Written by Shantanu Sharma 
“We don’t want to be the brand that no one copies” – Patrizio Bertelli (Prada CEO)
Property lays its existence since the inception of the law, there are theories defining property proposed by Salmond and Bentham as per which, without the existence of law there is no existence of properties because the property is something which has attached value to it, which can be owned for enjoying the possession or can be disposed of at the discretion of the owner, such properties demand protection and law plays that role of providing protection to such properties. There can be different types of properties (i.e. tangible properties, intangible properties, corporeal properties, etc.). Intellectual property is a property associated with the intellect of an individual, moreover, an intangible property which means it has no physical nature, a tangible property (i.e. a property with physical existence) can be derived out of an intellectual property but originally intellectual property remains an intangible property, such as Trademark, GI, Copyright, etc. Protection of properties bears equal relevance whether it is within the territory or across the territory of the country which has registered the IPR.
This research is restricted to the protection of Intellectual Properties Rights (IPR) by preventing the movement of counterfeited intellectual properties across the borders in order to curb the exploitation faced by the right holders of these intellectual properties as well as the deteriorating impact it has on the economy of the state where such IP is registered.
On the basis of cross-sectional data, majority of which is derived from the documented content this study analyses the aspects of International law dealing with the branch related to Border Security (i.e. TRIPS, Berne Convention, Paris convention, etc.) which further goes on to relate its effect on the major world economies and analyses the steps taken by the developed nations to overcome the drawbacks of International law in the aspect of Border Security.
A study to show the concernment of Criminal Law with IPR for enhancing the border security scenario relating to counterfeiting of IPR’s has been made, to reach to the conclusion that Criminal Law when applied stringently and effectively may seem to be a possible solution to the concern of Border Security of counterfeited IPR’s.
Whereas, when redeemed from an Indian perspective, merging of Criminal Law with IPR for enhancing the border securities is nothing less than a challenge by the virtue of overburdening of criminal courts in India, as then the matter gets delayed and the goods seized by the customs cannot be held by the customs authorities considering the time period of the criminal trial. The research further discusses the current legal regime/provisions in India which deals with border security issues relating to counterfeiting of IPR’s, the conundrum among section 53 of Copyright Act, 1957 and Section 11 of Customs Act, 1962.
The study concludes by providing the recommendations that India needs to adopt and implement certain provisions of TRIPS which it has not yet applied to its administration relating to Border Security of counterfeited IPR’s and further recommends the constitution of a separate enactment only with the objective of applying Criminal provisions to IPR defaults, which has seemed to be an effective method adopted by developed nations to curb such violations.
Intellect is the genesis of intellectual property, which is more or less an intangible form of property and is capable of subsequently transforming into a tangible form of property. Intellectual property rights are the rights provided with an objective to armour the owner with valuable intellects as, in order for the intellect to qualify as an intellectual property it must have some value attached to it as property always has some value attached to it, at last it is the law which has been assigned the duty to protect that value of the property on behalf of the true owner. This armour allows the people with valuable intellects to share their creation of intellect with the society for the upliftment of quality of life and for society’s betterment in general, in consideration of which certain rights are been provided to these owners so that they can subsequently benefit and enjoy from the value of their intellect, also it encourages and promotes creativity among the members of the society.
On an observation it is apparently evident that strong intellectual property protection is a crucial aspect associated with major developed nations of the world whereas developing countries do not provide equally complementary protection to intellectual property rights.
The world has become a global village from the perspective of economics and trade and by the virtue of this shift in the international dimension, there have been abrupt inflation of illegal trade practices globally which is inclusive of the violations associated with intellectual property rights and is been termed as piracy (i.e. unauthorized reproduction for commercial purposes), with this sudden inflation there have been increment in cases relating to transportation of counterfeited (unauthorized reproduction of properties subsequent to the violations intellectual property rights) products across the international borders for the purposes of importing or transiting these products. The enforcement of intellectual property rights at the borders has emerged as a serious issue in the present world dynamics due to which it has turned out to be a concerning issue for the major world organizations such as World Trade Organization (WTO), World Customs Organization (WCO), World Intellectual Property Organization (WIPO) and has also been a major part of a discussion in several bilateral and multilateral agreements. In fact, the US Federal Bureau of Investigation (FBI) has named counterfeiting as the crime of the 21st Century.
India too, not being ignorant has acknowledged the seriousness of the issue relating to border security and accordingly notified the Intellectual Property Rights (Imported Goods) Rules, 2007 on the model of World Custom Organisation (WCO) for empowering the customs department to seize or dispose of the counterfeited goods as they are the one entrusted with the responsibility of adjudicating the issue of infringement on borders.
In this research paper, the endeavour of the researcher is to enumerate and focus upon the aspects relating to border security of counterfeited products to further enunciate on the measures taken globally for combatting this issue of piracy, alongside analyzing it with measures taken in India for combatting the similar issue. Lastly, while focusing on the loopholes in Indian regulations, the researcher will conclude by suggesting the measures which will enhance and further strengthen the protection provided by India to the owners of its intellectual property rights.
This convention was adopted in the year 1883 and marks as one of the first few treaties on intellectual properties for the protection of industrial property which primarily lays its foundation with an objective to extend the national interests of the member countries by providing armour to the rights holders of these countries among all the other member states. As per the convention the member countries are required to seize or capture the goods bearing unauthorized trademarks or trade names in order to curb the unfair competition. However, the convention does not mandate the competent authorities to be bound for affecting the seizure of goods in transit, such seizure if required, is to be made at the request of the right holders or any competent authority, except for trademarks the aforementioned convention also extends the protection for other intellectual properties such as patent, geographical indication, industrial design etc. also.
This convention here is the oldest in the field of protecting the literary and artistic works and was adopted in the year 1886. As per this convention a right holder in any one of the member countries must be equally treated as the right holder of that particular creation in any other member country as if the right-holder acquired his/her right in their own respective country.
In the aforementioned convention a member country is obliged to seize unauthorized copies of the original work which has been legally sheltered irrespective of the law of the land where it has been provided this shelter even this protection is not been restricted to the countries where such right is not been cushioned.
Protection under World Trade Organisation (WTO)/ Trade Related Aspects of Intellectual Property Rights (TRIPS)
The prime objective of WTO/TRIPS was to promote international trade by bringing declination in the situations which prove to be unhealthy for international trade among the member states. With rapid escalation in international trade of goods and services, protection of intellectual property rights vested with the owners of these goods had become an imperative task and thus was another major objective pursued to be settled by WTO/TRIPS.
As provisions provided under the Paris and Berne conventions for the protection of IPR’s were inadequate and restricted to developed and limited number of developing countries which resulted in accession of piracy related cases globally and pushed the major industries of developed nations to include IPR in General Agreement on Tariffs and Trade (GATT). Subsequently, WTO/GATT included TRIPS Agreement for dealing with IPR in 1994.
Article 51 of the TRIPS Agreement instructs the member countries to adopt rules authorising the right holders of the intellectual properties to file an application to the concerned custom authorities for suspension on importation of unauthorised or counterfeited goods. Similarly, Article 52 to Article 60 of TRIPS provide for the steps to be adopted by the right holder for enforcing their right in case of violation.
Briefly, Article 52 asks the right holders to furnish the evidences before the custom authorities establishing their claim under Article 51. Article 53 requires the applicant to furnish certain amount of security to the customs authorities as an assurance to prevent the abuse of this process. Article 54 requires the custom authorities to promptly notify the applicant and the importer. Article 55 provides a period of 10 days from the serving of the notice to the applicant to initiate a proceeding or a concerned authority must initiate a proceeding to suspend the release of seized goods, failing which the goods will be released to the importer. Article 56 authorizes the custom authorities to order the applicant to pay certain damages to the importer for the loss caused to him due to the wrongful detention of goods. Article 57 provides the right holder to have an opportunity to inspect the goods in order to affirm there claim. Article 58 of the agreement provides an option for member states to authorize their custom authorities with ascendancy to take ‘Suo Motu’ cognizance on acquiring a prima facie evidence about the infringement. Article 59 instructs the competent authority to destroy the goods on they being established as infringed in order to prevent their further commercial propagation and Lastly, under Article 60 the goods in small quantities and for non commercial purposes are exempted from the purview of border measures.
Anti – counterfeiting Trade Agreements
The Anti – Counterfeiting Agreement (ACTA) is a novel agreement complying with international law for extending the stringent and effective enforcement of intellectual property right norms of TRIPS agreement in the online environment. The aim of US behind being the prime formulator of this agreement is to strengthen the entrustment of enforcement agencies by providing them with greater autonomy with respect to infringement activities and to further criminalize circumvention of digital security technologies by addressing piracy on digital networks. ACTA was negotiated among eleven countries including US, EU, Switzerland, Canada, Australia, New Zealand, Mexico, Morocco, Japan & South Korea, between the time period extending from the year 2007 to 2010 out of which eight countries signed the agreement in the year 2011.
Certain provisions of ACTA would increase the liabilities of the Internet Service Providers (ISP’s) by the virtue of their users activities which could ultimately result in ISP’s blocking significant amount of content in the public domain in order to refrain from their liabilities. Another compromising aspect of the agreement could be the privacy of the people as due to this agreement the ISP’s will be obliged to share information with the enforcement authorities. Furthermore, ACTA upsurges the ambit of interpretation associated with the term infringement to include non – commercial infringement, requiring countries to include criminal penalties for aiding and abetting infringement. The autonomy associated with this agreement takes its final turn when as per the agreement a separate ACTA committee is to be constituted comprising of unelected members from the signatory countries with authority to change certain provisions of ACTA.
As a result of its autonomous character the agreement has been faced with several criticism by several governments (i.e. European union parliament refused the ratification of the agreement by a majority of 92% ,China was not invited for ratification, India has refused the ratification etc.) along with people outrage by mass demonstration even in front of the white house.
Though, it was subjected to significant amount of criticism due to its too autonomous character the researcher concurs with the stringent approach adopted by the formulators of the agreement as per which the offence of piracy shouldn’t be restricted to being a civil offence but rather should include stringent criminal remedies at the disposal of the rightful owners, it emulates seriousness of the offence. IPR violations adversely affects the economics of the developed as well as the developing nations hence the remedies available should reflect the heinousness associated with the offence.
Goods from an outside jurisdiction lands at the border of a country for two reasons either for importing it into the host country for the commercial purposes or for the purpose of transshipment/transiting, similarly when the goods arrives at the border of India for any of the above mentioned two purposes, the Customs Act, 1962 empowers the customs department of India to seize or confiscate the goods if they find it to be pirated after subjecting them to proper examination. Now, this confiscation can be made on the intimation of the right holder or can also be made by customs department on having reasonable suspicion in accordance with Customs Act, 1962.
Section 11 of Customs Act, 1962 empowers the government of India to put a constrain on importation and exportation of goods bearing IPR violations. The goods imported in contravention with the provisions of Customs Act, 1962 are liable to be confiscated by the customs authorities, further the custom authorities are authorized to seize any document or material which will turn out to be useful in the investigation. For the same they are empowered to check the premises, conveyance, x – ray any person and conduct any other form of inquest on being suspicious about the goods being counterfeit or pirated in nature. Although no confiscation can be made without following the principle of ‘Audi alteram partem’ which means ‘to hear the other side’, hence prior to confiscation being made an opportunity will be provided to the owner of the goods being subjected to confiscation, to explain his/her position with respect to the goods in question, by way of a proper notice to be served failing which the goods will be released and restored to original owner.
Similarly, under Section 53 of Copyrights Act, 1957 Registrar of Companies (ROC) is empowered to make an order barring the importation of work which, if would have been contrived in India would infringe the Indian copyright provisions. Alike the powers under Customs Act even the Copyright Act authorizes the ROC to inspect any ship, dock, premises under his suspicion and unlike Customs Act, Copyright Act does not authorizes the suo – motu cognizance by the ROC or any other concerned authority. Under Copyright Act, the action can only be initiated on the intimation of the copyright owner or his agent via an application along with the prescribed fees to ROC.
Gramophone Company of India v. Birendra Bahadur Pandey, in this case the Gramophone Company was the copyright owner of certain sound recordings, they received an information regarding an assignment consisting the copies of the sound recordings of which the gramophone company was the copyright owner, arriving from Singapore at Calcutta Port to be dispatched to Nepal. On receiving this information they intimated the ROC under Section 53 of the Copyrights Act, 1957 to seize the goods but due to apprehension of delay in action by the ROC, the Gramophone Company filed a writ in Calcutta High Court and accordingly the High Court issued an order directing the ROC to proceed with the matter immediately on the contrary High court also passed an order for the appellant to pay the damages if the cassettes do not prove to infringe the copyright provision. The significant part of the case arrives when the Calcutta High Court makes the interpretation of the word ‘import’ subsequently on the basis of their interpretation rejects the claim of appellant. The appellant unsatisfied with the judgement of the High Court approaches the apex court in appeal, Supreme Court interprets the term import in a much broader sense and further explained it as “bringing into India from outside India” now it can be the commercial propagation of the good within India as well as for the purpose of transiting.
In the case of Trademark Act violation, section 140 of the Trademarks Act, 1999 urges the registered trademark licensee to give a notice to Collector of Customs to prohibit the importations of any goods.
India’s response to WTO/TRIPS
In order to achieve the effective enforcement of safeguarding the IPR’s India have signed several multilateral and bilateral agreements on customs mutual assistance with its trade partners which allows them to share confidential information and data relating to IPR violations, in conjunction with the customs mutual assistance agreement India has formulated the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007, which were amended in the year 2018 for the effective enforcement of border measures included in TRIPS agreement.
These rules were brought in to administer higher level of authority and autonomy to custom authorities for the better protection of right holders rights. Earlier Customs Act administered limited powers to custom authorities for effectuating the cross border movements of counterfeited goods.
Rule 2(b) of the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 has widened the ambit of intellectual property rights by providing certain uniform procedures to enforce various forms of intellectual properties such as trademark, patent, geographical indication, copyright and design. As per the aforementioned rules the right holders irrespective of any of the right mentioned above shall follow the common procedure for filing their notice which is, they have to give notice to Commissioner of Customs with a prescribed fees of Rs 2000/- , also unlike the customs act here the notice is to be in prescribed format attached by the document of ownership proof, grounds for the suspension of release of the goods allegedly infringing the IPR, details of consignment and prima facie evidence of infringement, description of goods with sample model or photograph of the genuine product and the name of the customs airport/ customs port/ land customs port/ customs sanction. Another important extension of the earlier customs provisions is the notice of registration to be provided within 30 days, when accepted.
Post the implementation ratification of these rules in the year 2007, the customs department in July, 2008 ordered absolute confiscation of counterfeited goods under section 110 of Customs Act, 1962, where the importer the M/s Women World Jewels Pvt. Ltd. was importing products with trademarks of Nivea, Dove, Sunsilk, and L’oreal.
India’s Criminal provisions for the prevention of counterfeiting of IPR’s.
As we have witnessed so far several developments and then different arrangements of these developments have been formulated globally as well as in India, in order to combat and irradiate the issues associated with piracy and counterfeiting of intellectual properties but from the perspective of India which hosted eight neighbouring nations, these arrangements have surely improved authority of competent authority but this does not seem to resolve the issue associated IPR violations in India and is subsequently affecting the Indian economy on a daily basis which when looked at from a larger perspective is significant amount of economy going in drain.
In the current scenario India does not have a separate statute dealing with counterfeiting specifically this has turned to have significant effect on the enforcement of IPR’s. On the other hand there are certain IP regulations which endorse the criminal remedies but there is no statute dealing specifically with criminal remedies or dealing with remedies per se.
Therefore, going by the economic losses suffered by India by the virtue of IPR violations, and the feeble effect which the already existing regulations have on combatting the IPR violation affair, it is pertinent that India resolves to more stringent and draconian approach. Hence, formulating and subsequently enacting a statute specifically dealing in criminalizing of IPR violations is the need of the hour.
Below mentioned are the current criminal provisions existing in the IPR regulations :
- Trademarks Act, 1999 penalizes for applying false trademark with imprisonment up to three years and fine ranging from fifty thousand to two lakh rupees.
- Section 63 of the Copyrights Act, 1957, provides imprisonment upto three years and fine extending from one lakh rupees to two lakh rupees.
- Geographical Indication Act, 1999, penalizes the offence for imprisonment extending from six months to three years and fine from fifty thousand rupees to two lakh rupees.
Except for these IPR regulations Indian Penal Code, 1860 provides imprisonment for the offences of cheating, counterfeiting, etc these provisions can also be applied at the disposal of the right holder subjected to IPR violation.
The actual issue today is not merely associated with monetary terms but consuming counterfeited edible products can lead to serious health issues and even in some cases may even be a reason for causing death, in such scenario the effect of not curbing the issue associated with counterfeited unauthorized products will lead to serious implications.
USTR (United States Trade Representative) Report in 2015 recognized India’s Tank Road and Sadar Bazar in New Delhi as the notorious market and further stated India to be at first rank in sheltering maximum numbers of physical markets selling counterfeited products. Not only this India reserved its spot in priority watchlist of USTR’s special 301 report issued in the preceding year.
Furthermore, IPR infringements also contributes in the income of several organised criminal groups such as drug traffickers, human trafficking, money laundering and many more. This very acumen is sufficient for formulating stringent criminal regulation for the protection of IPR infringements.
The only drawback associated with enacting such criminal regulations in India is the overburdening of courts with already existing matters. In the process associated with border security of IPR goods, time taken to reach the judgement is a very relevant and crucial factor, due to existing burden of the courts in India criminalizing IPR infringements will further adjourn the proceedings and to cope with the time bar will be a difficult task to be achieved by the current framework.
Hence, the researcher along with the stringent criminal regulations, would conclude by making additional suggestion which is with respect to the institution of a separate tribunal to be solely responsible for the matters arising out of criminal violations of regulations for IPR infringements.
 Damodaram Sanjivayya National Law University, Visakhapatnam.
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