A proposed European Union (EU) directive aimed at protecting clothing and textile businesses from counterfeit brands has been undermined by a European Court of Justice (ECJ) ruling.

Earlier this year, the European Parliament approved in principle a directive on 'criminal measures aimed at ensuring the enforcement of intellectual property rights'.

It tells member states to impose maximum penalties of at least EUR300,000 (US$432,650) in fines and/or four years' imprisonment for serious counterfeiting offences committed by organised crime, such as industrial scale piracy, as well as counterfeiting causing health or safety risks.

However, this week, the court - in a ruling scrapping a directive on ship-source pollution - said while the EU could insist on member states imposing "effective, proportionate and dissuasive criminal penalties" in general, ordering "the type and level of the criminal penalties…[is not] within the EU's sphere of competence."

Legal challenges are now expected against the proposed counterfeiting directive. 

Meanwhile, the European Commission will seek a mandate from EU ministers to negotiate a new anti-counterfeiting trade agreement with major trading partners, including the US, Japan, South Korea, Mexico and New Zealand, including cooperation to fight the counterfeiting of goods.

By Keith Nuthall.