Enemy at the Gates: Thai Anti-Counterfeiting Border Control Measures

Copyright 2001 Edward J. Kelly, Esq.
Dana Christine Bergling, Law Intern
Tilleke & Gibbins International Ltd.

Procedural Considerations For Matters Within Customs Jurisdiction

IP owners seeking border control measures are generally required to file an application and present adequate evidence to satisfy the Customs authorities that there is sufficient evidence (i.e., a prima facie case) supporting a claim of IP infringement.

In matters involving suspected infringement of copyrighted works, upon reasonable cause, the IP owner or the licensee may petition a Customs official for "suspension of the goods" before they are released to the importer or exporter. This has the practical effect of a "stop shipment order."

Typically, an IP owner would file a set of documents to support the petition:

It is highly recommended that any works with international copyright protection under the Bernie Convention should be accompanied by a copy of the applicable law of the country with a certified Thai translation.

Notification No. 28/2536 regulates the border control process. If the Customs officer determines it is appropriate to detain the goods, the Customs Department shall inform the applicant and the importer without delay. The IP owner-applicant must appear within 24 hours after filing the application with the Customs Department to examine the suspected goods.

One of two consequences results from this process: (a) if the IP owner or licensee establishes to Customs satisfaction that the imported goods actually infringe the genuine copyrighted or licensed works, a complaint is filed with the police, and investigation and prosecution, if justified, will follow. The IP owner must then immediately notify Customs of the filing of the police complaint -time is of the essence -because the IP owner risks that Customs officials, with no knowledge of police involvement, might release the goods into the hands of the importer or exporter; or (b) if the seized goods are undisputed infringing works, the Customs officials themselves may report the case to the police for further investigation and prosecution.

If, on the other hand, the copyright owner cannot persuade Customs authorities that the detained goods infringe the genuine copyrighted works, or if the importer/exporter defends the allegation, the copyright owner can still make out a complaint with the police to direct the Customs officials to seize the alleged infringing works.

Procedure for handling trademark cases (counterfeits or knock-offs) at Customs is somewhat different from the procedures outlined above in copyright cases. Why are the rules different? Perhaps the answer is that a trademark owner generally first files for protection of the trademark with the Department of Intellectual Property ("DIP"). The DIP, unlike the Customs Department, falls under the control of the Ministry of Commerce. The TM owner's petition is filed with the Trademark Division, DIP, to alert the Trademark Registrar of the trademark owner's demand to preclude the importation/exportation of the alleged counterfeits/knockoffs. The TM owner typically must support the application with appropriate documentary evidence, depending upon whether the trademark is validly registered in Thailand:

If a non-domiciliary of Thailand owns the mark and seeks protection he/she must have an office in Thailand to provide a local contact for the Registrar.

Following submission of the documentary proof of ownership to the Registrar, the request and all supporting documents will finally be provided to the Customs Department for its records and follow up.

If a TM owner has probable cause to believe that there is a particular shipment of pirated goods in transit, the petition to the Customs officials should include specific and detailed disclosure regarding the shipment, i.e. registry of the vessel with the pirated goods, date/time of the vessel's arrival in Thailand, and the name of the importer and location of its warehouse, if any. The TM owner risks liability for indemnity for possible damages if the petition turns out to have been filed in bad faith or with gross negligence.

If, after some preliminary investigation into the merits of the petition, the Customs official believes the application has merit, then an inspection or examination of the suspect counterfeit goods will be ordered in the presence of the TM owner.

If there is some question as to whether the goods are actually counterfeits or knock-offs, the Customs official will forward the matter to the Trademark Registrar for a decision along with the documentary and physical evidence in the case. The seized products are held by Customs until the Trademark Registrar's decision regarding the claim of infringement. The Trademark Registrar's judgment on the question of infringement is binding on Customs.

If the suspect goods are counterfeits, the Customs official will forward the case to the police for further investigation and possible prosecution, and the seized goods will be used as evidence in any criminal proceedings against the exporter or importer.

Jurisdiction of the IP&IT Court in Border Control Measures

With regard to a complaint to the IP&IT Court, the IP owner can also petition the Court to issue an injunction to stop the importation or exportation of the goods, but also must satisfy the burden of proof that the subject goods infringe her valid IP. This is done in a similar fashion as outlined above, by documenting the validity/priority of rights, Power of Attorney (if any), evidence to prove that a known party is about to import or export the infringing goods, and evidence describing the nature of the alleged infringement.

One key difference between a proceeding before Customs and a proceeding before the IP&IT Court is that an IP owner must deposit a bond/security with the Court to cover damages caused by the enforcement of the injunction order if it later turns out the goods seized are non-infringing. No posting of collateral is necessary with Customs.

In cases of infringement of protected IP, the Director-General of the Customs Department is authorized to order the destruction of all seized items pursuant to Section 25 of the Customs Act. In addition, Section 20 of the Export and Import Act 1979 allows the confiscation of the infringing goods, including items used for packing and loading.

The IP&IT Court is also authorized to place the seized goods under the care of a Government Department (see, e.g., CCC 1327) for eventual destruction once the case is final and the Court may issue an injunction order to seize the raw materials and components if the IP owner can prove the items were used to produce the infringing goods.

Conclusion

The Border Control Measures outlined above, although available as an enforcement mechanism, are unfortunately severely underutilized. The paucity of efforts by IP owners to use these tools can be directly traced to the complicated and difficult process of following the procedures required by the Customs Department, the sheer lack of resources and personnel within the Customs Department, and of course the possibility of corruption at low levels of staffing.

One example of the benefit that tightening IP protection and enforcement may be found in Singapore where the U.S. and Singapore are negotiating a bilateral Free Trade Agreement. One of the important negotiating points is the U.S. insistence that Singapore's Customs Department reform its procedures requiring IP owners to provide "unreasonable" information for border enforcement, including details of the arrival of infringing goods. If Singapore Customs enacts reforms to appease IP owners, that action will send a clear signal to Thailand to enact similar reforms to obtain similar favorable treatment. If new IP legislation and proposed improvements to the Thai Customs procedures concerning border control are adopted, implemented, and effectively executed, Thailand's aggressive posture towards protection of IP rights can be regarded as a model for other developing nations waging the difficult struggle against the global counterfeit and pirated goods trade.