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The Customs Act, 1962 prohibits import of those goods that infringed intellectual property. Under Section 11, the Central Government can prohibit import or export of goods that infringed patents, trademarks or copyrights, by issuing a notification. It also covered prevention of contravention of any law for the time being in force. Further, Section 111 and 113 of the same Act empowered the Customs to confiscate such imported and exported goods, respectively.
Previously the Central Government made several endeavours at issuing notifications in this respect. One such notification was released in 1960 that prohibited export through sea and land of goods that attracted Section 78 (Penalty for applying false trade marks, trade descriptions, etc.) and Section 117 of the Trade and Merchandise Marks Act, 1958 (The Central Government may by notification require that any goods specified in the notification imported into India shall indicate the country in which they were made or the name and address of the manufacturer of the said goods)
In 1864, there came another notification that prohibited goods bearing false trade mark, false trade description or any kind of passing off.
On May 8, 2007, the Central Government issued Notification No. 49/2007-Customs (N.T.), that prohibited the import of the following goods, subject to conditions and procedures as specified in the Intellectual Property Rights (Imported Goods) Enforcement Rules,2007:
1) goods having applied thereto a false trade mark as specified in section 102 of the Trade Marks Act, 1999 (Trade Mark conflicting with a geographical indication)
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. (Importation of infringing copies)
The Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 came into existence to strengthen the statutory and executive guidelines provided for the protection of intellectual property rights at the borders. These Rules have been formed based on the line of TRIPS (Trade-Related Aspects of Intellectual Property Rights) and WCO (World Customs Organization).
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”.
An intellectual property right holder shall give notice in writing to the Commissioner of Customs or any Customs officer authorized in his behalf by the Commissioner, requesting for suspension of clearance of goods alleged to be infringing intellectual property rights, accompanied by fees of Rs. 2000/-. This notice should be given in the format prescribed in the Annexure to the Rules prescribed and the data required to be filed in the notification should be furnished within 15 days.
Further, the notice should be registered or rejected within 30 working dates from the date of receipt of the notice or date of expiry of the 15 days period provided for furnishing the data required to be filed with the notice. Once the notice is registered, the minimum validity period shall be one year unless the intellectual property right holder requests for a shorter period of customs assistance.
The notice shall be registered following the stipulated conditions:
1) The right holder shall execute a bond with the Commission of Customs for an amount with the surety and security as appropriately deemed by the Commissions along with an undertaking to protect the importer, consignee and the owner of the goods and the competent authorities against all liabilities and to bear costs towards destruction, demurrage and detention charges incurred till the time of destruction or disposal.
2) The right holder shall execute an indemnity bond with the Commission of Customs indemnifying the Customs against all liabilities and expenses on account of suspension of the release of the suspected infringing goods.
The 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 allegedly 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. These suspended Goods, 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, then such suspected 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 a scenario where 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.
The Department of Customs has a website for online recording of intellectual property where online IP recordation database with their risk management division has made it easier and effective to communicate with officers dealing with imported cargo. On this recordal, 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.
It is pertinent to note that the goods infringing intellectual property rights are not to be re-exported in unaltered state. Further, where goods of a non-commercial nature contained in personal baggage or sent in small consignments are intended for personal use of the importer, such goods are exempted from the purview of the Rules.
Such infringing or counterfeiting goods have a drastic impact on the right holder and thus, on the market economy. It is important on part of the Government to extend the purview of the Rules to enforce controlling of all kinds of infringing goods. Not only should the law be stringent, but also complete co operation from the side of the right holders is necessary to eliminate the existence of counterfeit goods in the market.
About the Author: Ms. Madhuri Iyer, Trade Mark Attorney at Khurana & Khurana and can be reached at: Madhuri@khuranaandkhurana.com
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