SEPTEMBER 15, 2014

By Arjun Banerjee, IRS

INTELLECTUAL Property Rights (IPR) offences now affect everything that is manufactured and has commercial value. The offenders keep pace with technology employed for manufacture in the licit market while using an industrial approach, enabling them to improve both the quality and quantity of counterfeit goods. Counterfeiting causes serious economic and social damage to countries, in particular by discouraging inward investment.

The role of Customs in combating counterfeiting: Customs these days not only focuses on revenue collection, but has a veritable plethora of other tasks they carry out, simply by virtue of being placed at a strategic location at borders of countries, the main entry points into a nation. This places the Customs at a critical spot, in the frontline of the battle against counterfeiting, as the figures exhibit: Customs makes 90% of all seizures of counterfeit goods in Europe, and more than 70% worldwide. Part III, Section 4 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) lays down the role and responsibilities that Customs administrations are called upon to assume with regard to the IPR regulations. Many Customs administrations of developing countries which have joined the World Trade Organization (WTO) are required to implement the TRIPS Agreement in full. For example, the Thai Customs administration through numerous acts and notifications such as the Export and Import of Goods Act B.E.2522, Trademark Act B.E.2534, Copyright Act B.E. 2537, Customs Act B.E. 2469, Customs Notification No. 6/2531: Inspection of trademark, etc.

While Customs plays the supporting cast, the primary responsibility for taking measures to protect IPRs lies with the right holders themselves. The following are normally the pre-requisites for Customs intervention: First, the companies must protect their creation, e.g., through a trademark or copyright. Second, the right holder needs to lodge a written application for intervention by Customs, asking the latter to seize the goods. Nevertheless, Customs can intervene suo moto by suspending the clearance of goods where there are grounds for suspecting that IPRs have been infringed.

The WCO Plan of Action: Ever since it comprehended the key role Customs would have to play in IPR enforcement, the WCO provided Customs administrations with a set of IPR best practices by building Customs capacity and strengthening cooperation between Customs and its international partners as well as right holders. It has also established a Counterfeiting and Piracy Group (CAP) to provide a platform for its members to exchange views and hold discussions on IPR-related issues.

In line with the WCO's policy for IPR, the United States Customs and Border Protection (US CBP) Department has adopted a proactive approach to protect businesses and consumers every day through an aggressive IPR enforcement programme. CBP targets and seizes imports of counterfeit and pirated goods, and enforces exclusion orders on patent-infringing and other IPR violative goods. The pre-requisites again, preferably having one's intellectual property registered with the CBP and educating CBP personnel on it. Further, providing any updates from time to time where necessary and information on any suspected shipments of those products are essential. Information can be submitted anonymously through an online reporting system, called "e-Allegations". Rampant cases of counterfeiting have been noticed in the areas of children's products including clothing, jewellery, etc., drugs and medications, and CDs/DVDs. In 2011, the value of seizures based on the manufacturer's suggested retail price of genuine equivalents reached .1 billion.

Not only the US, but another major world economic power, the European Union (EU), has left no stone unturned when it comes to protecting innovation and creativity, the twin engines of the European economy. In the European Commission's (EC's) "Report on EU customs enforcement of intellectual property rights", it is stated that one of Europe's priorities is to provide right-owners with the certainty that the fruits of their inventions would be protected. Customs administrations in the Union have been known for years for their high standards of enforcement of IPR. In 2012, Customs authorities opened almost 91,000 detention cases for a total of nearly 40 million articles. The domestic retail value of the detained articles represented almost Euro 1 billion. In the last decade, the number of applications for action made in the Member States has constantly increased, from 1,671 in 2002 to 23,134 in 2012. A new regulation took over from 1 January, 2014, and replaced the earlier IPR measures of EU Customs established under regulation 1383/2003.

The Federal Customs Administration in neighbouring Switzerland is similarly authorized to notify the right holder if it is suspected that the importation, transit or exportation of goods which would infringe their IPRs in Switzerland is imminent.

In another part of the world, at the Asia-Pacific Economic Cooperation (APEC) Economic Leaders' Meeting, held during November 2005, the importance of strong IPR protection and enforcement to economic growth and trade in the Asia-Pacific region was recognized. Leaders welcomed the Anti-Counterfeiting and Piracy Initiative and endorsed the model guidelines to stop international trade in fake goods, reduce online piracy, and prevent the sale of counterfeit and pirated goods over the Internet. Just like the APEC, numerous other entities have initiated cooperation between themselves for a stronger defence of IPRs around the world, notable collaborations being the European Commission-ASEAN and EU-China Customs Cooperation.

Very much in line with the US method of IPR enforcement, the General Administration of Customs (GAC), the headquarters of China Customs, handles the receipt and granting of applications to record IPR with Customs. The Customs network in China consists of over 40 regional customs offices and more than 56 port customs offices. Similar to US CBP, the top three steps to ensure strong IPR protection with China Customs are: a.) Recording of IPR. b.) Training Customs officers. c.) Updating the Customs record. When Customs finds potentially infringing goods, they will issue an official notification to the IPR owner or its appointed agent. The IPR owner needs to immediately contact the relevant Custom House and get ask the officials to provide pictures of the detained goods. The latter must reply within 3 days and pay a deposit to cover for any potential losses to the consignor/ consignee in case of wrongful confiscation of the products.

Far below, the world's smallest continent, which is situated in the Southern Hemisphere-- Australia--might be better known for its cricket, its kangaroos and the Great Barrier Reef. It, however, has a strong Customs presence with its own department, the Australian Customs and Border Protection Service. Here, import provisions under the Copyright Act 1968,Trade Marks Act 1995 and Olympic Insignia Protection Act 1987 allow Customs, under certain circumstances, to seize goods that infringe trademarks, copyright and protected Olympic expressions. These provisions give rise to Australia's Notice of Objection Scheme. A Notice of Objection is a legal document that allows Customs to seize imported goods that infringe trademarks copyright or protected Olympic expressions. A Notice of Objection is valid for 4 years and cannot act retrospectively for goods that have already been imported.

New Zealand, further, is no exception to the norm. NZ Customs administer the border protection measures set out in the Trade Marks Act 2002 and the Copyright Act 1994 in respect of IP. A cash security of NZ ,000 with a completed security instrument needs to be filed just as in the case of China. The latter is a document that contains an indemnity clause allowing Customs to draw upon the cash security, if required, for the purposes of recovering any administrative or legal costs it incurs when enforcing a notice on behalf of a right holder.

In the sandy deserts of the Middle East, the IPR Department at Dubai Customs is the first unit of its kind in that region of the globe. Its importance stems from being a federal law enforcement body, which secures IPR laws and the 21 main land, sea and air entry and exit points. The theme of Dubai Customs "Together for a Better Protection" bases itself on teamwork with the goal of establishing a single chain linking efforts being made by advocates, trademark registration agents, trademark owners, trademark producers and manufacturers, federal ministries and authorities and local government departments, competent chambers of commerce and customs centres. A smooth coordination between stakeholders and concerned authorities is aimed at achieving maximum possible protection of IPR.

The land of the rising sun, Japan, also has stringent deterrent measures in place for IPR enforcement. The exportation, importation, and transit of goods infringing IPRs are prohibited under Articles 69-2, 69-11, 30 or 65-3 of Japanese Customs Law. They are punishable with heavy monetary fines and/or imprisonment. The goods infringing IPRs may be confiscated and destroyed by Customs.

Further, in the Far East, another trade hub, Hong Kong, has its own system in place. The Customs and Excise Department is the only department responsible for taking criminal sanctions against copyright and trademark infringements in the Hong Kong Special Administrative Region (HKSAR). The Department has the mission to protect the interests of intellectual property rights (IPR) owners and legitimate traders through enforcement of the Copyright Ordinance, Chapter 528, Laws of Hong Kong, the Trade Descriptions Ordinance, Chapter 362 and the Prevention of Copyright Piracy Ordinance, Chapter 544 under the Laws of Hong Kong. The Department adopts a two-pronged enforcement strategy against the supply and retail of pirated and counterfeit goods. On the supply side, the Department focuses its enforcement efforts against illegal activities at the import and export, manufacturing, wholesale and distribution levels. At the retail level, the Department takes repeated and sustained enforcement actions to eradicate street level piracy and counterfeiting activities.

In the midst of the Mediterranean, the lesser known minuscule island nation of the Republic of Malta also, perhaps surprisingly, has its Malta Customs IPR Unit. The Malta Customs Intellectual Property Rights Unit – Enforcement Directorate operates in terms of the Intellectual Property Rights Cross border measures Act VIII of 2000 chapter 414 of the Laws of Malta, EC Regulations 608/2013 and Commission Implementing Regulations 1352/2013.

Finally, at the end of our sojourn across the global Customs scenario, we end with our very own nation, India. The Central Board of Excise and Customs (CBEC), the apex body administering Customs policies in the nation, has formulated the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007. It has also drawn up several Notifications and Circulars, among the latest being Circular No. 10/2011-Cus. dated 24-02-2011. India has thus not been far behind other nations in implementing IPR enforcement laws in line with WCO policies. There is a certainty about the future of Customs in India, which is to diversify from a mere revenue-centric approach and effectively tackle situations of diverse nature, much like battling a hydra-headed monster. It is, thus, of the essence that we adopt international best practices and look these problems in the eye, sensitize our staff from the highest echelons to the lowest rungs about these issues we need to face in the near future.

Where no quarters are given by the opponent, we need to pull out all the stops in our battle against counterfeiting.

(The author is currently a probationer at the National Academy of Customs, Excise & Narcotics, Faridabad.)