JAHANZAIB WAHLAH, MEMBER JUDICIAL-III.--- Through this order , I intend to dispose of Customs Appeal bearing No. K-1144/2019 directed against the Order-in-Original No.09/2019 dated 26.08.2019 passed by. Additional Collector-II, Karachi.
2. Brief facts leading to the above case are that, on receiving information under rule 682 of the Customs Rules, 2001 from MCC, Appraisement (West), Karachi vide letter No.SI/Misc/1 18/2019-VI dated 22.06.2019, the Directorate of IPR-Enforcement-South (hereinafter) called the "Directorate") vide Seizure Report No.19/2019 dated 28.06.2019, reported that Messrs Nafees Traders, Room No.FF-253, Deans Trade Centre, Peshawar (hereinafter "the importers") have imported "281100 dozens of "Tonosheba" battery cells, aggregating to 3,373,200 pieces bearing mark "Tonosheba" and sought clearance thereof vide GD No.KAPWHC-178106 dated 17.06.2019, against the declared value of Rs.1,317,929 (assessed a Rs.1,986,533). The goods being deceptively similar to the registered trademark "TOSHIBA" were detained by the Directorate in terms of Rule 682 of the Customs Rules, 2001, for alleged violation of section 15 of the Customs Act, 1969 read with applicable trademark laws.
3. The directorate vide letter F.No.204 /Tonosheba-IPRE(S)/2019 dated 24.06.2019 informed the authorized representative of Messrs Toshiba Corporation, having registered office at I-I, Shihaura I-chome, Minato-ku, Tokyo 105-8001, Japan ('Right holder') registered the import of the infringing goods in Pakistan. The rights determination proceedings were carried out by this Directorate on 26.6.2019, by associating the right-holder , importer and the customs examination staff The right holder tendered written confirmation trademark "TOSHIBA" through its counsel, i.e. Messrs Marvi Bhutto, Advocate. The owner of the goods did not submit any counter-reply in the case. a) The right-holder presented documentary evidence on being the registered proprietor of the trademark "TOSHIBA" in Pakistan, whereas the owner of the goods failed to establish any right to the trademark 'TONOSHEBA'. The gist of pleadings by the right-holder was that it enjoyed exclusive rights in the trademark "TOSHIBA" in Pakistan, and that "TONO SHIBA" is deceptively similar to it. As such, "TONOSHEBA" constitutes infringement of its trademark "TOSHIBA" by being deceptively similar to the later. The right-holder established its credentials to the proprietorship of trademark "TOSHIBA" within the meaning of section 2(xxxiv) of the Trade Marks Ordinance, 2001 and pressed its exclusiv e claim to the said trademark in terms of section 39 ibid. The aforesaid contention was backed up the trademark registration certificate No.55127 issued by the Trade Mark Registry , Karachi, Pakistan.
The owner of the goods failed to rebut the above-said factual details, nor could establish any legal right to the false trade description "T ONOSHEBA".
4. Show cause notice issued and the case was adjudicated by the Learned Additional Collector-II, Karachi who passed an Order-in-Original No.09/2019 dated 26.08.2019. The operative part of the impugned order reads as under:- "I have gone through the case record and have given due consideration to the verbal and written arguments put forth by the complainant, importer and the seizing agency . The importer through his legal counsels objected to the manner of seizure made by the seizing agency . This, however , is beyond the mandate of instant proceedings to examine the propriety of the action initiated by the Directorate of IPR Enforcement (South). This judgment and proceedings held by the undersigned are restricted only to examine and decide as to whether or not the determination of infringement made by the Directorate of IPR Enforcement (Sou th) and subsequent seizure of goods under Rule No.681(4) of Custom s Rules SRO 450(1)/2001 dated 18.06.2 001 is justified. To that extent, ample opportunities were afforded to the importer and his representative to justify his position. In response the major argument from the respondent's side has been that applicant is not right holder of Toshiba Battery Cell and also raised objection on acceptance of application by DGIPR without fulfilling requirement in terms of SRO 170(1)12017 and produced the case law in support of his contention. He further argued that their goods TONOSHEBA though not registered in Pakistan, yet the registration is not mandatory for import of any goods in Pakistan."
The point to be decided in the instant proceedings is whether the imported goods bearing trademark TONOSHEBA can be termed as infringing goods being deceptively similar to the Trademark allotted to Messrs Toshiba Corporation. After a thorough scrutiny of record, and listening to the arguments put forth by the applicant, defendant and the seizing agency , I have reached to the conclusion that the impugned goods carry a false trade description within the meaning of Section (xviii) (a-c); are deceptively similar to a Registered Trademark within the meaning of section 2(xii); and therefore are infringing goods within the meaning of section 49(1)(a) of the Trademark Ordinance 2001. The act of import by the respondent, therefore, constitutes infringement under sections 40(2) (b), (3) (a) and 5 of the Trademarks Ordinance 2001. Thus the importers have violated sections 15(C), 32(1),
(2) and 79(1) of the Customs Act, 1969, read with para-5(A) (V) of Import Policy Order , 2016. Moreover , the procedural requirements in terms of rule 682 of the Customs Rules, 2001, were found to be completed by the applicant. Keeping in view the factual and legal position as narrated above, the charges levelled in the Show Cause Notice against the importer are established, therefore, in exercise of powers conferred upon me under section 179 of the Customs Act, 1969, read with clause 9 of section 156(1) ibid, I hereby order for outright confiscation of the impugned goods and impose a personal penalty of Rs.25,000/- each on the importer and the Clearing Agent.
5. Being aggrieved and dis-satisfied with aforesaid impugned order passed by the Additional Collector-II, Karachi.
The appellant filed the instant appeal before this Tribunal on the relevant grounds as under: A. That the Rules 680 to 682 of the Customs Rules, 2001 dated 16.03.2017, require that the Intellectual Property Right Holder having valid ground for suspicion to the effect that imported goods are infringed, may approach Directorate of IPR Enforcement abut in this case goods were first detained un-lawfully without any complaint by the Right Holder of "TOSHIBA" brand thereafter a complaint was generated by Model Collectorate of Customs-W est, Karachi and then Director IPR Enforcement seized the, goods and forwarded seizure report to the Model Customs Collectorate of Customs-W est, Karachi. Section 15 of the Customs Act, 1969 empowers customs authorities to take legal action against those goods which have been imported "having applied thereto a counterfeit trade mark" or a "false trade description". In this case the allegation is that the goods imported are deceptively similar to the registered trade mark "TOSHIBA". Consequently the adjudication officer was obliga ted to first examine whether the imported goods carry counterfeit trade mark or false description but no such discussion or finding to that effect can be found in the Order-in-Original. The allegation that the imported goods are "desceptively similar" to a trade mark does not mean that "counterfeit trade mark" or false description" has been applied to the imported goods. Unless this question is determined first the legal jurisdiction of customs authorities is ousted by the facts of the case as the allegation of goods being "deceptively similar" is not mentioned in section 15 of the Customs Act, 1969.
B. On 28.06.2019, seizure report No.19/2019 was issued without holding any joint hearing required as per Rule 681(3) which is a mandatory for identification of infringing goods. No hearing notice was issued by the Directorate IPR Enforcement nor they had provided copies of formal infringement complaints and other necessary legal documents required for lodging as infringement complaint as per the provisions of SRO 170(1)/2017 dated 16.03.2017 to verify whether all the legal requirements as per the Customs Act, 1969 and Customs Rules, 2001, were duly complied by Directorate of IPR-Enforcement (South) before putting the hold on the instant consignment.
C. That the seizure was unlawful and uncalled for as it clearly violates the rules laid down in SRO 170(1)/2017.
TONSHEBA is visually and phonetically completely different from TOSHIBA and there are least chances of confusion and deception. Application No.55127 is a work mark and only effective for applied goods only. The Trade Dress is not a registered Trade Dress and can be used by anyone without any legal objection and hindrance. No security deposit of Rs.500,000/- which is a mandatory requirement as per Rule 680(4) of SRO ,170(1)/2017 was submitted by the complainant, which has been deposited in shape of bank guarantee after a lapse of One and a half month which shown the disinterest of the complainant and to the fact that the impugned product did not pose any threat to their product and sale thereof.
D. The enforcement of Intellectual prope rty right as prescribed under Rules 678 and 679 and Sub-Rule VIII of section 679 wherein the Chapter XXVIII shall only apply to imported goods and shall not apply to parreral or gray market imports de-minimus imports. The relevant prescribed statutory obligation prescribed under sections 53, 54, 55, 56 and 57 clearly defined the procedure to dealt with the infringing goods, materials or articles if so be treated as prohibited. All such statutory obligation s were knowingly , deliberately and havin g full knowledge were not opted to for their application during hierarchy of the seizure in present subject case.
E. That the seizure of offending goods under Section 168 without serving mandatory notice under section 171 of the Customs Act, 1969 to the Appellant is illegal and abuse of powers.
F. That the provision of Section 24A of the General Clauses Act, 1897 has been violated by the Adjudicating officer while passing impugned order of outright confiscation of of fending goods which are neither banned nor prohibited.
6. Arguments heard and concluded. After perusal of the case record and arguments advanced by all the parties, it has been noticed and observed that, the subject consignment was detained after the report submitted by Deputy Director (IPR), Customs House, Karachi on the ground of containing infring ing goods, bearing trademark "TONOSHIBA". According to the Deputy Director (IPR), the subject alleged goods were detained on the basis of application filed by Legal Council of Discover Security Consultants dated 24.06.2019. Perusal of that application and contention mentioned therein does not classified to be treated as per requirement prescribed under rule 680(I) of Customs Rules, 2001 amended throu gh SRO 170(1)/2017. In presence of that application Messrs Discover Security Consultants submitted another application dated 26.06.2019 which is clearly reflected the element of mala fide, which was cause and created by the department for getting undue advantage and ulterior motives, better known to the applicant and department. It has been noticed by this court under the circumstances that the subject application filed by the complainant even otherwise not complied the mandato ry provisions of law and rule, specifically prescribed under sub-rule (4) of rule 680 of Customs Rules, 2001, which embodied that, the applicant, at the time of filing an application shall also submit a bank guarantee on the format as set out in the rules, from a scheduled bank for an amount of Pak Rs. 5,00,000/- or 25% of the value of suspected infringed goods whichever is higher , to cover the possible compensation for the losses suffered by the owner of the goods due to false application and payment of expenses on account of investigation, warehousing , maintenance and disposal of goods etc, incurred after detention by customs. In presence of subject anomaly , Deputy Director (IPR) Enforcement accepted the application, in violation of sub-rule (5) of rule 680 of Customs Rules, 2001. The copy of the bank guarantee submitted by applicant notarized by S. Rizwan, Advocate is available on record, which is infact contrary from prescribed procedure of law and rules made therein (emphasis implied).
7. According to the seizure report and show cause notice the Directorate (IPR) enforcement concluded the observations that, the impugned goods bearing Trade Mark "TONOSHEBA" are deceptively similar to original goods bearing Trade Mark "TOSHIBA" in all aspect i.e. names, typography and features presentation, in support of that conclusion, department tried to take the refuge of section 2(x) and (viii)(a-c) read with sections 49(1)(a), 40(2)
(a)(b), (3)(a), 4(a) and 5 of the Trade Marks Ordinance, 2001. Right holder also presented documentary evidence through their attorney as being the registered proprietor of the Trade Mark "TOSHIBA" in Pakistan and alleged imported goods under brand name of "TONOSHEBA" is deceptively similar with the applicant's Trade Mark. As such, applicant pressed its exclusive claim on to the Trade Mark "TOSHIBA" in terms of section 39 of Trade Marks Ordinance, 2001. The subject contention was backed up by relying on the registration certificate No.55127 issued by the Trade Mark Registry , Karachi Pakistan, for goods classified under International Classification of goods mentioned in class-9 issued by the Trade Mark, Registry Office Karachi Pakistan, but on the contrary confirmation collected by the department from recordation database maintained by the IPO Pakistan, the subject certificate of registration provided by applicant was issued against the goods specified in class-28 of the International Classification of the goods. Inspite of having such serious misconceived facts and statement submitted by the applicant, in proof of their alleged claimed and tried to establish the infringement action against the importer , its self requires legal dispensation, by this court. It is evident from the contents mentioned in the concluding para of the Order-in-Original, where Additional Collector of Customs (Adjudication) without any cogent reasons outrightly rejected the importer's legal objections, in reply to that, he also made the observation that, this is beyond the mandate of instant proceeding, to examine propriety of action initiated by the Directorate of IPR Enforcement. He restricted himself only to, examine and decide the subject matters, as to whether or not the determination of infringement made by the Directorate of IPR Enforcement (South) and subseque nt seizure of goods under Rule No.681(4) of Customs Rules, 2001 amended through SRO is justified and whether imported goods bearing Trade Mark "TONOSHEBA" can be termed as infringing goods being deceptively similar to the Trade Mark of applicants? -Under such circumstances mentioned above, it is important to analyze the available evidence with reference to the statutory obligations. By doing so, it is important to place here the definition what is the trade mark and its infringement?
Trademark : A word, phrase, logo, or other graphic symbol used by a manufacturer or seller to distinguish its products or products from those of others. The main purpose of a trademark is to guarantee a product's genuineness. In fact, the trademark is the commercial substitute for one's signature. To receive federal protection, a trademark must be (1) distinctive rather than merely descriptive, (2) affixed to a product that is actually sold in the market, and Trademark Office. In its broadest sense, the term trademark includes a service mark. --Often shortened to mark. Cf. SERVICEMARK. 2, The body of law dealing with how business distinctively identify their products. SEE LANHAM ACT. "A trade functions on three different levels: as an indication of origin or ownership, as a guarantee of constancy of the quality or other characteristics of a product or service, and as a medium of advertisement. Thus, a trademark guarantees,' identities and sells the product or service to which it refers. These three facts of a trademark -- of differing importance at different times, in different lines of business and for different product or services -- are somewhat correlative. The classical functions, that of identification, has been primarily responsible for molding the development of trademark law. The significance of the guarantee function has been somewhat exaggerated, while the implications of the advertisement function still await full recognition in the law." 3 Rudolf Callmann, The Law of Unfair Competition, Trademarks and Monopolies 17.01, at 2 (4th ed. 1998).
"What it infringement?"
"Trademark infringement".. The unauthorized use of a trademark -- or of a confusingly similar name, word, symbol, or any combination of these -- in connection with the same or related goods or services and in manner that is likely to cause confusion, deception, or mistake about the source of the goods or services.
"Vicarious infringement". A person's liability for an infringing act of someone else, even though the person has not directly committed an act of infringement. For example, a concert theater can be vicariously liable for an infringing performance of a hired band. "wilful infringement." An intentional and deliberate infringement of another person's intellectual property . "inrfringer" A person who interferes with one of the exclusive rights of a patent, copyright, or trademark owner .
8. Considering the aforementioned description of Trade Mark and Infringement: It is pertinent to mention here that the main purpose of Trade Mark Registration is to guarantee a product's genuineness actually sold in the market and right holder of the trademark is the legal authority to claim the same, upto the extent of its descriptive features rather than mere description, the comparative study and observed of both the brands "TOSHIBA" and "TONOSHEBA" are different from both aspects visually as well as phonetically , as such does not fall under the B provisions envisaged under section 5 of the Trade Marks Ordinance, 2001, specially there is no reference or evidence available on record about any confusion and deception, which is mandatory ingredients to establish any form of infringement. It is also observed from the record that, the subject impugne d goods were detained without getting any clarification about so called/ alleged claim of infringement against the importer from the competent authority tried to collect related data and c information. The Directorate only used the data based established by the IPO Pakistan and not made any effort to substantiate the controversy for getting relevant detail about the cause of infringement, which is clear violation of the statutory obligations prescribed under section 13 of the Intellectual Property Organization of Pakistan Act.
9. From the record of the case, it has also been noticed and observed that the impugned show cause notice was issued on the basis for violation of sections (xviii) (a-c), read with sections 49(1)(a), 40(2)(b), (3)(a), 4(a) and 5 of the Trade Marks Ordinance, 2001, being in contravention of section 15(c) of the Customs Act, 1969 along with para-5(A)(V) of Import Policy Order , 2016. Now above referred circumstances question arises, whether the subject seizure has been conducted in compliance of statutory obligations as envisaged in section 168 of the Customs Act, 1969 or under the statutory rules prescribed under SRO-170(I)/2017 dated 16.03.2017? It is the mandatory provision' prescribed under Rule 680 of the Customs Rules, 2001 that, the application through complainant shall submit a bank guarantee on the format as set out in the rules, from a scheduled bank for an amount of Pak ,Rs.
5,00,000/- or 25% of the value of suspected infringed goods which ever is higher , to cover the possible compensation for the losses suffered by the owner of the goods due to false application, and payment of expenses on account of investigation, warehousing, maintenance and disposal of goods etc, incurred after detention by customs. The order for the detention of the goods suspected to be infringing goods Director (IPR) Enforcement notify the same in writing to the applican t as well as to the owner of the goods (importer) asking them to join the proceeding, upon joining the proceedings by both the parties, the detained goods shall be examined jointly by any officer of customs, arranged by the Collector , having jurisdiction and officer of the Directorate General of IPR Enforcement, in presence of both parties. In present case, all such activities were never been performed nor been conducted by the concerned quarters including the applicant/complainant (no evidence privy to it).
10. Being custodian of law, it is also the responsibility of the court to dispense with the justice in accordance with the prescribed provisions of law. Chapter XXVIII was introduced/added in its Customs Rules vide SRO-170(I)/2017 dated 16.03.2017 for enforcement of Intellectual Property rights. Rule 678 defines its application that Chapter shall apply to imported goods only and shall not apply on to "parallel or grey market imports " and "de-minimis imports ", sub-rule (iii) and (vii) of Rule 679 of the Amended Customs Rules clearly define s the criteria which says,
(iii) "de-minimis imports " means and refer to small quantities of goods of non-commercial nature contained in the travelers personal baggage or sent through post or any other means of transmission; (vii) "parallel or grey market imports" are non-counterfeit goods which carry genuine trademarks and are im sorted into the country without the permission and consent of the right holder or outside his specified distribution system, provided that all other condition for importation have been complied with under the Act and other relevant law. Record of the present case reveals the face that the impugned goods imported by the appellant were never been declared as infringed, on the basis of any legitimate evidence only presumptive hypothetical allegations are been attributed, with regard to the similarly found in both ;rands or Trade Marks. To clarify the subject controve rsy, the court prefers to produce the relevant section here-in below ,
53. Infringing goods, material or articles may be treated as prohibited. -
(1) The proprietor of the registered trade mark may give notice in writing to the Collector of Customs that-
(a) he is the proprietor of the registered trade mark;
(b) at a time and place specified in the notice goods which in relation to that registered trade marks are infiringing goods material or article, or bear false indications as to their source or the identity of their manufacture are expected to arrive in Pakistan from outside Pakistan and that they are subject to the control of the customs authorities under . the Customs 1969 (IV of 1969): and such goods as prohibited goods he requests the Collector of Customs to treat such goods as prohibited goods.
54. Notice for intervention by customs authorities.-" when any notice to the Collector of Customs is made under section 53, it shall be accompanied by an undertaking by the person sending the notice to indemnify the customs authorities concerned and to compensate any import er, consignee or owner of the goods for loss or damage resulting from the wrongful suspension of clearance of goods.
55. Furnishing of security or equivalent assurance to customs authority .- The Collector of Customs may require an application to provide a security or equivalent assurance sufficient to protect the importer , consignee or owner of the goods but such security or equivalent assurance shall not be such as to unreasonably deter recourse to these procedures.
56. Collector of Customs may seize goods bearing infringing trade mark. - If goods to which section 53 applies-
(a) bear on them a trade mark which, in the opinion of the Collector of Customs, is identical with, or deceptively similar to the registered trade mark;
(b) are goods in respect of which the trade mark is registerd, the Collector of Customs shall seize the goods unless he is satisfied that there are no reaso nable grounds of believing that trade mark shall be infringed by the importation of the goods and the seized goods shall be kept in a secure place as directed by the Collector of Customs.
57. Notice of seizure .- The Collector of Customs shall, as soon as Practicable.
(b) give to the applicant a notice in writing-
(i) identifying the goods and stating that they have been seized under section 56;
(ii) giving the full name and address of the importer , consignee or owner of the goods and any information that the Collector of Customs has and believes, on reasonable grounds, to be likely to help the applicant to identify the importer or the owner of the goods; and
(iii) starting that the goods shall be released to the importer , consignee or owner of the goods unless the applicant brings an action for infringement of the registered trade mark in respect of goods before a District Court having jurisdiction in the matter and gives the Collector of Customs notice in writing of the action, within the period of ten working clays after the applicant has been given the notice, or if the Collector of Customs extends the period under subsection (1) of section 60, within such extended period."
11. Now coming towards the amended rules notified vide SRO-170(1)/2017 dated 16.03.2017, were issued, in exercise of powers conferred by Section 219 of the Customs Act, 1969, wherein it is defined that, the "Act" means the Customs Act, 1969. In this Act, under section 3, appointment Of officers of customs and their powers were defined. section 3 CC of the Customs Act, 1969 only refers the establishment of Directorate General of IPR (Enforcement) which shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors and such officers as the Board may, by notification in the official Gazette appoints.
There is no specific notification available on record nor produced by the respondents for the assistance of the court wherein, any powers and jurisdiction of Directorate General of IPR (Enforcement ) were prescribed (no evidence privy to it). Evidently in aforementioned statutory provisions of law only designated person/of ficial or officers of customs, specified as "Collector of Customs" and not the Director General or Director of IPR (Enforcement): In presence of the statute and statutory obligations amended rules prescribed vide SRO-170(I)/2017 dated 16.03.2017 are trite rules and there can be no cavil with the statutory conditions and requirements of law described above (in paras supra).
12. It was mandated upon the officials of the Customs to consult the Trade Marks Ordinance, 2001 prior to issuing any instructions, show cause notice or passing of impugned order , specifically sections 53 to 57 and sections 59 and 60 of the Trade Marks Ordinance, 2001. This was not done and show cause notice was issued on receipt of a complaint, this is totally contrary from the laid down proper procedure and law. Contents of section 53 of the Trade Marks Ordinance, 2001 express with clarity that the person/company lodging complaint with regard to infringement of the Trade Mark on material or article, the proprietor has to give a notice in writing to the Collector of Customs.
While doing so he has to make request to the Collector to treat such goods as prohibited and the said notice shall be accompanied with an undertaking by the person sending the notice to indemnify the Custom Authorities concerned and to compensate any importer , consignee or owner of the goods or damage resulting from wrongful suspension of the clearance of the goods under Section 54. Upon receipt of the complaint the Collector of Customs if desire may ask the complainant to provide a security or an equivalent assurance sufficient to protect the importer or consignee or owner of the good but such security or equivalent assurance shall not be such as to unreasonably deter recourse to these procedures as per the expression of section 55. Nothing has been concealed by the appellant as evident from the declaration, which is true and correct in all respect, further stood validated from the examination report, therefore confiscating the consignment of appellant is without any lawful authority instead in derogation of provisions of sections 53 to 57 read with sections 59 and 60 of the Trade Marks Ordinance, 2001.
13. It is the prime responsibility of the concern quarters, competent authorities including customs officials/respondents, are to follow the 'ratio decidendi, as observed by the Superior Courts and prevailing laws of lands including the globally recognized, international laws, for preparation of any legal instrument and also to follow the wisdom behind the minds of law makers specially envisaged in the intellectual property laws same has been ignored by the respondents in this particular case. Conversantly , it is also the duty of the court to determine the concept of legal jurisprudence for dispensation of justice. The detail description given and referred about the intellectual property laws and protection obtained there under by citizens of any country are required to be maintained rightly for equitable justice. It is also the mandate of the court to do justice between the parties in accordance with the provisions of law, as the litigants, who approached the court for the relief is bound to substantiate, that the procedure should be adopted by them in accordance with the law, because it is elementary principle of law that if a particular thing is required to be done in a particular manner it must be done in that manner , otherwise it should not be done at all. I have no ambiguity in my mind that, dispensation of justice is a mandatory part of judicial system and at the same time, being conscious of the issue, it is also the duty of the court to analyze the discretionary and equitable relief, in present case, even the equities are not in favour of the respondents.
14. By getting the strength from the afore mentioned observations and interpretatio n of law and to follow the ratio decidendi observed by the Superior Courts the show cause notice and the impugned orders passed during the hierarchy of the Customs are infested with patent illegalities and declared to be null and void and are, therefore, set aside, the appeal is accordingly allowed with no order as to cost. The respondent is also directed to issue delay and detention certificate to the appellant.
15. Order passed and announced accordingly .