Wednesday, 1 July 2009

The New Customs Regulation and the Current Practice of Customs Authorities

There was published on February 5 a the new Brazilian Customs Regulation, which provides the legal framework for importing and exporting goods from Brazil.

Decree 6,759/2009 has not brought any significant change when compared with the previous Customs Regulation (Decree 4,532/2002), especially in what concerns anti-piracy activities and IP rights infringement. In that matter, it maintained the right of the Customs authorities to conduct searches and seize “ex officio” counterfeit products that violate trade mark rights. This Regulation has not however extended such seizure right to goods that infringe third parties’ patents, industrial designs and copyrights. Thus an “ex officio” seizure order cannot be freely issued by Customs Authorities when the pirate product infringes patents, industrial designs and copyright.

Such omission has been subject of stringent complaints about IP owners, since this limitation significantly increases the difficulties to refrain counterfeit practices in Brazil, taking into account that seizure will only take place with the issuance of a Court order.

Further, customs authorities of the Port of Santos have been interpreting restrictively Decree 6,759/2009 by seizing “ex officio” goods that only infringe trade marks that are registered at the Brazilian Trade Mark Office (BTO). Hence, counterfeit goods infringing renowned trade marks not yet registered at the BTO will not be subject of seizure.

The rationale behind this understanding is that a trade mark application only grants to the applicant an expectation of such mark being registered and that the protection conferred is provisional, which cannot be the same as to the one provided to the holder of a registered trade mark.

Attorneys, scholars and IP owners are consistently opposing to such understanding based on Art. 198 of the Brazilian IP Law. This article states that the seizure of counterfeit products should take place whenever those products are identified by “trade marks”, without determining whether the trade mark is registered or not.

In this regard, Item III of Article 130 of the Brazilian IP Law also grants to trade mark applicants the right to take the necessary measures to secure the reputation and integrity of their marks. This should include the right to request the customs authorities to undertake an “ex officio” seizure of counterfeit products identified with the mark under examination.

The BTO normally takes between 2 and 4 years to register a trade mark. In the meanwhile, it appears that the trade mark applicant will have to stoically watch the entrance of counterfeit goods and must compete with them in the same market. It is expected that such restrictive interpretation will be soon challenged in Court to avoid more harmful practices.

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