Customs Loses Power to Interdict Patent Violating Goods at the Border

By Notification Nos. 56-Customs (NT) and 57-Customs (NT) dated 22 June 2018 the Customs has lost its power to interdict patent infringing goods at the time of Customs clearance.

In the previous dispensation, a patent registered with the customs, was automatically enforced at the border by an alarm triggered by the EDI computer which raised a flag from the inward manifest when goods registered patents entered a port.

The patent infringing goods import was prohibited under Sec. 11 of Customs Act, 1962 which offence could result in confiscation of the goods and their destruction.

Thus many multinationals gained patent protection at the border itself without going to a Court of Law to decide infringement. This provision in the border rules was deliberately inserted in the 2007 law by certain vested interests in the customs who wanted a source of income from legal practice of patent law after their retirement. They went beyond the TRIPs Agreement at WTO which allowed waiver of patent enforcement at the border to Developing Countries.

(The fact of Indian Border Rules on patent enforcement in going beyond WTO TRIPS was first pointed out by the Academy of Business Studies in 2007. It has taken 11 years for the government to amend the rules and bring with the special treatment offered to developing countries by WTO).

Many Indian manufacturers harassed by the customs on account of registered patents will get a relief. The imposters in India who registered false patents in order to blackmail importers will also lose ground. The Ramkumar case of 2007 comes to our mind. The worthy from “inventor” from Madurai registered a false patent for dual sim mobile phones of suitcase size. He demanded and secured, some 60 crore rupees from reputed importer like Samsung as licence fee to import dual sim phones. Finally, the law caught up on him, the IP Appellate Border overturned his patent and the customs allowed free import of dual six phones without Ramkumar’s NOC (No Objection Certificate).

The amended Border Rules do not mean that India will not give protection to patents. A regular Court of Law as well as the IPR Appellate Board (IPAB) may be moved to secure injunction to stop infringement at the point of sale.

In the two notifications reference to Patent Act 1970 have been omitted. In the registration as well as enforcement system. Other IPRs like copyright, designs and trade mark will however continue to get protection at the border.

Past cases will, however, be adjudicated at the customs border for the old law.

[Notification No. 56/2018- Customs (N.T.) dated 22 June 2018]

G.S.R. 581 (E).- In exercise of the powers conferred by sub-section ( I) of section 156 of the Customs Act, 1962 (52 of 1962), read with clauses (n) and (u) of sub-section (2) of sect ion 11 of the said Act, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following rules to amend the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007, notified by the Government of India in the Ministry of Finance (Department of Revenue), Notification No. 47/2007-CUSTOMS (N.T.), dated the 8th May, 2007, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-sect ion (i), vide number G.S.R. 331 (E), dated the 8th May, 2007, except as respects things done or omitted to be done before such amendment, namely:-

I (i)   These rules may be called the Intellectual Property Rights (Imported Good s) Enforcement Amendment Rules, 2018.

(ii) They shall come into force on the date of their publication in the Official Gazette.

2.      I n the said rules, -

(A)    in rule 2, -

(i)   in clause (b), the words and figures "patent as defined in the Patents Act, 1970," shall be omitted;

(ii)  in clause (c), the words and figures "the Patents Act, 1970," shall be omitted;

(B)    in rule 5, after condition (b), the following conditions shall be inserted, namely:-

"(c) the right holder or his authorised representative shall inform the Commissioner of Customs at the time of giving notice about any amendment, cancellation, suspension, or revocation of the Intellectual Property Right by the authorities under the Intellectual Property Laws or any Court of Law or Appellate Board, subsequent to its registration with the authorities under the Intellectual Property Law and in case of any such amendment, cancellation, suspension or revocation of the Intellectual Property Right during the validity of the notice registered under rule 4, the same shall be brought to the notice of the Commissioner of Customs by the right holder within a period of one month of the date of communication of any such amendment, cancellation, suspension or revocation of the Intellectual Property Right to the right holder or any person authorised by him in this regard;

(d)  in the event of any amendment, cancellation, suspension or revocation of the Intellectual Property Right by the authorities under the Intellectual Property Law or by any Court of Law or Appellate Board, the Commissioner of Customs may accordingly amend, suspend or cancel the notice and the corresponding protection."

[F. No. 394/04/2018-Cus(AS)]

[Notification No. 57/2018- Customs (N.T.) dated 22 June 2018]

G.S.R. 582 (E).- In exercise of the powers conferred by section 11 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 51 /2010-CUSTOMS (N.T.) dated the 30'" June, 2010 published in the Gazette of India, Extraordinary , Part II , Section 3, Sub-section (i), vide number G.S.R. 568(E), dated the 30'" June, 2010, except as respects things done or omitted to be done before such amendment, namely:-

1. In the said notification,

(i)     Clauses (iv) and (v) shall be omitted;

(ii)    in the Explanation, the words, figures and brackets "the Patents Act, 1970 (39 of 1970)," shall be omitted;

2.  This notification shall come into force on the date of its publication in the Official Gazette.

[F.No.394/04/2018-Cus(AS)]