Customs Intervention for IP in the Indian Sub-Continent

Intellectual Propriety (IP) rights holders are under the perpetual threat of counterfeit goods in the market that is growing exponentially with advancing technology and a surge in cross-border trade among countries. Such counterfeit products may not always be produced and distributed for trade and commerce in the domestic market but may also enter illegitimately through the borders of a nation. Thus, the IP rights holders must monitor and take suitable and timely action against the imports that can possibly be infringing on their Intellectual Property Rights (IPRs).

To stop such illegal entry of infringing products, governments of various nations provide for intervention of the Customs authority of that particular country. The IP rights holders can either record their IP beforehand, enabling the Customs authority to suo motu monitor shipments and exclude, detain, seize, destroy, or dispose of the merchandise that it suspects to be counterfeit or infringing the recorded trademark; or make a complaint to the Customs authority under the domestic Customs legislation. Countries in the Indian Sub-Continent, too, have taken considerable steps to put in place a system of Customs intervention either through recordation of IPRs with the Customs or via a specific complaint. It helps in stopping infringing goods at the borders of the country itself. Barring Afghanistan, Bhutan, and Maldives, all other nations of the Indian Sub-Continent have provisions regarding Customs intervention in place. The following is a detailed breakdown of Customs intervention laws, regulations, and procedures of various nations of the Indian Sub-Continent:

BANGLADESH

In Bangladesh, the National Board of Revenue has taken the necessary steps to incorporate provisions under its Customs legislation, which is The Customs Act, 1969, and The Imports and Exports (Control) Act, 1950.

Section 15 under Chapter IV (Prohibition and Restriction of Importation and Exportation) of the Customs Act, 1969 provides the enforcement mechanism to deal with the infringement of the TRIPS provisions concerning importation and exportation. Such measures, as provided for under Section 15, are highlighted below:

Goods having applied thereto a counterfeit trademark within the meaning of the Penal Code, 1860, or a false trade description within the meaning of the Trademarks Act, 2009;
Goods made or produced outside Bangladesh and having applied thereto any name or trademark, being or purporting to be the name or trademark of any manufacturer, dealer, or trader in Bangladesh unless:

The name or trademark is, as to every application thereof, accompanied by a definite indication of the goods having been made or produced in a place outside Bangladesh; and
The country in which that place is situated is in that indication shown in letters as large and conspicuous as any letter in the name or trademark, and the same language and character as the name or trademark;

Goods made or produced outside Bangladesh and intended for sale, and having applied thereto, a design in which copyright exists under the Patents And Designs Act, 1911 and in respect of the class to which the goods belong and any fraudulent or obvious imitation of such design except when the application of such design has been made with the license or written consent of the registered proprietor of the design; and
Goods or items produced outside Bangladesh involving infringement of the Copyright Act, 2000 or infringement of layout design of integrated circuits that are intended for sale or use for commercial purposes within the territory of Bangladesh.

Section 17 of the Act provides for detention and confiscation of goods imported or exported in breach of Section 15.

The penalty provisions for any infringement of such IPRs are also incorporated in the Customs Act in Clause 9 under Section 156(1). According to Clause 9, for such violation or infringement concerning imported or exported goods, “such goods shall be liable to confiscation; and any person concerned in the offense shall also be liable to a penalty not exceeding two times the value of the goods.”

INDIA

In India, the IP rights holders can take steps to record their IP with the Customs Authority of India for monitoring and confiscation of goods. The Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007and The Customs Act, 1962 form the legal basis for Customs Recordal of IPRs in India. They act as a preventive measure wherein infringing and counterfeit goods can be detected, detained, and disposed of at the border itself. According to Rule 2(a) of the IPR (Imported Goods) Enforcement Rules, 2007, ‘infringing goods’ mean any goods, which are made, reproduced, put into circulation, or used in breach of the IP laws and without the consent of the rights holder or any other authorized person.

Custom Recordal Application Procedure

The procedure for recordal of IPR with the Customs authority is as follows:

*An online application for recordal of IPR with the Customs authority is to be filed on the website of Customs.

A Unique Temporary Registration Number (UTRN) is generated on filing the online application
Hard copies of the documents uploaded in the online application are sent along with the UTRN to the Customs Office.
After approval of the application for recordation by the Commissioner of Customs, the UTRN will be converted to UPRN (Unique Permanent Registration Number), and the said UPRN would be issued, which confirms the recordation.

Documents required to be filed online along with the application are as follows:

Proof of ownership of the IPR and copies of the corresponding registration certificate
Images of genuine goods (for trademarks and designs)
Images of infringing goods (if applicable/available)
A statement regarding the scope of the IPR sought to be recorded
Details regarding the differentiating features of genuine and infringing goods
Statement of grounds for suspension of infringing goods (if applicable)
The Importer Exporter Code (IEC code) of the rights holder and other authorized importers
In the case of Geographical Indication (GI), description of the GI and geographical area of production
Customs Tariff headings of the applicable goods (if available)
Power of attorney authorizing the person who is applying

Furthermore, the following documents are to be submitted in hard copy:

Hard copies of the complete set of documents uploaded online to be submitted at the Customs Office of the opted location
Demand draft of Rs. 2000 in favor of the Commissioner of Customs of the opted location
An Indemnity Bond
A General Bond or Centralized Bond

The Indemnity Bond protects the Customs authorities against all liabilities and expenses they may incur as a result of having detained the goods. In other words, the person importing the goods will not be able to claim damages from the Customs authorities on account of the clearance of the goods having been suspended. Any such liability will be borne by the rights holder.

Under a General Bond, the rights holder needs to provide consignment specific bond of an amount equivalent to 110% of the value of the detained goods, along with security, in the form of a bank guarantee or fixed deposit, equivalent to 25% of the bond value at the port of intervention.

Under a Centralized Bond, the Customs will debit the applicable amount (equivalent to 110% of the value of the detained goods) along with a security equivalent to 25% of the bond value from the Centralized Bond Account. In case of inadequate balance, the same can be supplemented by the rights holder executing a supplementary bond with necessary security at the Customs Office where registration has taken place.

At the time of registration, the rights holder may opt to submit a general bond, i.e., a consignment wise bond or a centralized bond, which acts as a running bond for a value that is sufficient in their judgment to correspond to the value of allegedly infringing goods all over India.

Within 30 working days of receipt of an application, the Customs must notify the applicant whether or not the IP has been recorded. Once recorded, a single application for a particular IP covers all ports of the country. The period of validity of Customs registration is 05 years, and the same is required to be re-filed after the expiry to renew the same.

The procedure followed when allegedly infringing goods are detained is as follows:

Once goods suspected to be infringing are detained, the Deputy Commissioner of Customs or Assistant Commissioner of Customs, shall inform the importer and the rights holders (or their authorized representatives) by speed post or email of the suspension of clearance of the goods and shall state the reasons for such suspension [Rule 7 (2)].
At this stage, the rights holder or its authorized representative shall, to join the proceedings under Rule 3, either provide the BRN (General Bond Number) or execute a Specific Bond indemnifying the Customs authorities and provide documentary proof of the validity of UPRN.
The rights holder’s authorized representative is then provided with photographs/serial numbers of the products/samples for examination, testing, and analysis to assist in determining whether or not they are infringing [under Rule 8].
The rights holder must join the proceedings within 05 days of receipt of communication from the Customs. The rights holder must inspect the goods and take follow-up action within 10working days from the date of the notice. This period may, for sufficient cause, be extended by another 10 days. In the case of perishable goods, the period of suspension of release is 03 working days, which may be extended by another 04 days. If no steps are taken by the rights holder within the above period, the goods may be released.
If the rights holder does not join the proceedings within the stipulated period, then the goods may be released to the importer, provided all other conditions of import of such goods have been complied with under the Customs Act, 1962.

The procedure after detention is as follows:

After receiving a reply from the rights holder and evidence of infringement coming forth, the Customs will issue a show-cause notice to the importer.
A copy of the show-cause notice will be provided to the rights holder.
Determination of the infringement shall be made following the process of adjudication, which includes an opportunity for the importer to reply to the notice and present his or her case in a personal hearing.
Where the goods are found to have infringed the IPR, the adjudicating authority shall pass an order of confiscation.
A copy of the order shall be conveyed to the rights holder.
Appeal provisions under the Customs Act apply to these orders.

If the Customs concludes that the goods are infringing the rights holder’s IPR and no other legal proceeding is pending, then after confiscation, they will have the said infringing goods destroyed or disposed of outside the normal channels of commerce. Such destruction or disposal will be done after obtaining a ‘no objection’ or concurrence from the rights holder. Before destruction, samples of goods may be provided to the rights holder or the importer on request.

NEPAL

In Nepal, all trading activities are regulated by the Ministry of Finance under The Customs Act 2007. Section 68(1) of the Act provides that if any party exports or imports goods in violation of the IPRs acquired by any IP rights holder under the prevailing laws, then the concerned rights holder may submit an application, accompanied by the evidence to the relevant Customs officer for the withholding of such export or import. Recordation of IPRs cannot be done beforehand; however, the Customs authority is empowered to intervene upon the application by a registered IP rights holder.

If an application is made, the concerned Customs officer will withhold such goods in the Customs office as per Section 68(2) and request the relevant body or authority to take the necessary action in that respect as per Section 68(3).

Such a body or authority will, on being requested under an application:

Take action in that respect;
Settle the matter following the prevailing laws; and
Give information thereof to the Customs office.

If on taking action following the prevailing laws, the body or authority holds that such goods are liable to be forfeited, the Customs officer will hand over the goods to such body or authority.

PAKISTAN

In 2017, Pakistan amended its Customs Rules, 2001, to incorporate a new chapter that deals with border enforcement of IPRs. It has simplified the procedure for action against the import of counterfeit goods, which are already prohibited under Pakistan’s Trade Marks Ordinance, 2001, read with The Customs Act, 1969. To prevent counterfeit goods from entering the local and international markets, brand owners may enforce their rights through the Pakistan Customs by filing a written complaint with proof of their IP registrations. The rights holders have the option to record their trademarks and copyright (provided they are registered with the Pakistani PTO) with the Customs so that the Customs officials can watch the IPRs throughout Pakistan. The Federal Board of Revenue has created the Directorate General of IPR Enforcement (Pakistan Customs) for the enforcement of IPR laws of Pakistan, especially at the import and export stage. The Directorate General of IPR Enforcement can interdict import/export/smuggling of IP infringing goods through targeted investigations and operations.

Pakistan has implemented the Customs intervention mechanisms enabling the proprietor of the trademark to inform the Customs authorities about Trademark Infringement to suspend the clearance of counterfeit or infringed goods. Upon an application in writing, the Collector of Customs can treat the infringing goods, material, or articles as prohibited goods. The database from the Intellectual Property Office is automatically shared with the Customs, which then keeps track of the infringing imports. The goods can be detained, seized, destroyed by the Customs authorities as per the prescribed procedures.

Custom Recordal Application Procedure

The database maintained by the Trademarks Registry, Copyright Office, and Patent Office corresponding to the details of the IPRs registered or applied for by rights holders is automatically shared with the Directorate General of IPR Enforcement. Online filing of a recordal application is not available in Pakistan.

The rights holders with valid grounds for suspicion that infringing goods are being imported into Pakistan can make an application (in the prescribed format) to the Directorate General of IPR Enforcement when the goods arrive at the notified Customs station.
An undertaking (in the prescribed format) indemnifying the Customs against the liabilities must be submitted.
Additionally, a bank guarantee for an amount of PRs 500,000 or 25% of the value of the suspected infringing goods, whichever is higher, to cover possible compensation for losses suffered by the owner of the suspected goods or expenses incurred by Customs on account of the investigation, warehousing, maintenance or the disposal of goods after detention should be submitted.
On receipt of an application, the Directorate General of IPR Enforcement consults the database to verify the rights holder’s particulars.
Once verified, the Directorate General must order the detention of the suspected goods and notify the applicant and owner of the said goods about the detention.

Documents to be submitted along with the application are as follows:

A certified copy of the registration certificate of the concerned IP
A copy of the rights holder’s electronic national identity card
A copy of the rights holder’s national tax certificate
A copy of the rights holder’s passport
An indemnity bond and bank guarantee
A certified copy of power of attorney (in the case of an authorized representative)
Samples (if available)
A statement of grounds for the detention of goods with evidence

The procedure followed when allegedly infringing goods are detained is as follows:

Upon determination of the fact that the detained goods infringe the IPRs of the rights holder, such goods shall be seized by the Directorate General of IPR Enforcement.
Then, the case shall be forwarded to the concerned Collectorate of Customs having jurisdiction for adjudication.
An officer of Customs having reasonable grounds to believe that the infringing goods have arrived at the Customs station of his jurisdiction shall, with the prior approval of the Additional Collector, inform in writing the concerned Directorate of IPR (Enforcement) for taking cognizance.
The Director, IPR (Enforcement), or the Collector of Customs having jurisdiction may also detain any goods for IPR infringement of health and safety standards in the exercise of powers conferred.

The procedure after detention is as follows:

It is a mandate upon the Customs to alert the rights holder about the imported goods suspected of being counterfeits.
Upon receiving the information, the rights holder is required to formally initiate the enforcement action with the Customs and complete the formalities of filing the prescribed application, along with the mandatory indemnity bond and bank guarantee.
If the rights holder does not initiate the enforcement action, the Customs will release the suspect counterfeit goods.
The Customs can then examine the given goods in the presence of the rights holder and importer.
If the given goods are indeed counterfeit, the Customs will issue a formal order about their forfeiture.
If the importer voluntarily accepts that the given goods are counterfeit, the Customs, in that case, will also issue a formal order about their forfeiture.

The Customs will release the goods to the importer if:

They are satisfied that there are no reasonable grounds for believing that the given goods are counterfeit;
The rights holder does not commence court action within the statutory timelines; or
There is no court order approving/endorsing seizure within 21 days of the commencement of court action.

Both the parties join the proceedings. In case a party to a proceeding willfully and without good reason refuses to access or otherwise does not provide necessary information within a reasonable period or significantly impedes a procedure relating to enforcement action, the officer conducting the enforcement shall have the power to make preliminary and final determinations, affirmative or negative, based on the information presented to him, including the complaint or the allegation presented by the party adversely affected.

If it is ascertained that the detained goods are infringing or spurious, they will be seized by the Directorate General of IPR Enforcement, or with the prior consent of the rights holder, the infringing goods can be forfeited in favor of the federal government or destroyed.

SRI LANKA

The Intellectual Property Act No. 36 of 2003 and The Customs Ordinance of Sri Lanka, along with a Government Gazette Notification Extraordinary No.1523/22 of 15.11.2007 issued by the Finance Minister, form the legal basis of Customs intervention for dealing with counterfeit products in Sri Lanka.

Section 125A of the Customs Ordinance prohibits the importation and exportation of counterfeit trademark goods, pirated copyright goods, and any other goods, which contravene the provisions of the Intellectual Property Act. Any violation shall entitle the Customs authorities to forfeit the goods and dispose outside the channels of commerce.

As per Section 125B of the Customs Ordinance, the owner of any registered trademark or holder of the copyright or any other IPR may make an application to the Director-General of Customs requesting the Customs to suspend the clearance of imported/exported goods that are suspected of being counterfeit or pirated. A prima facie case of infringement must be established to the satisfaction of the Director-General of Customs.

Custom Recordal Application Procedure

A rights holder, who has valid grounds to believe that the importation of counterfeit trademark or pirated copyright goods or any other goods in contravention of the rights holder’s rights under the Act is taking place, may make an application in writing to the Director-General of Customs requiring him to suspend the release of such goods into free circulation.
A rights holder who makes an application needs to provide adequate evidence to satisfy the Director-General of Customs that there is a prima-facie case of infringement of the rights holder’s rights under the Act and supply a sufficiently detailed description of the goods to make them readily recognizable by any officer of the Customs.
The Director-General shall, within a reasonable time of the receipt of an application, notify the applicant whether the application has been granted, rejected, or reserved for further consideration.

Documents to be submitted along with the application are as follows:

Adequate evidence to prove the ownership of the registered trademark or copyright or any other right to the goods imported or to be exported;
Adequate evidence that such IP right has been violated;
Description of the goods, which includes the following:

Name and address of the importer or exporter;
Country/countries of origin of the suspect goods;
Country/countries of manufacture of the allegedly infringing goods;
Name of the business address of the foreign business entity involved in the manufacture and/or distribution of suspect articles;
The mode of transportation and the identity of the allegedly infringing goods;
The port(s) where it is anticipated the suspect articles will be presented to the Sri Lanka Customs;
The anticipated date of presentation to the Sri Lanka Customs;
A sample article bearing the registered trademark or copyright or two photographs of the trademark or copyright no longer than 8 1/2″ x 1,” if available; and
The place and identity of the manufacture of genuine goods, if available.

Proof of the payment of such sum as the Director-General of Customs may in his discretion determine the sum being adequate or appropriate; and
The fees paid shall be utilized by the Court or Director-General of Customs to compensate any importer, consignee, exporter, or owner of the goods for loss or damage resulting from the wrongful suspension of the import or export of the goods.

The procedure followed when allegedly infringing goods are detained is as follows:

The Customs authority, on its initiative, suspends the clearance of importation or exportation of goods, in respect of which it has acquired prima facie evidence that an IPR has been, or maybe infringed.
The rights holder should take legal action within 10 working days of the suspension in the Court of Law. Otherwise, the goods will be released.
The suspension of clearance is initially for 14 days, and any extension thereof is decided by the Director-General of Customs.
If within 14 working days after the applicant has been served the notice of the suspension, the Director-General of Customs has not been informed of the institution of proceedings, in respect of the release of any goods suspended, the goods shall be released provided all other conditions have been complied with for importation or exportation.

The procedure after detention is as follows:

Any infringing goods shall be destroyed or disposed of by the Customs Authorities on the order of the Court, at the expense of the importer or exporter as the case may be, who is guilty of the said infringement.

Conclusion

Today, the role of the Customs authorities has grown from that of a mere gatekeeper to a much more dynamic and vital one in international trade. With the growth of e-commerce, quick transportation, and consumer demand for international goods, trade between international borders has become a commonplace phenomenon. In such a scenario, the IPRs of legitimate holders are constantly at risk of being misused and infringed. Each country’s Customs authority is given special administrative powers to help them stop counterfeit and infringing products at the borders, which are the first point of contact. Even the TRIPS Agreement has enumerated the importance of border control measures and protection of IPRs with the help of the Customs authority of a country.

The practice of Customs intervention for IP protection has gained popularity in recent years, and the Indian Sub-Continent is no exception to this trend. While countries such as India, Pakistan, and Sri Lanka have gone one step ahead by allowing the IP rights holders to record their IP with the Customs beforehand, enabling them to take action on their initiative, other nations are not far behind with the enactment of proper rules and legislation to let the Customs authorities intervene for IP protection. The time is not too far ahead when Afghanistan, Bhutan, and Maldives, too, will start thinking on the lines of their neighbors. ✅ For more visit: https://www.kashishipr.com/

Kashish IPR | Intellectual Property | Registration Law Firm

Wednesday, 4 August 2021