On July 1st, 1992, the relevant laws and regulations relating to the protection of Intellectual Property were regrouped together under one single code: the "Code de la Propriété Intellectuelle (CPI)" (Code of Intellectual Propert). The CPI contains, among other topics, the enforcement procedures for Intellectual Property: civil, criminal and Customs.

It was soon felt that the protection of IPR, as provided by the current law, was not sufficient. The counterfeiting phenomenon had been changing from a small scale individual activity to an industry, highly organised, and internationally controlled by organised crime.

On December 15th, 1993, the World Trade Organization adopted the Agreement on Trade- Related Intellectual Property Rights (TRIPS), which provides (art. 41) that Members shall ensure that enforcement procedures permit effective action and constitute a deterrent to further infringement.

The French Government, hence, proposed a draft law to the Parliament, under the name of its current Minister of Industry, M.Gérard Longuet (it is a French tradition to call important pieces of legislation by the name of the Minister in charge, when the draft is proposed by the Government).

This law, enacted on February 5th, 1994, provides for the harmonization of the criminal procedures and sanctions applicable to various intellectual property rights, raises the level of penalties, and strengthens the powers of Customs.

Criminal enforcement

According to the CPI, polices officers have the power to immediately seize fake CDs and DVDs and to start investigations leading to the prosecution of persons involved in such crimes. The new "Longuet" law extends these powers to all acts of infringement of designs and trademarks. In fact, such powers were not really new. Pursuant to Article 76 of the Criminal Code, collecting evidence and conducting investigations of all crimes is part of the duties of police officers. However, it was considered that the re-affirmation of such powers in the new law, and their extension to trademarks and designs, was meant to provide an incentive to the police forces, who were invited to devote more human resources to IPR violations.

Existing discrepancies between penalties, depending on the type of IP right concerned, were eliminated.  In particular, the infringement of designs, which was considered in the CPI as a minor offence, is to be punished at the same level as the infringement of other IP rights. The new law provides for much higher penalties: a fine of up to 1 million francs (approximately 1,5 millions RMB) and up to 2 years imprisonment. These sanctions are the maximum allowable, and the judge remains free to fix the penalty at a lower level. However, they are cumulative and the judge must pronounce both sanctions: a fine and a prison sentence (the latter may be a suspended for a fixed term).

It is important to note that, according to French law, the crime of infringement applies not only to manufacturing and selling, but also to retaining counterfeit goods knowingly and without legitimate cause. Therefore, the intentional aspect of the crime is confirmed, and the burden of proof is on the prosecution.

Special provisions of the law deal with the repetition of offences. If the infringer is found guilty of another infringement of the same kind, within 5 years of the first sentence, the penalty is automatically doubled. In the CPI, this was only applicable to copyright infringement, and the double sanction was left at the discretion of the judge. The new law extends the double penalty to all IP rights, and makes it automatic.

The law contains a special provision relating to situations where the infringer was bound by a contractual relationship with the IP owner (the draft law contained the expression "worked for the infringer" but it was found too restrictive, as referring only to a labour contract. The expression "contractual relationship" covers, therefore, all situations such as a sub-contractor for the manufacturing of a product). In such cases, the penalty is automatically doubled.

In addition to a fine and imprisonment, the judge may also order the shutting down of the location where the infringing business was performed, temporarily or indefinitely. And in such a case, special provisions of the law stipulate that the closing down of the business does not exonerate the owner from his obligation towards the employees.

Legal entities are also subject to criminal penalties. The CPI already provided the possibility for a judge to impose a criminal sanction on a legal entity in cases of infringement of copyrights. Such possibility is extended to trademarks and designs. Of course, certain conditions should be met: the entity must be a legal person, the infringement must have been committed by a legal representative of the entity (and not simply by an employee), and it must have been committed on behalf of the entity. Both criminal liabilities (individual and legal entity) are therefore cumulative, and the judge may pronounce separate sanctions for both.

The fine applicable to a legal entity is five times higher than for an individual: maximum 5 millions Francs (7,5 million RMB), and double in case of a repeat offence. As for an individual, the judge may order the closing down of the business, and the confiscation of the infringing products, as well as of all equipment used to commit the infringement. The sanction can go as far as pronouncing the liquidation of the enterprise.

More recently, the fines and penalties have been increased again, by a law enacted on March 9, 2004 (the "Perben" law). The maximum penalty is increased to 3 years imprisonment and 300,000 € (3 million RMB). Furthermore, the penalty is increased to 400,000€ and 4 years for those who engage in industrial production, import, export, re-export or transportation of products bearing a counterfeited trademark.

Finally, if the infringing acts have been committed by an "organized criminal network", the penalty can reach 5 years and 500,000€.

Customs enforcement

Customs play a crucial role in the enforcement of intellectual property rights. Apart from France, where Customs have the power to operate throughout the whole country, the place of control is mostly located at the border between independent states, hence the international nature of regulations governing the work of customs.

In Europe, the basic Regulation dates back to December 1986. It provides for the temporary withholding of products suspected of bearing a counterfeit trademark, upon request from the trademark owner. This regulation was introduced in the French legislation in 1991, with an additional stipulation relating to the right of the trademark owner to have access to (normally confidential) information relating to the case, such as, the name and address of the sender, importer and receiver of the suspicious goods.

The system of withholding works as follows: the trademark holder files an application to Customs, which is valid for one year and is renewable. Whenever Customs decides to withhold a shipment, they notify the trademark owner who may take action (legal action or preservations measures) within a period of 10 days, from the date that the merchandise is withheld.

In the 1991 law, this system only applied to trademarks.

The new "Longuet" law extended the system to copyrights and designs, and introduced another modification in the calculation of the 10-day period, which starts from the date of the notification to the IP owner (and not the date of withholding). Such period of 10 days can even be extended for another 10 days if the Public Prosecutor, who is notified of the case, gives his authorization (he always does).

But the law went further: the simple act of importing or exporting products bearing a counterfeit trademark is qualified as a crime, regardless of whether the person who commits such an act knows or does not know that the trademark is counterfeit. Therefore, the prosecution does not need to prove that the act was intentional. Of course, where an importer/exporter can prove that it has taken all reasonable precautions to verify the authenticity of the goods (such evidence is usually provided by an authentic invoice showing that the normal of authentic goods has been paid), there would be no consequence. On the other hand, if the importer/exporter purchased the same goods for a fraction of their real price, and cannot justify their source, trouble can be expected.

And finally, the law went one step further, by providing that (1) products bearing a counterfeit trademark are to be considered as prohibited goods (in the same way as drugs or weapons), and providing further (2) that importing such goods is deemed to have been made "without declaration" (even if a declaration is made), which constitutes the specific "custom crime" of smuggling.

The result is an extremely powerful "weapon" against the counterfeiting trade: importing or exporting goods bearing a counterfeit trademark is considered both to be a crime, and also smuggling as defined by Customs, and both are subject to specific penalties that can be cumulative: the above mentioned penalties for the crime of counterfeiting, as defined in the "Perben" law, and the Customs penalties (confiscation, a fine up to two times the value of the merchandise and a prison term up to three years).

This is why, most of the time, French Customs use this possibility to ex officio seize merchandise whenever they consider that they are fake, without having to notify the trademark owner nor having to wait for his decision (as they do in case of withholding).

The tolerance is zero: even a small shipment or goods contained in the luggage of passengers, regardless of the quantity, are subject to this rule. Of course, the actual implementation is a question of common sense and practice. The Customs authorities have the discretion to decide at what level they intend to take action. But it is important to bear in mind that each time Customs decides to take action and seize goods, they notify the Public Prosecutor, with the infringer/passenger being, then, subject to possible prosecution before a criminal court.

Needless to say the exercise of such power raised comments a few years ago, when a Chinese tourist was caught by the French customs, carrying a fake bag, full of garments bearing some well known counterfeited brands. He was strongly warned against repeating such type of action.

The severity of the treatment was put in question: how could a Chinese tourist know that the bag and the garments were fakes? Was it not unfair to apply such a strict law to a person who might have been acting in good faith?

In fact, these questions, even if they sound legitimate at first sight, are irrelevant. The laws of a country apply to all, and take no consideration of the nationality of the persons involved. It would not make any sense to define that smuggling only applies to citizens of certain countries and not to others. The priority is to tackle the circulation of counterfeit goods; a phenomenon that has reached unprecedented levels and is the result of increasingly sophisticated criminal organisations.

Public awareness is another priority. Chinese tourists should be aware that, whenever they travel to Europe, but in particular to France, they should take some precautions such as keeping with them the invoices given to them by the seller, whenever they travel with items bearing a foreign trademark. 

Further advice could be given concerning the place where such goods are purchased: a reputed department store is definitely less likely to sell fake goods than a retail market selling the same goods for a fraction of the price.

People should always bear in mind that counterfeiting, even when involving luxury goods, is not a victimless crime. The price difference between the authentic goods and the fake ones is easily explained by the fact that counterfeiters hardly pay their workers, do not provide them with any of the security and welfare provided by law, do not spend any money on innovation, creation or design, do not spend any money on advertising and do not pay taxes. They are organized criminals, which mean that whenever a consumer purchases, for a very low price, an item bearing a counterfeited brand, he takes an active part in the commitment of such crime.