Protecting rights at the borders: a global strategy
The global trade in counterfeit and pirated goods is more than just an ever-present nuisance for rights holders, legitimate businesses and consumers – it is a threat to public health, economic growth and global legitimate trade. Apart from direct action against sellers, importers and manufacturers, the most important legal remedies at hand are border measures.
The global trade in counterfeit and pirated goods is more than just an ever-present nuisance for rights holders, legitimate businesses and consumers – it is a threat to public health, economic growth and global legitimate trade.
Apart from direct action against sellers, importers and manufacturers, the most important legal remedies at hand are border measures, typically available through local customs authorities.
The main international legal framework for these measures is the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). All 161 member states of the World Trade Organisation (WTO) have implemented rules based on Section 4 of TRIPs, allowing Customs to act in cases of suspected counterfeit or pirated goods.
Minimum provisions under TRIPs
Article 51 of TRIPs provides a legal basis for member states to offer procedures for the seizure by customs authorities of goods that are suspected of infringing trademarks or copyright. In addition to the compulsory border measures regarding imports, member states may offer corresponding procedures concerning the seizure by customs authorities of suspected infringing goods destined for export.
These are minimum provisions only. Consequently, some member states may offer better protection or more extensive remedies to rights holders than those set out in TRIPs. For example, a number of member states have adopted more elaborate provisions extending the customs seizure remedies to include other types of IP right (eg, patents and designs), as outlined below.
Importance of up-to-date IP portfolio
As any application for customs intervention is only as strong as its legal grounds, rights holders must ensure that the actual IP rights forming the basis of any application to customs authorities are sufficiently updated and relevant for the jurisdiction.
For example, an out-of-date local trademark registration may cover goods other than those actually being counterfeited and therefore provide no basis for seizure. Also, counterfeit goods (or their packaging) may sometimes include a trademark in a language and/or graphic character that is neither visually or phonetically identical nor confusingly similar to the rights holder’s sign, but may have an identical or similar conceptual meaning in certain jurisdictions.
Rights holders should therefore carefully review their global IP portfolio and ensure that it covers the obvious avenues for circumvention in each relevant region and country.
The border measures under TRIPs are applicable only to trademarks and copyright. However, the local regime may cover additional IP rights. For example, the EU Customs Regulation (608/2013) covers not only trademarks and copyright, but also designs, patents, utility models, geographical indications, semiconductor topography, supplementary protection certificates for medicinal products or plant protection products, plant variety rights and trade names.
It is therefore important to review whether rights other than trademarks or copyright may form the basis for customs seizure under local law and adopt a local customs enforcement strategy accordingly, updating this strategy on an ongoing basis.
Generally, trademarks and designs (ie, design patents) may prove the most effective basis for the day-to-day handling of customs seizures, as they often have sufficient clarity to serve as the basis for actions even where there is little or no training of local customs officers.
Ex officio actions by customs authorities are provided for under Article 58 of TRIPs. However, even in jurisdictions where such actions are allowed, rights holders should rely on actual applications for customs actions instead. Otherwise, the inherently random nature of ex officio seizures and their somewhat clouded legal basis may prove an obstacle to efficient enforcement. Thus, both the number of seizures and their apparent legitimacy are increased by actual applications for customs actions.
Significance of efficient copy-protection measures
Copy protection of products and their packaging should be state of the art. A high level of copy protection will not only serve its usual purpose of deterring counterfeiters, but also come into its own during customs inspections, provided that the customs officers have been presented with the specific products in their original form. The copy-protection measures and other distinctive features or qualities of the original products will assist with the inspection and evaluation of the products by customs authorities.
Training and cooperation with local customs authorities
In addition to ensuring the up-to-date and jurisdiction-specific application of IP rights and a high level of copy protection, rights holders should provide relevant brand protection information and documentation to local customs authorities.
This information may be provided as part of the application for customs action. However, in cases of complex products or a wide (and developing) product range, local training of customs officers and officials handling cases in the field can be instrumental in securing the optimum assistance from customs applications.
Possible strategies for border measures
The choice of strategy must take a number of factors into consideration. Apart from the costs involved, rights holders should first consider the necessary geographic scope of the customs measures. The nature of the goods and the array of IP rights available will also be key in deciding the optimum strategy.
Regarding geographic scope, the best approach for setting up an efficient customs strategy is to target obvious sources of counterfeit and pirated goods. If these jurisdictions allow applications for customs actions in relation to exports, such applications should be made. The application should be accompanied by information on the production countries/locations/entities of the original goods, so that apparently original goods arriving at Customs on a larger scale than usual from unusual locations and/or entities can be easily identified and inspected.
Rights holders should also target the usual shipping routes and transit hubs between the sources of counterfeit goods and the main markets that they seek to protect. If possible, an application for customs measures in a transit hub should cover both imports and exports.
Further, rights holders should cover the markets that they seek to protect through customs applications in relation to imports.
By including one or more of these geographical areas in their global enforcement strategy, rights holders may secure a high level of protection against counterfeit and pirated goods in their preferred markets.
The specific goods that may be subject to counterfeiting or piracy – and their packaging – must be clearly protected by trademarks under local law. In general, the physical appearance of distinctive trademarks for clearly defined goods is the best basis for a broad, hassle-free application of border measures against counterfeit goods. Clarity in this regard reduces the scope for uncertainty on the part of customs authorities and the risk of protracted legal disputes with counterparties.
Goods in transit
TRIPs sets minimum standards for the inspection and seizure of counterfeit or pirated goods only in relation to imports (with the option to include similar measures in relation to exports). Goods in transit are not subject to TRIPs, as by definition they are not imported to be released into free circulation in any transit country. Such goods cannot be inspected in relation to their possible counterfeit or pirated nature under the customs action provisions.
This causes special concern for rights holders, as counterfeit or pirated goods may arrive in a country and either be stored for several days awaiting further shipment or be shipped across the country (eg, by road). Even though the actual shipment is subject to a customs procedure, the goods themselves are physically present in the market and are thus at risk of being stolen or redirected regardless of the customs procedure to which they are subject.
However, the principles of global free trade promoted by the WTO must allow safe passage of goods that qualify as counterfeit or pirated under the laws of the transit country if their final destination is a country in which the rights holder does not hold IP rights that would be infringed.
Obviously, this can be a bone of contention between developed countries and developing countries, as the interests of the latter (eg, in inexpensive foodstuffs) conflict with the desire of the former for efficient enforcement of IP rights. To date, there has been no general legal clarification of this issue from the WTO and rights holders must rely on extended exchange of information between customs authorities in order for illicit products in transit to be seized upon entry into their destination country.
The best approach to devising a coherent and efficient global strategy for border measures is to identify the factors that are decisive for the level of overall protection. These include the likely countries of illicit manufacture and likely shipment routes to the main markets and end consumers of the counterfeit or pirated goods in question. The kinds of IP right applicable to the products and their enforceability under local law will also play an important role.
However, as in all aspects of IP protection and enforcement, the weakest link will always be the actual IP rights protection in any given jurisdiction. The broader the protection, the easier and more efficient border enforcement will be.
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