Adv. Gill Nadel, Moran Shmilovich

As we know, the Customs Authority has the power to hold goods which, prima facie, violate copyright and/or trademarks. Under paragraph 200a and onward of the Customs Code, the Customs Authority may hold goods that seem to infringe upon copyright and/or trademarks following a notice on behalf of the rights-bearer or on its own initiative. However, the hold is not limitless or endless. The rights-bearer must deposit with the Customs Authority, within a short time after the hold, a guarantee that is sufficient to cover any expense connected to the hold or to compensate for any damage that may be caused by the hold. Additionally, the rights-bearer must file an action with the court against the import of the infringing goods within ten work days from the receipt of notice of the hold.

Recently, the question of the liability of customs relating to handling the infringing goods was discussed by the District Court of Petah Tiqwa.

The case involved a shipment including five types of chocolate that underwent physical inspection by customs. Following the inspecting, a suspicion arose that these goods infringe upon the trademark of the candy manufacturer Ferrero Rocher. Therefore, customs sent the Ferrero Company pictures of the chocolate types that arrived with the shipment. At the same time, customs informed the importer of a hold on the goods for three work days, in light of the fact that there was a suspicion that these were goods that violated the rights of the Ferrero Company.

The Ferrero Company informed the customs that the goods in the shipment were, indeed, counterfeits of the Ferrero Company. Following this, customs informed the Ferrero Company of the hold on the goods and of the requirement to deposit a bank guarantee of 30,000 NIS. The Ferrero Company paid the bank guarantee and gave notice of its intent to file an action against the importer, and accordingly customs informed the importer of a hold on the goods for an additional 7 days.

The importer and the Ferrero Company conducted negotiations between them and therefore informed customs that Ferrero Rocher would request an extension of 10 additional days to file the action, and that in the meantime the shipment would continue to be held by customs.

Later, the Ferrero Company announced its agreement to the release of three of the five types, under the condition that the other two types be sent to be destroyed. Customs informed the customs agent acting on behalf of the importer for the release of the goods of this fact, but the importer claimed that he had not agreed to this offer, and therefore the goods were left with the Customs Authority, and Ferrero Rocher filed an action against the importer within the agreed period of time.

During the proceedings in court, the importer filed a counter-suit against Ferrero Rocher and against customs. The importer claimed that the agreement between it and Ferrero Rocher was not sufficient to overcome the stipulations of the law which set the date for the filing of the action on the part of the rights-bearer. Accordingly, the importer claimed that the goods were held unlawfully, and even though in the end some of them could be released- the hold in the intermediate period caused serious damages since the goods were intended to be released and sold before the Purim holiday. For this reason, the importer sued Ferrero Rocher and customs for his damages (storage, delay, cancelled ordered, and lost profits) - for unlawful hold of the goods.

The court rejected the importer's counter-suit. The court ruled that the Ferrero Company was ready to file the action against the importer at the date set under paragraph 200a of the Customs Code, but was kind to the importer and delayed filing the suit in response to his request. Therefore, the court ruled that the importer's claim that hold of the goods was unlawful because of the failure of the Ferrero Company to file suit was made in bad faith that descends to the root of the issue.

The court also ruled that when the sides agreed to leave the goods with customs beyond the dates set in the law, the goods were then held by virtue of agreement and not by virtue of implementation of governmental power under paragraph 200a of the Customs Code, and therefore, this is not considered hold of the goods by the Customs Authority.

The court further ruled that after it became apparent, post facto, that some of the types that were being held (two) did in fact violate the property rights of Ferrero, the decision could have been made to hold and confiscate the entire shipment, including the other three types of chocolate, and therefore the hold was lawful.

Civil Case 1976-08-07 Ferrero S.P.A v. N.A Castro Import and Export Ltd, decision given 30.11.09, for Ferrero- Adv. Gilit Bareket and Partners; for the importer: Adv. Avigdori; for customs: Adv. Eliaz-Shnizer