Select Committee on Trade and Industry Minutes of Evidence


Memorandum submitted by Shaneel Enterprises Ltd

  In August 1993: Returned Goods Relief. Goods Seized at Southampton and London Airport of Perfumery Products ex USA and Singapore. Goods made in EU, but Customs demanded proof of manufacture, which only brand owner can give. Previous practice over three years had not been to demand this. Neverthless relief refused as brand owner would not co-operate.

  EU 1 Certificate: VAT & Duties Tribunal in December 1995. Goods made in Italy and shipped to UK via Malta. Customs say Maltese authorities cannot give EUR 1, despite fact that goods already had an Italian EUR 1.

  March 1997. Goods Initially Seized by French Customs in France while en-route from Malta to the UK. Final destinations of goods were USA & Russia. French customs released the goods to the brand owners in France, who are now still holding goods and the case is pending in the French courts as of today.

  August 1998, following the Silhouette Decision, Lancaster UK & Germany, part of the Coty Group, put an injunction on goods while in UK customs bond, orginating from Singapore. Goods inspected by Lancaster with Trading Standards (not customs) on pretext that counterfeit. Case pending.

  In simple terms, the Law as it stands, and people enforcing the Laws are not at all helpful to the consumers or Parallel traders and favour the branded goods owners. This is exactly the opposite in USA.

4 March 1999

Summary letter from Mr Mehta's Solicitors in France

  A British company, Shaneel Enterprises Limited, of Amertrans Park, Bushey Hill Lane, Watford, is a co-defendant with a Maltese company, LCD Company Limited, in four actions taken by the French perfume houses Parfums Christian Dior, Socie«te« des Parfums Rochas, Yves Saint Laurent Parfums et Socie«te« Paco Rabanne Parfums, before the Tribunal de Grande Instance (High Court) in Aix en Provence. The proceedings have been pending since April/May of 1997 following the seizure of a consignment of perfume by the French Customs Authorities. It is important to note that there is no dispute that the goods seized are genuine products of the aforementioned French perfume houses. Moreover, it is undisputed that the goods were produced within the European Community.

  There are two fundamental legal issues in the actions brought against Shaneel and LCD. The first issue concerns whether or not the goods were initially put on the market in France by the French perfume houses themselves. In all four cases, the perfume houses sold the goods to intermediaries before the goods were purchased by LCD in Malta. The question of whether or not the goods were indeed put on the market in France is crucial given the doctrine on the exhaustion of rights in the trade mark, which would come into effect once the goods were put on the market within the European Community by the trade mark owner or with the consent thereof. On the facts, it can be argued that the initial sales of the goods by the French perfume houses themselves did indeed take place within the EC, with payment in French francs and delivery on French territory. Currently, the only argument submitted by perfume houses against a finding that the goods were put on the market within the EC relies on the fact that the intermediaries to which the perfumes were initially sold have their registered offices outside the European Community.

  The second legal issue concerns the fact that the goods were to be shipped from Malta to Shaneel's bonded warehouse in the United Kingdom. The goods were then to be sold onto customers in the United States and Russia. At all times, the goods were subject to the external transit regime by which goods may cross the territory of the European Community from port of entry "A" to port of exit "B" without being subject to import duties precisely for the reason that the goods are not intended for importation into a member state of the European Community. During the shipment, however, the perfumes were seized as they crossed French territory.

  The legal issue which arises in the present case, if upheld, would constitute a further restriction on parallel imports going beyond the recent decisions of the European Court of Justice in the Silhouette case. In the Silhouette decision, and in most cases to date, proceedings have been taken against parallel importers in situations where the genuine goods have been imported into an EC member state and actually placed on the market, ie, the goods are sold to consumers at retail outlets. In the present case, LCD and Shaneel Enterprises Limited are the subject of proceedings because they shipped the goods in transit across French territory although they were never intended for sale within the European Community, but were destined for customers in the United States and Russia.

  The French perfume houses are relying on an interpretation of the French Code of Intellectual Property and on a decision of the supreme French Civil Court, the Cour de Cassation in 1990, which allows the seizure of goods even when subject to the transit regime. Nevertheless, the Cour de Cassation decision involved criminal proceedings for goods which were not genuine but counterfeit and therefore it remains a moot point within the current proceedings whether or not any breach of the French legislation has actually occurred.

  On both legal issues, it may be necessary to seek a preliminary ruling from the European Court of Justice, firstly, as to what constitutes putting the goods on the EC market for the first time; and, secondly, whether or not the interpretation which the plaintiffs would like to give to the French legislation is compatible with European Community Law, and notably with Directive 89-104 EEC of 21 December 1998.

9 April 1999


 
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