Customs Dept. pulled up for overstepping its jurisdiction


In LG Electonics India Pvt. Ltd v. Bharat Bhogilal Patel & Others, Delhi HC vide its interim order pulled up Customs Dept. for restricting clearance of consignments which, as per latter’s determination, allegedly violated patent. It was held that the Customs Commissioner (Imports), one of the defendants, violated Clause 4 of the Notification No.305/96/2004-FTT videCircular No.41/2007-Customs dated 29.10.2007 (“Notification”) and therefore, exceeded its jurisdiction. The judgment was not unanticipated considering that the Notification unequivocally precludes the Customs Dept. from initiating any action in case of infringements pertaining to patents unless the offences have already been established by a judicial pronouncement in India and the Customs is called upon or required to merely implement such order.

We had earlier blogged about Mr. Bharat Bhogilal Patel’s patents [covered hereand here]. It was also mentioned that Mr. Patel tried to replicate the Ramkumar saga by enforcing his patents under the IPR (Imported Goods) Enforcement Rules, 2007 in a bid to have the Customs Authorities impound all imports allegedly infringing his patents.

A brief summary of judgment

The defendant No.1, Mr. Bharat Bhogilal Patel held a process patent titled “A Process of manufacturing engraved design articles on metals or non-metals”. Last year, Mr. Patel filed complaint against the plaintiff, LG Electonics India Pvt. Ltd and various other importers before the Customs Commissioner alleging that they were importing products which infringed his patent rights. The Customs Commissioner issued an Order restricting the clearance of plaintiff’s consignments.

The plaintiff challenged the Order, contending that the Order was in breach of Clause 4 of Notification which sets out instructions for implementation of IPR Enforcement Rules. Clause 4 reads as follows: “It is pertinent to mention that while the mandatory obligations under Articles 51 to 60 of the TRIPS dealing with border measures are restricted to Copyright and Trade Marks infringement only, the said Rules deal with Patents, Designs and Geographical Indications violations as well, in conformity with the practice prevailing in some other countries, notably EU countries. While it is not difficult for Customs officers to determine Copyright and Trade Marks infringements at the border based on available data/inputs, it may not be so in the case of the other three violations, unless the offences have already been established by a judicial pronouncement in India and the Customs is called upon or required to merely implement such order. In other words, extreme caution needs to be exercised at the time of determination of infringement of these three intellectual property rights.”

In the light of clause 4 of the Notification, it was rightly held that the Customs Dept. could not initiate any action in case of infringements pertaining to patents, design and geographical indications unless the offences were established by judicial pronouncements. As there was no judicial pronouncement restraining the plaintiff from infringing the impugned patent in the instant case, the Customs Commissioner violated Clause 4 of the Notification and therefore, exceeded its jurisdiction. Further, the Customs Department could not prima facie restrict clearance of plaintiff’s consignments on the basis of alleged patent or complaint filed by Mr. Patel. Considering the aforesaid, the plaintiff was granted ex-parte ad-interim injunction.

H/T: On behalf of Spicy IP, I thank Mr. Irfan Modi for drawing our attention to this case.

Mathews P. George

Mathews is a graduate of National University of Juridical Sciences, Kolkata. His interest in intellectual property was kindled when he bagged the second position in his second year of Law School (in the prestigious Nani Palkhiwala Essay Competition on Intellectual Property). His stint as a student of Prof. Shamnad Basheer further accentuated his interest in intellectual property. Winner of almost a dozen essay competitions in his Law School days, he was involved in various research and policy initiatives relating to intellectual property. Mathews is, currently, based out of Munich, Germany. He had earlier done his LLM in 'IP and Competition Law' from Munich Intellectual Property Law Centre (jointly run by Max Plank Institute for Innovation and Competition, University of Augsburg, Technical University of Munich and George Washington University, Washington).

3 comments.

  1. Anonymous

    I have read the ex parte ad interim injunction order passed by the Delhi High Court which has been referred to by you. It does not “pull up” the Customs Department in any specific terms except stating that “the complaint, if any, filed by the patentee is to be treated contrary to the Clause 4 of the notification issued by Government of India and any order passed contrary to that would be without any jurisdiction”.

    The court has dealt with the objection of jurisdiction prima facie on the basis of the decided case of Delhi High Court (Full Bench). But then the said judgment requires to be seen again in view of the judgment of the Supreme Court in the case of GODREJ SARA LEE LIMITED Vs RECKITT BENCKISER AUSTRALIA in CIVIL APPEAL NOS. 996-997/2010 (Arising out of SLP(C)Nos.21955-21956 of 2008 decided on 29/1/2010.
    From the contents of the ex parte order what is revealed that the patentee namely the defendant No: 1 had filed a complaint with the Custom Officials at Mumbai. The same is clear from the contents of the order which reads as under:
    “On 29.09.2010, the defendant No.1 filed a complaint with the defendant No.2 against the plaintiff and various other importers namely…………”
    From further reading of the order it is revealed that defendant no: 2 is the Custom commissioner Mumbai. See as follows:
    “The defendants No.2 and 3 are Commissioners of Customs (Import), Officers of Customs under Section 3 of Customs Act, 1962 located at Mumbai and Delhi”.
    From the above it is clear that the Commissioner of Customs has been deliberately roped in by the plaintiff in the suit with the sole purpose of conferring the jurisdiction to Delhi High Court.
    It is also further clear from yet another fact which finds mention in the order namely:
    “The plaintiff is an importer at various Indian ports one of them being Mumbai Air Cargo Complex,………..”
    It seems that the Court will have to look into the jurisdiction objection very seriously.

    Reply
  2. Mathews P. George

    Dear Anonymous,

    1) “Pull up” means inter alia “to stop something” / “to check”.

    2) The question of jurisdiction is to be decided on merits after filing of written statement by the defendants. This is only an ad-interim Order.

    regards
    Mathews.

    Reply
  3. Prateek Andharia

    Nice post, good critique of the judgment.

    However, with regard to your passing observations doubting whether a mere circular can be used to interpret statutory rules or a statute, I would say that such doubt is most warranted.

    A peep into the realm of taxation law (both direct as well as indirect), will reveal that Departmental circulars do carry substantial weight, and are in fact often bones of contention between the Assessing Officer and the assessee. Further, if I’m not mistaken even under our Foreign Exchange Management regime, I believe RBI circulars, and under our Corporate law regime, SEBI circulars are important tools of interpreting Rules and especially filling in gaps.

    While, as you most persuasively argue, there might not be gaps to fill, or that the circular purports to do more than just fill gaps, that question is an entirely different one from whether circulars are a permissible aid to interpretation.

    Reply

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