Many companies are familiar with this situation: no sooner has a product been successfully launched than pirate copies are thrown onto the market. If the product is protected by intellectual property rights (e.g. patents, design rights, trademark rights, copyrights), the question arises as to how these can be used to defend against pirate copies.
Often, civil litigation is thought of, i.e. the rights holder sues the companies responsible for producing the pirated copies and demands compensation for damages and an injunction against further infringements. However, the means of civil litigation are hardly suitable in very many cases: they are very expensive (risk of litigation costs), take a very long time and cannot be used efficiently if the infringers are domiciled abroad or there are difficulties of proof / lack of evidence.
It can be much cheaper and more effective to enlist the help of law enforcement agencies and customs. How is this possible?
All laws in the areas of intellectual property rights (Patent Act, Design Protection Act, Trademark Protection Act and Copyright Act) provide for criminal sanctions for the infringement of such property rights. Thus, if a company notices that its IP rights are being infringed, it can file criminal charges against the persons responsible for the infringement. Central to this purpose is that not only the manufacturer of products that infringe IP rights is subject to the threat of prosecution, but a relatively wide circle of co-participants, especially importers and sellers! Not only the resellers (shops) but also trading platforms such as Amazon and Alibaba (or their responsible employees) could also be exposed to criminal sanctions if they distribute the infringing products. Such distributors and middlemen usually are much more tangible than the (foreign) manufacturers.
The first step to be taken in the event of an IPR infringement is therefore always to issue a warning to these sales assistants, combined with the threat of criminal charges. Law enforcement authorities can also seize infringing products. For the middlemen, the possible sanctions are usually disproportionate to their profit, which is why they very often quickly cease their involvement. Such criminal sanctions are particularly feared in business because they are not primarily directed against companies, but against the responsible persons.
Customs is also a highly underestimated aid in practice in the case of infringement of IP rights. By the way, everyone can experience first-hand how effective it is: Who is not familiar with the street traders, markets and shops in faraway countries that offer countless pirated copies of various products, including Rolex watches, Luis Vuitton handbags, Nike trainers etc. etc.? It is very tempting to take such souvenirs home with you from your holidays. However, even private individuals are not allowed to import such pirated products, and customs are entitled to confiscate such products.
It is not only the owners of world-famous trademarks who can make use of this assistance from the customs authorities, but all owners of intellectual property rights, i.e. also owners of patents, designs and copyrights. It is not just a question of typical consumer goods, but also of industrial or commercial products, e.g. apparatus, medicines, chips, machines, etc.
What is the procedure for seeking the assistance of the customs administration?
The legal basis for the assistance of the Customs Administration was introduced on 1 July 2008 by expanding the provisions on legal protection in all intellectual property laws in Switzerland (but not uniformly for all laws):
– In the Trademark Protection Act (TmPA), the import, export and transit of commercially manufactured pirated products was prohibited even if they are not used for commercial purposes, i.e. for private use (Art. 13 para. 2bis TmPA).
– The same solution was inserted into the Design Protection Act (Art. 9 para.1bis DesPA).
– In patent law, however, import, export and transit were only prohibited if this serves commercial purposes, while the private import or use of a patent-infringing product is exempt from protection (Art. 9 para.1 lit.a. PatPA).
– In copyright law, the import, export and transit of copyright-infringing products for commercial purposes has always been prohibited (but not for private purposes). In Art. 75 ff. of the Copyright Act (CPA), a comprehensive regulation for the assistance of the customs administration was introduced.
Although the assistance of the customs administration in the enforcement of intellectual property rights is set out in Art. 75-77h of the Copyright Act, it also applies to the other intellectual property rights.
What can the customs administration do?
- On the one hand, it is authorised to notify the holder of the intellectual property right if there is suspicion of an infringement of the intellectual property rights. However, it is not obliged to do so. Such notifications are important information for the IP right holder.
- On the other hand, it examines IP right infringements at the request of an IP right holder.
What does the procedure to activate the Customs Adminitration look like?
The owner must submit a request for assistance in writing to the Directorate General of Customs in Bern. The request must include information on the IP right holder, a copy of the registration certificate or the document deposited with the Federal Institute of Intellectual Property, evidence of the infringement including distinguishing features between counterfeit and original goods and, if applicable, a list of authorised importers.
To cover any claims for damages by third parties against the Customs Administration, a declaration of liability must also be attached to the application. In justified cases, for example if there are doubts that the applicant is in a position to pay any damages, the Customs Administration may request a security to cover any claims for damages.
In addition, it must be requested what is to be done with the pirated products. The intellectual property right holder must explicitly request whether samples, specimens or photos of the seized products should be sent to him, whether goods should be destroyed by the customs administration after the expiry of the intervention period and whether the customs administration should also retain those goods that pass through customs for private purposes.
Not only Swiss companies can claim the assistance of the customs administration with an application, foreign companies can do so as well. If the applicant is domiciled or resident abroad, the Customs Administration expressly requires that a representative domiciled in Switzerland be appointed and duly authorised. The representative’s power of attorney must also be submitted with the application.
The submitted application for assistance is examined by the Directorate General of Customs and either returned to the applicant for improvement or transferred to the internal information system (“Intra Customs”). The customs offices then try to detain the suspicious goods and report detentions to the applicant as well as to the other party.
Three different scenarios follow:
- if there is a request for destruction, the goods are destroyed, provided there is no objection from the opposing party.
- if the applicant does not act, the customs office must release the goods.
- if the applicant acts by obtaining precautionary measures or a civil or criminal judgment from a court, the customs office destroys the goods or releases them in accordance with the judgment.
Finally, the customs administration invoices the fees. Two different fees are charged to the applicant. On the one hand, there is the fee for processing the application, which amounts to between CHF 1500 and CHF 3000, and on the other hand, fees are due as soon as the customs offices detain goods on the basis of the application.
The application is valid for two years; before the expiry of the period of validity, a renewal can be requested from the Directorate General of Customs.
Normally, the seizure or destruction of the products will have a sufficient deterrent effect. But also the information obtained by the customs authorities is also important, as it shows the parties involved in the transaction: manufacturer, consignor of the goods, consignee, transporters, etc., or the very fact that the infringing products were to be brought across the border – the customs authorities are virtually a “radar” for the IP right holders here. This information can be very useful for further criminal and civil proceedings.
In summary, it can be stated that in Switzerland there are defence options for holders of intellectual property rights against the import, export and transit of counterfeits and unauthorised copies. The Federal Customs Administration provides assistance in this regard, although it should be noted that this is only done upon request and that corresponding fees, which are not entirely insignificant, are charged. Compared to civil proceedings, however, this procedure has immense advantages, especially because enforcement is at least partially anticipated: The products that infringe IP rights are immediately seized. This already leads to serious disadvantages for all those involved in the distribution of these products. For example, they may not be able to meet promised deliveries, they may not have any revenues even though they have already paid for the goods, etc. This leads to serious disadvantages. The seizure is also a clear warning for each party that they may be participating in an IPR infringement and exposing themselves to legal sanctions. In the event of repetition, they would hardly be able to take the stand in later proceedings (criminal proceedings, civil proceedings) that they had assumed in good faith that the distribution of the products was permissible.
The system of assistance by the customs administration is described here only for Switzerland. Abroad, it is important to use the mechanisms that also exist there.
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