SOUTH AFRICAN INSTITUTE OF INTELLECTUAL PROPERTY LAW
SUBMISSIONS ON THE DRAFT REVENUE LAWS AMENDMENT BILL, 2007
Background: Who we are
The South African Institute of Intellectual Property was
established in 1954 and represents some 140 patent attorneys, patent agents and
trade mark practitioners in
Intellectual Property Law embraces the law relating to
patents, trade marks, registered designs, copyright and unlawful competition
(passing-off of trade secrets). It also includes litigation, licensing, franchising
and anti-counterfeiting measures.
The SAIIPL is widely regarded as the custodian of South
Africa's intellectual property rights, and comprises practising attorneys,
academics, practitioners in businesses and other parties and persons interested
in the protection and enforcement of intellectual property rights.
The members of the SAIIPL represent the majority of
national and international businesses who have built their businesses on
brands, innovation and technology, and who protect their interests through our
country's intellectual property laws.
Our objection to the Draft Revenue Laws Amendment Bill
Our objection is aimed at Chapter XB of the draft bill
which relates to powers, duties and procedures in connection with counterfeit
goods. We submit that certain of the provisions contained in this Chapter will,
if promulgated, conflict with existing legislation, namely, the Counterfeit
Goods Act of 1997.
In addition, we submit that certain of the provisions will
create practical difficulties which will hinder the effective prevention of
counterfeit goods entering the country, instead of achieving the stated goal of
the proposed legislation, which is improving control over counterfeit goods.
The Counterfeit Goods Act of 1997
The Counterfeit Goods Act of 1997 (the "CGA") is
the primary Act governing measures aimed against the trade in counterfeit goods
in
Some of the relevant procedures proscribed by the CGA are
as follows:
·
an interested person may apply to the Commissioner for
Customs & Excise to seize and detain all counterfeit goods entering South
Africa which bear its intellectual property right (Section 15 of the
CGA);
·
inspectors in terms of the Act (which includes the
Commissioner for Customs & Excise and Customs officers) must obtain a warrant
to seize, detain and remove counterfeit goods;
·
if goods are seized without a warrant, the inspector must
apply to court for confirmation of the seizure within 10 days of the seizure;
·
seized goods must be removed to a counterfeit goods depot
which is designated as such by the Minister of Trade & Industry, which is the department,
under whose control the Act falls;
·
the complainant or prospective complainant has three days
after the seizure within which to lay a criminal charge against the
counterfeiter (in the case of goods entering the country, this is the importer);
·
the seized goods must be released if the State does not
give notice of its intention to prosecute the offender or if the Complainant
does not give notice of its intention to institute civil proceedings against
the offender within 10 days of the seizure and/or if the criminal/civil
proceedings are not actually instituted within 10 days after that date of the said
notice.
In practice, the way in which Customs & Excise currently deals with the
prevention of the importation of counterfeit goods is: where an application
has been made and approved in terms of Section 15 of the CGA to
detain suspected counterfeit goods bearing the subject matter of a
right-holder’s intellectual property right, goods are detained in terms of Section
113A of the Customs and Excise Act to determine whether the goods so
detained are counterfeit. The relevant officer then sends a sample of the suspected
counterfeit goods to the right-holder or its representative and allows the
right-holder 5 working days after receipt of the sample to file an affidavit
confirming the goods to be counterfeit. This period can be extended on good
cause shown.
Once an affidavit has been filed, Customs & Excise
obtains a warrant from a Magistrate or Judge and then proceeds to
seize the goods in terms of the CGA. The goods are then removed to a
Counterfeit Goods depot and the right-holder and the SAPS take matters further
through the specific provisions set out in the CGA, ensuring that all
of the procedural steps are complied with.
This procedure has received approval from the Full Bench of
the Transvaal Provincial Division in the matter between The Commissioner for the South
African Revenue Service and another - vs
– Sterling Auto Distributors CC . The court, per Smit, J, in a
careful exposition of the provisions of the relevant Acts, found it important
to distinguish between the procedures of “detention” and “seizure”. It was established that provision is made in
the Customs & Excise Act for the detention of goods in order to determine
whether the goods in question must thereafter actually be seized or released
once the officer’s investigation of the goods is complete. There is also a duty
on the officials who detain goods not to allow the goods to be released until
they are satisfied that the relevant provisions of the Customs and Excise Act
or any other law have been complied with.
Smit,
J also quoted authorities which supported the point that Customs officials must
be given the opportunity to detain suspected counterfeit goods without
affording a prior hearing to the importer. The initial detention affords the
Customs official an opportunity to investigate the matter before finally
seizing the goods, should such a seizure prove warranted. If the Customs official receives an
affidavit from the right-holder confirming that the goods are counterfeit, this
gives him/her sufficient cause to continue detaining the goods until such time
as a warrant has been obtained for the goods to be seized.
Proposed Revenue Laws Amendment Act
Bearing in mind this already existing piece legislation (which has
been used extensively by Customs & Excise, the South African Police Service
and the Department of Trade & Industry to seize counterfeit goods), we
submit that any provisions relating to counterfeit goods within
the Customs & Excise Act must be in line with the provisions of
the CGA and not in conflict, or at variance, with them. If not, then
a conflict of laws could arise.
In that regard, the proposed amendments to the Customs
& Excise Act appear to create a procedure which is in some respects a
duplication of the procedure envisaged by the CGA but which differs in
certain other material respects. The procedure envisaged
by Chapter XB is as follows:
·
a right holder may apply to the Commissioner to detain
goods under customs control suspected of infringing the holder’s intellectual
property right (Section 78B) – this appears to duplicate the
procedure provided for in Section 15 of the CGA;
·
where an officer examines goods entering the country and
has reasonable cause to believe that the goods are prima facie counterfeit goods, he must, where
an application in terms of Section 78B has been approved, detain the goods.
Where no application in terms of Section 78B has been approved, he must inform
the right holder and give him/her an opportunity to make an application in
terms of Section 78B;
·
upon detention of the prima facie counterfeit goods, the officer must
inform the right holder and the importer/consignee of the detention and furnish
the right holder with a sample of the goods (Section 78C);
·
where the right holder wishes to institute criminal
proceedings, he may lay a charge with the South African Police Service (Section
78D(1) – but no time limit is imposed on the right-holder within
which to do so);
·
if the right-holder wishes to institute civil proceedings,
he/she must deliver to the Commissioner and the affected party (ie. the
importer/consignee) a written notice that he/she intends to apply to Court for
a determination that the goods detained are counterfeit goods (Section 78D(2) – no affidavit is
required);
·
within a period of 10 days after delivery of the said
notice, the right holder must apply to court for a determination and order that the goods are
counterfeit (the words “counterfeit goods” have the meaning assigned to them in
the Counterfeit Goods Act);
·
the goods detained must be removed to a counterfeit goods
depot (as defined in the CGA) not later than one day after the date of the
notice contemplated in Section 78D(2);
·
where the right holder fails to institute the said civil
proceedings within the 10 day period, the person in charge of the depot must,
at the request of the Commissioner, release the goods to the affected party.
We submit that the above procedure conflicts with the
CGA in that:
·
the definition of “right-holder” does not accord with the
group of persons who are entitled to take action in terms of section 3 on the
Counterfeit Goods Act;
·
the procedure envisages a detention which then continues indefinitely,
provided the right-holder states its intention to apply to court for a
determination that the goods are counterfeit and then institutes the said
proceedings. Such an application could take months, or even years, before it is
heard by a court. The detention therefore, in effect, becomes a seizure;
·
this effective seizure of the counterfeit goods is conducted without a warrant or any subsequent
confirmation of the seizure, as is prescribed by the CGA, which we submit is
contrary to law and the Constitution;
·
a right-holder can initiate such a “seizure” by means of
writing a simple letter. It does not need to satisfy the person seizing the
goods that they are counterfeit by stating so under oath and providing reasons
for the conclusion;
·
the goods are to be moved to a counterfeit goods depot on
the initial detention of the goods, or if the rightholder has not made such
arrangements, by the Customs officer at the right holders expense. These depots
are not under Customs control. Counterfeit Goods depots may only be used, once
goods are seized in terms of the Counterfeit Goods Act.
·
the CGA provides for a criminal complaint to be lodged
within 3 days after the date of the seizure notice. The inspector is
governed by section 7(2)(b) of the CGA in this regard. This section conflicts
with 78D(1);
·
the proceedings contemplated, given that the definition of
“counterfeit” is as defined in terms of the CGA must, of necessity, be
proceedings in terms of the CGA. However, such proceedings cannot be brought
unless the provisions of the CGA have been complied with (certain notices
issued and other procedural steps taken etc);
·
reference is only made to an “application to court” whereas
proceedings in terms of the CGA are not limited to applications only. In
practice, such proceedings are generally brought by way of action;
·
no provision is made for the right-holder to be able to
lodge a criminal complaint only. If civil proceedings are not instituted, the goods will be
released. By contrast, the CGA specifically makes provision for a
right-holder to choose to lay only a criminal complaint;
·
under 78D(5) it is contemplated that the goods on a request
of the Commissioner must be released from the Counterfeit goods depot to
the affected party. SARS has no control of these depots and a request this can
only be as the depots are not answerable to SARS where the depots are
designated and administered by the Department of Trade and Industry.
Although not expressly stated, the proposed amendments
therefore appear to be subject to possible amendments to the CGA.
This is problematic because, firstly, we believe that
without seeing the proposed amendments to the Counterfeit Goods Act, it is
impossible for a decision to be made on the appropriateness and
legality or otherwise of the proposed amendments. These amendments cannot be assessed in isolation, outside
of their context. Secondly, as the amended Chapter XB is drafted, no provision
is made stating that this chapter will only come into operation on a date to be
determined and/or subject to certain amendments to the Counterfeit
Goods Act.
Thirdly, even if the CGA is amended so as to exclude any reference
to Customs & Excise (ie. so that Chapter XB of the Customs & Excise Act
becomes the only legislation dealing with Customs powers to stop counterfeit
goods), we submit that the amended Act will still conflict with the CGA
insofar as, for example, a right-holder will be required to bring
proceedings in terms of the CGA without the various procedural requirements of
that Act having been met.
Further Objections : Time Periods
The Chapter envisages that a detention will arise when the
goods have been examined. Samples will be drawn and sent to the right
holder. The time period stipulated in the Chapter for the right holder to take
action is 10 days from the date of the detention. The sample will only be sent
after the detention notice has been issued and, depending from which border
post it is to be sent and the nature of the sample, we are concerned that
it may take more that 10 days to reach the right
holder. Often a sample needs to be examined in a foreign country, especially where the
nature and sophistication of counterfeits has improved. This process,
using courier services and with no delays, may easily result in the right
holder not being able to give the required notice within
the 10 days, as prescribed. There may also be situations where that right
holder's expert is unavailable. No provision in terms of 78D(2) is made for
extensions on good cause shown, as is a fundamental principle of our law.
A possible amendment would be to calculate the time period
for lodging the letter from the date of receipt of the sample. Either way,
provision should be made for extensions.
In addition, it is unclear who will pay for and arrange the
dispatch of such samples. The onus as it stands is on SARS at their cost.