Border Measures (FM) are temporary measures designed to prevent the importation or exportation of goods that infringe the rights of a trademark holder and allow the suspension of customs activity and the removal or confiscation of the infringing merchandise.
The objective of FMs is to suspend the clearance of counterfeit or “pirated” goods that infringe intellectual property rights. These infringements must not only be stopped so that such goods are not released into the commerce of a given territory, but also help to prevent further infringements by third parties through the filing of lawsuits regulated by law.
In this sense, regardless of the moment in which the FMs are requested, either by own initiative of the holder of the Intellectual Property rights before a Court, or by request of the Customs Authority ex officio, there are the following legal proceedings:
- Mainly criminal proceedings. Derived from the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), criminal procedures and penalties were established for cases of fraudulent counterfeiting of trademarks or piracy harmful to the right.
- Border measures procedure in each Central American country. With CAFTA DR, Central America increased the years of imprisonment and the amounts of the fine (except for Nicaragua). In this sense, all IPR infringement must start with a criminal complaint before the Intellectual Property Prosecutor’s Office or the Public Prosecutor’s Office.
- Civil proceedings for infringement of intellectual property rights, the ultimate purpose of which is the compensation of damages.
- Commercial proceedings for Unfair Competition in intellectual property matters[1].
- Procedure for the suspension of the dispatch of goods, according to TRIPS:
- Implies the suspension of clearance for 10 days.
- They are executed without prior notification.
- Must be notified immediately upon execution to the importer and the plaintiff.
- Extension for 10 more days.
- Confirmation by the judge hearing a lawsuit on the merits.
In which cases are border measures not applicable?
In the case of original goods, we speak of the exhaustion of the trademark right. This means that once a trademark owner has sold its product to a consumer, it no longer has the right to control the distribution and sale of that particular item. National exhaustion is one approach to this problem, which limits the rights of intellectual property owners to control the disposition of an item after it has been sold with their authorization.
The exhaustion of trademark rights is an express provision to regulate national and international trade, protect business and provide legal certainty to commercial relations. The exhaustion of rights is a limitation to the exclusive rights conferred by intellectual property, as well as to the ius prohibendi that the trademark confers to its owner.
The WTO, and its rules governing international trade, deals with these aspects of trade in the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). This builds on existing multilateral systems for the protection of various intellectual property rights[2].
Article 98 of the Industrial Property Law of Honduras, as well as in the other legislations in this type of matters in the region, establishes this limitation to the holder’s right[3].
The owner of a trademark cannot prevent its use by a third party when he himself or an authorized person has placed the products with the trademark in the market. Therefore, the trademark right is exhausted after the first commercialization of the marked product.
In cases where the trademark owner manages several markets in parallel, buyers, in good faith, who do not participate in the distribution channels established by the owner, will of course try to obtain the products in the country where the prices are lower and then market them in another territory at a lower price.
In many countries, although this practice is not accepted, it is no less true that this refusal to exercise trademark defense actions under a license of use or exclusive distribution contract could be interpreted as unfair competition.
The matter under discussion is the means of intervention by the State against those who engage in this type of unfair conduct. However, regional legal systems are prevented from making any withholding of legitimately marked merchandise when it is requested as a defense of intellectual property by criminal or administrative means.
The distributor or exclusive agent in each territory may filed a civil action for breach of contract or for damages before the corresponding judicial bodies, and among the precautionary measures, the immediate cessation of the infringement may be requested.
[1] https://estadisticas.sieca.int/documentos/ver/Manual%202,%20Medidas%20en%20frontera,%20final.pdf
[Exhaustion of Rights: For the purposes of dispute settlement under this Agreement, subject to Articles 3 and 4, no use shall be made of any provision of this Agreement in relation to the issue of exhaustion of intellectual property rights.
TRIPS Article 8.2 (Principles): Appropriate measures, provided that they are consistent with the provisions of this Agreement, may be necessary to prevent the abuse of intellectual property rights by right holders or the resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology.
[Exhaustion of Rights: For the purposes of dispute settlement under this Agreement, subject to Articles 3 and 4, nothing in this Agreement shall be used in connection with the issue of exhaustion of intellectual property rights.
RIPS Article 8.2 (Principles): Appropriate measures, provided that they are consistent with the provisions of this Agreement, may be necessary to prevent the abuse of intellectual property rights by right holders or the resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology.