228. The representative of Brazil said that enforcement of IPRs was not a permanent item on the Council's agenda. In his view, the content of Japan's communication was not really about border enforcement of IPRs. The only subject matter of interest to his delegation with regard to the communication was whether Japan's regulations and practices in respect of border measures were compliant with the TRIPS Agreement. In his view, such issues were best discussed as part of Members' obligation to notify laws and regulations under Article 63, so that their compatibility with the rights and obligations under the TRIPS Agreement could be scrutinized.
229. He raised a series of questions in regard to the compatibility of Japan's measures taken with the Agreement. The chapeau of Article 41 reflected an overriding principle according to which the measures adopted to implement Part III of the Agreement were to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse. He asked how Japan's regulations and practices with respect to border measures complied with this obligation, given that the enforcement measures were in reality trade measures taken by customs officials at the border. Furthermore, the whole of Part III referred to procedures concerning the enforcement of IPRs which were to be understood as judicial procedures, and not self-initiated procedures by customs officials. These judicial procedures were carefully crafted to ensure that all actions with respect to IPR enforcement were initiated by the right holder within a Member's local or national judicial system and that defendants had a right to fair and equitable procedures to argue their case against whatever action was taken with respect to the enforcement of IPRs. Cases were therefore required to be brought to the court before actions were initiated. He wondered how Japan took care of the obligation to make available fair and equitable procedures both for the applicant and the defendant, which were not unnecessarily complicated or costly, and which did not entail unreasonable time limits or unwarranted delays. Article 41.3 confirmed that procedures were meant to refer to judicial procedures because reference was made to decisions on the merits of a case, preferably in writing and reasoned, to be made available at least to the parties to the proceeding without undue delay, and to be based on evidence in respect of which parties were offered the opportunity to be heard. He asked how Japan's border measures complied with these criteria and whether the parties were allowed to be heard with respect to the suspension of imports of allegedly infringing goods. Article 41.4 provided that parties to a proceeding were to be given an opportunity for review by a judicial authority of final administrative decisions. He asked if Japan's border measures provided for such an opportunity. Article 41.5 indicated that this part did not create any obligation to put in place a judicial system for the enforcement of IPRs distinct from that for the enforcement of law in general. No Member was required to adopt any measures similar to those adopted by Japan. The same applied with respect to the distribution of resources between IPR enforcement and enforcement of law in general.
230. Article 42 referred to fair and equitable procedures to be made available under national judicial systems. Cases had to be brought to court, initiated by the right holder and subject to certain criteria. The defendant had a right to a written notice, including the basis of the claim. He asked who had to make the claim for action by the Japan Customs to suspend the importation of goods. Parties had to be allowed to be represented by an independent legal counsel. He wondered if this was allowed in Japan, in particular to avoid that procedures imposed overly burdensome requirements concerning mandatory personal appearance. Article 44 was another fundamental provision for this discussion because Japan had indicated that IPR enforcement under Section 4 on border measures was related to Article 44. However, Article 44 referred to judicial authorities, and not customs officials, which had the authority "to order a party to desist from an infringement, inter alia to prevent the entry into the channels of commerce in their jurisdiction of imported goods that involve the infringement of an IPR immediately after customs clearance of such goods". He asked if there was customs clearance of such goods in Japan before decisions on the suspension of their entry into channels of commerce was taken by customs officials. Article 44 had to be clearly distinguished from import suspension, since it only applied to situations occurring after customs clearance. Article 46 addressed other remedies. Here again, it was judicial authorities and not customs officials which had the authority to order that goods that they had found to be infringing be, without compensation of any sort, disposed of outside the channels of commerce. In considering such requests, there was a need for proportionality between the seriousness of the infringement and the remedies ordered as well as the interests of third parties to be taken into account. He asked how Japan complied with this determination in Section 3 of the TRIPS Agreement, how the interests of third parties were taken into account and how proportionality was established by customs officials with respect to the seriousness of the infringement. The Japan Customs had recently increased the suspension of imports of small packages of goods, but it was left open how customs officials applied the issue of proportionality in the seriousness of the act in respect of the suspension of imports of small quantities of goods which are sometimes for personal use. Article 48 provided for the indemnification of the defendant. The judicial authorities had to be authorized "to order a party at whose request measures were taken and who has abused enforcement procedures to provide to a party wrongfully enjoined or restrained adequate compensation for the injury suffered because of such abuse". He asked what kind of indemnification was foreseen in the context of the Japanese border measures in case of abuse or in case of wrongful action and whether the defendants' expenses were paid for by the Japan Customs.
231. Section 3 concerned provisional measures ordered by judicial authorities. These provided more expedite action, but were drafted along the same lines as the preceding provisions. A decision on the merits of the case was required at some stage, either before or even after the action was taken. Fair and equitable treatment had to be guaranteed. These principles applied, including where provisional measures were taken inaudita altera parte. Article 50.3 provided the judicial authorities with the authority "to require the applicant to provide any reasonably available evidence in order to satisfy themselves with a sufficient degree of certainty that the applicant is the right holder and that the applicant's right is being infringed or that such infringement is imminent, and to order the applicant to provide a security or equivalent assurance sufficient to protect the defendant and to prevent abuse". He asked how the Japan Customs complied with this particular requirement of the TRIPS Agreement, how the necessary degree of certainty about the applicant's status as right holder was obtained and how sufficient assurance was gained to protect the defendant and to prevent abuse. Article 50.6 stipulated that "if proceedings leading to a decision on the merits of the case are not initiated within a reasonable period, to be determined by the judicial authority ordering the measures where a Member's law so permits or, in the absence of such a determination, not to exceed 20 working days or 31 calendar days, whichever is the longer". This meant that the provisional measures and the suspension of entry into the channels of commerce of imported goods that had already been cleared by customs had to be revoked or otherwise cease to have effect if proceedings leading to a decision were not initiated within a reasonable period of time. He asked how Japan's rules, regulations and practices with respect to border measures described in the communication complied with this obligation. Appropriate compensation had to be paid to the defendant according to Article 50.7. Pursuant to Article 50.8, the same principles applied where a provisional measure was ordered as a result of administrative procedures. There was therefore no change regarding the requirements to be complied with by the Japan Customs. According to Article 51, Members had to "enable a right holder, who has valid grounds for suspecting that the importation of counterfeit trademark or pirated copyright goods may take place, to lodge an application in writing with competent authorities". This addressed right holders and not customs officials. The representative of Brazil thought that both injunctions and border measures had motivated the US question as to whether the increase in the suspension of imports had been met with a corresponding increase in applications for suspension. This was also a relevant question with respect to the issue of compliance of Japan's border measures with the Agreement. Article 52 foresaw that "any right holder initiating the procedures under Article 51 shall be required to provide adequate evidence to satisfy the competent authorities that, under the laws of the country of importation, there is prima facie an infringement of the right holder's intellectual property right and to supply a sufficiently detailed description of the goods to make them readily recognizable by the customs authorities". He asked how this obligation was met by Japan in its procedures for suspension of importation by customs officials. Furthermore, the representative of Brazil referred to Article 53 as another relevant provision, providing the competent authorities with the authority "to require an applicant to provide a security or equivalent assurance sufficient to protect the defendant and the competent authorities and to prevent abuse". He asked in how far such securities were sought in the process of applying Japan's border measures to suspend the importation of goods. A further question was how a prompt notice of suspension was given to the importer and the applicant of the suspension of the release of goods according to Article 51, as provided for in Article 54.
232. The duration of the suspension was addressed in Article 55 according to which "if, within a period not exceeding 10 working days after the applicant has been served notice of the suspension, the customs authorities have not been informed that proceedings leading to a decision on the merits of the case have been initiated by a party other than the defendant, or that the duly empowered authority has taken provisional measures prolonging the suspension of the release of goods - again the release of goods not the importation of goods – the goods shall be released, provided that all other conditions for importation or exportation have been complied with". This was an important element because it limited the discretion of the customs authority to maintain the suspension of the goods for a period of time that was unduly long or created an unreasonable or unsubstantiated barrier to trade of other WTO Members. Proceedings leading to a decision on the merits of the case were required and it was questionable how this was achieved in the context of Japan's border measures. Article 56 referred to the indemnification of the importer and of the owner of the goods. He asked if such indemnification was guaranteed by Japan in the case of wrongful detention of the goods. The right of inspection and information was foreseen in Article 57, and he wondered if the importer in Japan was given an equivalent opportunity to have the goods inspected. Article 58 addressed ex officio action. In his view, this was probably what Japan intended to cover by the measures set out in its communication. This provision did, however, not refer to the suspension of importation of suspected goods, but to the possibility for competent authorities to act upon their own initiative and to suspend the release of goods in respect of which they had acquired prima facie evidence that an IPR was being infringed. Reference was made to the release of goods and not the suspension of importation, implying that the goods had to clear customs before action was taken. Article 60 addressed de minimis imports, which was a permissive provision, indicating that Members were allowed to exclude from the application of the other provisions in Part III small quantities of goods of a non-commercial nature contained in travellers' personal luggage or sent in mail consignments. This seemed to indicate that, in the spirit of the Agreement, small consignments were not meant to be subject to mandatory coverage of the provisions in Part III.
233. His delegation believed that enforcement was an issue for discussion in WIPO's Advisory Committee on Enforcement where Brazilian officials had actively participated, including through presentations on the enforcement of IPRs at domestic level. Those discussions should not be duplicated in the TRIPS Council.
