Customs Circular No-41/2007-CUS.
Dated 29.10.2007
Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 –
instructions for implementation
Section 11 of the
Customs Act,1962 provides that the Central Government may, by issuance of
notification in the official Gazette, prohibit either absolutely or subject to
such conditions as may be specified, import or export of goods for the purposes
specified in sub-section (2) of section 11 of the Customs Act, 1962. The Central
Government may restrict or prohibit import and export of goods infringing
trademarks, patents and copyrights under clause (n) of subsection (2) of section
11 of the Customs Act, 1962. Similarly, the Central Government may restrict
import and export of goods for the purpose of prevention of the contravention of
any law for the time being in force, under clause (u) of subsection (2) of
section 11 of the Customs Act, 1962.
2. Prior to 8-5-2007, notification no. 1/64-Cus dated 18-1-64 prohibited import
of goods infringing trademarks and designs under the Trade and Merchandise Marks
Act 1958 and Indian Patents and Designs Act, 1911 respectively.
3. Representations were received from the trade for issuance of a notification
to prohibit import of goods infringing other IPR laws as well. Further,
considering our obligation to implement border measures as envisaged in Articles
51 to 60 of the WTO Treaty on Trade Related Aspects of Intellectual Property
Rights (TRIPS), a need was felt to define the role of Customs precisely in
combating IPR infringements at the borders. Accordingly, notification No
49/2007-Customs dated 8-5-2007 has been issued, which prohibits import of goods
infringing intellectual property rights of the right holders under The Copyright
Act, 1957, the Trade Marks Act,1999, the Patents Act, 1970, the Designs Act,
2000 and the Geographical Indications of Goods (Registration and Protection)
Act, 1999. Besides, the procedure for registration of a notice with the Customs
by right holders and the conditions for such registration, etc. have been laid
down in the Intellectual Property Rights (Imported Goods) Enforcement Rules,
2007 notified under notification 47/2007-Customs (NT) dated the 8th May,2007
(hereinafter referred to as the said Rules). The said Rules lay down a detailed
procedure to be followed by the right holders or their authorized
representatives as also by the Customs for seeking suspension of release of
suspect imported goods.
4. It is pertinent to mention that while the mandatory obligations under
Articles 51 to 60 of the TRIPS dealing with border measures are restricted to
Copyright and Trade Marks infringement only, the said Rules deal with Patents,
Designs and Geographical Indications violations as well, in conformity with the
practice prevailing in some other countries, notably EU countries. While it is
not difficult for Customs officers to determine Copyright and Trade Marks
infringements at the border based on available data/inputs, it may not be so in
the case of the other three violations, unless the offences have already been
established by a judicial pronouncement in India and the Customs is called upon
or required to merely implement such order. In other words, extreme caution
needs to be exercised at the time of determination of infringement of these
three intellectual property rights.
The said Rules, inter alia, provide for
(i) the filing of a notice by the right holder;
(ii) registration of said notice by the Customs;
(iii) a time limit for right holders to join proceedings;
(iv) a single point for registration of the notice filed by the right holder;
(v) adequate protection to the rightful importer;
(vi) adequate protection to the Customs for bonafide act;
(vii) suo-moto action by the Customs in specified circumstances;
(viii) disposal of the confiscated goods.
(ix) no action against goods of non commercial nature contained in personal
baggage or sent in small consignments intended for personal use of the importer.
5. The right holders would be required to give a notice for registration in the
manner detailed in para 10 of this circular , to any one of the Commissioners of
Customs at the ports where counterfeit goods are likely to be imported
infringing the IPR in respect of any trademark, copyright, patent, design or
geographical indication. The grant of registration by Customs is subject to the
execution of a bond, along with surety and security by the right holder or his
authorized representative in terms of Rule 5(a), undertaking to protect the
importer, consignee, the owner of the goods and the competent authorities
against all liabilities and to bear the costs towards destruction, demurrage and
detention charges incurred till the time of destruction or the disposal of the
infringing goods. The registration is also subject to execution of an indemnity
bond by the right holder in terms of Rule 5(b), indemnifying the Customs
authorities against all liabilities and expenses on account of suspension of the
release of allegedly infringing goods.
6. At the time of registration but prior to importation, it may be difficult to
fix the bond amount corresponding to the value of suspected infringing goods not
yet imported. Further, this would lock in right holders’ money in the form of
security. Therefore, it has been decided that, the right holders may furnish a
General Bond without security to the Commissioner of Customs in the format as
prescribed at Annexure-A to this circular prior to the grant of registration,
undertaking to execute the Bonds with the jurisdictional Commissioner of Customs
at the port of interdiction as per the format specified under Annexure-B and
Annexure-C within three days from the date of interdiction of any allegedly
infringing imported consignment . Prior to grant of registration, the right
holder shall also be required to furnish an indemnity bond under Rule 5(b) in
the format as specified at Annexure-C to this circular, in addition to the
General bond. Thus, the registration would be subject to execution of the
General Bond as specified at Annexure-A and indemnity bond as specified at
Annexure-C. The specimens for consignment-specific Bond to be executed in terms
of Rule 5(a) and the indemnity bond to be executed in terms of Rule 5(b) are
enclosed for guidance at Annexure-B and Annexure-C respectively. Necessary
amendments may be made to suit the requirements, on case to case basis.
7. The surety and security shall be on consignment basis and shall be furnished
along with the bond (Annexure B) consequent upon interdiction of the consignment
allegedly infringing rights of the right holder. Keeping in view the value of
the goods and other incidental expenses, it has been decided that the bond
amount shall be equal to 110% of the value of goods. However, the amount of
security to be furnished along with the bond shall be 25% of the bond value. The
right holder may furnish security in the form of bank guarantee or fixed
deposit. However, if the right holder fails to execute the consignment specific
bond and to furnish security within three days from the date of interdiction of
the goods, the same must be released forthwith.
8. In case it is found at any stage that the right holder furnished wrong or
false information, the registration accorded under Rule 4 of the said Rules may
be cancelled forthwith.
9. If , after the registration is granted , the right holder wants any
modification on account of any amendment in registration granted to them by the
respective registry of the departments enforcing the parent IPR law or on
account of any other reason, the right holder shall be required to seek fresh
registration in place of the old registration and shall be required to undergo
all the processes of registration again, like making fresh application, payment
of fees, execution of bond etc.
10. The said Rules provide that notice would be given by the right holders in
the format prescribed in the Annexure to the Rules. However, as a trade
facilitation measure enabling right holders to file the notice electronically, a
user friendly web- enabled application form is being devised. The right holders
would be required to log into http://www.icegate.gov.in. Thereafter, they can
choose the Custom House where they wish to record their notice, from among the
ports of importation of the suspected infringing goods. Option has been provided
to separately register different IPR’s viz., Copyrights, Trade Marks, Patents,
Designs and Geographical Indications. As regards payment of registration fees,
option has been given to the applicants either to use on-line credit card mode
of payment or the conventional mode of Demand Drafts, drawn in favour of
Commissioner of Customs of the Custom House where they wish to get their notice
registered. For every separate right, the right holder shall be required to
submit a separate notice (application). After completing the formalities
on-line, the application can be “submitted” on the website. A Unique Temporary
Registration Number (UTRN) will be generated by the System. The System would
also prompt the applicant to take a print- out of the application. This printed
application form, along with the Demand Draft and physical copies of Bond and
indemnity Bond (as prescribed under Rule 5 of the said Rules) and as detailed
above, would be required to be submitted to the Commissioner of Customs along
with samples, models or photographs.
11. After the receipt of the application, the Commissioner of Customs shall
verify the veracity of declarations made therein. If required,
cross-verification of particulars furnished may be carried out with the
concerned authorities with whom the rights are registered in accordance with the
parent enactments. The Commissioner may call for any additional information from
the applicant(s). After verification of the application, the Bond (general) and
the indemnity bond as required under the said Rules, the particulars would be
required to be entered in the CBEC web-site duly furnishing the details. The
System would then automatically generate a Unique Permanent Registration Number
(UPRN), which will be communicated to the applicant for all future
correspondence. Simultaneously, a formal communication to this effect shall be
sent, within 24 hours, to the Risk Management Division (RMD), Mumbai and all
other Custom Houses, who can access the details through the user names and
pass-words given to them. On the contrary, if the Commissioner or his authorized
officer of Customs has to reject the application leading to denial of
protection, principles of natural justice may be followed. It may be noted that
the temporary registration number granted by the System does not accord any
protection to the right holders. The temporary registration is only an
acknowledgment of the application filed by the right holders and cannot be taken
as actionable. The registration will be granted only after the Commissioner of
Customs has completed verification of the documents and facts and after the
right holder has furnished the General Bond and Indemnity Bond. The protection
of rights will be accorded only on grant of a permanent registration number to
the right holders.
12. To begin with, while the web-enabled electronic registration system is being
put in place, the field Commissioners are advised to accept the applications in
the format as prescribed in the Annexure to the said Rules. However, in order to
have a centralized registration , it will be mandatory for all applicants to
file applications on-line, once the system is geared up for accepting electronic
on-line registration. The trade will be intimated the date of coming into force
of the electronic regime.
13. It may be noted that though the notice/application for registration may be
submitted to the Commissioner of Customs at any of the ports where counterfeit
goods are likely to be imported infringing the IPR in respect of any trademark,
copyright, patent, design or geographical indication and all formalities
associated with the registration are undertaken by that Commissioner, protection
will be accorded at all the ports as specified in the notice. Therefore, there
is no apparent need for the right holders to make several notices/applications
with all the Commissioners of Customs covered under the notice. It may be
emphasized that for protection of separate rights under any IPR law, the right
holder would be required to apply for separate registration for each such right.
14. In case of suspension of clearance of goods by Customs on its own
initiative, the right holder is required to give notice as laid down under rule
3 of the said Rules and to execute the Bonds as specified in rule 5 of the said
Rules within five days from the date of suspension of clearance. The procedure
of registration would be as stated in the foregoing paragraphs. However, the
right holder would be required to execute a Bond in the format as specified in
Annexure-B along with security and the indemnity Bond in the format as specified
in Annexure-C, prior to grant of registration.
15. Rule 4(2) provides that registration may be granted for a minimum period of
one year unless the right holder wants the same for a lesser period. It has been
decided that the period of validity of the registration under the said Rules
would be 5 years. The Commissioners, therefore, may keep a watch on the expiry
of this period. Once the period of validity of registration has lapsed,,t the
right holder would be required to furnish fresh notice, pay the fees as
applicable, execute general Bond etc as done at the time of initial
registration.
16. It may be appreciated that systematic enforcement of IPRs is new to Customs.
Further, the nature of implementation of IPR regime is different in EDI and
non-EDI locations. Besides, RMS has not been implemented in all EDI locations.
It may be noted that while national-level targeting of consignments can be
handled by RMD, Mumbai on the basis of the information furnished by the
applicants, and, under normal circumstances, consignments suspended by the
national targets will be sent with appropriate instructions to the officers to
handle the suspect consignments, any intelligence driven interdictions on the
own initiative of officers cannot be discouraged. However, such ex-officio
intervention by officers needs to be regulated and exercised with utmost
caution, given the fact that the liability for wrong detention in an ex-officio
case would rest entirely with the department. In EDI locations where RMS is not
implemented, all the consignments are necessarily assessed before clearance.
Therefore, officers in Groups and Sheds at such locations may be sensitized
about the IPR registration database so that they can keep a watch on suspect
imports. Apropos, the non-EDI locations, where officers do not have access to
the “icegate”, copies of the applications along with the accompanying documents
shall be sent without delay by the Commissioners who are handling the
registration of Rights to such locations by e-mail or by speed post.
17. It may be noted that the terms and the phrases used in the notification and
the Rules made in terms of section 11, have the meanings, with all grammatical
variations and cognate expressions, assigned to them in the respective parent
enactments like The Copyright Act, 1957, The Trade Marks Act, 1999, The Patents
Act, 1970, The Designs Act, 2000 and The Geographical Indications Act, 1999.
Thus, it may be emphasized that determination of the fact whether a particular
consignment infringes the rights of the right holder would be done taking into
account the provisions of the parent acts.
18. It is important to adhere to the time lines prescribed in Rule 7. The
Customs and the right owners/holders seeking protection are under obligation to
follow the time lines indicated in various sub-rules that cover practical
situations that may arise in the field. Since every suspension of clearance has
its concomitant legal implications, the trade as well as field officers dealing
with the infringing goods, may be adequately sensitized about the importance of
timely action.
19. Sub-rule (9) of Rule 7 of the said Rules, provides for seizure of infringing
goods, if there are reasons to believe that the goods are liable to confiscation
in terms of section 111 of the Customs Act, 1962. In this context, it may please
be borne in mind that Customs is enforcing laws in personam while protecting
intellectual property rights. Thus it is important to make sure that the right
holder participates in the Customs proceedings. In case the right holder
abstains, the Customs have no obligation to continue with the detention and the
goods shall be released forthwith, if otherwise in order.
20. Rule 8 enables examination of goods and drawal of samples on the request of
right holders or importers. The regular procedure for sampling may be followed.
Representative samples must be kept in the safe custody of Customs till the
proceedings are concluded. The expenses involved in sampling, testing of samples
etc have to borne by the right holders.
21. For smooth implementation of the IPR regime, it is desirable that an IPR
Cell may be constituted in each Custom House. The IPR Cell may be vested with
the responsibility of verifying the applications, completing web-enabled
registration formalities and making correspondence with the Risk Management
Division and other Customs formations. Further, any import involving suspected
infringement of IPRs may have to be invariably handled by the IPR Cell. Any
instance of suo-moto interdiction of the import consignments by the Customs,
involving possible infringements, should also be referred to such IPR Cell. The
job is time – bound and sensitive and hence it is advised that officers of
proven calibre may only be posted in the IPR Cells.
22. Wide publicity to this Circular may be given by way of issuance of public
notice and standing order.
23. Difficulties , if any, faced in the implementation of this circular, may be
immediately brought to the notice of the Board.
24. Please acknowledge receipt.
25. Hindi version follows.Yours faithfully
(P. S. Pruthi)
Commissioner (Customs &EP)
F. No. 305/96/2004-FTT (Pt-I)
Click here for
Annexure - A || Annexure - B
||
Annexure - C
ieport.com - India's Premier portal on Customs
matters