21 May 2017

Pakistan: New Customs Rules On Counterfeits

On March 16, 2017, Pakistan amended its Customs Rules, 2001 (CR’01) to incorporate a new chapter that deals with border enforcement of intellectual property rights. This statutory upgrade has simplified the procedure for action against imports of counterfeit goods, which are already prohibited under Pakistan’s Trade Marks Ordinance, 2001 (TMO’01), read with the Customs Act, 1969 (CA’69).

CR’01 and CA’69 Scope

CA’69 expressly prohibits imports of counterfeit goods, and CR’01 has clarified that this prohibition does not apply to parallel imports and de minimis imports.

Under a memorandum of understanding with the Intellectual Property Organization of Pakistan, Customs already have access to a national database of registered trademarks, so there is no formal requirement for separate recordation of trademarks with the Customs, because details of registered trademarks are automatically available to them.

Notice of Customs Against Suspect Goods

TMO’01 and CR’01 prescribe a formal application by a right holder for initiating an enforcement action before the Customs for seizure of imported goods suspected of being counterfeits. TMO’01 further maintains that a right holder may commence a court action for trademark infringement within ten days of submitting the notice.

Indemnification and Bank Guarantee

TMO’01 provides that the  notice to Customs shall be accompanied by an undertaking to indemnify Customs and to compensate the importer of the goods for loss or damage resulting from any wrongful seizure of goods.

Accordingly, TMO’01 and CR’01 make it mandatory for a right holder to submit a written indemnity bond and standing bank guarantee to Customs. This must amount to 25 percent of the value of the consignment (and at a minimum be US $5,000) so that it can be used by Customs in the event of a Customs decision adverse to the right holder. It can also be used if a stay is vacated, an application for a writ petition/special leave is dismissed, or if there is any further court order which results in any loss/liability to Customs.

The amount can also be used for compensation for any losses suffered by the importer of goods if the notice of a right holder is ultimately found to be baseless, and for payment of expenses on account of investigation, warehousing, maintenance, disposal of goods, etc, incurred after detention by Customs.

Alerts by Customs

CR’01 creates a prerogative for Customs to alert the right holder about imported goods suspected of being counterfeits. Thereafter, the right holder is required to formally initiate the enforcement action with Customs and complete the formalities of filing the prescribed application, along with the mandatory indemnity bond and bank guarantee. However, if the right holder does not opt for initiating an enforcement action then the Customs will release the suspect counterfeit goods.

CR’01 also creates a prerogative for Customs themselves to seize and forfeit imported goods suspected of being counterfeits when such goods are also suspected of not meeting the required health and safety standards.

Forfeiture of Goods

CR’01 provides that upon receipt of the notice, Customs shall detain the suspect infringing goods, notify the importer of such detention, and then examine the given goods in the presence of the right holder and importer. If the given goods are indeed counterfeit then Customs will issue a formal order about their forfeiture. If the importer voluntarily accepts that the given goods are counterfeit, in that case Customs will also issue a formal order about their forfeiture.

Release of Goods

TMO’01 maintains that Customs shall release the goods to the importer if: (a) Customs are satisfied that there are no reasonable grounds for believing that the given goods are counterfeit; (b) the right holder does not commence court action within the statutory timelines; or (c) there is no court order approving/endorsing seizure within 21 days of the commencement of court action.

Junaid Daudpota is the Managing Partner at Daudpota International. He handles a wide variety of matters relating to trademark prosecution and enforcement in a number of countries in the Middle East and South Asia. He co-heads the firm’s IP practice. He can be contacted at:

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