CUSTOMS INSPECTIONS
THE COMPLEXITIES OF ISRAELI-PALESTINIAN CUSTOMS UNITY
Recent contradictory district court rulings in Israel are pending before the Supreme Court on matters that will affect the ability of IP owners to prevent infringing goods being imported into the Palestinian territories and Israel.
Israel is a member of the World Trade Organization and party to various international trade agreements, including TRIPS. Te need for the active involvement of the state in preventing infringing products from entering the market is becoming more urgent, especially as infringing goods contribute to thriving criminal industries, oſten funding terror organisations, drugs trafficking and money laundering.
Te Paris Agreement, signed by Israel and the Palestinian Authority in 1994, implemented customs unification between the two. In practice, goods imported into the Palestinian territories are inspected by Israel Customs before crossing the border. Israel Customs is responsible, among other things, for inspecting these goods and detaining those that are suspected of infringing IP rights.
Upon detention of suspected goods, the customs authority informs the rights owner of the detention. If the IP owner wants to prevent the goods being released, it is usually required to submit a bank guarantee (from which the importer can be compensated if the detention was unlawful) and thereaſter file a lawsuit against the importer with the Israeli court. It should be noted that apart from customs unity between Israel and the Palestinian Authority, all other authorities remain separate.
Te current situation between Israel and Palestine makes it very difficult to directly contact and serve legal documents to Palestinians, as well as to have
72 World Intellectual Property Review September/October 2010
a Palestinian appear before an Israeli court. It also creates difficulties in enforcing Israeli court judgments. Accordingly, a current topic of debate is whether the state can obtain reimbursement for the storage and destruction costs of infringing items, if the Palestinian importer does not pay these costs. In the matter of Christian Dior, the company confirmed that the goods detained by the customs authority were infringing, deposited the required guarantee and filed a lawsuit against the Palestinian importer. Te Palestinian importer did not attend the court hearing, and a default judgment was rendered, ordering the destruction of the counterfeit goods and requiring the importer to pay the storage and destruction costs. Although there was no dispute that the costs should be paid by the importer, the state argued that if the importer did not pay the expenses, then they should be taken from the IP owner’s guarantee.
In earlier matters, district courts had ruled in favour of the state’s position in similar circumstances. However, in the Christian Dior case, the district court ruled that the guarantee was intended only to compensate the importer for damages caused where the detention was unjustified. Te court ruled that there cannot be an outcome whereby an entity whose rights are infringed is forced to bear the expenses incurred in storage and destruction of the goods, when all it wants is to protect its IP rights. Te state appealed against the judgment at the Supreme Court. We hope that the Supreme Court will hold the state responsible for destruction of infringing goods and not impose further costs on IP rights holders.
Another legal problem may arise at an earlier stage, when the owner of the IP rights is required to serve its statement of claim to a resident of the
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