Protecting intellectual property rights: what measures does the EU customs employ to combat counterfeiting and why is it essential for Ukraine, aspiring to join the European Union?

Safeguarding borders against the infiltration of counterfeit goods stands as a top priority for the EU. The EU Council, in May 2021, identified crimes related to intellectual property as a key aspect among the EU’s top 10 threats in combating organized crime from 2022 to 2025.

Why is it so important? Because trade in goods that infringe intellectual property rights causes significant harm to rights holders, users or groups of producers, as well as producers and traders who retain the rights. It can also mislead consumers and endanger their health and safety.

In the Conclusion of November 8, 2023[1] regarding Ukraine’s application for EU membership, the European Commission noted that to join the EU, Ukraine, in addition to implementing legislation, also should implement EU practice in the field of intellectual property rights (IPR) protection.

Thus, according to the conclusion of the European Commission, “there are still shortcomings in the fight against piracy and counterfeit products, as Ukraine remains one of the four main transit points for the supply of counterfeit products to the EU.”

Why do we in the EU pay so much attention to the fight against counterfeiting, how has the EU countries built a system to combat this problem, what has already been done in Ukraine and what are the recommendations of European experts for Ukraine to be able to join the EU Customs Union?

Counterfeit goods: all associated risks and negativity

At times, fake products from renowned brands might appear as an opportunity for less affluent individuals to purchase something ‘almost branded’ at a lower cost. However, when examining counterfeiting, we assess it using criteria that equate this practice with organized crime.

Counterfeit goods pose health risks to citizens, including children, often resulting in severe harm, even fatalities. This concern extends beyond food products. Unlike legitimate manufacturers, counterfeiters evade accountability for the raw materials, product safety, and materials used in their items.

Counterfeiting inflicts financial losses on legitimate businesses, enriches illicit enterprises through cheap materials and illegal production, leading to reduced tax contributions. Entrepreneurs involved in transporting counterfeit goods may have ties to criminal groups.

Consequently, endorsing counterfeiting—be it through inaction, insufficient efforts, or corruption—jeopardizes citizens’ lives and health. It favours shadow businesses, fosters unfair competition, and funds criminal entities.

[1] https://neighbourhood

Counterfeit products not only circulate domestically but also transit to other nations. As a result, a country’s customs allowing counterfeit goods to pass “exports” all associated risks and negativity to other countries: health hazards to citizens, economic losses to lawful businesses, and unrealized revenues from customs duties.

How the system is built in the EU

What system did the EU come to, considering it the most effective at the moment? Customs must perform the functions of international trade control: prevent illegal trade, promote legal trade, thus protect citizens from low-quality (i.e.: dangerous) products, promote fair payment of customs payments, fill the budget, and maintain fair competition in the market. Preventing violations of property rights in international trade or making it impossible for counterfeit products to pass through customs borders, is one of the directions of such work. For its implementation, the customs office must have the necessary tools regulation in place with mandate and procedures, IT solutions and established cooperation. Some words about those four components.

1. Regulation. The key legislative act within the EU Customs Code, which specifically concerns the protection of intellectual property rights at the customs level, is EU Regulation 608/2013[1].

It provides a legal mechanism for the protection of intellectual property rights at the external borders of the EU and empowers the customs authorities of EU member states to take measures to prevent the importation or circulation of goods suspected of infringing IPR. In particular, it regulates the customs control procedure for IPR compliance and provides a legal basis for customs intervention to detain or confiscate such goods at the border; customs detention procedure of suspicious goods (usually at the request of right holders); requests of rights holders for customs intervention, etc.

The legislation within the EU aligns with the Union’s stance on this issue. Combatting counterfeiting is part of the broader effort against smuggling, which is a criminal offense in the EU. While each country has its specific threshold for determining when a product batch’s volume constitutes a criminal violation, the underlying principle remains consistent[2].

2. Authority of customs. The EU Customs Code defines the institution of customs as one whose main task is not the collection of customs duties or the control of goods at the border; it provides customs with the tools to control the safety of goods – assigns it the role of “cargo police”.

The customs services of the absolute majority of the EU countries are endowed with law enforcement tools, that is, they can carry out full-fledged investigations in the field of customs offenses. Customs works effectively when it has legal tools and the ability to obtain and analyse high-quality information from operational sources in symbiosis with customs data.

3. Modern information systems. They allow not only to register information about brands, but also serve as a platform for online communication and cooperation between rights holders, customs and law enforcement agencies in matters of intellectual property rights protection. The entire history of registrations and communication is also stored here. The data and information may relate to seizures, trends and general risk information, including for goods in transit through the EU and originating in or destined for the territory of the third countries concerned.

The main information system is COPIS (anti-Counterfeit and anti-Piracy Information System), which contains closed information about the applications of right holders, the history of these applications – submission, changes, actions related to it, its relevance, countries of its application, archives, contact data in these countries, samples of protected products, etc., and is also a platform for communication with rights holders. Another platform for such cooperation is the IP-Enforcement Portal.

Through COPIS, the European Commission and the customs authorities of the EU member states can share certain data and information available to them with the relevant authorities of third countries in accordance with the agreements. COPIS plays a crucial role in liaising between customs and customs administrations in the EU at any stage of the suspension of counterfeit goods.

4. Interaction. The rules of conducting law enforcement activities in the field of international cooperation are established in sufficient detail in international agreements and conventions. Very often, illegal goods move in transit, and the organizers of this activity live in a third country. Then the customs office, whose competence is limited to the investigation of crimes within the country, most often will not know about the illegal actions of citizens abroad.

Customs can see the big picture, and based on data analysis, they can track and detain this cargo. But if it does not have legal instruments, then the detention will be only an isolated case of detection of smuggling at the border – without proper investigation, stopping of subsequent cases, criminal prosecution and punishment of all participants in criminal schemes.

When there is a movement of goods between countries, both the possibility of exchanging information and the similar qualification of offenses in EU countries are important for the effective fight against crimes. Because if such offenses do not fall under criminal jurisdiction in one of the states, it is difficult to conduct a full-fledged investigation.

How the system works in Ukraine: a side view

Ukraine is a transit country, so it is important for the EU to have confidence that the customs borders of Ukraine will not be an “open gate” through which counterfeit goods and related problems will enter the European Union.

In Ukraine, the State Customs Service aids rights holders in safeguarding intellectual property rights (IPR). When goods suspected of infringing IPR cross Ukraine’s customs border, the customs must identify and halt their clearance. Subsequently, the customs office informs both the rights holder and the declarant about the suspension, sharing details like the rights holder’s name and address. Further steps, such as handling counterfeit goods, are undertaken by the rights holder, like considering destruction methods.

Unlike most EU customs offices, Ukraine’s customs isn’t a law enforcement agency and lacks investigative functions. It holds the authority to initiate cases for customs rule violations and, under specific conditions, seize goods directly involved in these offenses, as per Article 476 of the Customs Code of Ukraine.

In Ukraine operates a Customs Register developed by the State Customs Service. While intellectual property rights violations are criminalized, smuggling ceased being a criminal offense in 2011. Discussions persist about reinstating its criminal status. Presently, transporting counterfeit goods across Ukraine’s customs border, including their transit through Ukrainian territory, isn’t considered a criminal offense under Ukrainian law.

Why should Ukraine heed the EU’s opinion and take action?

Firstly, it’s an obligation stemming from various international agreements, like the Association Agreement with the EU and the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement. Secondly, aligning legislation with EU norms and implementing EU IPR practices is a prerequisite for Ukraine’s EU membership aspirations.

Ukraine’s efforts in this direction hold immense significance. The country passed the law “On amendments to the Customs Code of Ukraine regarding the protection of intellectual property rights during the movement of goods across the customs border of Ukraine” in late 2019. This legislation mirrors EU Regulation No. 608/2013, marking another step towards harmonizing Ukrainian laws with EU standards. These changes aim to bolster intellectual property rights protection and expedite the movement of authentic goods across borders.

From 2020, the “Procedure for applying measures to promote IPR protection and interaction between customs authorities, right holders and declarants” and “Procedure for registration of IPR objects in the Customs Register” (Resolutions of the Ministry of Finance dated 09.06.2020 No. 281 and No. 282) are in effect. Therefore, it can be said that the norms of the Ukrainian Code correspond to the provisions of the EU acts regarding customs assistance in the protection of IPR. They, in particular, established a unified approach and rules for the application of measures by customs authorities in relation to goods suspected of violating IPR, unified forms of interaction of customs authorities with rights holders and declarants, updated the procedure for registering IPR in the customs register, established application forms used in EU countries.

Regarding practical steps, at the State Customs Service’s request, experts from EU countries offer insights into top European IPR protection practices and facilitate connections with reputable manufacturers. Regular online seminars, aided by the EU Public Finance Management Support Program (EU4PFM), invite representatives from renowned brands like Apple, Sony Interactive Entertainment, PUMA, KIA and etc. These sessions educate participants on crucial distinctions between authentic and counterfeit goods. During a study trip to Bulgaria, Ukraine’s State Customs Service representatives observed Sofia Airport’s anti-counterfeiting operations and engaged with the Department of Customs Operational Activities and Investigations of Bulgaria’s National Customs Agency. Moreover, the United States Agency for International Development (USAID) in Ukraine contributes to bolstering IPR protection capabilities.

Simultaneously, it would be beneficial for Ukraine to develop and approve rules/procedures for destroying detained goods infringing on intellectual property rights. Establishing centralized storage and consolidating information received from IPR owners or law enforcement agencies about detained goods, trends, and overall risk assessment, especially for goods transiting through Ukraine, would also be advantageous.

Having analyzed the situation in detail, European experts developed recommendations, the implementation of which will allow Ukraine to reach the required level of compliance with EU requirements. And, on the contrary, partial implementation threatens to put Ukraine on the list of countries that tolerate international trade in counterfeit goods. Ukraine is being recommended the following 5 steps.

1. Continuously align legislation, enforcement processes, and IT systems to meet the requirements of EU Regulation 608/2013.

2. Legislatively mandate that rights holders provide written confirmation to customs authorities when they believe intellectual property rights have been violated, including consent for goods destruction.

3. Outline the procedure for the destruction of IPR-violating goods in line with EU Regulation 608/2013. Encourage rights holders to destroy such goods, if feasible.

4. Bring the functionality of the national IPR application management system to EU requirements. To explore the possibility of implementing COPIS as a ready-made EU IT tool in Ukraine. This will reduce the time and costs of creating a new IT tool, and Ukraine will be ready to connect COPIS at the time of accession to the EU without any delays or additional changes. Another option – the possibility of exchanging information of the national system with COPIS.

5. To explore the possibility of introducing the portal for the protection of intellectual property rights IP-Enforcement Portal[3] in Ukraine, so that the customs authorities in Ukraine have information about registered trademarks and designs in the EU, about their protection and for exchanging information with the European Commission and right holders.

The protection of intellectual property rights is an important component of the investment climate in Ukraine. And the degree to which partner countries will trust Ukraine in the matter of IPR protection will influence investments for the recovery of the country.

Vytenis Alisauskas,

EU4PFM International Expert on customs

[1] %3A32013R0608