibility with particular vehicle models. Company B, the owner of trademarks for the vehicle models corresponding to Company A’s spare parts, sued Company A alleging trademark infringement due to the labels on the parts indicating compatibility with said vehicles. Company B claimed that affixing the labels mentioning Company B’s trademarks onto the spare parts constituted non-authorised use of their marks.

In February 2018 the first-instance court ruled that there was no trademark infringement. Company B appealed, but the appeal was dismissed in June 2019. The Court of Appeal decision was further appealed to the High Court of Cassation and Justice.

In December 2021 the High Court of Cassation decided to admit the final appeal and to send the case back to the Court of Appeal for a new judgment. During the proceedings, Company B invoked a recent decision taken by the High Court of Cassation in another file in June 2021 concerning Company C and the trademark owner for the vehicle models corresponding to Company D’s spare parts. The invoked decision underlines several aspects that the High Court considered necessary for evaluation by the Court of Appeal:

• The need to establish whether the use of the registered mark among codes formed by figures on the spare parts is designated to provide public information concerning the goods and whether it represents the only modality for correct information that is complete and intelligible to the public.
• The need to identify eventual infringement of the third party regarding the obligation of loyalty in respect to the legal interests of the mark owner, according to the ECJ’s definition in Gillette.
• The need to establish whether the third party’s use of the mark can affect the mark’s value, allowing the third party to take advantage of the distinctive character or reputation of the mark (according to Gillette), taking into account the normal practices in the market of the spare parts.

In June 2022, the Court of Appeal issued a decision to admit the appeal of Company B, considering that it cannot be excluded that Company A’s use of the mark (along with its own trademark, on its spare parts products to indicate compatibility with particular vehicle models of Company B) may suggest to the consumer a connection between Company A and Company B.

In January 2023 this decision was appealed by Company A to the High Court of Cassation. In January 2024 the High Court ruled with respect to the final appeal, deciding to partially admit it for the accessory claims and to return the matter to the Court of Appeal in this respect and to maintain the decision of the Court of Appeal in respect to the main claim – namely the infringement of the rights of the Company B. The motivated decision is not yet available.

Comment

Counterfeiters are creative by nature; therefore, rights holders must be as alert and creative as possible in enforcing their rights and always try to stay one step ahead of them.