October 21, 2014

Practical Approaches to Brand Protection: Getting the Most from Border Measures

Roy Kornick, Partner, Head of Enforcement Practice
Roy Kornick

Partner, Head of Enforcement Practice

Gilat, Bareket & Co.

An effective brand protection strategy fights counterfeiting by taking enforcement measures at the border in addition to other measures. As brand protection is an ongoing effort and enforcement measures should be taken routinely, practical approaches that reduce costs and increase results can enable trademark owners to pursue these measures diligently and effectively. 

In recent years, border measures with the Israeli Customs Authorities have proven to be the most efficient means of stopping the importation of counterfeit goods to Israel and the Palestinian National Authority (PNA), and of significantly reducing the distribution of counterfeit goods in Israel. As most of the goods destined for the regions under control of the Palestinian National Authority (PNA) pass through Israeli entry points, such measures are effective for the PNA territories as well.

A service for Trademark Recordal does not exist as such in Israel. However, the Customs Authorities conduct random checks of shipments on their own initiative and notify a registered trademark owner’s representative on a detained shipment of suspected counterfeit goods. Trademark owners may also approach the Customs Authorities and request that shipments imported by a specific importer or exported by a specific supplier be detained.

Over the past few years, there has been an increase in the number of shipments detained by the Customs Authorities. This increase is the result of intensified efforts on the part of the Customs Authorities to facilitate better cooperation with trademark owners in order to improve anti-counterfeiting protection as well as the efforts of trademark owners to build and maintain a productive relationship with the Customs Authorities by following and encouraging customs procedures.

Notwithstanding these increased efforts, only a small percentage of imported shipments are inspected for the purposes of IP enforcement. In consideration of this, we recommend conducting training sessions with customs officials to familiarize them with the trademark owner’s brand and alert them to the possible importation of counterfeits. Such training sessions provide officials with the tools for recognizing imitations and infringements of the brand during random checks, thus increasing the number of detained shipments.

We also encourage trademark owners to obtain information from their local distributors regarding suspected importers of counterfeit goods, so that we may notify the Customs Authorities and detain future shipments by such importers.

In Israel, two IP procedures, prescribed by law (The Customs Ordinance), dictate how the Customs Authorities handle a detained shipment suspected of containing counterfeit goods: the regular IP customs procedure and the expedited IP customs procedure.

If the expedited procedure is implemented by the Customs Authorities, then the trademark owner has the option of pursuing the expedited procedure or the regular procedure. On the other hand, if the regular procedure is implemented by the Customs Authorities, then the trademark owner is restricted to pursuing the regular procedure. In other words, when the expedited procedure is implemented, both procedures are available, whereas once the regular procedure is implemented, selecting the expedited procedure is not an option.

Briefly, according to the regular IP customs procedure, the trademark owner must provide a bank guarantee or deposit in an amount specified by the Customs Authorities, which is returned in full once the matter is finalized. After the bank guarantee or the deposit is provided, the Customs Authorities disclose the identity of the importer, and then the trademark owner may file an action (a regular civil action with no interlocutory injunction) against the importer in order to continue the detainment of the shipment and ensure the destruction of the goods.

In the framework of the expedited IP customs procedure, the trademark owner must provide a signed Undertaking for Indemnification (“UFI”) along with a statement that the goods are counterfeit, upon receipt of which the goods are destroyed, thereby finalizing the matter. In this procedure, the trademark owner is not required to submit a bank guarantee or deposit, but the Customs Authorities does not disclose the identity of the importer.

Pursuing the regular procedure is generally the advantageous course of action for the trademark owner. By following the regular procedure and finding out the identity of the importer, the trademark owner has the opportunity to obtain information on the supplier and marketing chain, as well as an undertaking and compensation for costs from the importer, all of which facilitate the trademark owner’s ongoing, worldwide enforcement efforts.

However, if the quantity of goods is relatively low, or if learning the identity of the importer is not of major importance, the expedited procedure is recommended.

Our recommendation in many cases is to pursue the regular procedure and take advantage of the time period before the deadline to file the action in order to reach a settlement agreement with the importer. Negotiated effectively, the settlement agreement accomplishes the same objectives as a legal action. As a result, the trademark owner promptly finalizes the matter without having to file an action, reducing legal costs considerably.

A settlement agreement in these cases usually includes: the destruction of the goods, payment of the storage and destruction costs by the importer, an undertaking signed by the importer, and disclosure of information and documents regarding the supplier of the goods—all of which are highly important within the framework of global enforcement efforts. In nearly all cases handled following the regular procedure, we succeed in reaching a settlement agreement before the deadline to file an action.

This article is provided for general information only. It is not intended as legal advice or opinion and cannot be relied upon as such. Advice on specific matters may be provided by our group’s attorneys.

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