Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 and clarification as notified on 2011

Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 (Rules[1]):

The Rules were formulated to define the role of the customs authorities in India in combating Intellectual Property Rights (IPR) piracy, pursuant to India™s obligations under the WTO treaty on Trade Related Aspects of IPR. Hence on May 8, 2007, the Central Government by a notification prohibited the import of the following goods:-

1. Goods having applied thereto a false trade mark as specified in Section 102 of the Trade Marks Act, 1999;
2. Goods having applied thereto a false trade description within the meaning of clause (i) of sub-section (1) of Section 2 of the Trade Marks Act, 1999;
3. Goods made or produced beyond the limits of India and intended for sale, and having applied thereto a design in which copyright exists under the Designs Act, 2000;
4. The product made or produced beyond the limits of India and intended for sale for which a patent is in force under the Patents Act,1970;
5. The product obtained directly by the process made or produced beyond the limits of India and intended for sale, where patent for such process is in force under the Patents Act 1970;
6. Goods having applied thereto a false Geographical Indication within the meaning of Section 38 of Geographical Indications of Goods (Registration and Protection) Act, 1999;
7. Goods which are prohibited to be imported by issuance of an order issued by Registrar of Copyrights under Section 53 of the Copyright Act, 1957.

The said Rules, inter alia, provide for:

1. The filing of a notice by the right holder;
2. Registration of said notice by the Customs;
3. A time limit for right holders to join proceedings;
4. A single point for registration of the notice filed by the right holder;
5. Adequate protection to the rightful importer;
6. Adequate protection to the Customs for bonafide act;
7. Suo-moto action by the Customs in specified circumstances;
8. Disposal of the confiscated goods.
9. No action against goods of non-commercial nature contained in personal baggage or sent in small consignments intended for personal use of the importer.

A.      Notice by the Right Holder

• A ‘right holder’ may give notice in writing to the Commissioner of Customs or any Customs Officer authorized in his behalf at the port of import of ‘goods infringing IPR’ as per the rules, requesting for suspension of clearance of goods suspected to be infringing IPR.[2]
• The notice in respect of goods infringing IPR shall be given in the format as per the Rules with following information:-
  • Proof of the evidence and ownership of a valid intellectual property right by the right holder; a statement of the grounds for the notice of suspension of release of the goods – infringing IPR; In the case of a specific consignment of goods – infringing IPR, details of the consignment and a statement of the ground for the notice including evidence of infringement; Detailed description of the goods with Customs Tariff Heading in respect of which an intellectual property right applies with a sample, model or photograph of a genuine product; and Name of Customs airport/customs port/land customs stations to be covered.

• Every such notice with be accompanied with payment of application fee of Rs. 2000/-. Period of 15 day is given if any more information is required by the authority from the holder and same is extendable on sufficient reasons.

B.       Registration of Notice by the Commissioner

• The Commissioner, within 30 days shall notify the applicant whether the notice has been registered or rejected. If rejected then it will indicate the validity period of the registration and the minimum validity period is one (1) year unless the notice provides otherwise. If granted and registered then he Commissioner will inform through a letter by speed post or electronic mode all customs offices covered by the notice.

C.       Conditions for Registration

The grant of registration shall be subject to the following conditions:

• The right holder will execute a bond with Commissioner with surety and security as required to protect the importer, consignee and the owner of the goods and authorities against all liability and to bear the costs towards destruction, demurrage and detention charges incurred till the time of destruction or disposal as the case may be;
  • The right holder will execute an indemnity bond with the Commissioner for indemnifying the authorities against all liabilities and expenses on account of suspension of the release of infringing goods;
  • The surety and security will be on consignment basis. It will be furnished along with the indemnity bond upon interdiction of the consignment infringing rights of the right holder. 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 will be 25% of the bond value. It can be either in the form of bank guarantee or fixed deposit. If the right holder fails to execute the consignment specific bond and to furnish security within three (3) days from the date of interdiction of the goods, the same must be released instantly.

 D.      Effect Of Registration

The import of infringing goods into India shall be deemed as prohibited once the notice is registered.

E.    Suspension of Import

• The Commissioner will suspend the clearance of goods if he has reasons to believe that the import of goods are suspected to be goods infringing IPR;
• The Commissioner can suo moto suspend the clearance if he has evidence to support on reasonable grounds that the imported goods are infringing IPR;
• The suspension of clearance of goods will be notified to importer and the right holder etc. by either speed post or through electronic mode;
• If the right holder does not join the proceedings within 10 days from date of suspension of clearance of goods leading to a decision the goods will be released provided that all other conditions of import of such goods under the Customs Act, 1962 (Act) have been complied with. This limit of 10 days can be extended upto another 10 days if appropriate;
• Where the Commissioner has taken suo moto action and suspends clearance of goods and the right holder does not give notice or does not fulfil the obligations within 5 working days then the goods shall be released only if all other conditions of import of such goods under the Act have been complied with.
• The Customs may seek from the right holder any information or assistance including technical expertise and facilities for the purpose of determining whether the suspected goods are counterfeit or pirated or otherwise infringe an IPR;
• The Commissioner of Customs or the officer duly authorized in this behalf shall allow a right holder to examine the goods and may provide representative samples for examination, testing and analysis to assist in determining whether the goods are pirated, counterfeit or otherwise infringe an IPR without prejudice to the protection of confidential information;
• At the request of the right holder, the Commissioner will inform the name and address of the importer and may also provide additional relevant information relating to the consignment which has been suspended from clearance. The information may be supplied to the importer also;
• In the case of perishable goods the period of suspension shall be three (3) working days which may be extended by another four (4) working days subject to the satisfaction that such extension shall not affect the goods. The right holder or his authorized representative shall join the proceedings failing which the goods shall be released;

F.       Disposal of Infringing Goods

• The goods shall be destroyed under the official supervision if found detained or seized because of infringement of IPR or will be disposed outside the normal channels of commerce after obtaining ‘No Objection’ from the right holder. If the right holder doesn™t react for 20 working days on the mode of proposal then such an act would be construed as concurrence to that mode of disposal. Any costs towards the destruction, demurrage and detention charges incurred till the time of destruction or disposal will be borne by the right holder.

The Government on 24^th February 2011 simplified the procedure for furnishing a bond and surety and created a mechanism for having a centralised registration and bond management procedure.[3] The objectives of this system are as follows:

• To provide for a single centralized bond account with security that can be used at all ports in India;
• The right holders will have the option to furnish either:
  • a general bond before registration followed by a consignment specific bond at the port of interdiction of  infringing goods or;
  • a centralized bond at the port of registration which will be valid at all ports in India.[4]
• The right holders can furnish a Centralized Bond as running bond at the port of registration which will correspond to value of suspected infringing goods all over India.[5]
• The existing right holders, who have registered their rights with customs authorities can migrate to the centralized bond management system by giving their consent. They shall submit a centralized bond with security in the prescribed format to the Commissioner in place of the general bond. The right holders exercising the option of a Centralised Bond will have to furnish a security for an amount equivalent to 25% of the value of the Centralized Bond with the customs formation, where the right holder is registered.
• On fulfilment of all the conditions, an on-line centralised account and security account will be activated for the right holders. For this purpose a unique Bond Registration Number (BRN) is emailed to right holder. This centralized bond account will cover one or more rights registered by a right holder with the Customs. To enable linking of all Unique Permanent Registration Numbers (UPRN) of a right holder, the applicant has to be the same in all the UPRNs which are to be so linked.
• In case of interdiction of infringing goods, if the amount of Centralised Bond and the security are not sufficient to cover the value of the goods interdicted, then within three (3) days of interdiction, the right holders would be required to execute a supplementary bond with the Commissioner at the port where the centralised registration was applied for and furnish security for the corresponding amount and same will be executed. The Commissioners of Customs at other ports where the infringing goods are interdicted cannot accept the supplementary bonds.[6]
• If the right holders choose to execute general bond, then they have to execute the consignment specific bond at the port of interdiction within 3 days of interdiction of the consignment infringing the right of the right holders as per the earlier circular.
• The right holders who have opted for the Centralized bond have to inform in writing the jurisdictional IPR Cell, where interdicted, duly mentioning the BRN along with the particulars of debits to be made in the bond and security accounts so that the same can be verified and debited by the IPR cell. If the right holder fails to submit such a letter, customs authorities will be under no obligation to suspend the clearance of the infringing goods.
• The right Holders shall ensure that the Centralized Bond and security account has sufficient balance. In case of inadequate balance, the same can be supplemented by executing a supplementary bond with necessary security at the Custom House.
• Irrespective of availment of either option of bonds, the rights holders would be required to furnish an indemnity bond in the format prescribed.
• 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 Rules and execute Bonds as specified in Rule 5 of the Rules.
• The Commissioner while intimating the right holder about interdiction of any goods, will also intimate the value of the goods to the right holder so as to enable him to work out the required bond amount or supplementary bond amount, along with the security.
• The IPR Cells will accept the requests for migration of existing IPR holders to the new system. The IPR cells should properly monitor the work relating to execution of bonds. The closure of bond will require checking and confirmation of the fact that there are no debits in the centralized bond account pertaining to any of the UPRNs by any other Custom House. All steps to renew the bank guarantees, wherever executed, shall be initiated by the IPR Cells well within time and at least 15 days before the expiry of the bank guarantee.