Counterfeiting is not restricted to any one jurisdiction. It is a serious issue in the global economy where infringing goods are mass produced in one nation and imported to other nations. Imported counterfeit and pirated products substantially affect the economic positions of businesses. In some cases, they may cause the withdrawal of a famous international brand from a particular national market, as the brand may be undermined to such an extent that it cannot exploit its products economically in a particular market. The government and end consumers are also negatively affected by imported counterfeit goods, as such products generally remain outside tax ambits and cause confusion in consumers’ minds. The expected quality of such products generally suffers as well.
The abovementioned reasons make IP right enforcement against imported counterfeit and pirated goods extremely important, not only in India but also in other jurisdictions. Border security measures aim to monitor IP infringing goods entering a jurisdiction. They can serve as an effective early remedy against counterfeiting because it is comparatively easier to restrict an infringer at a border than to cease the subsequent circulation of infringing goods.
In India, border security measures are carried out by customs authorities. The Central Board of Excise and Customs under the Department of Revenue deals directly with IP right issues. Customs authorities have the statutory power to confiscate and prohibit the import or export of counterfeit or pirated goods that infringe IP owners’ rights, which are granted under the ambit of the prevailing IP statutes in India.
The government has enabled IP owners to enforce their IP rights at Indian borders under the Intellectual Property Rights (Imported Goods) Enforcement Rules 2007. The owner must have a validly registered trademark or IP right. The customs protection period is the earlier of five years from the recordation of rights with the customs authorities or on expiry of the registration validity of the trademark or IP right.
Procedure for protecting IP rights against import of infringing goods As per the protection procedure, a notice can be given to the customs authorities after the trademark has been registered in order to initiate an action against the importers of counterfeit goods. Separate applications must be submitted for each IP right seeking protection. For online registration, hard copies of the uploaded documents must be submitted in the prescribed format to the IP rights cell of the customs house.
On receipt of an application, the commissioner of customs will verify the applicant’s information. The commissioner may ask for additional information from the applicant if required. Registration will be granted only after the complete verification of the application by the commissioner, who also has the power to reject the application, thereby denying the custom authorities’ protection of IP rights against imports of infringing goods by the custom authorities. Registration can be cancelled at any time if it is found that the applicant has furnished wrong or false information.
Procedure after detaining suspected goods On the detainment of suspected infringing goods, the customs authorities will inform the importer and IP rights holder about the suspension of clearance. The rights holder must join the proceedings within the statutory timeframe and provide the documentary proof for examining whether the goods detained are infringing. However, if the rights holder does not respond or does not join the proceedings within the statutory timeframe, the goods may be released by the customs authorities provided that the importer complies with all of the other import conditions. On receiving the reply from the rights holder within the timeframe, the customs authorities will issue a show cause notice to the importer of the goods. The proceedings for determining infringement will take place and the importer will be given an opportunity to present its case. If the goods are found to be infringing in nature, a confiscation order will be passed by the adjudicating authority. The Customs Act provisions relating to appeals can be applied in case of such an order. If goods are found to be infringing, they are confiscated and either destroyed or disposed of outside the normal channels of commerce after a no objection certificate has been obtained from the rights holder.
The main motive behind registering IP rights with the customs authorities is not only to ensure that rights holders incur no losses from the import of infringing goods, but also to guarantee that India as a country does not strengthen the counterfeiting industry.
Further, the import or export of infringing goods not only results in absolute confiscation, but also incurs penalties, which are imposed on the importer or exporter as per statutory provisions.