Thailand: Enemy At The Gates: Thai Anti-Counterfeiting Border Control Measures

Last Updated: 19 June 2002
Article by Edward J Kelly

Article by Edward J. Kelly and Dana Christine Bergling

Thailand: IP Developments May 2002

Article 51 of TRIPS required all member countries, including Thailand, to adopt measures allowing owners of Intellectual Property Rights ("IP Owners") to obtain suspension of release of imported counterfeit trademark or pirated copyrighted goods by the Customs authorities. In Thailand, this requirement is satisfied in theory by (a) the adoption of rules and regulations of the Customs Department, and (b) the Rules for Intellectual Property and International Trade ("IP&IT Rules") Cases B.E. 2540 (1997).

Organized under the Ministry of Finance, the Thai Customs Department is responsible for border enforcement of IP rights. On the other hand, the IP&IT Rules are applicable to Thailand’s specialized Intellectual Property and International Trade Court ("IP&IT Court"). Despite these complementary sets of rules and regulations designed to aggressively wage an anti-counterfeiting battle at Thailand’s borders, there are calls for adopting a more comprehensive regulatory regime governing both the importation of the equipment and raw materials needed to make pirated products (such as optical media products) as well as the equipment necessary for operation of counterfeit goods production facilities.

Reportedly, Thai officials from a number of agencies have been working with private sector advisors to draft comprehensive legislation. The draft, yet to be formally approved by the Minister of Commerce, full Cabinet or Parliament, is said to build on recently enacted legislation in Hong Kong and Malaysia, and would apparently cover both equipment and raw materials used in the counterfeit goods trade.

Clearly, Thailand is considering how it can more fully integrate customs, foreign trade, domestic trade, revenue and consumer protection agencies into the comprehensive enforcement of IP rights. Improved border controls (along with more effective use of tax, fraud, and other laws targeting organized criminal activity) was an action item clearly highlighted in the joint Thai-US Action Plan of 1998.

This article will outline the tools Thailand presently utilizes in its arsenal to control its borders in connection with the overall anti-piracy effort.

Jurisdiction of the Customs Department

According to Customs Act (No. 12) B.E. 2497, Customs officers have the power to search without a warrant within the Customs Control Zone. The exercise of this authority must be based on reasonable cause, and not only property/goods may be searched but persons as well. Customs Laws B.E. 2496 grants Customs officials the power to open and examine packages while the packages are passing through Customs. The same law allows officials to board and search vessels within the Kingdom’s boundaries. Customs officials also have the authority to arrest persons on reasonable suspicion of an offense against the Customs Laws.

It is important to note that Customs officials will generally not, as a practical matter, take the initiative to inspect goods believed to be counterfeit through the import and export process. The IP owner generally must be the impetus for the investigation of any shipment that is believed to contain the infringing goods. Accordingly, Customs officials generally do not examine incoming or out-going goods unless they receive a complaint from the IP owner.

Customs Department Rules and Regulations

The importation and exportation of pirated products alleged to infringe on trade-marks and copyrights comes within the ambit of Customs regulations issued pursuant to Section 5 of the Export and Import Act 1979. These regulations permit an IP owner to lodge a petition with the Customs authorities to prevent the release of the suspect goods from the Customs officials’ control. Suspected copyright and trademark infringement claims are handled with slightly different methodologies.

Copyright Infringement: Pirate Goods

If a copyright owner has cause to suspect that the goods are reproductions or modifications of a copyrighted work (i.e., a "pirated work"), the owner may pursue remedial action in a variety of ways. The web of regulations that apply include:

  1. Notification of the Ministry of Commerce Governing the Exportation and Importation of Goods (No. 94) 1993 ("Notification No. 94").
  2. Notification of the Ministry of Commerce Governing the Exportation and Importation of Goods (No. 95) 1993 ("Notification No. 95").
  3. Notification of the Customs Department providing the procedural guidelines for goods infringing copyrights owned by others (No. 28) B.E. 2536 (1993) ("Notification No. 28/2536").

Customs officials have the authority to seize pirated goods under Notification No. 94. Notification No. 95 authorizes officials to halt shipment of products believed to be reproduced or adapted from the copyrighted work of another person. A copyright owner or licensee may make petition pursuant to Notification No. 95 to the Customs Department for inspection of the products before they are released to the importer, but there must first exist reasonable cause to believe that the works were reproduced or adapted from a copyrighted or licensed work.

In addition to the Customs regulations, an IP owner also has the option of filing an application in the IP&IT Court for an order of injunction preventing the importation or exportation of goods, provided of course that the IP owner has met the heavy burden of proof on the infringement claim.

Trademark Infringement: False Designation of Origin of Counterfeit Goods

For cases of suspected trademark infringement, Customs enforcement procedures are governed by the Notification of the Ministry of Commerce Governing the Exportation and Importation of Goods 1987 ("Notification"). Under the Notification, the authorities are authorized to prevent the importation and exportation of products with forged or confusingly similar trademarks either registered in Thailand or overseas.

The Notification provided for certain regulations and pronouncements outlawing the importation or exportation of goods bearing a false designation of origin, including:

  1. Regulations of the Ministry of Commerce Governing the Exportation and Importation of Goods with a Fake or an Imitation of the Trademark of Another Person (1987).
  2. Notification of the Customs Department governing the examination of goods if there is reason to suspect that such goods bear counterfeit or imitated trademarks (No. 6) B.E. 2531 (1988).
  3. Article 20 of the Code of Customs Practices and Regulations B.E. 2530 (1987).
  4. Notice of the Trademark Registrar regarding Conditions, Bases and Procedures for Production of Evidence in Applying for Trademark Protection.

In order to proceed under this Notification, a Trademark owner has to first file with the Trademark Registrar, then, when the pirated products are seized, a petition must be filed with the Customs Department seeking examination of the suspect goods.

Procedural Considerations for Matters within Customs Jurisdiction

IP owners seeking border control measures are generally required to file an application and present adequate evidence to satisfy the Customs authorities that there is sufficient evidence (i.e., a prima facie case) supporting a claim of IP infringement.

In matters involving suspected infringement of copy-righted works, upon reasonable cause, the IP owner or the licensee may petition a Customs official for "suspension of the goods" before they are released to the importer or exporter. This has the practical effect of a "stop shipment order."

Typically, an IP owner would file a set of documents to support the petition:

  • Power of Attorney, if necessary (must be consularized/ certified by a Thai Embassy or Consulate);
  • Samples of the genuine copyrighted works;
  • Proof of copyright ownership (generally in the form of an affidavit with attached registration/recordation documents);
  • Copy of household registration certificate and a copy of identification card;
  • Certificate of Company/ Partnership Registration.

It is highly recommended that any works with international copyright protection under the Berne Convention should be accompanied by a copy of the applicable law of the country with a certified Thai translation.

Notification No. 28/2536 regulates the border control process. If the Customs officer determines it is appropriate to detain the goods, the Customs Department shall inform the applicant and the importer without delay. The IP owner-applicant must appear within 24 hours after filing the application with the Customs Department to examine the suspect goods.

One of two consequences results from this process:

  1. If the IP owner or licensee establishes to Customs’ satisfaction that the imported goods actually infringe the genuine copyrighted or licensed works, a complaint is filed with the police, and investigation and prosecution, if justified, will follow. The IP owner must then immediately notify Customs of the filing of the police com-plaint-- time is of the essence-- because the IP owner risks that Customs officials, with no knowledge of police involvement, might release the goods into the hands of the importer or exporter.
  2. If the seized goods are undisputed infringing works, the Customs officials themselves may report the case to the police for further investigation and prosecution.

If, on the other hand, the copyright owner cannot persuade Customs authorities that the detained goods infringe the genuine copyrighted works, or if the importer/exporter defends the allegation, the copyright owner can still make out a complaint with the police to direct the Customs officials to seize the alleged infringing works.

Procedure for handling trademark cases (counterfeits or knockoffs) at Customs is some-what different from the procedures outlined above in copyright cases. Why are the rules different? Perhaps the answer is that a trademark owner generally first files for protection of the trademark with the Department of Intellectual Property ("DIP"). The DIP, unlike the Customs Department, falls under the control of the Ministry of Commerce. The TM owner’s petition is filed with the Trademark Division, DIP, to alert the Trademark Registrar of the trademark owner's demand to preclude the importation/exportation of the alleged counterfeits/ knockoffs. The TM owner typically must support the application with appropriate documentary evidence, depending upon whether the trademark is validly registered in Thailand:

  • A certified copy of the Trademark Registration Certificate or a certified copy of the Trademark Registration Official Record. If the trademark is registered outside of Thailand, the original trademark registration certificate with a certified translation is needed, along with a statement of class, restrictions, filing and expiration date(s).
  • An original Power of Attorney authorizing a person to act on behalf of the trademark owner (if owner is not domiciled in Thailand, and if executed outside of Thailand, this must be consularized).
  • If the TM owner is a juristic person, an original, current (less than six months old) copy of the juristic person certificate (if from outside of Thailand, this must be consularized).
  • Letter of indemnity from the trademark owner assuming responsibility for any damages that may arise due to the application for protection.
  • Example of genuine trademark used with the trademark owner’s products for purposes of comparison.

If a non-domiciliary of Thailand owns the mark and seeks protection, he/she must have an office in Thailand to provide a local contact for the Registrar.

Following submission of the documentary proof of ownership to the Registrar, the request and all supporting documents will finally be provided to the Customs Department for its records and follow-up.

If a TM owner has probable cause to believe that there is a particular shipment of pirated goods in transit, the petition to the Customs officials should include specific and detailed disclosure regarding the shipment, i.e. registry of the vessel with the pirated goods, date/time of the vessel’s arrival in Thailand, and the name of the importer and location of its warehouse, if any. The TM owner risks liability for indemnity for possible damages if the petition turns out to have been filed in bad faith or with gross negligence.

If, after some preliminary investigation into the merits of the petition, the Customs official believes the application has merit, then an inspection or examination of the suspect counterfeit goods will be ordered in the presence of the TM owner.

If there is some question as to whether the goods are actually counterfeits or knockoffs, the Customs official will forward the matter to the Trademark Registrar for a decision along with the documentary and physical evidence in the case. The seized products are held by Customs until the Trademark Registrar’s decision regarding the claim of infringement. The Trademark Registrar’s judgment on the question of infringement is binding on Customs.

If the suspect goods are counterfeits, the Customs official will forward the case to the police for further investigation and possible prosecution, and the seized goods will be used as evidence in any criminal proceedings against the exporter or importer.

Jurisdiction of the IP&IT Court in Border Control Measures

With regard to a complaint to the IP&IT Court, the IP owner can also petition the Court to issue an injunction to stop the importation or exportation of the goods, but also must satisfy the burden of proof that the subject goods infringe his valid IP. This is done in a similar fashion as outlined above, by documenting the validity/priority of rights, Power of Attorney (if any), evidence to prove that a known party is about to import or export the infringing goods, and evidence describing the nature of the alleged infringement .

One key difference between a proceeding before Customs and a proceeding before the IP&IT Court is that an IP owner must deposit a bond/security with the Court to cover damages caused by the enforcement of the injunction order if it later turns out the goods seized are non-infringing. No posting of collateral is necessary with Customs.

In cases of infringement of protected IP, the Director-General of the Customs Department is authorized to order the destruction of all seized items pursuant to Section 25 of the Customs Act. In addition, Section 20 of the Export and Import Act 1979 allows the confiscation of the infringing goods, including items used for packing and loading.

The IP&IT Court is also authorized to place the seized goods under the care of a Government Department (see, e.g., CCC 1327) for eventual destruction once the case is final, and the Court may issue an injunction order to seize the raw materials and components if the IP owner can prove the items were used to produce the infringing goods.

Conclusion

The Border Control Measures outlined above, although available as an enforcement mechanism, are unfortunately severely underutilized. The paucity of efforts by IP owners to use these tools can be directly traced to the complicated and difficult process of following the procedures required by the Customs Department, the sheer lack of resources and personnel within the Customs Department, and of course the possibility of corruption at low levels of staffing.

One example of the benefit of tightening IP protection and enforcement may be found in Singapore where the U.S. and Singapore are negotiating a bilateral Free Trade Agreement. One of the important negotiating points is the U.S. insistence that Singapore’s Customs Department reform its procedures requiring IP owners to provide "unreasonable" information for border enforcement, including details of the arrival of infringing goods. If Singapore Customs enacts reforms to appease IP owners, that action will send a clear signal to Thailand to enact similar reforms to obtain similar favorable treatment. If new IP legislation and proposed improvements to the Thai Customs procedures concerning border control are adopted, implemented, and effectively executed, Thailand’s aggressive posture towards protection of IP rights can be regarded as a model for other developing nations waging the difficult struggle against the global counterfeit and pirated goods trade.

Thailand: IP Developments is intended to provide general information on intellectual property and recent developments in this area in Thailand. The contents do not constitute legal advice and should not be relied upon as such. If legal advice or other expert assistance is required, the services of competent professionals should be sought.

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