Intellectual Property (IP) rights holders are under the perpetual threat of counterfeit goods in the market, which is growing exponentially with advancing technology and surge in cross-border trade among countries. Such counterfeit products may not always be produced and distributed for trade and commerce in the domestic market but may also enter illegitimately through the borders of a nation. Thus, IP rights holders must monitor and take suitable and timely action against imports that may be infringing upon their rights.
Border control measures are one of the legal measures that IP rights holders can use for enforcement at the borders. They can be understood as the actions taken by the local customs authorities regarding goods under their control, in particular, but not exclusively, at the exit and the entry of goods into the internal (national or economically integrated) market. In this respect, it has to be understood that the final destination of goods going through customs may not always be the domestic market in question. There are various possible customs situations and procedures such as importation, exportation, re-exportation, placement under a suspensive procedure, or simple control. Either way, border measures are an effective method to combat the acts of infringement because they are much easier to stop the circulation of counterfeit or infringing products at the border rather than later when they have already been brought into or sent out of the nation and put into circulation.
What are Border Control Measures?
Border control measures can broadly be stated as procedures applied by countries that enable the respective municipal customs and IP law frameworks to place an embargo on the influx of counterfeit or pirated goods in and out of their respective domestic, commercial markets. These measures are chiefly based on Articles 51-60 of the TRIPS Agreement 1995, providing the basic framework of border enforcement. Signatories are obliged to implement these measures in their legal frameworks with appropriate modifications, as may be deemed necessary for the protection of the trading channels.
The Role of Customs
Traditionally, the customs authorities’ role has been one of a gatekeeper, i.e., acting as a barricade through which international trade must pass, in a bid to protect the interests of the country. Customs have the responsibility of executing a broad array of government policies, covering areas as varied as revenue collection, trade compliance, and facilitation, banning of prohibited substances, protection of cultural heritage, and enforcement of IP laws. In recent times, due to the growth of trans-border commerce, the role of customs in restricting infringing products has become more and more significant. Each nation’s customs authorities are given specific administrative powers to help them deal with counterfeit or infringing goods. Customs intervention is thus intended at being attracted when goods in trans-border transit are under suspicion of infringing IP such that when the infringement is proven, they can be destroyed and removed from the supply chain. Therefore, border measures are a useful instrument in dealing with the international trade of counterfeit or infringing products. Few jurisdictions offer a trademark recordation system with customs. Recording one’s trademarks allows the customs to monitor shipments and exclude, detain, seize, destroy, or dispose of merchandise that it suspects is counterfeit or infringing the recorded trademark.
The International Basis of Border Control Measures
The TRIPS Agreement lays down the method of governing border control measures and protecting the Intellectual Property Rights (IPRs), through which the customs authority of a country is empowered to stop the entry and exit of goods, which violate the IP laws. The procedure is set out in Articles 51 to 60 of the TRIPS agreement. Article 51 of the Agreement is the primary provision, which enforces cross border measures to protect IP. This provision authorizes the rights holder, who has valid grounds for believing that the importation of counterfeit trademark or pirated copyright goods may take place, to apply with relevant authorities, administrative or judicial, for the suspension of release into free circulation of such goods.
To enable this provision, Article 52 mandates that the applicant has to provide evidence, which prima facie makes a case of infringement of the IPRs and also offers a description of the goods for their quick recognition by the customs authorities. The applicant has to prescribe the period for which such goods will be suspended from circulation. The authority has the power to scrutinize the merits of the application and subsequently accept or reject it. Article 53 provides that after the scrutiny and acceptance of the application, the applicant may be asked to provide security for the duration of the suspension of the goods in question. Article 53.2 provides that the suspended goods may be released if the defendant pays a sufficient amount to protect the rights holder for any infringement as security. This amount should ideally not be unreasonable and also should not prejudice any other remedy available to the rights holder. If the rights holder fails to pursue the right of action within a reasonable period, the security amount shall be released by the authority. Furthermore, there are provisions for the issuance of notice to all the affected parties and adjudication by a competent authority.
The TRIPS agreement lays down that any proceeding should be initiated within not more than ten days after the issuance of the notice by the customs authorities. In a few cases, this period may be extendable by another ten days. Where proceedings leading to a decision on the merits of a case are initiated, the defendant is permitted under Article 55 to request a “review, including a right to be heard with a view to deciding, within a reasonable period, whether these measures should be modified, revoked or confirmed.” Article 55 also provides that where the suspension of the release of goods is carried out or continued following a provisional judicial measure, Article 50.6 shall apply to require that the suspension shall be revoked or cease to have effect if proceedings leading to a decision on the merits of the case are not initiated within a reasonable period, to be determined by the judicial authority, or, in the absence of such a determination, within 20 working days or 31 calendar days, whichever is the longer. Article 56 offers indemnification in cases of wrongful detention, which has to be paid by the applicant to the defendant once the proceedings have concluded. There is also a provision for inspection and information, which is given to the rights holder to establish his claim. The customs authorities are also authorized to take suo moto action under Article 58 in case it apprehends a wrongful import/export of goods. One of the corrective measures given to the relevant authorities under Article 59 is an option to destroy the infringing goods. However, the re-export of goods in the unaltered state is not permitted under this provision.
Border Control Measures in Practice
Goods traveling across global markets are largely required to follow the IP regulations. However, an enormous percentage of these goods do not follow international standards or are simply counterfeit goods. There is extensive infiltration in the international market of such goods. Piracy and counterfeiting activities represent between 5% and 7% of world trade.
The efficacy of the border control measures depends upon cooperation and collaboration between the rights holders and the customs authorities. The issue most often met is that the customs authorities are unaware or do not take action when informed. Furthermore, quite often, it is found that the enforcement authorities such as the police and judges do not have the technical know-how required for understanding the infringement of IP. Sometimes, rights holders do not possess the necessary information on products, routes, and shipping patterns, which is required to be submitted to customs.
The governments and customs administrations in the Asia-Pacific region have increased their attention on Intellectual Property Protection and their cooperation with businesses leading to improvements in combating the trade in counterfeit goods. Upholding this favorable environment is one of the most crucial responsibilities of governments, their agencies, and departments. Many developing countries have also taken the initiative in recent years to amend their laws to give customs authorities the power to record the IPRs to enforce the same at the borders. The efficiency of border control measures is gradually improving across nations.
Today, counterfeiting and piracy have an impact on a wide range of goods, ranging from aircraft parts, detergent, alcohol, perfumes to even medicines. Every industry is prone to counterfeiting. Earlier, only luxury brands were the main target; however, today, even our everyday consumer goods face the risk of counterfeiting. The kind of goods counterfeited is growing continuously with the evolving market trends. Today, counterfeiters are making widespread use of the internet to distribute fake goods. A broad range of counterfeit goods is available even on the most popular e-commerce websites such as Amazon, which puts the customers and trademark owners at very high risk.
To effectively record one’s IPRs with the customs, the first thing to do is obtain a registration. After that, recordation has to be done with the customs authority of the relevant country where the goods are going to be in transit/exported/imported. After this, the customs authorities take action on their initiative, or the rights holder has to furnish the details of the allegedly infringing goods. The customs authorities can inspect, seize, destroy, or dispose of the infringing goods after appropriate proceedings. Hence, by investing some amount in recordation of IP with the customs authorities, the IP rights holders can safeguard themselves from huge losses caused by counterfeit products to their revenue as well as reputation and goodwill, which they earn for their high-quality goods. Recordation with the customs and border protection is a smart move in developing a comprehensive Trademark Protection strategy.