India: Protecting IP Across Border Through Customs

Last Updated: 27 August 2019
Article by Ashima Obhan and Mehak Dhingra

Intellectual Property (IP) not only safeguards just ideas or concepts but protects genuine business assets that are integral to the core services of the business. Obtaining proper IP protection is critical and can make or break a business. The need to protect IP rights across borders has emerged as a significant issue.

The Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007, were issued to strengthen border measures for IP protection, and were drafted in consonance with TRIPS and World Customs Organisation Model. These Rules offer Rights Holder an option to register rights with Customs Authorities, known as Customs Recordal. Once rights are recorded, Customs Authorities can seize and detain goods suspected to be goods infringing IP.

Rule 2 of the Rules defines certain critical terms as follows:

  • goods infringing intellectual property rights” means any goods which are made, reproduced, put into circulation or otherwise used in breach of IP laws in India or abroad and without the consent of the right holder or an authorised person;
  • right holder” means a natural person or a legal entity, who is the owner of protected IPR, its successors in title, or its duly authorized exclusive licensee as well as an individual, a corporation or an association authorized by any of the aforesaid persons to protect its rights.

Documents/Information Required:

An e-portal facilitates easy recordal of IP rights with the Customs Authorities (See ). The Right Holders are required to submit the following information/documents:

  • Name and contact details of the Right Holder;
  • The serial number and details of the demand draft in favor of the Commissioner of Customs;
  • Details regarding the scope of the IP right which the Right Holder is intending to register;
  • Details regarding the differentiating features of genuine and infringing goods;
  • The IEC code of the Right Holder and other authorized importers;
  • In case of geographical indications – description of the GI, the area of production;
  • Grounds for the notice of suspension of the release of the goods allegedly infringing intellectual property rights;
  • A detailed description of the goods with Customs Tariff Heading in respect of which an intellectual property right applies, together with a sample, model or photograph of a genuine product; and
  • Product code of the goods been imported/exported

Procedure for registration:

An IP Right Holder must notify Customs Authorities in writing, requesting for suspension of clearance of goods alleged to be infringing IPR, accompanied by fees of INR 2000. If the paperwork is in order, Customs Authorities will register the notice of the Right Holder and issue a Unique Permanent Registration Number (UPRN). This process takes up to 30 days. The minimum validity period is one year unless the Right Holder requests for a shorter period of customs assistance.

The grant of registration under Rule 4 is subject to the following conditions:

  1. the right holder or his authorised representative must execute a bond with the Commissioner of Customs for an amount 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.

After the grant of the registration of the notice, the import of allegedly infringing goods into India is deemed as prohibited within the meaning of Section 11 of the Customs Act, 1962.

Detaining of goods by the Custom Authorities and Remedies to the Right Holders:

Based on the notice given by the Right Holder, if Custom Authorities suspect that the imported goods infringe IPR, they shall suspend the clearance of the goods. Thereafter, the Custom Authorities must inform the importer and the Right Holder of the suspension of clearance of the goods, giving reasons for the suspension. If the Right Holder does not join the proceedings within 10 working days (extendable by another 10 days) from the date of suspension of clearance, the suspended goods can be released.

If the clearance of goods was suspended on the initiative of the Customs Department itself, then such suspected goods may be released within five working days from the date of suspension of clearance, if the Right Holder fails to attend proceedings. In case of perishable goods, the period of suspension of release is three working days, extendable by another four days.

Disposal of infringing goods:

Once Custom Authorities determine that the goods detained or seized have infringed IPR, and have been confiscated under section 111 (d) of the Customs Act, 1962 and no legal proceedings are pending in relation to such determination, Customs Authorities must 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. The costs toward destruction, demurrage and detention charges incurred till the time of destruction or disposal are borne by the Right Holder.

Goods of a non-commercial nature contained in personal baggage or sent in small consignments intended for personal use of the importer are not subject to the above Rules.

Conclusion:

The e-portal set up has made it easy for Right Holders to record the rights. These Rules significantly enhance the level of protection available to Right Holders, although the implementation of these rules still offers potential for abuse. A case in point is that of Ram Kumar1 highlighted the tendency for abuse, where the importers needed multiple litigations in order to obtain clearance for their goods. Further, the question whether Customs Authorities possess the requisite expertise to deal with complex intellectual property infringement matters is also not clear. This is a slowly developing area in India's IP enforcement landscape.

1. 2010(44)PTC785(Mad)

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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