A proposed EU directive aimed at protecting food businesses from counterfeit brands has been undermined by a ruling from the European Court of Justice.

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

The regulation tells member states to impose maximum penalties of at least EUR300,000 in fines and/or four years' imprisonment for serious counterfeiting crimes committed by organised crime, such as industrial scale piracy, as well as counterfeiting causing health or safety risks.

However, this week, the ECJ - 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.