In the present case the Petitioner NBU Bearings Pvt. Ltd. had filed 6 bills of entry with the Customs Authority and asserted before the Bombay High Court (‘Court’) that without issuing any order of confiscation under the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 (‘IPR Rules’), the Customs Authority had suspended clearance of its goods imported from China worth INR 23,139,233, all bearing the petitioner’s registered trademark “TR”. Upon investigation, it was noted that a ‘system alert’ was raised by one of the respondents stating that the said goods were suspected of infringing intellectual property rights due to which the goods of the petitioner were confiscated. Notably, Rule 7 of the IPR Rules provide for suspension of clearance of goods when there is a ‘reasonable belief’ that the imported goods are suspected of infringing intellectual property rights.
The counsel for the Petitioner argued that while the procedural safeguards were not implemented, the Petitioner has been litigating with the informant for ownership of the right to use the trademark / trade name “TR” before the Delhi High Court and the right of either party over the mark “TR” has not yet been established by a court of law.
The Court observed that for any goods to be called as ‘infringing the intellectual property rights’ under the IPR Rules, there must be breach of intellectual property laws under the respective statute.
Additionally, Section 53 of the Copyright Act, 1957, casts a legal duty on the Customs Authority to release the goods and no longer treat them as prohibited goods if the right holder i.e. the person raising the ‘system alert’ does not produce an order from a court having jurisdiction as to the temporary or permanent disposal of the goods within 14 days from the date of detention.
Accordingly, the Court held that without any such order from a civil court, it is inappropriate for the Customs Authority to withhold/detain the consignment beyond the prescribed 14 days. Merely based on the information of an informant by depositing the requisite amount of security with the Customs Authority while raising the ‘system alert’, cannot be a reason for the Customs Authority to treat the imported goods as prohibited especially when the importer of the goods has also placed the requisite authorizations with respect to the intellectual property rights, on record.
More importantly, the Court noted that the ownership and entitlement of the mark “TR” is admittedly pending before the Delhi High Court along with the Bombay High Court and there has been no finality in ownership. Accordingly, the Court ordered for the release of the imported goods of the Petitioner vide the bills of entry subject to the Petitioner executing such bond with such surety or security and other conditions as may be specified in the bond in accordance with the law.
SOURCE: WRIT PETITION (L) NO. 3371 OF 2021
DUCTUS EDGE 