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:-
- goods which have a false trademark as specified in section 102 of Trade Marks Act, 19993;
- 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;
- 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;
- 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.
- 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
- 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:-
- the filing of the notice by the right holder;
- registration of the said notice by the Customs;
- a time limit for right holders to join proceedings;
- a single point for registration of the notice filed by the right holder;
- adequate protection to the rightful importer;
- adequate protection to the Customs for bona fides acts;
- Suo Moto action by the Customs in specified circumstances;
- disposal of confiscated goods; and
- 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 Ł 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:-
- 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.
- 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.
There are two ways in which the Customs Authorities function when they believe that infringing goods have come into the port:-
- 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;
- 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.
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.
1. Mr. Sagar is a Partner at Kachwaha & Partners and specializes in Customs laws and proceedings thereunder. He can be contacted at firstname.lastname@example.org
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.