Is Custom Recordal of Intellectual Property Rights (IPRs) available in Panama?
Is Custom Recordal of IPRs compulsory in Panama?
Is it an effective measure to stop the infiltration of illegal and counterfeit products in Panama?
Which law forms the legal basis for Custom Recordal of IPRs (Border Control Measures) in Panama?
The following laws deal with border control measures in Panama:-
The Industrial Property Law (Law 35/1996);
The Copyright Law (Law 64/2012);
The Penal Code;
The IP Customs Regulations (Executive Decree 123/1996, modified by the Executive Order 466/2015); and
The IP Colon Fee Zone Regulations (Executive Decree 79/1997).
Is Custom Recordal of IPRs effective on import or export of goods or both?
Customs Recordal of IPRs is effective on the import, export, and goods in transit.
What is the role of the customs department/authority? (Kindly give 2-3 points)
The customs authorities are empowered to inspect and seize merchandise that is subject to the customs procedures and which may violate Panama’s IP laws, regardless of its final destination. This means that even the in-transit goods can be inspected and seized. It is, therefore, their duty to intercept counterfeit goods or goods that might infringe upon the rights of an IP rights holder.
Is there a procedure to record IP with the customs department/authority? If yes, then kindly explain it in brief.
The procedure requires the filing of a formal denunciation before Customs or the CFZ (Colon Fee Zone) providing as much information as possible to allow the authorities to locate the suspected counterfeit merchandise.
What documents are to be submitted along with the application for Custom Recordal of IPRs?
Along with the denunciation, the rights holder must submit certified copies of the local registrations for the trademarks that are being infringed, as well as a bond to guarantee the potential damages.
Is the applicant required to execute a bond (against all liabilities and to bear the costs towards destruction, demurrage, and detention charges incurred till the time of destruction or disposal) with the customs department/authority for Custom Recordal of IPRs?
Yes - The resolution setting the amount of the bond is served on the rights holder’s counsel by posting a notice at the customs/CFZ office for 01 day. The rights holder then has 03 business days to post the bond.
What is the time frame for the customs department/authority to notify the applicants whether their application (for custom recordal of IPRs) is registered or rejected?
There is no time limitation set for notifying the applicant about the said information; however, any information of such nature shall be intimated at the earliest.
Does the customs department/authority have a centralized system or the Custom Recordal is required to be done with each port of entry in Panama by land, sea, and air?
It is a centralized system.
Is there an online system for Custom Recordal in Panama?
There is no online system due to which a written request has to be lodged.
What is the official fee for Custom Recordal in Panama?
There is no such fee; however, there is a bond that has to be submitted as well as an inspection fee to enforce the IPRs at the instance of the customs.
What is the term of Custom Recordal of IPRs? Can it be further renewed?
Does the customs department/authority have a right to conduct raids and seize the counterfeit goods within Panama?
In which scenario does the customs department/authority suspend the clearance of imported goods?
Where goods forming a part of a certain merchandise are suspected of infringing upon the IPRs of a legitimate proprietor protected under the laws of Panama, the customs authority/department suspends the clearance of imported goods until the inspection is conducted after the payment is made as well as the payment of the bond is received.
Who bears the liabilities and expenses related to suspension of the release of infringing goods?
It is the applicant or the interested party that pays the required expenses and liabilities related to the suspension of the release of infringing goods.
As an expert witness will examine the seized products and confirm whether they are counterfeits or imitations during the investigative stage at the IPDA, the customs and CFZ authorities are not empowered to dispose of the merchandise. The powers of these authorities are limited to conducting inspections and provisionally seizing the suspected goods. Following this, a criminal proceeding to determine the IP rights crime will commence. It is, therefore, necessary to take an inspection fee of $300 per case before the search and seizure is conducted.
Is the IP rights holder authorized to examine the goods, the clearance of which has been suspended?
Is the IP rights holder authorized to request the information about the personal details of the importer and additional crucial piece of information concerning the consignment, which has been suspended from clearance?
Can the importer or the authorized representative of the goods, which have been suspended from clearance, request the information of the IP rights holder in question?
Within what timeframe the IP rights holder needs to confirm whether the goods are counterfeit or original after suspension?
It is not the IP rights holder who confirms whether the goods are counterfeit or not rather, it is the inspection authorities that conduct a neutral inspection of the same and report the findings concerning the case.
Is the IP rights holder required to produce an injunction order or evidence of court proceedings to detain the goods?
No - Where the inspection authorities find that the goods are of infringing nature, the case is then transferred to the IP district attorney’s office, i.e., the IPDA, for the initiation of corresponding criminal action.
If the answer to the above question is 'Yes,' then what is the deadline to do so?
Does the IP rights holder need to pay an additional bond for the detention of goods?
If the answer to the above question is 'Yes,' then to what extent and how is the valuation calculated?
This bond is initially set at $2,000, and must be increased if the percentage of the value assigned to the detained goods as the bond amount is higher than the initial bond. Thus, if the definitive bond is set at more than $2,000, the rights holder must deposit an additional bond to cover the difference. Once the rights holder is notified of the appraisal and the amount of the bond, he has 03 business days to post it.
In the scenario where the goods detained or seized are found to be infringing the IPRs of the IP rights holder in question, what steps does the customs department/authority take?
In the scenario where the goods detained or seized are found to be infringing the IPRs of the IP rights holder in question, the rights holder is intimated about the same after which he or she is required to pay the cost of inspection. Thereafter, the case is transferred to the IP district attorney’s office whereby the case is decided as per its merits.
Does the customs authority invite the rights holder and importer to join the proceedings? Are there any consequences of failure to join such proceeding, if any?
Yes, after the inspection is conducted, and it is discovered that the goods are infringing nature, either civil or criminal enforcement measures are undertaken. Even provisional remedies may be undertaken, which includes injunctive orders or preventive arrest of the defendant. Until then the procedure rules in Panama also allow the parties to settle their dispute through a settlement agreement, provided that the trademark owner declares before the criminal court that it has been redressed.
Before disposal/destruction of infringing goods, does the rights holder need to submit a ‘no objection’ or concurrence document?
Are there any disadvantages of Custom Recordal of IPRs in Panama? If yes, then kindly give 2-3 points?
If an IP rights holder is not satisfied with the action taken by the customs department/authority, can he/she initiate separate legal proceedings to enforce his/her IP rights?
To establish if the goods are counterfeit before the court of justice, will the affidavit by the IP rights holder suffice or any other documentary requirement is there?
The court may require the submission of other documents in addition to the documents that have already been submitted.
Upon conclusion of proceedings before the Court of Justice, what are the possible remedies awarded by the court?
The following provisional remedies are available:
Seizure of the infringing products and the equipment or machinery used in their manufacture or assembly;
Seizure of assets or moneys derived from the commission of the crime;
An injunction forbidding the defendant to leave the country without judicial approval;
An injunction ordering the defendant to appear before the IPDA or the criminal court periodically to verify his or her domicile or stay in the country; and
Preventive arrest of the defendant. This is the most serious provisional remedy that can be executed against a defendant in a criminal proceeding as it entails the arrest of the defendant while the criminal process is pending. The defendant is incarcerated while the case is decided. However, this remedy is rarely ordered for this type of crime. The arrest can be lifted by posting bail.
The following criminal penalties may be imposed:
Imprisonment from 04 to 06 years;
Impoundment and destruction of the infringing products and the equipment used in their manufacture;
A fine equivalent to twice the damages or patrimonial benefit;
Suspension of the right to do business or exploit industries; and
Regarding the legal entity used to commit the crime and which benefits from it:
Suspension of its commercial licence or registration for up to 05 years;
A fine of at least $5,000 and no more than twice the damages or patrimonial benefit;
Total or partial loss of tax benefits;
A prohibition against contracting with the state, directly or indirectly, for up to 05 years, which may be imposed together with any of the above; and
Dissolution of the company.
Panamanian IP laws entitle rights holders to seek monetary compensation through a civil action for damages sustained as a result of trademark counterfeiting or infringement.
Although the Trademark Law does not establish the type of damages for which the trademark owner should be redressed, it should be understood that they include economic as well as moral damages (i.e., damages to reputation or goodwill) based on civil law.
The statute of limitations for civil actions for trademark counterfeiting or infringement is 06 years as of the last time the violation occurred.
Notably, a civil action can be brought not only to obtain a damages award; it can also be aimed at obtaining:
A court ruling recognising the trademark counterfeiting or infringement;
An order directing the defendant to cease all infringing acts and enjoining it from engaging in those illegal activities in the future; and
The imposition of fines against the defendant.
Ex parte provisional remedies
The plaintiff can request the following provisional remedies, which are all processed as ex parte motions:
Immediate cessation of the infringing acts;
Seizure of the counterfeit or infringing products and the means exclusively used in the commission of the violation;
Immediate suspension of the import or export of the counterfeit or infringing products;
Suspension of the CFZ operation permit for companies doing business in that duty-free area;
The posting of a bond by the defendant to guarantee payment of damages;
Seizure of bank accounts or other assets of the defendant to guarantee payment of damages (this remedy is contemplated in the Civil Procedure Code for all types of civil action where monetary damages are claimed); and
Examination of the defendant’s business records to obtain evidence of the suspected trademark infringement in support of the future civil action.
To obtain the first five of these provisional remedies, the plaintiff must post a bond, which may be up to 50% of the appraised value of the seized merchandise. The bond must be deposited with the court within 03 business days of the date of seizure of the infringing products.
In the case of suspension of the operation permit of companies located in the CFZ, the calculation of the bond is left to the judge’s discretion.
Finally, in the case of seizure of bank accounts or other property of the defendant, the bond must be posted before the seizure and will correspond to a percentage of the sum indicated in the petition as the amount intended to be attached.
The ex parte examination of business records is also subject to the prior filing of a bond to guarantee potential damages. The civil procedure rules set the maximum amount of the bond required for this purpose at $1,000, which is usually the bond required by the courts to conduct the inspection.
The following civil penalties may be imposed:
A fine ranging from $10,000 to $200,000 (for companies operating in the CFZ, fines equivalent to 25% of the company’s monthly business movement, but no less than $75,000, may be imposed);
Suspension of the right to do business or exploit industries for 03 months;
Suspension for a minimum period of 03 months or cancellation of the operation permit granted to operate in the CFZ;
Seizure and destruction of all infringing products and the equipment used in their manufacture;
Monetary compensation for damages suffered by the trademark owner, if claimed; and
Publication of the condemnatory ruling in the Official Gazette.
Is the rights holder under an obligation to inform customs authority when his Intellectual Property Right ceases to be valid/ he ceases to be the owner of such IPR?