Intellectual Propriety Rights (IP Rights) holders are under constant threat of counterfeit products in the market, which is increasing exponentially with growing technology and increase in cross-border commerce between countries. Interestingly, such counterfeit goods may not always be manufactured and circulated for trade and commerce in the domestic market but may also enter illegally through the customs frontiers of a country. Therefore, it is crucial for IP Rights holders to keep a close watch and take appropriate and timely action against imports that can potentially be infringing on the rights of such IP Rights holders.
With an intention to protect the IP Rights of proprietors in India and also to honour India’s international commitments under the TRIPS (Trade Related Aspects of Intellectual Property Rights) Agreement, the Government of India has framed the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 [as amended from time to time] (“Rules”). These Rules are aimed to prevent counterfeiting and infringing goods from surreptitiously being imported into the Indian markets. IP Rights holders can now record their IP Rights i.e. trademark, designs, copyright and geographical indication (excluding patents) online, through the Indian Customs IPR Recordation Portal (https://ipr.icegate.gov.in).
PROCEDURE FOR RECORDAL OF IP RIGHTS WITH THE CUSTOMS
The IP rights holder will have to file separate applications for its respective trademark, design, copyright and geographical indication through the above referred online portal. Upon registration on the portal, a unique user name (ID) and a password will be created and thereafter the duly filled-in form along with the necessary documents must be submitted online. Subsequently, a Unique Temporary Registration Number (UTRN) will be provided to the IP Rights holder. The said UTRN along with the physical copy of documents, print-out of the online form and statutory fees of Rs. 2000 must be filed at the Customs Office of the IP Right holder’s choice which has an IPR cell. The IP Right holder may choose any Customs Officer as per their convenience. The IP Right holder need not have to file multiple applications for different ports as a single application covers multiple ports.
DOCUMENTS TO BE FILED WITH THE APPLICATION FORM
- Proof of ownership of the IP rights and copies of the corresponding registration certificates.
- Images of genuine goods (for trademarks and designs).
- Images of infringing goods (if applicable/available).
- A statement regarding the scope of the IP right sought to be recorded.
- Details regarding differentiating features of genuine and infringing goods.
- Statement of grounds for suspension of infringing goods (if applicable).
- The Importer Exporter code (IEC code) of the rights holder and other authorized importers.
- In case of geographical indications - description of the GI and geographical area of production.
- Customs Tariff headings of the applicable goods (if available).
- An indemnity bond indemnifying the Customs authorities against all liabilities and expenses on account of suspension of clearance of allegedly infringing goods.
- The General Bond or Centralized Bond: Such bond to be executed by the IP rights holder in order to bear the cost towards destruction and detention charges of the infringing goods.**
- Power of attorney authorizing the person who is filing the application.
- Demand draft of Rs. 2000 in favour of the Commissioner of Customs of the opted location.
** GENERAL BOND + CONSIGNMENT SPECIFIC BONDS: -
Rights Holder need to provide consignment specific Bond of an amount equivalent to 110% of the value of the detained goods, along with security, in the form of a bank guarantee or fixed deposit, equivalent to 25% of the bond value at the port of interdiction.
CENTRALIZED BONDS: -
The IP Right holder may alternatively file a Centralized Bond (which will be a running bond) for a value that is sufficient in their judgment, to correspond to value of suspected allegedly infringing goods, all over India. The particulars of the Centralised Bond will be uploaded online and applicable to all the ports in India with an online facility of debit and credit. This security amount would then be used against future interdictions of goods that infringe the Right holder’s IP. The IP Right holder would have the ability to “top up” the Centralised Bond at any time without the worry of needing to produce a Consignment-specific Bond in a short time period when infringing goods are interdicted. Customs will debit the applicable amount (equivalent to 110% of the value of the detained goods) along with a security equivalent to 25% of the bond value from the Centralised Bond Account. In case of inadequate balance, the same can be supplemented by the Rights Holder by executing a supplementary bond with necessary security at the Customs Office where registration has taken place. A Centralized Bond account can cover one or more rights registered by a rights holder with the Customs.
The Customs office will scrutinize the documents within 30 days of the online filing and may call upon the IP rights holder to furnish additional documents/information if required. Upon satisfaction, the office shall issue the Unique Permanent Registration Number (UPRN) and formally record the IP rights with the Customs authorities. Accordingly, import of allegedly infringing goods intended for sale or use in India of the recorded IP rights shall be deemed as prohibited under Section 11 of the Customs Act, 1962.
Type of goods to be prohibited
Subject to conditions and procedures as specified in the Rules, import of the following goods are prohibited:
- goods having applied thereto a false trademark as specified in section 102 of the Trademarks Act, 1999;
- goods having applied thereto a false trade description within the meaning of clause (i) of sub-section (1) of section 2 of the Trademarks Act, 1999;
- 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;
- goods having applied thereto a false Geographical Indication within the meaning of section 38 of Geographical Indications of Goods (Registration and Protection) Act, 1999;
- 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.
Detention of goods and consequent process
In case where any goods purportedly infringing upon recorded IP rights are detained at the customs frontiers of India, the Deputy Commissioner of Customs or Assistant Commissioner of Customs, shall inform the importer and the right holders (or their Authorized Representatives) by speed post/ email of the suspension of clearance of the goods and shall state the reasons for such suspension. At this stage, the IP rights holder or its Authorized Representative shall, in order to join the proceedings under Rule 3, execute a Specific Bond indemnifying the Custom authorities and provide documentary proof of the validity of UPRNs. The IP right holder’s Authorized Representative is then provided with photographs/ serial numbers of the products/ samples of the products for examination, testing and analysis to assist in determining whether or not they are infringing (under Rule 8).
If the IP rights holder fails to join the proceedings within the given time period, the infringing goods shall be released to the importer. The prescribed time period for IP Rights holder to join the proceedings in respect of non-perishable goods is ten working days extendible by another ten working days, whereas it is just three working days extendible by four working days in case of perishable goods. If the IP rights holder attends the proceedings and the Customs officials conclude that the goods are indeed infringing on the IP right holder’s recorded IP rights and there is no legal proceeding pending, the infringing goods will be seized and thereafter destroyed under intimation to the IP right holder, in accordance with the provisions provided in the Customs Act. The cost of such detention and destruction shall be borne by the IP right holder. Customs Authorities are also entitled to suo moto, suspend the clearance of the imported goods, if there is prima facie evidence or reasonable grounds to believe the goods are infringing on the IP Rights of any third party.
AMENDMENT TO THE RULES IN 2018- PATENT RIGHTS EXCLUDED FROM THE PURVIEW OF THE RULES:
It is pertinent to note that the Rules were amended vide a notification of the Department of Revenue, Ministry of Finance in the year 2018 and pursuant to which the following two important changes have been brought into effect:
- ‘Patent Rights’ have been excluded from the purview and scrutiny of Customs authorities. Accordingly Custom Authorities no longer have the jurisdiction to scrutinize imports of any products/goods on the ground that such products/goods may be infringing on any Indian patent. In the light of such amendments to the Rules, enforcement of patent rights at the Customs frontier/ border is possible only through an order of the Court whereby specific injunction against import of infringing products is obtained by the patents right holder.
- An amendment to Rule 5 of the Rules has been brought in, mandating the requirement of a notice by the IP Rights holder to the customs authorities, in case of any order of amendment, cancellation, revocation or suspension of their subsisting IP Rights by a court of law.
The amendment regarding exclusion of ‘Patent Rights’ from the purview of the Rules was necessitated considering the fact that any assessment of a potential patent infringement would require a detailed method of assessment of a technical nature of the relevant goods/products, and the same method of limited scope of enquiry as in the case of Trademarks and Copyrights was found to be not sufficient in order for the customs authorities to form an opinion on potential patent infringements arising out of certain imports. This amendment is a welcome change since the custom authorities do not possess the necessary training and expertise to analyse the specifics of a registered patent.
Further, the second amendment mandating the requirement of a notice by the IP Rights to customs authorities, would ensure that frivolous infringement claims are not an unnecessary hurdle to genuine trade and persons holding expired or revoked IP Rights are mandated to inform the customs authorities as such and this directly ensures that trade and business does not get affected by suspension of clearance of imported goods where no IP Rights subsist.
It is undoubtedly a great initiative by the government to set up such a user-friendly platform to encourage the IP Rights owners to record their IP Rights with the Customs office and thereby fight together against cross-border counterfeiting and infringement of IP Rights in India. Thus, the IP Rights owners need to be vigilant and ensure to take such pro-active measures to record their IP Rights with the Indian customs authorities.