Enforcement and protection of IP rights in Croatia

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Enforcement and protection of IP rights in Croatia Powered By Docstoc
					Enforcement and protection of IP rights in Croatia
Authors: Tamiko R Franklin and Andrej Matijevich

The Croatian legal system has included specific IP legislation since the country declared
its independence in 1991. Upon gaining independence, Croatia adopted all laws of the
former Yugoslavia regulating IP rights and their enforcement, including the Law on
Protection of Industrial Property, which governs all aspects of intellectual property. In
1999 the Law on Protection of Industrial Property was repealed by the enactment of the
Trademark and Copyright Laws, the Patent Law, and the Laws on Geographical Origins
and Semiconductor Circuits. Generally, all IP rights in Croatia are protected through
registration, with the exception of copyright, which is protected from the moment of the
work’s creation.

By means of the Notification on Succession, Croatia became a member of the World
Intellectual Property Organisation (WIPO), as well as a party to conventions and treaties
administered by WIPO, to which the former Yugoslavia was a party. Today, Croatia is a
party to the Paris Convention, the Madrid Agreement and Protocol, the Nice Agreement,
the Berne Convention, the Locarno Agreement, the Patent Cooperation Treaty, the
European Patent Convention, the Nairobi Treaty, the Rome Convention, the Strasbourg
Agreement, the Budapest Treaty, the Convention for Protection of New Plant Varieties,
the Copyright Treaty, the Patent Law Treaty and the World Trade Organisation (WTO).

During 2003 domestic IP legislation was harmonised with EU law. The Croatian
Parliament adopted the following new IP laws:

• the Copyright and Related Rights Act;

• the Patent Law;

• the Trademarks Law;

• the Industrial Designs Law;

• the Law on Geographical Indications and Designations of Origin of Products and
Services; and

• the Law on the Protection of Topographies of Semiconductor Products.

All laws are also harmonised with the standards of the WTO Agreement on Trade-
Related Aspects of Intellectual Property Rights (TRIPs).

In 2004 the Croatian Parliament passed an amendment to the Law on Medicines which
included provisions for data exclusivity in order to prevent generic companies from using
the test data of innovative companies in order to obtain marketing approval for their
products. This was a requirement of the interim agreement with the European Union as
well as the bilateral IP rights agreement with the United States.

Croatia subsequently harmonised provisions of the Criminal Law on IP rights violations
with TRIPs standards, regulating specific criminal liability for violation of a range of IP
rights. These provisions concern penalties for different copyright-related felonies, patent
infringement, trademark infringement – including protection to the owners of company
names – and infringement of industrial designs, designations of origin and other IP
rights. The penalties prescribed for violation of IP rights range from fines to
imprisonment of up to five years.

In addition, the objects intended or used to commit these felonies will be seized, and the
objects that result from the felony will also be seized and destroyed. In relation to the
protection of intellectual property, the Criminal Law also contains a provision prohibiting
the disclosure of trade secrets under threat of a fine and up to 10 years’ imprisonment.

With the 2003 enactment of the last chapter of the Criminal Law, various computer
crimes were introduced into the legislation to reflect the increasing number of crimes
committed using computer systems.

In addition, each of the individual IP laws contains separate provisions on felonies and

In 2004 Croatia introduced legislation on the criminal liability of legal persons for the first
time, in order to harmonise its criminal legislation with EU law. The criminal liability of a
legal entity is derived from and based on the liability of the person responsible for acts of
the legal entity. The punishments for legal persons range from fines to dissolution of the
legal entity.

Fines for the violation of IP rights can range from HRK10,000 to HRK3 million
(approximately €1,350 to €400,000). In addition, the following protective measures are
available against infringers:

• a refusal to grant necessary permits, approvals, subventions or concessions;

• a ban on conducting business with state and local budget beneficiaries; and

• seizure of infringing objects and material gains.

The provisions relating to unfair competition are contained in the Law on Trade.
According to this law, acts of unfair competition – including use of deceptive wordings,
signs or data – are forbidden. The law provides for the imposition of fines on legal
entities that commit acts of unfair competition, ranging from HRK50,000 (approximately
€6,600) to HRK210,000 (approximately €28,000) for companies and from HRK50,000 to
HKR150,000 (approximately €20,000) for natural persons. The law provides for two
protective measures: seizure of material gains, and seizure of objects intended or used
to commit the misdemeanour or objects resulting from the act.

Well-established patent, copyright, design and trademark legislation allows owners to
build and manage their IP rights with confidence in Croatia. In 2001 the country-code
top-level domain registry adopted arbitration rules for disputes involving domain names,
further improving the IP legal framework.

The enforcement authorities involved in the protection of IP rights in Croatia are the
Ministry of Interior (police), the State Inspectorate, the District Attorney’s Office and the
courts. Misdemeanour proceedings are initiated by the State Inspectorate and
prosecuted by the misdemeanour courts. Felonies are investigated by the police; if the
investigation results in a determination of IP infringement, the police will submit a
criminal complaint to the district attorney, who will file and argue the case before the
competent courts.

In Croatia, felonies violating IP rights may be prosecuted ex officio only. It is of the
highest priority that the officers handling IP cases have extensive knowledge of IP rights
and continue to develop this knowledge.

In the last decade, the government and IP owners launched numerous initiatives to train
and educate the enforcement agencies on various IP-related matters. As a result of
these efforts, the enforcement agencies may now be considered to have acceptable
levels of skills in handling IP cases. The Commercial Crime Department of the police,
which covers IP matters, has even established its own specialist Computer Crime
Department. Recently, the tendency has been to assign IP and related issues to
designated professionals with extensive IP knowledge.

According to a report issued by the State Inspectorate, in 2003 the State Inspectorate
identified 143 targets and searched over 500 computers in the course of investigating
software piracy. As a result of these actions, state inspectors found and seized 298
unlicensed computer programs on 227 computers and filed 63 misdemeanour
complaints. The total value of the illegal software seized was estimated at €160,000.
Pursuant to their powers to investigate the use of audio works, state inspectors further
inspected 11,919 targets, filed 1,488 misdemeanour complaints and seized 7,488 CDs
and audio cassettes.

In the same year, state inspectors inspected 493 targets in relation to the sale of car
parts, textiles and footwear marked with registered trademarks without the authorisation
of the trademark owners. Many of these inspections were conducted in coordination with
the police, who filed criminal complaints against infringers. Fifty-nine targets against
which the State Inspectorate filed misdemeanour complaints were found to be selling
counterfeit goods and the goods were duly seized.

The counterfeit goods included products bearing well-known marks such as Adidas, BIC,
Big Star, Bosch, Calvin Klein, Diesel, Fendi, Fila, Fishbone, Gas, Gucci, Hugo Boss,
Kodak, Lacoste, Levi’s, Lotto, Nautica, Navigare, Nike, Puma and Timberland. Many of
the counterfeit goods originated from China, Italy, Thailand and Turkey, while others
were locally made.

Generally, Croatian court proceedings in both civil and criminal cases are lengthy, when
compared with the situation in other EU member states. Intermediate injunctions, for
example, are sometimes ordered only after two to three months, and a determination of
a case on the merits may take from three to five years. Civil cases at first instance may
last approximately three years. An appeal may take an additional two to three years.

The commercial courts have jurisdiction to hear civil cases relating to infringement.
Jurisdiction is established based on the defendant’s main seat of business or
headquarters. It is possible to file an appeal to the High Commercial Court and
subsequently to the Supreme Court.

The lack of specialised IP courts and judges may delay proceedings and influence the
outcome of the case. Croatian judges do not posses technical or other scientific
knowledge, and in patent cases they rely on the opinions of court-appointed experts.

The problems of inconsistent court practice and lack of extensive publication of court
decisions, especially at first instance, still remain. This trend does not allow practitioners
to follow the practice of the courts or help the courts to build a consistent practice.
Stronger efforts to build judges’ internal networks and make court decisions accessible
to third parties are required.

Before enforcing IP rights in Croatia, it is essential to map out a strategy with a local
professional and decide whether the matter is criminal, and should thus be handled by
the state, or whether the initiation of a civil action is more appropriate. Where insufficient
information on the infringement is available, it is beneficial to engage private
investigators in order to identify those involved in the infringement and the details of the
infringing activity. A proactive approach on the part of the IP owner may result in faster
processing by the enforcement agencies during the investigation phase, or by the civil
courts if civil litigation is initiated.

In many cases the IP owner’s primary objective will be to halt the infringing activity, and
only secondarily to obtain damages from the infringer. In such cases, if circumstances
allow, it may be beneficial to initiate criminal proceedings only.

It is possible to request payment of damages and other civil remedies during criminal
proceedings, unless the judge believes that the duration of the criminal proceedings
would be adversely affected by such request. If the fact of infringement is disputed, the
only way to establish infringement and halt further acts of infringement is by initiating a
civil action.

A regulation on customs measures for ensuring the protection of IP rights was enacted
in 2003 and is an important tool for the enforcement of IP rights. In order to initiate a
customs enforcement procedure, the rights owner must submit an application through its
legal representative to the General Customs Department. The application must be
accompanied by the following documentation:

• the applicant’s details (address and contact information);

• detailed information on the infringing goods;

• proof of ownership of the right that has allegedly been violated (for trademarks, a
certificate of registration);

• the legal representative’s power of attorney;

• evidence of the alleged infringement;

• the proposed duration of the customs measures (maximum one year);

• proof of payment of administrative taxes; and

• an undertaking to pay damages to the owner of the seized goods, if necessary.

The statement must be notarised and legalised by apostille.
In the event of a seizure, the customs authority will notify the applicant immediately. The
applicant then has three days to inspect the goods, and must inform the customs
authority whether legal proceedings will be initiated. Upon receiving notice that legal
proceedings will be initiated, the customs authority will issue a seizure decision that is
valid for the next 10 days. The applicant must submit proof that court proceedings have
been initiated within this 10-day term. The applicant must also submit a bank guarantee,
upon which the customs authority will issue a seizure decision that remains valid until
the court has reached a final decision.

As Croatia is still not an EU member state, it is of potential interest to counterfeiters as a
stepping stone into the territory of the European Union. However, Croatia has willingly
and successfully harmonised its legislation with EU law and the TRIPs standards. This
should encourage IP owners to consider Croatia as a jurisdiction in which they can
effectively manage and protect their IP rights.

Published in IP Value 2006