Enforcement of Patent Rights at Customs

10 September 2012

The influx of counterfeits and infringing goods into India is a growing threat to intellectual property right holders. Counterfeit goods not only pose a threat to the market space of the right holders, but also to the public at large. Efficient border measures can curb the inflow of these counterfeit goods. Border measures to protect interest of intellectual property right holders in India is governed by the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007. The Indian Customs authority under these Rules is empowered to seize infringing goods on an application made by the right holder or suo motu, that is, on its own motion.

The aforesaid rules are applicable to inter alia patent law in India, and goods infringing patent rights can be intercepted and seized at Customs. According to the rules, goods infringing patent rights are goods manufactured and commercially made available in violation of patent rights in India.

Overview of the Procedure at Customs

However, no action can be initiated against goods of a non-commercial nature, i.e. goods contained in personal baggage or sent in small consignments intended for personal use of the importer. Also, according to a recent circular, the Intellectual Property Rights (Imported Goods) EnforcementRules, 2007 will not apply to parallel importation of goods covered under patent law in India.

Application to the Customs

A patentee or his duly authorized representative aggrieved by the import of goods infringing his patent rights can approach the Customs authority and make an application notifying a suspected consignment.

The application has to be made in accordance with the procedures and conditions set out under the Rules which requires the patentee to include bibliographic details of the patentee, proof of existence of patent rights, date of cessation of patent rights, statement supporting grounds for suspending import of infringing goods along with prescribed fees. Further, the patentee must execute a general bond without security and an indemnity bond with the Customs authority, indemnifying the Customs authority against all liabilities.

Examination and Enforcement of the Application at Customs

The Customs authority, on receiving the application, examines the application and responds to the patentee whether the application has been accepted or rejected within 30 working days from the date of receipt of the application. The application is registered for a minimum period of one year and is valid for a period of five years unless the patentee requests for a shorter period for Customs assistance. Once the period of validity lapses, the patentee has to register the application again as done at the time of initial registration.

Upon registration of the application, the clearance of the reported goods is suspended and the goods are seized. Once goods are seized at Customs, Customs communicates information regarding the seizure of the goods to the patentee and the importer, and invites the patentee to join the proceedings and examine the goods within a prescribed time limit depending on nature of the goods – three days for perishable goods and 10 days for nonperishable goods. This time limit is extendable by a period of four days for perishable goods, and 10 days for non-perishable goods. If the patentee for any reasons abstains from joining the proceedings at Customs within the prescribed time limit, Customs is under no obligation to detain the goods, and shall release the seized goods forthwith.

At this stage, the patentee has to furnish a consignment specific bond of an amount equivalent to 110% of the value of seized goods, and a bank guarantee equivalent to 25% of the bond value.

Upon examination of the goods and conclusion of the proceedings by the Customs authorities if it is determined that the seized goods are infringing patent rights of the patentee, and no legal proceeding is pending in relation to such determination, an order is passed to destroy and dispose of the seized goods outside the normal channels of commerce.

Although under the said rules, Customs is empowered to prohibit import of goods in breach of intellectual

property rights registered under patent, design, trademark, copyright and geographical indication laws in India, identification of goods infringing patent rights remains a challenge.

Krishna & Saurastri

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Wallace Street, A. K. Nayak Marg

Fort, Mumbai 400 001 India

T: +91 22 2200 6322

F: +91 22 2200 6326

E: info@krishnaandsaurastri.com

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