Measures Taken Against Counterfeit and Pirated Goods at Japanese Customs

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Measures Taken Against Counterfeit and Pirated Goods at Japanese Customs

By David E. Case and Joshua Nussbaum, White & Case LLP - 09/21/2010
The entry of counterfeit goods in the Japanese marketplace has become a significant threat to Japan's overall economy. Counterfeit imports have caused financial losses for intellectual property right holders, manufacturers, and importers across all industry verticals. In one study conducted by the Japan Patent Office (JPO) in 2009, the percentage of companies having sustained damage from counterfeits for fiscal year 2008 was 24.9%, up 0.9% points from the previous fiscal year.

In our experience, counterfeit imports from other parts of Asia, in particular China, appear to be particularly problematic. We have found that by working closely with Japan Customs Authorities (Customs) we have been able to stem the flow of counterfeit goods to the great benefit and satisfaction of our clients.

Customs can stop the importation of products that infringe a trademark, utility model, design, or patent registered or issued in Japan. To do so, the aggrieved person must be either (i) the owner of such registrations or issuances or (ii) hold the exclusive license. Copyrights do not need to be registered in Japan for Customs to act and copyrights registered in the United States may be submitted as evidence of ownership.

Customs may also stop the importation of unregistered intellectual property based on the Japanese Unfair Competition Prevention Law (UCPL), but this is more difficult than with registered intellectual property due to the added burden of proving to Customs that the feature, mark, logo or design to be protected is protectable under Japanese law. For intellectual property that is applied for, but unregistered, this is an option worth pursuing in some cases.

Japanese law also offers rights holders the preemptive ability to request Customs to "suspend" (i.e., enjoin) the entry of counterfeit goods into Japan. The application does not have to be made with respect to specific goods, but may be a general application. Based on this general application, if Customs comes to learn of suspected counterfeit goods entering the country, it will stop the goods and contact the importer and the rights holder regarding shipment. The rights holder is then invited to inspect the goods to determine authenticity.

To make a suspension request, a rights holder would need to apply for prospective importation suspension by submitting evidence establishing a case for prima facie infringement to the Director General of Customs. As part of this process, rights holders must complete Customs Form C5840, which can be submitted to Customs without charge. The C5840 form must specify, among other the things, the nature and scope of the rights that would be infringed (i.e., patent, trademark, design right, copyright, etc.), biographical information of the rights holder and if known the surmised importer's or foreign exporter's identities and addresses, a description of possible or likely infringing articles, and an explanation listing the how the genuine articles can be distinguished from the infringing articles.

The rights holder must also prepare additional supporting documentation to accompany the submission of the C5840 form, such as a certified copy of the registered right, documentation or items that can be used by Customs to help identify pirated or counterfeit goods, material related to foreign or domestic court decisions, provisional orders, or patent office determinations demonstrating that the articles subject to the suspension motion infringe upon intellectual property rights, and a the written expert opinion from a Japanese lawyer ("bengoshi") or patent attorney ("benrishi") detailing how the articles subject to the suspension motion infringe upon the rights holders intellectual property rights.

Customs also encourages holding preliminary discussions to go over the nature of the suspension request and to confirm that the requisite information has been properly compiled. In addition, to appoint a law firm to act on a rights holder's behalf in regards to import suspension matters (and other anti-counterfeiting measures) or the submission of C5840 forms, or both, it is necessary for the rights holder to sign and date one or more Power or Attorney forms.

If Customs discovers suspect goods during the term of import suspension, the Director General of Customs will first deliver a Notice of Identification Procedure Commencement (ID Procedure Notice) to both the rights holder as well the importer to the effect that an identification procedure will take place with respect to the suspect goods.[1] The ID Procedure Notice will contain the number and date of the import declaration, the name of the suspect goods, the number of suspect goods identified, the reason why the identification procedure has been commenced, and the specific intellectual property rights that may be being infringed.

The rights holder will be given the opportunity to submit written arguments and further evidence explaining why it believes that the suspect goods are counterfeit, and the importer will be given the opportunity to explain why it believes the goods are genuine.

Customs may order the rights holder to post a security bond to compensate the importer for damages if it is determined that the suspect goods do not infringe upon the rights holder's intellectual property rights. But the rights holder will receive a refund if Customs determines that the suspect goods are counterfeit.

If Customs determines that the goods do in fact infringe upon the rights holder's intellectual property rights, Customs may confiscate or destroy the goods or order the importer to reship them.[2]

To learn more about the prevention of counterfeiting in Japan, remedial measures that can be taken and the long term strategy to protect against counterfeiting, click here to view video.

[1] See Customs Act Article 69-12 Paragraph 1.

[2] See Customs Act Article 69-11 Paragraph 2.

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