India: Enforcement Of Intellectual Property Rights Through Customs

Last Updated: 2 June 2009
Article by Jayant Kumar

Custom Authorities are gaining importance for their role in enforcing intellectual property by protecting borders from the entry of goods that infringe intellectual property. In the wake of increasing international trade, Customs has broader responsibility of border control and IP protections, since there cannot be any better solution for intellectual property protection than confiscating infringing goods at the border itself. Indian Customs is in news again for detaining Samsung and others' import consignments at several ports in the country on the basis of a patent granted to S. Ram Kumar. This Article analyzes the legal framework for border enforcement of IP in the India.

Legal Framework under Customs Act, 1962

Customs Act, 1962 prohibits import of goods that infringe intellectual property. Section 11 of the Act empowers the Central Government, for the purposes specified in subsection 11(2), to prohibit import or export of goods of any description by issuing a notification. Section 11(2)(n) read with Section 11(1) of the Act empowers the Central Government to prohibit import or export of goods for the protection of patents, trademarks and copyrights. Section 11(2)(u) covers prohibition for the prevention of the contravention of any law for the time being in force. Section 111 and 113 of the Act empowers the Customs to confiscate improperly imported and exported goods respectively.

There have been attempts in the past by the Central Government to issue notifications under Section 11 of the Act and prohibit import of goods that infringe intellectual property. The Central Government issued a notification in 1960 prohibiting export – through sea and land - of goods that attract Section 78 and 117 of the Trade Marks Act, 1968. Another notification was issued in 1964 which prohibited goods bearing false trade mark, false trade description and goods passing off a trademark.

Procedure under Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007

On May 8, 2007, the Central Government vide Notification No. 49/2007-Customs (N.T.), prohibited the import of the following goods, subject to conditions and procedures as specified in the Intellectual Property Rights (Imported Goods) Enforcement Rules,2007, namely:-

  1. goods having applied thereto a false trade mark as specified in section 102 of the Trade Marks Act, 1999;
  2. goods having applied thereto a false trade description within the meaning of clause (i) of sub-section (1) of section 2 of the Trade Marks Act, 1999;
  3. goods made or produced beyond the limits of India and intended for sale, and having applied thereto a design in which copyright exists under the Designs Act, 2000;
  4. the product made or produced beyond the limits of India and intended for sale for which a patent is in force under the Patents Act,1970;
  5. the product obtained directly by the process made or produced beyond the limits of India and intended for sale, where patent for such process is in force under the Patents Act 1970;
  6. goods having applied thereto a false Geographical Indication within the meaning of section 38 of Geographical Indications of Goods (Registration and Protection) Act, 1999;
  7. goods which are prohibited to be imported by issuance of an order issued by Registrar of Copyrights under section 53 of the Copyright Act,1957.

The Central Government also notified 'Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007' on the same date. The rules were notified with a view to strengthen the statutory and executive guidelines provided for the protection of intellectual property rights at the borders.

Under the rules, infringing goods are defined as "goods which are made, reproduced, put into circulation or otherwise used in breach of the intellectual property laws in India or outside India and without the consent of the right holder or a person duly authorized to do so by the right holder". The rules define intellectual property law as "the Copyright Act, 1957, the Trade Marks Act, 1999, the Patents Act, 1970, the Designs Act, 2000 or the Geographical Indications of Goods (Registration and Protection) Act, 1999".

Under the rules, an intellectual property right holder may give notice in writing to the Commissioner of Customs or any Customs officer authorized in this behalf by the Commissioner, requesting for suspension of clearance of goods suspected to be infringing intellectual property rights. Such notice shall be given in the format prescribed in the Annexure to the Rules and all the information required in the notice should be furnished within 15 days.

Such notice should be registered or rejected within 30 working days of the date of receipt of the notice or date of expiry of extended 15 days period provided for furnishing information required to be filed with the notice. In case the notice is registered, the minimum validity period shall be one year unless the noticee or right holder requests for a shorter period for customs assistance or action. The grant of registration of the notice is subject to following conditions:

  1. right holder or his authorized representative shall execute a bond with the Commissioner of Customs for such amount with such surety and security as deemed appropriate by the Commissioner, undertaking to protect the importer, consignee and the owner of the goods and the competent authorities against all liabilities and to bear the costs towards destruction, demurrage and detention charges incurred till the time of destruction or disposal, as the case may be;
  2. the right holder shall execute an indemnity bond with the Commissioner of Customs indemnifying the Customs authorities against all liabilities and expenses on account of suspension of the release of allegedly infringing goods.

Custom Authorities can suspend clearance of suspected goods if the Deputy/Assistant Commissioner of Customs has a reason to believe that the imported goods are suspected to be goods infringing intellectual property rights. Thereafter, the Deputy/Assistant Commissioner of Customs shall immediately inform the importer and the right holder of the suspension of clearance of the goods and shall state the reasons for such suspension. Goods suspended on the basis of a notice given by the right holder, can be released if the right holder fails to join the proceedings within a period of ten working days (extendable by another 10 days) from the date of suspension of clearance. In case the clearance of goods was suspended on Customs own initiative, such goods shall be released within five working days from the date of suspension of clearance, if the right holder fails to give notice or fails to execute the bond. In case of perishable goods, the period of suspension of release is three working days, extendable by another four days.

In case the Deputy/Assistant Commissioner of Customs determines that the goods detained or seized have infringed intellectual property rights, and have been confiscated under section 111 (d) of the Customs Act, 1962, he shall destroy such goods under official supervision or dispose them outside the normal channels of commerce after obtaining 'no objection' or concurrence of the right holder. The right holder can raise objection on the mode of disposal within 20 working days (extendable by another 20 days) after having been informed so.

Customs provides exclusive website for online recording of intellectual property. With this, they have integrated this online IP recordation database with their risk management division, making it easier and effective to communicate with officers dealing with imported cargo. On the basis of such recordial, Customs has successfully made seizures. After seizure, the Enforcement Rules have also given the power of adjudication on related matter to Customs. Recently, in the case of S. Ram Kumar, Commissioner of Customs, Mumbai, decided on the question of patent infringement, holding against the patent holder.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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