Title : INFRINGEMENT OF TRADEMARKS BY GOODS IN TRANSIT

Transcription

1 1 Question Q230 National Group : INDIAN NATIONAL GROUP Title : INFRINGEMENT OF TRADEMARKS BY GOODS IN TRANSIT Contributor : MANOJ MENDA Reporter within Working Committee : Nil Date : 30 th September 2012 Questions I. Analysis of current legislation and case law:- The Groups are invited to answer the following questions under their national laws and if applicable their regional/community legislation: In-transit term 1) Does your country s law provide for an in transit concept (regardless of the exact terminology)? In India the concept of goods in transit is provided and explained in the Customs Act, 1962 and the Sale of Goods Act, ) If yes to question 1, what term is used in your country to describe this concept? The Customs Act, 1962 in CHAPTER VIII deals with the issues on the subject of Goods in Transit. The terms used in Sections 52 to 56 of CHAPTER VIII of the Customs Act, 1962 are goods in transit, transhipment of goods and transport of goods. Under the Sale of Goods Act, 1930 the phrase used is goods in transit.

2 2 3) If yes to question 1, does your country make any distinction between customs transit, transhipment and in-transit? The distinctions between customs transit, transhipment and in transit are defined and also explained in Customs Act, Accordingly, the Act explains them to be as follows:- SECTION 53: Transit of certain goods without payment of duty. - Subject to the provisions of section 11(which deals with Power to prohibit importation or exportation of goods) any goods imported in a conveyance and mentioned in the import manifest or the import report, as the case may be, as for transit in the same conveyance to any place outside India or any customs station may be allowed to be so transited without payment of duty. Which means that:- IN TRANSIT covers the following:- 1. The goods are in transit in the same mode of conveyance by which the goods brings into India to any other country. 2. No such additional documents or different documentation is required for carrying the goods from first port to another port within the country or in any other country. 3. Goods In transit are covered under section 53 of the Customs Act, Liability of duties imposed upon such goods in transit is covered under section 55 of the Customs Act, SECTION 54.Transhipment of certain goods without payment of duty. (1) Where any goods imported into a customs station are intended for transhipment, a bill of transhipment shall be presented to the proper officer in the prescribed form. Provided that where the goods are being transhipped under an international treaty or bilateral agreement between the Government of India and Government of a foreign country, a declaration for transhipment instead of a bill of transhipment shall be presented to the proper officer in the prescribed form. (2) Subject to the provisions of section 11, where any goods imported into a customs station are mentioned in the import manifest or the import report, as the case may be, as for transhipment to any place outside India, such goods may be allowed to be so transhipped without payment of duty.

3 3 (3) Where any goods imported into a customs station are mentioned in the import manifest or the import report, as the case may be, as for transhipment (a) to any major port as defined in the Indian Ports Act, 1908 (15 of 1908), or the customs airport at Mumbai, Calcutta, Delhi or Chennai or any other customs port or customs airport which the Board may, by notification in the Official Gazette, specify in this behalf, or (b) to any other customs station and the proper officer is satisfied that the goods are bona fide intended for transhipment to such customs station, the proper officer may allow the goods to be transhipped, without payment of duty, subject to such conditions as may be prescribed for the due arrival of such goods at the customs station to which transhipment is allowed. SECTION 55.Liability of duty on goods transited under section 53 or transhipped under section Where any goods are allowed to be transited under section 53 or transhipped under sub-section (3) of section 54 to any customs station, they shall, on their arrival at such station, be liable to duty and shall be entered in like manner as goods are entered on the first importation thereof and the provisions of this Act and any rules and regulations shall, so far as may be, apply in relation to such goods. Which means that :- TRANSHIPMENT covers the following:- 1. The goods in transhipment use a different conveyance from the conveyance which brings the goods into India. 2. Additional or different documentation are required for carrying the goods from first port to another port within India or to any other country. 3. For transhipment of goods under an international treaty or bilateral agreement between the Government of India and Government of a foreign country, a declaration for transhipment instead of a bill of transhipment requires to be presented to the proper officer in the prescribed form. 4. Transhipment of goods are covered under section 54 of the Customs Act, Liability of duty are covered under section 55 of the Customs Act, 1962 which the goods are transhipment. In India as provided in Section 55 of the Customs Act, 1962, irrespective of whether the goods are in transit or being transhipped the goods must be entered on their arrival at such port or airport, be liable to duty and shall be

4 4 entered in like manner as goods on the first importation thereof and the provisions of this Act and any rules and regulations shall, so far as may be, apply in relation to such goods. 4) Does your country s in transit concept include for example customs warehouses, free warehouses, free zones and other customs procedures under which the goods are not released for free circulation and are kept under customs control? A propos the answer to the previous question, the provisions of Section 55 of the Customs Act, 1962 goods in transit and transhipped goods are considered to be imported goods. These goods along with goods for export are stored under customs control in warehouses, public and private warehouses and are not released for free circulation without appropriate permissions from customs control. Where the proper officer is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid the import duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance of the goods for home consumption. Where the proper officer is satisfied that any goods entered for export are not prohibited goods and the exporter has paid the duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance and loading of the goods for exportation. The relevant provisions are as under:- 45. Restrictions on custody and removal of imported goods: (1) Save as otherwise provided in any law for the time being in force, all imported goods unloaded in a customs area shall remain in the custody of such persons as may be approved by the Commissioner of Customs until they are cleared for home consumption or are warehoused or are transhipped in accordance with the provisions of Chapter VIII. (2) The person having custody of any imported goods in a customs area, whether under the provisions of sub-section (1) or under any law for the time being in force,- (a) shall keep a record of such goods and send a copy thereof to the proper officer; (b) shall not permit such goods to be removed from the customs area or otherwise dealt with, except under and in accordance with the permission in writing of the proper officer. (3) Notwithstanding anything contained in any law for the time being in force, if any imported goods are pilfered after unloading thereof in a customs area

5 5 while in the custody of a person referred to in sub-section (1), that person shall be liable to pay duty on such goods at the rate prevailing on the date of delivery of an import manifest or, as the case may be, an import report to the proper officer under section 30 for the arrival of the conveyance in which the said goods were carried. 46. Entry of goods on importation: (1) The importer of any goods, other than goods intended for transit or transhipment, shall make entry thereof by presenting to the proper officer a bill of entry for home consumption or warehousing in the prescribed form: Provided that if the importer makes and subscribes to a declaration before the proper officer, to the effect that he is unable for want of full information to furnish all the particulars of the goods required under this sub-section, the proper officer may, pending the production of such information, permit him, previous to the entry thereof (a) to examine the goods in the presence of an officer of Customs, or (b) to deposit the goods in a public warehouse appointed under section 57 without warehousing the same. 47. Clearance of goods for home consumption: (1) Where the proper officer is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid the import duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance of the goods for home consumption. 48. Procedure in case of goods not cleared, warehoused, or transhipped within thirty days after unloading: If any goods brought into India from a place outside India are not cleared for home consumption or warehoused or transhipped within thirty days from the date of the unloading thereof at a customs station or within such further time as the proper officer may allow or if the title of any imported goods is relinquished, such goods may, after notice to the importer and with the permission of the proper officer be sold by the person having the custody thereof: Provided that- (a) animals, perishable goods and hazardous goods may, with the permission of the proper officer, be sold at any time; (b) arms and ammunition may be sold at such time and place and in such manner as the Central Government may direct. Explanation:

6 6 In this section, "arms" and "ammunition" have the meanings respectively assigned to them in the Arms Act, 1959 (54 of 1959). 49. Storage of imported goods in warehouse pending clearance: Where in the case of any imported goods, whether dutiable or not, entered for home consumption, the Assistant Commissioner of Customs is satisfied on the application of the importer that the goods cannot be cleared within a reasonable time, the goods may, pending clearance, be permitted to be stored in a public warehouse, or in a private warehouse if facilities for deposit in a public warehouse are not available; but such goods shall not be deemed to be warehoused goods for the purposes of this Act and accordingly the provisions of Chapter IX shall not apply to such goods. 50. Entry of goods for exportation: Clearance of Export Goods (1) The exporter of any goods shall make entry thereof by presenting to the proper officer in the case of goods to be exported in a vessel or aircraft, a shipping bill, and in the case of goods to be exported by land, a bill of export in the prescribed form. 51. Clearance of goods for exportation: Where the proper officer is satisfied that any goods entered for export are not prohibited goods and the exporter has paid the duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance and loading of the goods for exportation. Goods in transit infringement In the following questions 5-12, in-transit refers to the term used in your country. 5) Are goods in transit considered to fall within the trademark owner s exclusive right to prevent others from importing goods bearing the trademark? The following Notifications/Circulars have been issued by Government under the Customs Actin respect of Intellectual Property Rights. Circular No. 10/2011 Customs dated : Instructions for implementation of Intellectual Property Rights (Imported Goods) Enforcement Rules, Notification No. 51/2010 Customs (N.T.), dated : Prohibits the import of specified goods intended for sale or use in India, subject to certain conditions and procedures.

7 7 Circular No.41/ Customs dated : Instructions for implementation of Intellectual Property Rights (Imported Goods) Enforcement Rules, Notification no. 50/2007 Customs (N.T.), dated : Prohibits export of the goods. Notification no. 48/2007 Customs (N.T.), dated : Amendments in the notification regarding Prohibiting import of counterfeit trademark goods. Notification no. 47/2007 Customs (N.T.), dated : Intellectual Property Rights (Imported Goods) Enforcement Rules, These Circulars and Notifications deal with and refer only to the import and export of goods. Under the Customs Act, 1962 the terms import and export are defined as:- "import" with its grammatical variations and cognate expressions, means bringing into India from a place outside India; and "export" with its grammatical variations and cognate expressions, means taking out of India to a place outside India; There is no Express provision covering goods in transit covered by these Circulars/ Notification. In Gramophone Company Of India Ltd. Vs. Birendra Bahadur Pandey & Ors., the questions which arose was what is the meaning of the word `import' used in section 53 of the Copyright Act. Gramophone Company of India Limited was the owner of copyrights. A consignment of pirated copies recordings was seized at Calcutta. The pirated copies were in transit from Singapore to Nepal through India. The Supreme Court of India held that an order under section 53 may be made by the Registrar of Copyrights on the application of the owner of the Copyright, but after making such enquiry as the Registrar deems fit. On the order being made the offending copies are deemed to be goods whose import has been prohibited or restricted under section 11 of the Customs Act. Thereupon the relevant provisions of the Customs Act are to apply, with the difference that confiscated copies shall not vest in the Government, but shall be delivered to the owner of the Copyright. Import - Expression "import" as occurring in section 53 of the Copyright Act, 1957,simply means bringing into India from a place out of India including transit of works through India, and it does not conceive merely "importing and mixing" or "mixing up of the goods imported with the mass of the

8 8 property in the local area"-copyright Act,1957, section 53, Customs Act, 1962, section 2(23). The Supreme Court held that import includes importation for transit across the country and accordingly there was infringement of Copyright. On plain interpretation of this judgment, it may extend to the provisions of Trade Marks Act, ) Taking into account the following scenarios, are goods in transit considered to be infringing in the country of transit if: i. goods bearing a trademark are sent from country A (where it is not registered) to country C (where it is not registered) via transit country B (where it is registered). In India although the Provisions of the various Notifications and Circulars as listed in the answer to the previous question refers mainly to the import of goods, reading these provisions with Section 55 illustrated below, it is clear that all goods in transit and transhipped goods are entered on the first importation at the customs port or airport and are subject to the provisions of the Customs Act, Entry, etc. of transited or transhipped goods on arrival at customs port or customs airport: Where any goods are allowed to be transited under Section 53 or transhipped under sub section (3) of section 54. to any customs port or customs airport, they shall, on their arrival at such port or airport, be liable to duty and shall be entered in like manner as goods are entered on the first importation thereof and the provisions of this Act and any rules and regulations shall, so far as may be, apply in relation to such goods. ii. the trademark owner has a valid trademark registration only in the country of destination (country C). If the country of destination (country C) is India (goods in transit on the way to a different port within the country) or any country with which India is a party to any Treaty, Agreement or Convention which is akin to Treaty of Transit or a Treaty of Trade, the provisions of the Customs Act, 1962 with respect to transhipped goods and goods in transit would apply. iii. the trademark owner has a valid trademark registration only in the country of origin (country A). In line with the answer to the previous question, If the country of Origin (country A) is India (goods in transit on the way to a different port within the country) or any country with which India is a party to any Treaty, Agreement or Convention which is akin to Treaty of Transit or a Treaty of

9 9 Trade, the provisions of the Customs Act, 1962 with respect to transhipped goods and goods in transit would apply. iv. the final destination of the goods is not known at the time of entrance of the goods in the transit country (consider both scenarios where it is registered in country B and where it is not registered in country B). scenario 1: Where the IP under which the goods transported is registered in India: Goods in transit will be considered to be infringing and the provisions of the Customs Act, 1962 will apply. scenario 2: Where the IP under which the goods transported is not registered in India: Goods in transit will be considered to be infringing and the provisions of the Customs Act, 1962 will apply only subject to the final destination of the transhipped goods or goods in transit. 7) In those scenarios where in-transit goods are considered to infringe a registered trademark right in the transit country: i. Would that be the case if it is shown that goods will be or that there is a risk for the goods being illicitly diverted into the market in the transit country? The custom authorities have the right under the Customs Act 1962, to seize any goods that may infringe any law of the land, which includes various types of IP. The customs cannot detain cargo on the mere suspicion that cargo may be diverted into India, the complaint needs to be registered by a Rights Holder which definition means 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 under the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 of the Customs Act, Under the transhipment permit rules, once transhipment is permitted, the customs cannot detain or confiscate the cargo once it has left the territorial waters. However, if at the time of first import, or when the application for transhipment is applied, if any laws are breached, broken or complaints received with regards to infringement of Intellectual Property, then under the provisions of the Customs Act, 1962, the goods are confiscated and impounded according to due procedure.

10 10 If it is likely that goods will be or that there is a risk for the goods being illicitly diverted into the market in India, this would be the standard IPR infringement case. ii. Who has the burden of proof to show that goods will be or that there is a risk for the goods being illicitly diverted into the market of the transit country? The right holder of the registered IP(trade mark)has the burden of proof. A right holder may give notice in writing to the Commissioner of Customs or any Customs officer authorized in this behalf by the Commissioner, at the port of import of goods that are infringing the registered intellectual property rights of the Rights Holder in accordance with the procedures and under the conditions as set out in the Rules, requesting for suspension of clearance of goods suspected to be infringing intellectual property right or for impounding the alleged infringing/ counterfeit goods. iii. What is the nature of evidence that may have to be submitted in this regard? With regard to requests made by Rights Holders to the Customs Office to suspend clearance of infringing / counterfeit goods, at the point of first import, documents to prove the following need production: 1. Name of the Applicant: 2. Contact Details of the applicant: (A) Office address: (B) Residence address (C) address (D) IEC No 3. Applicant s Telephone numbers( including mobile number): 4. Name and contact details of authorized representative of the right holder. ( please attach authorization from the right holder): 5. Proof of the existence and ownership of a valid intellectual property right by the right holder: 6. A statement of the grounds for the notice of suspension of release of the goods allegedly infringing intellectual property rights: 7. In the case of a specific consignment of goods allegedly infringing intellectual property rights, details of the consignment and a statement of the ground for the notice including prima facie evidence of infringement: 8. Detailed description of the goods with Customs Tariff Heading in respect of which an intellectual property right applies, together with a sample, model or photograph of a genuine product:

11 11 9. Name of customs airport/ customs port/land customs station to be covered Documental evidences are submitted. The nature of evidence submitted to a court will depend on the particular facts and circumstances of any given case. Section 116 of the Trade Marks Act, 1999 : In the case of goods brought into India by sea, evidence of the port of shipment shall, in a prosecution for an offence under this Act or under clause (b) of section 112 of the Customs Act, 1962, relating to confiscation of goods under clause (d) of section 111 and notified by the Central Government under clause (n) of sub-section (2) of section 11 of the said Act for the protection of Trade Marks relating to import of goods, be prima facie evidence of the place or country in which the goods are made or produced. iv. What is the standard of proof in such cases? The Legal system in India is derived from the British. Therefore, as is in systems of justice derived from the British model the standard will be beyond reasonable doubt. The burden of proof will usually be carried by the prosecution; in this case the Right Holder must prove beyond reasonable doubt that he is the Registered Proprietor of the IP Rights in all criminal law proceedings. The fundamentals of criminal jurisprudence apply to the enforcement of the provisions of the Customs Act. However, in civil law proceedings, the defendant will usually carry the burden of making out the defence, usually on the balance of probabilities. Therefore, the standard minimum standard of proof in such cases must be proved on Balance of Probabilities. Categories of goods and trademarks 8) Are there any differences as to whether goods in transit are considered to be infringing in the country of transit if the goods are (i) counterfeit, (ii) parallel traded or (iii) bear confusingly similar trademarks? Case 1: When the goods in transit are counterfeit in the country of transit: Answer: Goods that are counterfeit in India will be considered counterfeit under the trademarks act even if they are in-transit. The definition of infringement of a trademark under Section 29 includes use of a registered trademark, where use of a registered trademark under Section 29 (6) includes export and in-transit goods qualify as goods being exported. Under the Patents Act however, the act of merely exporting a good that infringes a patent will not qualify as infringement. In-transit goods that infringe Copyright are clearly exempt under the Copyright Act as export is not included in the definition of an infringing act (much like the Patents Act).

12 12 Case 2: When the goods are subject to parallel trade in the country of transit: The Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 which are framed to bring counterfeits under the aegis of the Customs Act, 1962 exempt parallel imports as also does Section 30(3) of the Trademarks Act which lays down the principle of international exhaustion. However any material change or impairment of the condition of the goods after they are put in the market by the proprietor works as an exception under the Trademarks Act and has the effect of rendering the goods infringing (although Customs will still not seize them). Under the Patents and Copyright Acts parallel imported goods will not be treated as infringing. Case 3: When the goods in transit bear confusingly similar trademarks in the country of transit: Confusingly similar trademarks are considered infringing trademarks under Section 29 (2) (b) and in-transit goods bearing confusingly similar trademarks would consequently be treated as counterfeits for the reasons elaborated above. 9) Is there any extended or special protection for well-known and famous trademarks in respect of goods in transit? The Trade Marks Act, 1999 provides statutory protection to well-known trademarks the applicable provision being Section 29 (4) which pertains to infringement in respect of goods bearing well-known trademarks. If goods in transit bear well known trademarks and are the subject of trademark registration in India then they will get an equal protection as goods in India bearing well-known trademarks. 10) Does the extended or special protection under question 9 above, exist even where no registration has been obtained in the country of transit? The protection mentioned above does not apply if no registration is obtained as the act of infringement will not come into play. Border measures and Remedies 11) Are border measures available for goods in-transit under your statutory law? If yes, please quote the corresponding article(s) or paragraph(s). In India border measures are enforced by the executive i.e. the Central Board of Excise and Customs of the Finance Ministry of the Government of India under the Customs Act, 1962 and the relevant delegated legislation is the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007.

13 13 The Rules extend to goods in-transit (insofar as they pertain to trademarks) as the basic requirement is that they must be infringing under the parent statute which they are under trademark law. The Rules do not extend to goods in transit under the Copyright and Patent laws. 12) Does your case law / jurisprudence deal with border measures regarding goods in transit? If yes, please comment if possible trends can be observed from court precedents, and in which direction. The Customs Act, 1962 and all other legislations relating to the protection of the territorial waters and borders, ports, and airports of India are based on criminal jurisprudence. All offences under the Customs Act, 1962 and under the allied Notifications and Circulars relating to Intellectual Property are based upon the fundamentals and principles of criminal jurisprudence. Provisions under the Customs Act relating to offences are penal in nature and the appropriate customs authority is empowered to make an inquiry in respect of an offence alleged to have been committed by a person under the said Acts, summon and examine witnesses, decide whether an offence is committed, make an order of confiscation of the goods in respect of which the offence is committed and impose penalty on the person concerned. In many situations though the provisions of the Code of Criminal Procedure or the Evidence Act may not apply except in so far as they are statutorily made applicable, the fundamental principles of criminal jurisprudence and of natural justice must necessarily apply. If so, the burden of proof is on the customs authorities and they have to bring home the guilt to the person alleged to have committed a particular offence under the said Acts by adducing satisfactory evidence. This was upheld by A Constitution Bench of the Supreme Court in Ambalal v. Union of India AIR 1961 S.C. 264 : 1983 ECR 1935D (SC) : ECR C Cus. 118 SC and the same has been observed on a number of occasions by the Supreme Court. However, on a number of occasions various courts in India have passed appropriate orders for confiscation of counterfeit goods, goods which are sold in the parallel traded grey markets and infringing goods on import. Interestingly, The Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 carves out a separate evidentiary threshold in relation to border measures for goods infringing the various IP laws to the extent that it is mandatory for rights holders to enjoin the proceedings, identify the goods as counterfeit and even indemnify Customs against claims for damages by the importers. The Rules have been challenged in various courts and upheld in entirety. 13) What kinds of remedies are available if goods in transit are considered to be infringing in the transit country? Are, for example, injunctions, monetary damages, or destruction of such goods possible? The various kinds of remedies are available if goods in transit are considered to be infringing in the transit country are as follows under the Trade Marks

14 14 Act, This section 135 also provides that the court may grant an ex parte injunction and in particular orders intended to preserve evidence or documents relating to the subject matter of the suit so that the defendant is restrained from dealing with assets in a manner which would affect the plaintiff s ability to recover damages or other pecuniary remedies after final orders. Trade Marks Act, 1999: Section 135. Relief in suits for infringement or for passing off:- (1) The relief which a court may grant in any suit for infringement or for passing off referred to in section 134 includes injunction (subject to such terms, if any, as the court thinks fit) and at the option of the plaintiff, either damages or an account of profits, together with or without any order for the delivery-up of the infringement labels and marks for destruction or erasure. (2) The order of injunction under sub-section (1) may include an ex parte injunction or any interlocutory order for any of the following matters, namely:-- (a) for discovery of documents; (b) preserving of infringing goods, documents or other evidence which are related to the subject-matter of the suit; (c) restraining the defendant from disposing of or dealing with his assets in a manner which may adversely affect plaintiff's ability to recover damages, costs or other pecuniary remedies which may be finally awarded to the plaintiff. (3) Notwithstanding anything contained in sub-section (1), the court shall not grant relief by way of damages (other than nominal damages) or on account of profits in any case-- (a) where in a suit for infringement of a Trade Mark, the infringement complained of is in relation to a certification Trade Mark or collective mark; or (b) where in a suit for infringement the defendant satisfies the court-- (i) that at the time he commenced to use the Trade Mark complained of in the suit, he was unaware and had no reasonable ground for believing that the Trade Mark of the plaintiff was on the register or that the plaintiff was a registered user using by way of permitted use; and (ii) that when he became aware of the existence and nature of the plaintiff's right in the Trade Mark, he forthwith ceased to use the Trade Mark in relation to goods or services in respect of which it was registered; or (c) where in a suit for passing off, the defendant satisfies the court--

15 15 (i) that at the time he commenced to use the Trade Mark complained of in the suit he was unaware and had no reasonable ground for believing that the Trade Mark of the plaintiff was in use; and (ii) that when he became aware of the existence and nature of the plaintiff's Trade Mark he forthwith ceased to use the Trade Mark complained of. In addition Rule 11 of the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 provides that:- 11.Disposal of infringing goods: - (1). Where upon determination by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, it is found that the goods detained or seized have infringed intellectual property rights, and have been confiscated under section 111 (d) of the Customs Act, 1962 and no legal proceedings are pending in relation to such determination, the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, shall, destroy the goods under official supervision or dispose them outside the normal channels of commerce after obtaining 'no objection' or concurrence of the right holder or his authorized representative: Provided that if the right holder or his authorized representative does not oppose or react to the mode of disposal as proposed by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, within twenty working days after having been informed, or within such extended period as may have been granted by the Commissioner at the request of the right holder, not exceeding another twenty working days, he shall be deemed to have concurred with the mode of disposal as proposed by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be: Provided further that the costs toward destruction, demurrage and detention charges incurred till the time of destruction or disposal, as the case may be, shall be borne by the right holder. (2) There shall not be allowed the re-exportation of the goods infringing intellectual property rights in an unaltered state. (3) The Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, may on his own, or at the request of the right holder, retain samples of goods infringing intellectual property rights prior to their destruction or disposal and provide the same to the right holder or importer if such samples are needed as evidence in pending or future litigations.

16 16 14) If the answer to question 13 includes monetary damages, how are the damages computed? Damages in legal proceedings follows the same principle as is followed world over, i.e. whether the plaintiff s goodwill has suffered or is likely to suffer damage and not whether the defendant has reaped any positive benefit from a misappropriation of goodwill. It also takes into consideration the value of the trade mark on the date of filing of the civil or criminal action and after the disposal of the action. 15) If the answer to question 13 includes destruction of the infringing goods, who is responsible for ensuring the destruction of the infringing goods? The costs toward destruction, demurrage and detention charges incurred till the time of destruction or disposal, as the case may be, shall be borne by the Right Holder. I. Proposals for harmonization The Groups are invited to put forward proposals for the adoption of harmonized rules as to the infringement of trademarks by goods in transit. More specifically, the Groups are invited to answer the following questions. Please note that in-transit in the following refers to the term in a broader sense and is not limited to a specific customs procedure. Goods in transit infringement 16) Should goods in transit be considered to infringe a registered trademark in the transit country? If yes, why? If no, why not? The issue of infringing or counterfeit goods being detained, impounded, and destroyed in transit is definitely the next step to prevent, prosecute, and punish infringers and counterfeiters. It is possible that looking to the trade and looking to the nature of infringements and counterfeits that are happening in India and with respect to Nepal, Bangladesh, China that these goods, which are infringing or counterfeit goods, could be easily diverted into the local market and passed off as the original goods, thus cause great detriment to the local economies in addition to destroying the legitimate trade and brand owner s interest. 17) Should it matter whether the goods have been lawfully manufactured in and/or exported from the country of origin? Intellectual Property like Trade Mark laws are territorial in nature and when goods are exported from one jurisdiction to another, different local laws are applicable. This being so, the country of origin should matter only if there is a bilateral agreement, treaty or international convention in place by which

17 17 the transit country is party to the country of origin, otherwise the law of the land should apply. 18) Should it matter whether the goods could be lawfully put on the market in the country of destination? The idea of whether the goods could be lawfully put on the market in the country of destination would come into focus a transit country only in the case of any bilateral agreement, treaty or international convention in place by which the transit country is party to the country destination; otherwise the law of the country of destination should apply. 19) If in-transit goods are not considered to infringe a registered trade mark in the transit country, should there be an exception if it is shown that the goods will be or that there is risk for the goods being illicitly diverted onto the market in the transit country? If it is likely that goods will be or that there is a risk for the goods being illicitly diverted into the market in India, this would be the case of infringement of Intellectual Property Rights by imported goods and the laws of the transit country come into play and therefore there should be an exception to that extent. Considering that in many countries the goods in transit just pass through the land or territorial waters without stopping or without entering with customs or costal authorities, the transit country does not even know what the cargo that is being carried through is? 20) What kind of evidence should be presented for this exception to take effect? To start with the evidence that needs to be produced should be fool proof and there should be extremely effective databases, communication system and clear intelligence shared between the customs and coastal authorities across various countries. Evidence such as details of prospective buyers and agents, past consignment details and previously obtained clearances from previous ports or airports which would establish travel path, consideration received for the goods in question, bills of lading, Letters of credit marking out guarantors, duration of transit. Difficulty in identifying the consignor of goods, lack of documentary evidence to show the Custom Officials, any information coming from the third party in this regard, no clear information of the final destination of the goods and all kinds of loose ended circumstantial documentary evidence clearly shows that the intention of diversion of goods in the transit country.

18 18 Categories of goods and trademarks 21) Should infringement by goods in transit be limited to counterfeit goods or should also parallel traded goods and goods bearing confusingly similar goods be considered to infringe when in-transit? Infringement by goods in transit should not be limited only to counterfeit goods. There should not be any distinction between counterfeit goods, parallel traded goods or goods bearing confusingly similar goods. 22) Should famous and well-known trademarks enjoy extended protection in respect of goods in transit? If so, should this be the case even when no registration has been obtained in the country of transit? Although there is a consensus that well known trademarks should enjoy extended protection, the proprietors of these well known marks should also abide by the provisions of law, the custom and coastal authorities normally cannot act without sufficient evidence being submitted to them. It should not be the case that even when no registration has been obtained in the country of transit, such well known trademark be given protection of law. Border measures and Remedies 23) Should border measures be available for goods in transit? Border measures should be available for goods in transit in line with the IP Laws and the other local laws. 24) Should the same remedies (such as injunctions, monetary damages and destruction) be available for infringement by goods in transit as for other trademark infringements? Ethically of course, the remedies should be the same as trade mark infringements. However, this answer would vary depending on the foreign policy of the Central Government since it has a direct bearing on foreign trade and trade policies. 25) Should the same defences be available for the importers of goods in transit as for goods under direct importation from the country of origin or other? If goods in transit can be lawfully put in a destination country then that defence should be available to importers in transit country. If goods under direct importation from country of origin or another are infringing then defences and evidence relating to non-infringement could be considered by a competent court of law in the jurisdiction.