A global strategy on Customs recordals
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A global strategy on Customs recordals

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James Whymark compares Customs recordal programmes and other aspects of counterfeit seizures around the world

One-minute read

Seizing products when they enter a country is by far the most effective way to deal with counterfeits. But the best way to work with Customs authorities varies by jurisdiction. Some recordal programmes accept products collectively; others require individual registration. Some are worth spending time and money on because the enforcement procedure is effective; in others it is almost pointless. Other points on dealing with Customs, such as the amount of sensitive information that it is worth providing, are more general and should dealt with on a case-by-case basis.


One of the problems of dealing with counterfeits is that once an infringing product enters circulation it is very difficult and expensive to take action – often it is hard to trace the origin of products or deal with widespread low level sales. Therefore, one of the most effective ways of dealing with high-volume counterfeit activity is to cut it off at the source by detaining and destroying infringing products at the border. However, the level of pro-active involvement and intervention by Customs authorities varies widely between jurisdictions due to budgetary constraints, legislative limitations or the appetite for active IP enforcement.

A global Customs enforcement strategy must therefore deal with many different management issues and varied recordal programmes.

What information should you provide?

Product information

A recordal will only be as effective as the amount and detail of information provided to Customs. While in some jurisdictions putting a recordal in place is as simple as sending a letter to Customs with a list of owned trade marks, in practice these recordals are fairly ineffectual. Only where Customs authorities are provided with detailed information on genuine branded products and indicators of counterfeit products will they be able to effectively identify, detain and eventually destroy infringing products.

Therefore as far as possible businesses should try to provide Customs with comprehensive documentation, including detailed images, of all products bearing their trade marks. In practice this may not always be possible or cost-effective, especially where genuine products may be packaged or branded differently in different countries. The most efficient way of dealing with this is to produce Customs manuals on genuine branded products that are applicable in most jurisdictions and can therefore be used for the majority of recordals. However, in some jurisdictions Customs will only accept information on those products on sale in that market – it is then a question of whether the production of jurisdiction-specific Customs information is cost and time effective and this will often be driven by the importance of those markets to the overall programme.

Counterfeit indicators

Customs authorities will often require brand owners to provide so-called counterfeit indicators that can be used to compare potentially infringing products with genuine branded goods. Many brand owners now incorporate security features on their products (from serial coding to tamper-proof seals and holographic watermarks).

The difficulty with filing this information with Customs is determining what is necessary to assess potentially infringing products and what information should be kept confidential. While Customs authorities will generally keep this type of information confidential, once it is provided to Customs it is no longer in the brand owner's control. The risk of key counterfeit indicators becoming common knowledge is often too great.

Examples of counterfeit products

It is advisable to provide Customs with information on any patterns or examples of counterfeit products that brand owners may already be aware of. While the typical method of detaining infringing products is via reliance on a Customs recordal, some Customs authorities (notably those within the EU) can seize suspect products in their own capacity and without prior reference to the brand owner. In these cases Customs will often seek confirmation from the brand owner that the goods are in fact infringing and may require the brand owner to file an emergency recordal in order for the goods to then be destroyed.

These ad hoc Customs detentions often provide useful intelligence on counterfeit activity and may be the impetus for commencing a more expansive recordal programme. It is also possible in some cases to provide details of known importers of infringing products, although obviously care should be taken when providing this information, especially in the EU where the Customs Regulation prohibits use of information provided by Customs except in very limited circumstances.

How to select jurisdictions

Brand owners may have many different drivers for establishing a recordal programme and for determining its geographical scope. There are a number of factors to consider when determining which jurisdictions to record marks with Customs.

Cost

The administrative procedures involved in recording trade marks and other IP rights in different jurisdictions can vary dramatically.

One factor that brand owners should be aware of is that in some jurisdictions it is possible to record trade marks or other IP rights as a collective recordal (for example, in the EU) but in others it is necessary to file separate recordal applications for each IP right (the case in China). Strategically therefore you tend to get more bang for your buck where you can record all IP rights together rather than having to cherry pick only a few of the key brands or products.

Another factor is that in some jurisdictions it is necessary to physically meet with Customs officials and travel to various Customs offices before a recordal will be accepted. In those jurisdictions where it is necessary to file separate applications for each IP right it is therefore also advisable, as far as possible, to file these recordals at the same time so that renewals can be carried out in bulk.

Enforcement procedures

One of the key drivers behind selecting certain countries is the ability and ease by which brand owners can enforce their rights once a consignment of suspect products is detained.

In many (and soon to be all) European jurisdictions for example, Customs may rely on the "simplified procedure" that allows goods to be destroyed if a consignee or consignor of the products does not actively object to the destruction. The simplicity of this enforcement process makes Customs recordals in Europe attractive. In sophisticated jurisdictions detained products may only be destroyed following potentially lengthy and expensive court proceedings.

Customs activity

If protection of IP rights is not high on a Customs authority's agenda then even with the most extensive training and most detailed product information, a recordal in that jurisdiction is unlikely to reap many rewards.

Customs authorities in these jurisdictions often have periodic pushes for certain types of product or in certain regions. It is therefore important to monitor activity in those jurisdictions and maintain good relations with Customs even if they are not particularly active. It may also be the case that the jurisdiction is simply not a target for counterfeiters, although infringers are sophisticated in their concealment methods and so it is not always easy for Customs to spot infringing products passing through their borders.

Is it possible to protect relevant IP rights?

The Customs recordal and enforcement process is suited to those IP rights that can be identified through visual inspection. Therefore the majority of brand owners tend to record their registered trade mark rights with Customs as an initial step.

However, this does not mean that other IP rights cannot be recorded. We have had success with recording both registered design rights and registered patent rights with Customs, especially where key features of a product protected by designs or patents can be easily identified. As these types of rights are often more difficult to identify, in many jurisdictions Customs recordals are limited to only trade marks (indeed, in many jurisdictions there is no equivalent to a registered design right).

Technology companies often have extensive patent protection in many jurisdictions throughout the world. These rights can be very powerful when enforced but present obvious draw-backs when dealing with Customs. Ultimately, the information provided to Customs has to be in such a form that the officials at the coal face are able to look at a product and determine whether it is likely to be infringing or not. In some cases this may be straight forward – if a product claims on its packaging to contain a patented substance (often the case with infringing pharmaceutical products) then it may be relatively easy for Customs officials to look out for reference to those substances and detain those which are not manufactured by the patent owner.

However, where the patented element of a product is not visible (perhaps contained within the internal mechanism of a product) it is very unlikely that infringing products will be stopped. Customs will not open up products and look at their inner workings and generally are not qualified or sophisticated enough to determine whether a product is likely patent-infringing in any case.

Even in those countries where patents and designs can be recorded and enforced through Customs, the burden of confirming that a detained product is infringing will always fall upon the rights holder (usually Customs will require the rights holder to indemnify them for any unlawful detention or destruction of products). Rights holders who rely on their patent rights via a Customs recordal often find it difficult to determine whether a product is in fact infringing without extensive testing and physical analysis. This takes time and money and rights holders are usually required to provide this confirmation within a short time frame. Therefore the majority of rights holders rely on visual rights such as trade marks and, to a lesser degree, registered designs.

Other forms of protection

Whilst Customs recordals can produce effective results, they should be considered in conjunction with other enforcement opportunities and forms of protection available. Many jurisdictions have consumer protection authorities or public health organisations that have specific powers to take action against potentially dangerous or poor quality products. In some cases, for example in the UK through the Medicines Health Regulatory Authority (MHRA), regulatory bodies have different and potentially more extensive powers to take action. So while Customs recordals may often provide useful information on targets, it may be more appropriate and cost effective to take action through these other bodies.

Jurisdictional challenges

While these are general considerations applicable when considering filing a Customs notice in any jurisdiction, there are a number of more specific administrative challenges that may make certain jurisdictions less attractive than others.

Recordal process

One such specific factor to be considered is whether the jurisdiction has a formalised recordal process in place which has been established under a relevant legal instrument. A formal recordal generally provides the Customs authorities with legal powers to detain products and the process for putting a recordal in place will therefore be prescribed, making it easier to do so. The map on the previous spread sets out key jurisdictions where formal recordals can be filed (in green), where an informal process can be used (in yellow) or where it is not possible to file a recordal (in red).

The majority of jurisdictions, and especially those with sophisticated Customs and IP functions, now have a formal method of recording trade marks and seizing infringing products. However, much of south and central America either has no recordal process at all or only provides for an informal recordal via letter to Customs. Invariably, these informal recordals are less effective than the formalised procedures as there is not a centralised point for disseminating the information to the various Customs offices and Customs often do not have the legal power to take pro-active steps to deal with infringing and counterfeit products.

A number of jurisdictions still do not offer a method for rights holders to record their brands and products and prevent the influx of counterfeits. While this may be more expected in smaller and less sophisticated jurisdictions, it is perhaps surprising to note that places such as Canada and Iceland do not offer either a formal or informal process. It is possible in virtually all jurisdictions to notify Customs in relation to a specific consignment of products that is suspected of being counterfeit but this requires prior detailed intelligence.

How to make a programme cost-effective

A recordal is only effective if there is an underlying counterfeiting problem to deal with. Therefore careful consideration of the appropriate scope and geographical spread of a programme is important to ensure that the initial investment is repaid through large seizures and the destruction of infringing products.

One way to enhance the efficiency of a programme is to standardise the administrative processes used to record and enforce rights. Many Customs recordal and enforcement procedures have similar features and so there is scope to standardise these functions. In the EU, for example, many jurisdictions rely on the so-called simplified procedure. In these jurisdictions the underlying steps involved in recording an IP right with Customs and then liaising with Customs to destroy a detained product are virtually identical. We have an online tool that assists with the filing of Customs notices in the EU and dealing with the resultant seizures.

The most cost-effective programmes are those based on a close relationship with Customs authorities. While detailed documentation and extensive geographical coverage of recordals will assist, ultimately it is the Customs officials who will detain suspect products. Nothing beats face time with Customs authorities, providing practical training and useful materials. If a product or a brand is fresh in the mind of Customs officials then they are more likely to spot infringing products at the borders.

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On managingip.com

How to protect your mark in a changing Russia, October 2012

Counsel give advice on working with Chinese Customs, September 2012

How to make the most of Italian Customs procedures, August 2012

Two contradictory judgments on Customs seizures, August 2012


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James Whymark


© James Whymark 2012. Whymark is an associate at Baker & McKenzie in London

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