Ukraine: Changes Concerning Customs Enforcement of IP Rights

Olga Kudoyar

The amendments to Ukraine’s Customs Code related to customs enforcement of intellectual property rights entered into force on November 14, 2019.

The amending law is modeled after the Regulation (EU) No. 608/2013, which is another step towards bringing Ukrainian legislation to the EU standards and fulfilling obligations under the EU-Ukraine Association Agreement. The changes are aimed at strengthening customs enforcement of IP rights and accelerating the movement of genuine goods across the border.

Several key changes are outlined below:

1. Revised List of IP Rights

The list of IP rights subject to customs protection now includes topographies of semiconductor products and excludes utility models. While the initial list included trade names, they were deleted during the second reading.

2. Revised Definitions

The definition of the term “counterfeit goods” has been broadened and includes, among other things, “any packaging, label, sticker, brochure, operating instructions, warranty document or another similar document, even if presented separately”. The terms “pirated goods” and “goods suspected of infringing intellectual property rights” have been included in the Customs Code for the first time.

3. Revised List of Situations in Which Customs Enforcement of IPR Must Be Carried Out

In the event of suspected IPR infringement, the customs authorities will take action concerning the goods:

• Carried by private individuals into or out of Ukraine;
• Entering or leaving the customs territory of Ukraine (including goods in transit);
• Placed under the customs regimes of import, re-import, export, re-export, temporary import, temporary export, customs warehouse, free trade zone, and processing inside and outside the customs territory.

4. Exclusion of Genuine Goods from Customs Enforcement Procedures

The customs enforcement of IP rights now does not apply to genuine goods, which are defined as “goods manufactured with the consent of the rights holder, or goods manufactured by a person authorized by the rights holder to produce a certain quantity of goods, even if the quantity exceeds the quantity stipulated by that person and the rights holder”. Previously, the customs officials had the authority to suspend parallel imports, that is genuine goods imported by unauthorized parties.

This amendment implicitly confirms the principle of international exhaustion of IP rights in Ukraine, and will likely diminish the role of the customs register of IP rights as a tool against parallel and grey imports. The register was often used for monitoring and preventing parallel imports, by posing time- and cost-related challenges to unauthorized importers of genuine goods.

Under the amendments, protective customs measures do not apply to personal effects (articles, new or used, which a traveler may reasonably require for his or her personal use during the journey) and goods of a private and non-commercial nature brought into Ukraine as part of hand luggage or checked baggage, as long as they meet the value and weight requirements specified in the Ukrainian Customs Code.

5. Amended Simplified Procedure for the Destruction of Infringing Goods

The simplified procedure for the destruction of goods suspected of infringing IP rights has been harmonized with the one in the Regulation (EU) No. 608/2013. If the owner of the goods does not explicitly object to the destruction within a prescribed time period, the customs officials will destroy the goods (tacit consent). Previously, the simplified procedure would not have been carried out without the written agreement between the rights holder and the owner of the goods.

6. Reimbursement of Costs for the Storage and Destruction of Goods

Rights holders need to reimburse the costs incurred by the customs authorities for the storage and destruction of goods, the customs clearance of which was suspended. The amending law includes a provision entitling the rights holder to seek compensation from the owner of the infringing goods, or from other persons who might be considered liable for the infringement. The rights holder may request a cost estimate from the customs authorities.

7. Early Release of Suspended Goods

Early release of goods suspected of infringing IP rights, under certain conditions and upon the owner/declarant’s request, has been introduced. The following conditions must be met:

• The detained goods are suspected of infringing the following IP rights: industrial designs, patents, plant varieties or topographies of semiconductor products;
• The customs authorities have no information from the competent state authorities on precautionary measures regarding these goods, or on the application of measures which prevent their use;
• The owner of the goods has provided documents confirming that the rights holder and the owner of the goods have come to an agreement; and
• All customs formalities required for the release of these goods have been completed.

Initially, the amending law included a guarantee requirement, similar to the requirement from Art. 24 of Regulation (EU) No. 608/2013, but the wording was changed to the “agreement between the rights holder and the owner of the goods”.

The provision introducing the early release of goods is considered to be a measure against patent trolling, but it is uncertain if it will prove effective, taking into account the procedural requirement of obtaining an agreement between the owner of the goods and the rights holder.

8. Destruction of Small Consignments

A procedure for the detention and destruction of small consignments similar to the one outlined in the Regulation (EU) No. 608/2013 has been introduced.

9. Customs Authorities Relieved of Financial Liability

The amending law includes a provision stating that rights holders cannot seek compensation for damages from customs authorities for any untaken enforcement actions.

IP experts and rights owners have criticized this provision, which may provide an excuse for the inadequate enforcement of IP rights.