Linking Patent Validity to Customs

19 October 2012

While incentive to innovation is one aspect of intellectual property rights, protection of intellectual property from infringement is another. Enforcement of IPR has been a burning issue among all countries; India particularly has been in the limelight for its developing enforcement regimes. Indian Courts have adjudicated several cases dealing with seizure of goods at airports while in transit. With negotiations for an Anti-counterfeiting Trade Agreement (ACTA) between countries of the world set to establish international standards on intellectual property rights enforcement, developing countries like India are expected to make their IPR regimes more stringent than existing provisions. The framework seeks to create its own governing body outside World Intellectual Property Organisation (WIPO) and World Trade Organisation (WTO) or even the United Nations. ACTA is described by the negotiating countries as a response “to the increase in global trade of counterfeit goods and pirated copyright protected works.” The scope of ACTA includes counterfeit goods, generic drug medicines and copyright infringement on the Internet. It seeks to setup procedures for IPR holders to petition customs authorities to seize suspected goods in transit between third countries.

In India, the provisions have so far kept in mind the developmental objectives of the nation and have also led to the formation of a fine generics industry with state of the art facilities and research and development. Even at the wake of incorporation of a product patent regime, the Courts have been very proactive in ensuring that the public interest, and availability of cheap drugs, are ensured. But the enforcement of ACTA could disturb this balance, and access to affordable medicines and transfer of technology could become tricky.

For example, Indian medicines have been seized in the Netherlands on their way to Brazil, on the grounds that these medicines do not meet the patent requirements of European Union (EU). India has taken the EU to the WTO with Brazil as an observer. While the outcome of the decision is awaited, various developing countries and developed countries have opposed ACTA’s stringent provisions. The United States, for example, proposed to limit the above clause to counterfeit trademark goods and pirated copyright only; the EU also wants to include geographical indications under its purview.

The Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 has been enacted in India in exercise of the powers conferred by Subsection (1) of Section 156 of the Customs Act, 1962 read with clauses (n) and (u) of Sub-section (2) of Section 11 to enable customs officer to seize “goods infringing intellectual property rights.” Section 2(d) defines this as “any 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” and Sectipindia.nic.in/tmr_new/tmr_act_rules/TMRAct_New.pdfion 2(d) defines a right holder as a natural person or a legal entity, which according to the laws in force is to be regarded as the owner of protected intellectual property right, 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. “Intellectual property” means a copyright as defined in the Copyright Act, 1957, trademark as defined in the Trade Marks Act, 1999, patent as defined in the Patents Act, 1970, design as defined in the Designs Act, 2000 or geographical indications as defined in the Geographical Indications of Goods (Registration and Protection) Act, 1999. Thus we can see that in the national legislation India has provisions for the enforcement of IPR to ensure that no right holder’s goods are infringed.

But at the domestic level, the pertinent question that arose was how Customs officials could decide on issues of patents. Giving such a wide authority to customs officials can cause hardship to an importing company. Customs authorities can’t be experts in identifying the elements of a claim construction, nor do they have the technical know how or the patent claim while deciding whether a particular product is infringing or not. Identifying copyright or trademark infringement won’t be a daunting task, but ascertaining patent infringement on the same lines will definitely have a detrimental impact.

Given this backdrop, the issue of concern is that generic pharmaceutical companies and local manufacturers that make cheaper drugs available to the poor will be restrained by patent holders using this mechanism, as will access to technology for small industries, both of which will hamper the needs of developing countries. The need to balance the interests of right holders and the needs of the public to get access to generic medicines and the development of local technology will both be affected.

A basic agreement has been concluded between 40 nations. This agreement presently covers only the seizure of counterfeit trademarked and pirated copyrighted goods, giving customs officials the ‘ex officio’ power of seizure without a request from the right holder or an order of the court. While the EU wants to bring geographical indications under its purview, the same has been opposed by United States. Only time will tell whether patents will also be subject to seizure.

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