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Seizures by Brazilian Customs: the intellectual property issue

In Brazil, customs procedures involving withholding and seizure of products infringing trademarks still generate discussions, specially among Brazil Federal Revenue Service civil servants, in charge of control and inspection of customs activities. The main conflict point is placed under discussion among those who understand a court order is necessary for the effective seizure of provenly counterfeit products, in this case, requiring the proposition of court order by the holder of intellectual property rights, and those who understand being applicable to the ex officio seizure, once counterfeit is confirmed.

Regardless of guidelines established by TRIPS, in Brazil, the Ministry of Finance Ordinance no. 430, dated October 09, 2017, which created the current Internal Regulation of Brazil Federal Revenue Service Office (RFB), sets forth, among other subjects, RFB's purposes, which include management, oversight, guidance, coordination and execution "of the customs administrative, inspection and control services, including regarding customhouse of areas and warehouses", in addition to planning, coordination and execution of activities of "enforcement action against smuggling, embezzlement, counterfeiting and piracy, illegal trafficking of narcotics and similar drugs, international firearm trafficking and money laundering or assets, rights and values concealment, observing the specific jurisdiction of other agencies."

The Internal Regulations of Brazil Federal Revenue Service Office also sets forth, expressly, as one of its purposes, the execution of agreements between RFB and "agencies or entities of the Public Administration and public or private liability entity, to exchange information, rationalize activities, development of shared systems and performance of joint operations." Upon including the execution of agreements into frameworks described above within RFB purposes, the standard not only authorizes, but also fosters interaction and the implementation of cooperation instruments both between different public agencies and entities, and between organizations representing the private sector, in order to fight against illegal products market and unfair competition.

Such instruments enable the interaction between public agents and intellectual property holders, so as possible infringements may be quickly proven, providing assistance for the customs authorities action, in order to inhibit the spreading of counterfeit products in the market. In our opinion, once confirmed the counterfeit of the product object of import, measures for the effective seizure of cargo and imposition of penalty of forfeiture through the filing of an administrative procedure by RFB proves legitimate, possibly mandatory.

One should consider that the action of the State in the course of customs procedure is supported in Brazil Federal Revenue Service Office's own Internal Regulations, being unquestionable the compliance with the competences assigned to it by the standard. Participation of the intellectual property rights holder for the legitimate proof of infringement of such rights proves to be of paramount importance, once the suspected cargo is withheld for verification, whether by an act practiced de officio by the customs authority, upon facing products presenting evidence of illegality, whether by request presented by the holder of the right infringed or even by its licensed, in that directly impacted by unfair competition, when having information leading to the previous identification of cargo containing counterfeit products.

Thus, it is important to provide customs authority with easy access to the intellectual property rights holders or to their representatives in national territory.

Particularly in the case of infringement of right on a brand or false indication of origin, the authorization for seizure by an official act of the customs authority is provided for in Law 9,279/96, in its article 198. Although there still is a certain questioning by those who construe said provision of law in a different manner, such understanding has already been repeatedly confirmed by the Judiciary, both in the court of appeals and by the Superior Court of Justice, thus providing legal certainty for practicing the official act by the customs authority in order to seize counterfeit products in customs traffic course. In addition, it is emphasized in the Superior Court Notice 0392 the legitimate exercise of national sovereignty in the enforcement of this country's legislation by the Brazilian authority, even if in situations of products intended for other countries, in transit through the national territory.

The bases for seizure of counterfeit products in customs proceeding course by an official act of the customs authority, once confirmed the infringement of intellectual property by its holder, reach well beyond that. The Paris Convention for the Protection of Industrial Property, as revised at Stockholm on July 14, 1967, impose that the product illegally bearing a "trademark or trade name shall be seized on importation into those countries of the Union where such mark or trade name is entitled to legal protection", reinforcing the legitimacy of the Brazilian customs authority to proceed with the seizure.

The decision regarding the forfeiture of the good is also based on the RFB Normative Instruction no. 1169, dated June 29, 2011, which "sets forth special procedures of control, in the importation or exportation of assets and goods, upon suspicion of irregularity punishable with penalty of forfeiture." In the same direction of the provisions in article 689, item VIII of Decree 6.759/2009, the article 2, item II of the abovementioned normative instruction sets forth the enforcement of the forfeiture penalty in case of suspicion regarding the "fraud or tampering of an essential characteristic of the good", which is susceptible to confirmation, in the cases of infringement of intellectual property, by the holder of said right.

The seizure by an official act of the customs authority and the enforcement of forfeiture penalty of the good, once confirmed the infringement of intellectual property rights, are also supported by the fact of it constituting a prohibited import, finding legal basis on the provisions in article 2, item III, also from RFB Normative Instruction no. 1169, dated June 29, 2011, and in article 692 of Decree 6.759/2009, facing the characterization of conduct considered a crime against the intellectual property, and the material object of the crime, that is, the counterfeit good.

The arguments for RFB action in order to inspect and hinder the inflow of counterfeit products in the national market may be found in the concept and definition itself, institutionally presented by said national agency regarding customs control, which aims at safeguarding Brazilian society safety. The low quality and risk to the population health and safety, inherent to counterfeit products motivates the action of public agents, in order to ensure fairness and safety in the market.

Nevertheless, although there are sufficient arguments for the seizure of counterfeit products by customs authorities being performed ex officio, without the need of a court order, there is the construction regarding the enforceability of the proposition of measures before national courts to ensure the seizure of counterfeit products withheld in Brazilian customs. Oftentimes, this obligation is imposed to the intellectual property rights holder at different moments, entailing the treatment of similar cases in diverse manners. Occasionally, the measures to be taken in cases of importation of counterfeit products to hinder its inflow in the Brazilian market depend on the location, harbor and situation in which the goods have been found, on the confirmation of other illegalities, such as tax crimes and forgery of documents, related to the process of import and, finally, on the judgement and understanding of those who conduct the fiscal administrative proceeding initiated before RFB.

In this scenario, it is highly recommended the maintenance of updated records before customs authorities, so as they are able to easily contact the intellectual property rights holder or its representatives, in order to obtain the necessary information for the regular development of control and inspection works, as well as to request the necessary measures to prevent imported counterfeit products from entering the Brazilian market, causing irreparable damages for both customers and intellectual property rights holders.