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Destruction of counterfeit goods under the new customs rules

In early July, a large consignment of counterfeit goods under a well-known global brand was destroyed at the Odessa customs of the State Customs Service of Ukraine with the application of the procedure provided for in Article 401 of the Customs Code of Ukraine (CCU). This is the first case where such destruction procedure was applied, after the entry into force on June 30, 2020 of two orders of the Ministry of Finance of Ukraine № 281 and № 282 of June 09, 2020, aimed at counteracting the movement across the customs border of Ukraine of goods suspected of infringing intellectual property rights, according to amendments to the Customs Code of Ukraine adopted on November 2019.

In his comment to ”GRAD” TV and radio company made via phone, a Partner of Pakharenko and Partners, director of the Ukraine  Alliance Against Counterfeiting and Piracy, attorney-at-law Alexander Pakharenko stressed out that counterfeit goods are goods that infringe intellectual property rights and do not meet the established quality standards, since no one controls their manufacture and transportation methods. The risks posed by counterfeit goods are not always obvious to consumers, but the consequences for health, safety and the environment can be very serious or even life threatening. That is why it is important for rights holders that counterfeit goods are destroyed and do end up in free circulation on the Ukrainian market.

At the state level, counterfeiting causes harm to the economy of Ukraine, whose budget annually receives billions of hryvnias less then due of potential tax revenues; reduces direct investment due to the country’s loss of investment attractiveness; contributes to the growth of corruption and crime; destroys fair competition in the market; leads to a reduction in the number of jobs and the outflow of professional staff abroad; causes harm to the environment and health of the Ukrainians.

However, the main threat for the state and society is posed by the link between intellectual property crimes and other serious crimes. Counterfeiting is the second largest source of income for criminal organizations worldwide after arms, drugs and human trafficking, and proceeds from trade in fakes are used to support organized criminal groups, to “sponsor” pharmaceutical crime, drug trafficking, arms trafficking, forced labor and corruption.

That is why the respect for intellectual property rights is an obligation of Ukraine as a state, enshrined in the provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the EU-Ukraine Association Agreement. At the same time, the signing and implementation of TRIPS requirements was a necessary condition for Ukraine’s accession to the WTO in May 2008. Amendments to the Customs Code and new versions of bylaws of the Ministry of Finance are aimed at strengthening the protection of intellectual property rights.

In particular, by the order of the Ministry of Finance № 281 of June 09, 2020 a new procedure for the application of measures to assist in the protection of intellectual property rights and cooperation between customs authorities, right holders and declarants was approved.

In this particular case, the destruction of goods whose customs clearance was suspended on suspicion of infringement of intellectual property rights, was carried out by placing them under the customs regime of destruction in the manner prescribed by Article 401 of the CCU. A declaration for placing such goods under the customs regime of destruction was filed by the right holder.

This case is a good result attained by the Department for Assisting in Protection of Intellectual Property Rights of the Odessa Customs of the State Customs Service and a positive example of the implementation of the adopted amendments to the Customs Code of Ukraine for all Ukrainian customs.

ЗНИЩЕННЯ ПАХАРЕНКО

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