TMI Blog2014 (2) TMI 703X X X X Extracts X X X X X X X X Extracts X X X X ..... ority has the discretion to relegate the parties to civil proceedings. This according to us is the interpretation which is to be given to the Rules read with the aforesaid [Circular] dated 29-10-2007. Otherwise, the said Notification cannot be read in the manner which totally annihilates or supplant a particular provision of the Rules. on the facts of this case the learned Single Judge has rightly held that the aforesaid order does not disclose on what basis the Dy. Commissioner had entertained the “reason to believe” that the goods in question infringed the patent claimed by the appellant herein - order of the Dy. Commissioner dated 30-3-2011 does not show any application of mind, we sustain the order of the learned single judge. However, we set aside that portion of the direction contained in the impugned order dated 19-12-2009 whereby the appellant was directed to approach the competent Court to assert its claim to patent and, on that basis, seek injunction against release of the consignment of the Respondent No. 4 herein. Instead, the aforesaid direction is substituted by the direction to the Dy. Commissioner of Customs to pass fresh orders giving ‘reasons to believe’. In ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd to be so, then such goods confiscated under Section 111(d) of the Act can be destroyed by the Customs Authorities after obtaining no objection or concurrence of the right holder or his authorized representative. This is the gist and purport of the aforesaid Rules. 2. As far as Rule 7 is concerned, it deals with suspension of clearance of imported goods , detailed note whereof shall be taken along with other relevant Rules after stating the contextual facts of the case as that would provide better understanding. 3. The appellant herein is the registered owner of patents bearing Nos. 203036, 203034, 203686, 213723 and 234157 relating to certain models of G Five brand of mobile phones and thus claims exclusive right in the said technology. After the aforesaid IPR Rules, 2007 were notified vide Notification dated 8th May. 2007, the appellant registered its aforesaid five patents with the Commissioner of Customs, Deputy Commissioner of Customs (Respondent Nos. 2 and 3 herein) under Rule 4 of the IPR Rules. At this stage, we would like to reproduce Rule 2(b), (c), (d), and Rule 6 which provides certain definition as well as mechanism for the said registration by the intellectua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d security as prescribed under the said Rule, which the appellant furnished on 5-4-2011. The Respondent No. 3 vide another decision dated 30-3-2011 informed the Respondent No. 4 that since the models and brand of the mobile phones in the said consignment were the same which were infringing with the patent rights of the appellant herein, the release of the said consignment was suspended. Since this communication/suspension order is the bone of contention and validity thereof is the subject matter of judicial review, the same is reproduced below in entirety :- Subject : Suspension of goods imported vide Bill of Entry No. 2979282, dated 16-3-2011 due to infringement under Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 reg :- Please refer to your consignment vide Bill of Entry No. 2979282, dated 16-3-2001 wherein 1900 Nos. of G Five Mobile Phones are imported. M/s. Telefonaktiebolagat LM Ericsson (PUBL), Sweden has registered their five Intellectual Property Rights as given in Annexure-I at this Commissionerate under Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007. The right owner has stated that 18 models listed in Annexure-II of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up by the Respondent Nos. 4 5 was that insofar as patent is concerned, the Deputy Commissioner was not the appropriate authority to determine as to whether the imported goods were infringing the intellectual patent rights of the right holder and therefore unless there was a stay order granted by civil competent Court, which is the only competent forum to decide such violations, there cannot be any order of suspension. This edifice was built on two pillars. Provisions of the Patents Act were relied upon to impress that registration of patent per se does not lead to any presumption of its validity inasmuch as whenever suit for injunction is filed by the patent holder on the basis of such registration, the defendant can always set up a defence that registration was not valid and it is for the Civil Court to go into this aspect without seeking cancellation of the registered patent from the registering authorities. It is submitted that such mechanism was not available with the customs authorities and therefore, they were incompetent to arrive at any such conclusion and could not act only on the basis that there was valid registration in favour of the patent holder. 9. Proceeding fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred by the appellant. 12. Mr. Jayant Bhushan, learned senior counsel argued on behalf of the appellant questioning the approach of the learned Single Judge in the impugned order. His submission was that Rule 2(b) of the IPR Rules which defined intellectual property specifically includes patent as well, as defined under the Patents Act. Thus, each form of the intellectual property whether it be Copy Right, Trade Mark, Patent Designs Act and Geographical Indications of Goods had to be given same treatment. It was argued that once under these Rules power was given to the Dy. Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, to suspend the clearance of goods based on notice given by the right holder after forming an opinion that he had reason to believe that imported goods are suspected to be infringing intellectual property rights, the competent authority had adequate jurisdiction to exercise power and this exercise is not dependent upon an injunction order of the civil court. His submission was that the Respondents Nos. 4 and 5 in their writ petition had not challenged the validity of these Rules and, therefore, the Rules were to be given their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n executive order. The Constitution is the highest law of the land, and no law which is in conflict with it can survive. Since the law made by the legislature is in the second layer of the hierarchy, obviously it will be invalid if it is in conflict with a provision in the Constitution (except the Directive Principles which, by Article 37, have been expressly made non-enforceable). 36. The first decision laying down the principle that the Court has power to declare a statute unconstitutional was the well-known decision of the US Supreme Court in Marbury v. Madison 5 U.S. (1 Cranch) 137 (1803). This principle has been followed thereafter in most countries, including India. 14. Mr. Bhushan also made reference to various provisions of Trade Marks Act, Copy Right Act as well as Patents Act to draw parallel between them and argued that the scheme of three Acts was almost the same. He, thus, made a fervent plea that if the IPR Rules, 2007 could be applied in respect of Trade Mark and Copy Rights which had secured registration in the aforesaid Acts, no different treatment could be given to the registered holder of a patent under the Patents Act. He submitted that the onus was on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read with Section 31 of the Trade Marks Act which provision raises presumption about the validity of a registered trademark. His further submission was that before there could be suspension of the clearance of the imported goods on the ground that they are violating the patent rights of the right holder, two issues need to be addressed namely; (a) Grant is valid (b) Imported goods infringed that patent. On the first aspect, he argued that validity of the grant cannot be adjudicated upon by the Dy. Commissioner of Customs who had neither power nor necessary withal or expertise to rule on its validity. 17. Insofar as second aspect is concerned, his submission was that examining the infringement was a very technical aspect which again could not be gone into by the Dy. Commissioner of Customs. In this behalf he tried to impress that in the instant case itself the appellant had placed on record 12000 pages to establish its patent rights, there was no mechanism with the Dy. Commissioner of Customs to examine the issue that patent was rightly registered and to compare it with so called infringing goods of the respondent and record reason to believe that there was such in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through a letter issued by speed post or through electronic mode of the suspension of clearance of the goods and shall state the reasons for such suspension. (3) Where clearance of the goods suspected to be infringing intellectual property has been suspended and the right holder or his authorised representative does not join the proceedings within a period of ten working days from the date of suspension of clearance leading to a decision on the merits of the case, the goods shall be released provided that all other conditions of import of such goods under the Customs Act, 1962, have been complied with : Provided that the above time-limit of ten working days may be extended by another ten days in appropriate cases by the Commissioner or an officer authorized by him in this behalf. (4) Where the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, has suspended clearance of goods on his own initiative and right holder does not give notice under Rule 3 of the Rules or does not fulfil the obligation under Rule 5, within five days from the date of suspension of clearance, the goods shall be released provided that all other conditions of import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended period under sub-rule (6), as the case may be, and within three working days or the extended period as provided in sub-rule (7) of this rule in the case of perishable goods, the right-holder or his authorized representative joins the proceedings, the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, having reasons to believe that the goods are goods infringing intellectual property rights and liable to confiscation under Section 111(d) of the Customs Act, may seize the same under Section 110 of the Customs Act. 20. The order was passed under Rule 7(1)(a) of the IPR Rules. This order could be passed on the satisfaction that the competent authority had reason to believe that the imported goods are suspected to be the goods infringing the intellectual property rights. After going through the complete text of Rule 7 of IPR Rules, it becomes clear that such an order for suspension of clearance of goods can be passed on the aforesaid belief either on the notes given by the right holder of the intellectual property rights or even by his own initiative. After the passing of the order of suspension the importer is to be informed about the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found that the goods detained or seized have infringed intellectual property rights, and have been confiscated under Section 111(d) of the Customs Act, 1962 and no legal proceedings are pending in relation to such determination, the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, shall, destroy the goods under official supervision or dispose them outside the normal channels of commerce after obtaining no objection or concurrence of the right holder or his authorized representative : Provided that if the right holder or his authorized representative does not oppose or react to the mode of disposal as proposed by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, within twenty working days after having been informed, or within such extended period as may have been granted by the Commissioner at the request of the right holder, not exceeding another twenty working days, he shall be deemed to have concurred with the mode of disposal as proposed by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be : Provided further that the costs toward destruction, demurra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /decision. As per Section 13(4) of the Act, the validity of a patent not guaranteed by the grant and there is no presumption in favour of the validity of the patent. [see M/s. Bishwanath Prasad Radhey Shyam (supra)]. 24. So far so good. However, what follows from the aforesaid is that when a patent holder files a suit for infringement, the defendant is given right to contend that such a grant was not warranted and that should be revoked. When a counter claim for revocation of patent is made the Court is to look into the same and this aspect would be considered while deciding the suit for infringement of patent filed by the patent holder and also while deciding the application for injunction. At this stage, the question which would fall for consideration would be as to whether it is necessary that this aspect is to be considered only by the Court through judicial pronouncements? To put it otherwise, whether the competent authority under the IPR Rules, 2007 is not competent to go into this question and, therefore, it is debarred from passing any order of suspension of clearance of goods sought to be imported merely because the case relates to the patent? As pointed out above, insof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... what is mentioned is that the Custom Officers has to exercise extreme caution at the time of determination of infringement of these three intellectual property rights . Thus, no doubt, it is emphasized that the case of patent violation may pose problem for Custom Officers and unless the offence has already been established by the judicial pronouncements and the Customs is called upon or required to merely implement such order, it would not pose any difficulty. Otherwise, there may be difficulties and in the absence of judicial pronouncement, extreme caution is to be exercised at the time of determination of infringement of such a right. It clearly follows therefrom that power of determination is not taken away from the Custom Officers in case of violation of patent right and even when there is no judicial pronouncements. The Custom Officer is asked to exercise extreme caution. 26. The position which emerges from the reading of Clause 4 can be summarized as under :- (a) In case of violation of Patents, Design and Geographical Indications, the determination of infringement may not be easy for the Custom Officers; (b) When there is already a judicial pronouncement deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ights as given in Annexure-I at this Commissionerate under Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007. The right owner has stated that 18 models listed in Annexure-II, of G Five brand of mobile phones infringes their intellectual property rights and has requested for the suspension of the consignments of above mentioned models of G Five brand of phones in accordance with IPR (Imported Goods) Enforcement Rules, 2007. Since the above said consignment contains models as listed in Annexure-II, clearance of the goods is suspended in terms of Rules 7(1)(a) of the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007. 28. We are of the opinion that on the facts of this case the learned Single Judge has rightly held that the aforesaid order does not disclose on what basis the Dy. Commissioner had entertained the reason to believe that the goods in question infringed the patent claimed by the appellant herein. 29. Thus, on this ground namely, the order of the Dy. Commissioner dated 30-3-2011 does not show any application of mind, we sustain the order of the learned single judge. However, we set aside that portion of the direction contain ..... X X X X Extracts X X X X X X X X Extracts X X X X
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