Ukraine Adopts Bylaws Implementing Customs Code Amendments

In order to implement the recent amendments to Ukraine’s Customs Code related to customs enforcement of intellectual property rights, the Ukrainian Ministry of Finance adopted two Orders, No. 281 and No. 282, which entered into force on June 30, 2020.

The Customs Code amendments and the subsequent bylaws were modeled after the Regulation (EU) No. 608/2013, which is another step towards fulfilling Ukraine’s obligations under the EU-Ukraine Association Agreement and the WTO Trade Facilitation Agreement.

The Order No. 281, regulating how customs authorities handle goods suspected of infringing IP rights and how they interact with rights holders, provides for the following procedures:

Customs Clearance Suspension Based on Customs Register Data

In order to identify goods suspected of infringing IP rights, the customs authorities compare the information about the products undergoing clearance with the information about original and counterfeit goods available in the Customs Register. Because customs enforcement of IP rights will not work when it comes to genuine goods, it is important for rights holders to provide complete, relevant and reliable information when filing customs watch applications (CWAs), to enable the customs authorities to distinguish the authentic from counterfeit goods.

Customs Clearance Suspension upon Customs Authorities’ Initiative

The Ukrainian customs authorities can act on an ex officio basis should they suspect IPR infringement, which is now the only ground for the suspension of customs clearance of goods that are not covered by a valid CWA and recorded in the Customs Register. There were previously several grounds on which the customs officials could suspend goods on their own initiative.

If there is a suspicion of IPR infringement, customs clearance may be suspended provided that:
a) The customs authorities are able to identify the rights holder;
b) There is a valid registration for the corresponding IP right or a copyright certificate;
c) The suspect goods are not perishable.

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. If the customs authorities suspect that certain goods infringe IP rights, they inform the declarant or the owner of the goods about their intention to destroy the goods. If the declarant or the owner do not file an objection against the destruction, the goods are destroyed under customs supervision. If the declarant or the owner do object, the rights holder is given an opportunity to initiate proceedings to protect their IP rights. If the customs authorities do not receive a confirmation from the rights holder that legal proceedings have been initiated before the expiration of the relevant deadline, the suspended goods must be released and are subject to completion of all other customs formalities.

Removing Labels from Goods and Packaging

Following the rights holder’s consent or request, the customs authorities are allowed to remove the marks and labels from the detained goods and their packaging in order to eliminate the traces of IP rights infringement. The costs associated with this procedure are borne by the rights holder.

Bearing Storage Costs

The goods that are suspended based on the data from the Customs Register or on the customs authorities’ initiative are to be stored at the customs warehouse provided that the IP rights holder has confirmed that the goods are infringing. The costs associated with this procedure are borne by the rights holder, who may request a cost estimate when responding to a customs detention notification. The customs authorities must provide a cost calculation to the rights holder and the declarant/owner of the goods.

The Order No. 282 regulates a new procedure for recording IP rights in the Customs Register for purposes of customs surveillance.

Electronic Submissions

The Order provides for the creation of an online Customs Register of Intellectual Property Rights, which is to be launched in the foreseeable future and which will eventually enable electronic communication between the customs authorities and the rights holders. Particularly, it will enable the e-filing of CWAs, online amendments of registered CWAs, online responses to customs notifications and requests, and similar activities.

New Application Forms

The CWA and the Renewal Application forms were modified based on those used in the EU countries. It is now possible to apply for the registration of multiple IP rights with one CWA, while one CWA could previously cover only one IP right.

IP rights that are already recorded in the Customs Register should be renewed before the renewal deadline by submitting a new CWA that conforms to new standards.

Required Information

The scope of information required in the CWA has been extended in order to enable the customs authorities to identify genuine and counterfeit goods without rights holders’ involvement.

Time Frames

The customs authorities have 30 working days from the receipt of a CWA to either register an IP right or to refuse registration.

Applicants are provided a 10–day period to respond to office actions issued during the consideration of their CWA.

The renewal request must be filed at least 30 working days before the expiration date. This term was previously 10 working days before the expiration date.

Grounds for Refusal to Register or Renew a CWA

A CWA registration or renewal may be refused on the following grounds:

• Lack of a valid IP right registration in Ukraine when submitting a CWA;
• Failure to fill in the required information in customs application forms;
• Nonconformity of the goods listed in the CWA with those covered by the trademark registration;
• Insufficiently detailed description of the original goods to enable the customs authorities to recognize them;
• Submitting inaccurate or insufficient information and/or false documents;
• Failure to cover the costs associated with the storage of goods in the customs warehouse.

Removal of a CWA from the Customs Register

A CWA may be removed from the Customs Register on the following grounds:

• Upon a rights holder’s request;
• Upon a court order;
• If an IP right has been cancelled or its legal protection has lapsed;
• Partial or full assignment of an IP right;
• Termination of an IP right in the Customs Register;
• Inclusion of inadequate or false information in a customs application;
• Systematic (three or more times) lack of updates of the information in the Customs Register relating to any changes to the IP right registration, or of the information enabling the customs authorities to analyze and assess the risk of IP right infringement;
• Failing to cover the costs associated with the storage of goods in the customs warehouse;
• Systematic (three or more times) lack of filing a response to customs notifications relating to detentions;
• Rights holder’s use of information received from the customs authorities for purposes not related to border control.

By: Tatiana Panchenko

For more information, please contact Tatiana Panchenko at our Ukraine office.