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Issues: (i) Whether the customs authorities had jurisdiction under the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 to suspend clearance of imported goods suspected to infringe patent rights even in the absence of a prior judicial pronouncement or civil court injunction; (ii) whether the suspension order dated 30-3-2011 disclosed the requisite "reason to believe" and application of mind under Rule 7(1)(a).
Issue (i): Whether the customs authorities had jurisdiction under the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 to suspend clearance of imported goods suspected to infringe patent rights even in the absence of a prior judicial pronouncement or civil court injunction.
Analysis: The Rules define intellectual property to include patents, and the scheme of the Rules applies uniformly to copyrights, trade marks, patents and geographical indications. Rule 7 authorises the Deputy Commissioner or Assistant Commissioner of Customs to suspend clearance where there is reason to believe that imported goods are suspected to infringe intellectual property rights. The mere fact that patent validity may be open to challenge in infringement proceedings does not exclude patent matters from the scope of the Rules. The circular relied upon by the respondents was read as requiring extreme caution in patent matters, not as withdrawing the customs authorities' power. The authority may act under Rule 7, and may in a complex case relegate parties to civil proceedings, but patent cases are not outside the Rule altogether.
Conclusion: The customs authorities do have jurisdiction under Rule 7 to act in patent cases, and a prior judicial pronouncement is not a precedent for suspension of clearance.
Issue (ii): Whether the suspension order dated 30-3-2011 disclosed the requisite "reason to believe" and application of mind under Rule 7(1)(a).
Analysis: Rule 7(1)(a) requires the competent authority to form a reason to believe that the imported goods are suspected to infringe intellectual property rights. The impugned order merely recorded that the right holder had registered patents and alleged infringement, and that the consignment contained the listed models. It did not set out the basis on which the authority formed its belief. The order therefore failed to reveal an independent satisfaction or the grounds on which the suspension was ordered.
Conclusion: The suspension order was not sustainable to the extent it failed to disclose proper reasons and application of mind, and fresh consideration by the customs authority was required.
Final Conclusion: The statutory power to suspend clearance in patent matters was affirmed, but the particular suspension order was set aside in part for want of recorded reasons, with a direction for fresh adjudication by the customs authority.
Ratio Decidendi: Patent disputes are not excluded from the customs authorities' power under Rule 7 of the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007, but any suspension of clearance must be founded on a recorded and reasoned "reason to believe" formed by the competent authority.
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