CIPR and Latvian Government organize
public destruction of seized counterfeits.

BACKGROUND

Counterfeit Cigarette Shipments to be Destroyed by Latvian Law Enforcement Authorities

This year Latvian law enforcement authorities have intercepted several large shipments of contraband cigarettes. The State Revenue Service reports that Latvian customs agents have already seized over 32 million cigarettes so far this year. The World Customs Organization recently praised Latvia's Customs Service for its success in tipping off its counterparts in Germany and Poland about suspected shipments of contraband cigarettes, resulting in some significant arrests.

The illegal flow of contraband tobacco products has been covered by the Latvian media as a process whereby legally exported original product is transported multiple times across state borders and reenters the black markets by evading the applicable excise taxes.

It turns out, however, that many contraband cigarette affairs involve not the genuine articles, but rather the blatant counterfeiting of well-known trademarks. In this case we are talking about an open infringement of intellectual property rights, which is a special kind of crime not only against the rightful trademark owners, but also encourages corruption and threatens public health. There are aspects of these cases, which also touch upon national security, as it is known that international organized crime is connected with world terrorist networks.

What follows are brief descriptions of each counterfeit cigarette case.

1. The Viski Fire Affair

Responsible state structure: Latgale regional branch of the Anti-Corruption and Organized Crime Bureau of the Criminal Police Department of the State Police under the Ministry of Interior
Cargo owner: none
Cargo sender: none
Infringed trademarks: Marlboro, Marlboro Lights, L&M
Number: 1162 master cases / 58,100 cartons / 581,000 packs / 11.62 million cigarettes
Trademark owners: Philip Morris
Trademark owners' representative: Law offices of Ineta Krodere-Imsa

On the night of December 30, 2000 in Viski parish of Daugavpils district a fire broke out in a private home, in which its resident burned to death along with the house. Police officers searching the premises came upon two metal containers, or master cases full of 1162 cartons of cigarettes. They were labeled as Marlboro, Marlboro Lights, and L&M brand cigarettes, however they did not bear the proper excise tax labels of the Republic of Latvia.

On January 18, 2001 Daugavpils police began a criminal investigation into the affair, in close cooperation with Latgale regional officials from the State Revenue Service and Border Guard. According to the State Revenue Service, the street value of the found cigarettes is 250,000 lats.

Technical inspection of the seized tobacco products was conducted in close cooperation with Philip Morris representatives. By written request of the trademark owner, the cargo was sent to Spektrs-K on February 8 for impounding until further decisions regarding the case. On February 14 Philip Morris sent its report affirming that the cigarettes are counterfeit. The inspection concluded that these tobacco products were not made in Philip Morris facilities, nor elsewhere according to license by the company.

The pre-trial investigation found only that the cigarettes were at in the possession of the burned man, but the police had no further leads. Considering the circumstances of the case, the police were unable to determine the possible circle of persons involved in the bringing of these fake tobacco products to the Daugavpils district.

The decision to cease criminal investigative proceedings and destroy the 1162 counterfeit products was issued October 11. The seized fake cigarettes are considered to be property "without owner".

2. The Water Boiler Affair

Responsible state structure: Anti-contraband section of Riga Customs department of the State Revenue Service under the Ministry of Finance
Defendant: none
Infringed trademarks: Benson&Hedges
Number: 250,000 packs / 5.4 million cigarettes
Cargo owner: MSC Latvia
Cargo sender: Wah Neng Int. Trading Co. Ltd; MSC Belgium (Antwerp)
Trademark owners: BAT / Philip Morris
Trademark owners' representative: Law offices of Ineta Krodere-Imsa

On June 6 of this year in the territory of SIA MSC Latvia within the Riga Free Trade Port, officials from the Anti-Contraband section of the Riga Customs department of the State Revenue Service inspected a declared shipment of 270 crates containing water boilers. While the officials indeed found water boiler tanks inside the crates, upon their dismantlement they were found to contain large number of Benson&Hedges cigarette packages. An official investigation into the administrative violation was initiated.

By the end of the next day the cargo was completely unloaded and inspected, with officials counting 23,225 cartons and 39,212 packs of cigarettes, comprising a total of 5,435,040 cigarettes.

The entire cargo - the over 5 million cigarettes and the metal water boiler tanks were transferred to be held at the Spektrs-K warehouse. On June 12 Riga Customs department director Andris Drulle issued the order to confiscate the fake goods and apply an administrative fine against SIA MSC Latvia.

After receiving requested samples, BAT inspectors determined that the cigarettes are indeed counterfeit, notifying the Latvian authorities of this in a letter dated July 10.

After the Riga Northern District Court confirmed that it had received no appeals against the Riga Customs department ruling by November 8, BAT's representative requested further information regarding the investigation of the case.

3. The Non-Excise Benson&Hedges Affair

Responsible state structure: Security Police, Anti-Contraband Center of the Central Customs Board of the State Revenue Service
Defendant: none
Infringed trademark: Benson&Hedges
Number: 1598 master cases / 39,950 cartons / 399,500 packs / 7.99 million cigarettes
Cargo owner: Spectrum Supplies LLC (declared); SIA Mono subsidiary Mono-Logistik customs warehouse
Cargo sender: Rais Nassan Saadi C/O Adam Trading Dubai, AAE
Trademark owners: BAT / Philip Morris
Trademark owners' representative: Law offices of Ineta Krodere-Imsa

At the end of last year the ship "Sea Baltica" docked at Riga's port and unloaded a container full of declared Benson&Hedges cigarettes in the customs warehouse of Mono-Logistik, a subsidiary of SIA Mono. These 1598 cases of cigarettes did not have the proper excise tax labels and were seized as possible contraband.

The trademark owners' legal representative on April 9 submitted a written request for samples of the suspected contraband, which were determined on June 4 to be counterfeit, according to BAT's technical inspectors. On its part, the Certification Center of Latvia performed its own inspection, comparing the seized goods with samples of genuine-brand cigarettes provided by the trademark owner, and also found that the two products differed according to mass, condensation, water content in condensed smoke, nicotine and tar levels.

The Security Police ruled on July 12 not to initiate a criminal investigation, due to the lack of evidence in the case, and ordered Spektrs-K to destroy the seized counterfeits, based on Article 5, Section 2 and Article 112, paragraph 66, point 3 of the Criminal Process Code.