India: Indian Customs Authorities And Protection Of Intellectual Property Rights

Last Updated: 9 November 2009

Article by Mr Ashok Sagar1

In pursuance of its obligations to implement border measures as envisaged in Articles 51 to 60 of the WTO Treaty on Trade Related Aspects of Intellectual Property Rights (TRIPS), India has defined the role of the Customs Authorities in combating Intellectual Property Rights (IPR) infringements at the borders (land, sea and air).

Section 11 (1) of the Customs Act, 1962 (hereinafter 'Act') empowers the Central Government (Union Government) to prohibit either absolutely or subject to conditions, the import or export of goods of any specified description for any of the purposes set out in sub-section (2) of the said section. Such prohibition may, inter-alia, be for the protection of patents, trade marks or copyrights. For convenience of reference the relevant portions of section 11 are reproduced herein below:-

"Section 11. Power to prohibit importation or exportation of goods. – (1) If the Central Government is satisfied that it is necessary so to do for any of the purposes specified in sub-section (2), it may, by notification in the Official Gazette, prohibit either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification, the import or export of goods of any specified description.

(2) The purposes referred to in sub-section (1) are the following:-

(a) - (m) .......

(n) the protection of patents, trade marks and copyrights;

(o) – (t) ......

(u) the prevention of the contravention of any law for the time being in force; ..........."

In pursuance of the aforesaid, the Central Government issued a notification on 8th May, 20072 prohibiting the import of certain goods subject to following of conditions and procedures specified in the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007. The said notification, inter-alia, prohibits the import of the following goods:-

  1. goods which have a false trademark as specified in section 102 of Trade Marks Act, 19993;
  2. goods which have applied a false trade description within the meaning of clause (i) of subsection (1) of section 2 of the Trade Marks Act, 1999, other than in relation to any of the matters specified in sub-clauses (ii) and (iii) of clause (za) of that section4;
  3. goods made or produced beyond the limits of India and intended for sale, having applied a design in which copyright exists under the Designs Act, 2006 in respect of the class to which the goods belong or any fraudulent or obvious indication of such design. However, the prohibition does not apply where the application of such design has been made with the licence or written consent of the proprietor of the design;
  4. products made or produced beyond the limits of India and intended for sale for which a patent is in force under the Patents Act, 1970, except in cases where the consent from the patentee in India has been obtained. However, such prohibition is not applicable to cases where such importation is allowed under the Patents Act. The Notification also prohibits the import of products 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, except in cases where the consent of the patentee in India has been obtained. Such prohibition, however, is not applicable in cases where importation of such products is allowed under the Patents Act.
  5. Goods having applied thereto a false geographical indication within the meaning of section 38 of Geographical Indications of Goods (Registration and Protection) act, 1999; and
  6. goods which are prohibited to be imported by an order issued by the Registrar of Copyrights under section 53 of Copyright Act, 1957.

The Central Government has also issued a notification5 dated 8th May, 2007 prohibiting the export of goods (i) which are required by a notification under section 139 of the Trade Marks Act, 1999, to have apply to them an indication of the country or place in which they are made or produced or of the name and address of the manufacturer or the person from whom the goods were manufactured, but which have not applied to them such indication in the manner specified in the notification, and (ii) any goods which are required to be stamped under section 81 of the Trade Marks Act, 1999 but which have not been stamped in the manner specified.

For purposes of giving effect to the prohibition contained in the above-mentioned Notification prohibiting the import of goods, the Central government has framed rules known as the 'Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 (hereinafter 'Rules'). These Rules concurrently came into force on 8th May, 2007. These Rules are administered by the customs authorities of India.

The Rules, inter alia, provide for:-

  1. the filing of the notice by the right holder;
  2. registration of the said notice by the Customs;
  3. a time limit for right holders to join proceedings;
  4. a single point for registration of the notice filed by the right holder;
  5. adequate protection to the rightful importer;
  6. adequate protection to the Customs for bona fides acts;
  7. Suo Moto action by the Customs in specified circumstances;
  8. disposal of confiscated goods; and
  9. no action against goods of non-commercial nature contained in personal baggage or sent in small consignments intended for personal use of the importer.

The Rules define "goods infringing intellectual property rights" to mean any 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 authorised to do so by the right holder.

A "right holder" has been defined to mean a natural person or a legal entity, which according to the laws in force is to be regarded as the owner of protected intellectual property right, its successors in title or its duly authorised exclusive licensee as well as an individual, a corporation or an association authorised by any of the aforesaid persons to protect its rights.

"Intellectual property" has, inter alia, been defined to mean a patent as defined in the Patents Act, 1970, a copyright as defined in the Copyright Act, 1957, or trade mark as defined in the Trade Marks Act, 1999 and geographical indications as defined in Geographical Indications of Goods (Registration and Protection) Act, 1999.

Registration of Notice given by Right Holder

Rule 3 provides that a right holder give notice in writing to the Commissioner of Customs or any Customs Officer authorised by the Commissioner, at the port of import of the goods infringing the intellectual property rights, requesting that the clearance of goods suspected of infringing intellectual property rights be suspended. A form for making such request has been prescribed. The form is to be accompanied by a fee of Rs. 2000 (approximately £ 27 or US $40). The right holder has to specify the Customs airport, Customs Port and land Customs station to be covered by the notice.

Such notice is required to be registered by the concerned Commissioner of Customs within 30 days from the date of receipt or time extended for providing clarifications. On registration the Commissioner has to indicate the validity period of the registration during which period assistance would be rendered by the customs authorities. The Rules provide that the minimum validity period shall be one year, unless the right holder or his authorised representative request for a shorter period. The Central Government has clarified by means of Circular that the period of validity of the registration of a notice by right holder would be five years.

However, the grant of registration is subject to certain conditions, namely:-

  1. The right holder or his authorised representative shall execute a bond with the Commissioner of Customs for such amount with such surety and security as may be deemed appropriate by the Commissioner.
  2. The right holder is required to execute an indemnity bond with the Commissioner indemnifying the customs authorities against all liabilities and expenses on account of suspension of the release of the goods.

From a practical point of view, it may become difficult to determine the amount for which a bond should be given prior to the importation of the infringing goods as the value of the consignment may not be known. Therefore, the Central Government has clarified vide a Circular that right holders may furnish a general bond without security to the Commissioner of Customs at the port of interdiction prior to registration of their notice, undertaking to furnish the necessary security within three days of the interdiction.

The surety and security are required to be furnished on a consignment basis. The Bond is to be of a value equal to 110% of the value of goods and the security is to be equal to 25% of the value of the Bond. The security may be either in the form of a bank guarantee or a fixed deposit.

On the grant of registration of the notice by the Commissioner, the import of the alleged infringing goods is deemed to be prohibited under the provisions of section 11 of the Act.

A single grant of registration (from any Commissioner of Customs) operates on an all India basis and prohibits the impugned importation at any port of India specified in the notice submitted by right holder.

Procedure:

There are two ways in which the Customs Authorities function when they believe that infringing goods have come into the port:-

  1. they may suspend the clearance of goods based on the notice given by the right holder and have reason to believe that the imported goods are goods infringing intellectual property rights;
  2. they may suspend the clearance of goods on their own initiative if they have prima facie evidence or have reasonable grounds to believe that the imported goods are goods infringing intellectual property rights.

In either case the customs authorities are required to be immediately inform the importer and the right holder stating the reasons for suspension. The right holder is required to join the proceedings within 10 days of the order of suspension, which may be extended by another 10 days. If the right holder does not join the proceedings within the time prescribed the goods are to be released.

In cases where the suspension of clearance is at the initiative of the customs authorities the right holder is required to give notice as prescribed under Rule 3 within five days from the date of suspension of clearance and is also required to fulfill the obligation of furnishing the Bond and security within the same period of five days. In case this is not done the goods are to be released.

In the case of perishable goods the aforesaid time limits are reduced to three working days which may be extended by another four days subject to the satisfaction of the customs authorities that such extension will not affect the goods.

Where the right holder joins the proceedings within the time periods prescribed and the customs authorities have reasons to believe that the goods are goods infringing intellectual property rights and liable to confiscation, the customs authorities may seize goods under section 110 of the Act.

The right holder has been given the liberty to examine the goods and the right holder may take representative samples for purposes of testing to assist in determining whether the goods are pirated, counterfeit or otherwise infringe intellectual property rights.

The customs authorities are required to provide information regarding the importer to the right holder and regarding the right holder to the importer if so requested by them.

If it is found that the goods retained or seized have infringed intellectual property rights and have been confiscated (and no legal proceedings are pending in relation to such determination) the customs authorities shall destroy the goods under official supervision or dispose them outside the normal channels of commerce, after obtaining no objection or concurrence of the right holder. If the right holder does not oppose or react to the mode of disposal within 20 days or such extended period not exceeding a further 20 days, he shall be deemed to have concurred with the mode of disposal. All costs towards destruction, demurrage and detention charges incurred till the date of disposal or destruction are required to be borne by the right holder.

Conclusion:

As would be seen from the above, a fairly smooth procedure has been prescribed to prevent import of infringing goods. The provisions lean heavily in favour of the right holder and a simple act of a notice can straight away suspend clearance of infringing goods. At the same time if the right holder is not able to make good its case it would be liable for damages and costs.

Footnotes

1. Mr. Sagar is a Partner at Kachwaha & Partners and specializes in Customs laws and proceedings thereunder. He can be contacted at ashoksagar@kaplegal.com

2. Notification No. 49/2007-Cus (NT)

3. "Section 102. – (1) A person shall be deemed to falsify a trade mark who, either,-

(a) without the assent of the proprietor of the trade mark makes that trade mark or a deceptively simple mark; or
(b) falsifies any genuine trade mark, whether by alteration, addition, effacement or otherwise.
(2) A person shall be deemed to falsely apply to goods or services a trade mark who, without the assent of the proprietor of the trademark,-
(a) applies such trade mark or a deceptively similar mark to goods or services or any package containing goods;
(b) uses any package bearing a mark which is identical with or deceptively similar to the trade mark of such proprietor, for the purpose of packing, filling or wrapping therein any goods other than the genuine goods of the proprietor of the trade mark.

(3) Any trade mark falsified as mentioned in sub-section (1) or falsely applied as mentioned in sub-section (2), is in this Act referred to as a false trade mark.

(4) In any prosecution for falsifying a trade mark or falsely applying a trade mark to goods or services, the burden of proving the assent of the proprietor shall lie on the accused."

4. section 2 (1) (i) of the Trade Marks Act, 1999 defines "false trade description" and clause (za) of thatsub-section defines "trade description".

5. Notification No. 50/2007-Cus

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions