Tactics for brand owners dealing with Hungarian customs

1st May 2017

Businesses can seek to turn the increase in customs costs into an enforcement advantage by showing active engagement with smaller shipments of infringing goods. Right holders may wish to re-think applying thresholds to enforcement, or alternatively decide on sending proactive release responses to customs.

Customs agencies are on the frontline of enforcement of intellectual property rights at the EU borders. It is common practice for right holders to file an EU wide application for action (“AFA”) with the relevant customs department.

The AFA is well known for being a very versatile tool as it not only allows the active enforcement of IP rights, but provides an opportunity to oversee the most common routes and entry points of counterfeit products to the EU as well as its sources.

Customs, in order to effectively carry out their task, need the active engagement of the right holders themselves. Active participation however comes with a price, which – in light of the seized amounts – sometimes might seem too high to pay, so right holders tend to introduce enforcement thresholds.

Experience shows that in Hungary, many notifications do not reach the right holders’ threshold for enforcement. Generally, this results in a standard ‘no response required’, letting the goods be released.

This has two drawbacks:

• seized goods stay in customs detainment for a longer time – even up to one month – this burden is born by the right holder; and
• local customs tend to become less vigilant in acting on the AFA as they perceive the right holder has lost interest, meaning a bigger fish might get missed later on.

In May 2016 customs storage fees doubled, resulting in a steep rise of administrative costs of up to EUR 200–250 per seizure (for goods weighing between 1-100 kg). This increase of costs can be turned into an opportunity to respond in a proactive way, even when instructing customs to release goods.

Such active participation only requires one, short and quick, well worded communication emphasising the importance of smaller actions despite not seeking legal action against the alleged infringer. The earlier the communication is submitted, the quicker such goods are released; saving the payment of increased storage fees.

Here’s how you can make the most out of your customs programme even in the cases of seemingly less significant seizures in Hungary:

• Deliver dedicated special training to let them know that you do take the enforcement of your IP rights seriously. This provides a kick-start to the local customs to be more attentive and amp up seizures and detainments.
• Respond quickly to notifications. A ‘no response’ approach may result in significant administrative costs due to increased storage fees, and have a long-term negative effect on the willingness of customs to take actions based on your AFA, even for larger shipments.
• Provide feedback and updates. It is essential to keep customs and your local representatives in the loop on your activity, product developments or new additions to your IPRs to keep customs engaged and alert.

Cooperation is the most effective weapon in local AFA enforcement; a quick reassuring response even to release the goods is more beneficial than no response at all.

Originally published in BrandWrites 8th Edition.