South African Revenue Service cracks down on counterfeit goods

The South African Revenue Service (SARS) has tightened up its procedures and operations relating to the seizure of counterfeit goods entering the country. Until recently, Customs & Excise (a department of SARS) stopped containers of goods that its officials suspected to be counterfeit on an ad hoc basis. The new policy means that containers will only be stopped in instances where an intellectual property (IP) right owner has applied to SARS, under Section 15 of the Counterfeit Goods Act 37 of 1997, requesting that it detain and seize all suspected counterfeit goods bearing the subject matter of the IP right.

Section 15 of the Counterfeit Goods Act makes provision for applications to be brought by an IP right owner before the commissioner for SARS. These applications call on the commissioner (through his officials) to seize any counterfeit goods that enter, leave or are transhipped through South Africa.

A Section 15 application must include the IP right owner's particulars, details of its legal representative and the IP right concerned. The application must be supported by documentation (eg, documentation evidencing the existence of a trademark). A single application can be used for an IP right holder's entire portfolio of trademarks and copyright works.

The IP right owner must (i) furnish SARS with a blanket indemnity against any liability that may be incurred pursuant to the seizure and detention of the goods, and (ii) cover any expenses that may follow from the seizure and detention. These expenses include the reasonable costs of storage and also legal costs in the event that SARS has to appoint outside counsel to defend any matters.

In addition, it is not only the registered marks of a proprietor that can be included in the application, but also well-known (but unregistered) trademarks. These are also specifically protected under the Counterfeit Goods Act.

As soon as SARS receives the Section 15 application, it must approve or reject it and, if it is rejected, provide reasons for the rejection. If the application is approved, SARS will enter the details of the applicant's intellectual properties on a central database that will be available to customs officials only. These officials will then detain suspected counterfeit goods (bearing the subject matter of the IP right) and will notify the legal representatives mentioned in the application of any such detention. At the same time, the trademark proprietor will be provided with samples to enable it to make a determination of the counterfeit nature of the goods, which must later be confirmed in an affidavit.

It is important to note that SARS will only be obliged to stop goods bearing an applicant's trademarks from the date that such an applicant's Section 15 application is approved. It is therefore imperative that interested persons lodge such an application as soon as possible.

If the application is granted by SARS, it will be valid for a period of 24 months, whereafter it may be renewed. However, it will only be valid for a shorter period if the renewal date of any trademark covered in the application falls due for renewal before the expiry of the 24-month period, in which case it will be valid for a period equal to the period of validity of the trademark.

Kelly Thompson and Lindsey Kilmartin, Adams & Adams, Pretoria