From China to Iran, via Dubai - transnational cooperation leads to the tracking and seizure of counterfeit product
Our Hong Kong office coordinated the tracking and seizure of a large shipment of counterfeit electrical goods being shipped from China to Iran via Dubai.
Background
On December 30th 2003 , Shanghai Customs telephoned our Shanghai office, as it was the registered agent for Customs Intellectual Property Recordation purposes for a well-known electrical goods company. Customs had detained three containers of electrical goods marked with a trade mark that was identical to the well-known mark, save for the reversal of two letters. Pronunciation of the marks would have been similar and we believed the trade mark had been infringed.
Under Chinese Customs Law, Intellectual Property holders are required to provide a bond equal to the value of the goods detained. Customs calculated the value of the goods at US$38,000. Unfortunately, because of the size of the consignment and the fact that it was New Year and most of the client's offices were closed, it was not possible to provide the bond before the 2 January deadline. Although the law provides for a 10 day period within which to notify the Intellectual Property owner, in practice it is not unusual for only two or three days notice to be given.
Investigations
Our investigators obtained shipping documentation identifying the consignee of the goods. It appeared that the shipping route would be from Shanghai to Singapore where the goods would then be moved onto a different vessel in which they would be shipped to Dubai and then on to Bandar Abbas in Iran .
Action
Singapore Customs will not take action against goods held in transit. However, there have been several cases where the Singapore Criminal Courts have issued Warrants enabling the Police to enter the Customs Zone and seize goods that are being transhipped. This has only been done in cases of counterfeiting and where the goods had been taken off the vessel and stored on the dock side.
Lawyers in Singapore were, therefore, instructed to draw up the papers and an Affidavit sworn by a Rouse manager verifying the events that had taken place. This Affidavit annexed a copy of the sample packaging which had been sent to our office by Shanghai Customs, copies of the Trade Marks Certificates and the faxed Power of Attorney (with the original to follow by courier). The night before the application was due to be made to the Singapore Court , the investigators reported that the shipping route had changed. Now, the goods would no longer be transferred to another vessel at Singapore , but would continue on the same vessel direct to Dubai . We speculated that perhaps the consignee or consignor had been made aware of the detention in Shanghai and that the route has been changed as a result.
Our office in Dubai was then instructed to take up the case. On a Moslem public holiday, it made contact with the Director of Customs by phone, who confirmed orally that he would be prepared to stop transhipped goods. The following week, the goods were duly seized by Dubai Customs, under instructions from our Dubai office, in the Jebel Ali free zone in Dubai .
Subsequently, the Iranian consignor travelled over from Iran to request the release of his goods. At this point, Customs was unsure what to do. There are no clear procedures applying to the seizure of infringing goods in transit. We then entered into a dispute, through Customs, with the consignor, who eventually had to return to Iran . However, this presented a problem for Customs. It could not destroy the goods in Dubai – not only because the goods were in transit, but also because it is difficult to destroy such goods in a desert environment. The situation was made worse by the fact that Customs feared it may be sued by the consignor.
Eventually our client paid for the onward shipment of the three containers to Germany where the goods were destroyed.
Comment
This case demonstrates both the significant difficulty of transnational enforcement and ways in which the barriers to enforcement in developing countries can be overcome.
We were able to succeed because of our transnational enforcement experience, strong coordination and management skills (here, the case was managed by our Hong Kong office) and our presence in both China and Dubai .
