Background: Who we are


The South African Institute of Intellectual Property was established in 1954 and represents some 140 patent attorneys, patent agents and trade mark practitioners in South Africa who specialise in the field of Intellectual Property Law.


Intellectual Property Law embraces the law relating to patents, trade marks, registered designs, copyright and unlawful competition (passing-off of trade secrets). It also includes litigation, licensing, franchising and anti-counterfeiting measures.


The SAIIPL is widely regarded as the custodian of South Africa's intellectual property rights, and comprises practising attorneys, academics, practitioners in businesses and other parties and persons interested in the protection and enforcement of intellectual property rights.


The members of the SAIIPL represent the majority of national and international businesses who have built their businesses on brands, innovation and technology, and who protect their interests through our country's intellectual property laws.


Our objection to the Draft Revenue Laws Amendment Bill


Our objection is aimed at Chapter XB of the draft bill which relates to powers, duties and procedures in connection with counterfeit goods. We submit that certain of the provisions contained in this Chapter will, if promulgated, conflict with existing legislation, namely, the Counterfeit Goods Act of 1997.


In addition, we submit that certain of the provisions will create practical difficulties which will hinder the effective prevention of counterfeit goods entering the country, instead of achieving the stated goal of the proposed legislation, which is improving control over counterfeit goods.


The Counterfeit Goods Act of 1997


The Counterfeit Goods Act of 1997 (the "CGA") is the primary Act governing measures aimed against the trade in counterfeit goods in South Africa. The CGA grants powers to certain persons to seize counterfeit goods and keep them detained pending the institution of civil or criminal proceedings in terms of the CGA. It also grants the Commissioner for Customs & Excise and his officers these powers. Stringent procedures are laid down by the Act, which were included in the CGA in view of South Africa’s international obligations in terms of the Trade Related Aspects of Intellectual Property (TRIPS) agreement, administered by the World Trade Organization (WTO).






Some of the relevant procedures proscribed by the CGA are as follows:



·         an interested person may apply to the Commissioner for Customs & Excise to seize and detain all counterfeit goods entering South Africa which bear its intellectual property right (Section 15 of the CGA);

·         inspectors in terms of the Act (which includes the Commissioner for Customs & Excise and Customs officers) must obtain a warrant to seize, detain and remove counterfeit goods;

·         if goods are seized without a warrant, the inspector must apply to court for confirmation of the seizure within 10 days of the seizure;

·         seized goods must be removed to a counterfeit goods depot which is designated as such by the Minister of Trade & Industry, which is the department, under whose control the Act falls;

·         the complainant or prospective complainant has three days after the seizure within which to lay a criminal charge against the counterfeiter (in the case of goods entering the country, this is the importer);

·         the seized goods must be released if the State does not give notice of its intention to prosecute the offender or if the Complainant does not give notice of its intention to institute civil proceedings against the offender within 10 days of the seizure and/or if the criminal/civil proceedings are not actually instituted within 10 days after that date of the said notice.


In practice, the way in which Customs & Excise currently deals with the prevention of the importation of counterfeit goods is: where an application has been made and approved in terms of Section 15 of the CGA to detain suspected counterfeit goods bearing the subject matter of a right-holder’s intellectual property right, goods are detained in terms of Section 113A of the Customs and Excise Act to determine whether the goods so detained are counterfeit. The relevant officer then sends a sample of the suspected counterfeit goods to the right-holder or its representative and allows the right-holder 5 working days after receipt of the sample to file an affidavit confirming the goods to be counterfeit. This period can be extended on good cause shown.


Once an affidavit has been filed, Customs & Excise obtains a warrant from a Magistrate or Judge and then proceeds to seize the goods in terms of the CGA. The goods are then removed to a Counterfeit Goods depot and the right-holder and the SAPS take matters further through the specific provisions set out in the CGA, ensuring that all of the procedural steps are complied with.


This procedure has received approval from the Full Bench of the Transvaal Provincial Division in the matter between The Commissioner for the South African Revenue Service and another  - vs – Sterling Auto Distributors CC . The court, per Smit, J, in a careful exposition of the provisions of the relevant Acts, found it important to distinguish between the procedures of “detention” and “seizure”.  It was established that provision is made in the Customs & Excise Act for the detention of goods in order to determine whether the goods in question must thereafter actually be seized or released once the officer’s investigation of the goods is complete. There is also a duty on the officials who detain goods not to allow the goods to be released until they are satisfied that the relevant provisions of the Customs and Excise Act or any other law have been complied with.


Smit, J also quoted authorities which supported the point that Customs officials must be given the opportunity to detain suspected counterfeit goods without affording a prior hearing to the importer. The initial detention affords the Customs official an opportunity to investigate the matter before finally seizing the goods, should such a seizure prove warranted. If the Customs official receives an affidavit from the right-holder confirming that the goods are counterfeit, this gives him/her sufficient cause to continue detaining the goods until such time as a warrant has been obtained for the goods to be seized.



Proposed Revenue Laws Amendment Act


Bearing in mind this already existing piece legislation (which has been used extensively by Customs & Excise, the South African Police Service and the Department of Trade & Industry to seize counterfeit goods), we submit that any provisions relating to counterfeit goods within the Customs & Excise Act must be in line with the provisions of the CGA and not in conflict, or at variance, with them. If not, then a conflict of laws could arise.


In that regard, the proposed amendments to the Customs & Excise Act appear to create a procedure which is in some respects a duplication of the procedure envisaged by the CGA but which differs in certain other material respects. The procedure envisaged by Chapter XB is as follows:


·         a right holder may apply to the Commissioner to detain goods under customs control suspected of infringing the holder’s intellectual property right (Section 78B) – this appears to duplicate the procedure provided for in Section 15 of the CGA;

·         where an officer examines goods entering the country and has reasonable cause to believe that the goods are prima facie counterfeit goods, he must, where an application in terms of Section 78B has been approved, detain the goods. Where no application in terms of Section 78B has been approved, he must inform the right holder and give him/her an opportunity to make an application in terms of Section 78B;

·         upon detention of the prima facie counterfeit goods, the officer must inform the right holder and the importer/consignee of the detention and furnish the right holder with a sample of the goods (Section 78C);

·         where the right holder wishes to institute criminal proceedings, he may lay a charge with the South African Police Service (Section 78D(1) – but no time limit is imposed on the right-holder within which to do so);

·         if the right-holder wishes to institute civil proceedings, he/she must deliver to the Commissioner and the affected party (ie. the importer/consignee) a written notice that he/she intends to apply to Court for a determination that the goods detained are counterfeit goods (Section 78D(2) – no affidavit is required);

·         within a period of 10 days after delivery of the said notice, the right holder must apply to court for a determination and order that the goods are counterfeit (the words “counterfeit goods” have the meaning assigned to them in the Counterfeit Goods Act);

·         the goods detained must be removed to a counterfeit goods depot (as defined in the CGA) not later than one day after the date of the notice contemplated in Section 78D(2);

·         where the right holder fails to institute the said civil proceedings within the 10 day period, the person in charge of the depot must, at the request of the Commissioner, release the goods to the affected party.


We submit that the above procedure conflicts with the CGA in that:


·         the definition of “right-holder” does not accord with the group of persons who are entitled to take action in terms of section 3 on the Counterfeit Goods Act;

·         the procedure envisages a detention which then continues indefinitely, provided the right-holder states its intention to apply to court for a determination that the goods are counterfeit and then institutes the said proceedings. Such an application could take months, or even years, before it is heard by a court. The detention therefore, in effect, becomes a seizure;

·         this effective seizure of the counterfeit goods is conducted without a warrant or any subsequent confirmation of the seizure, as is prescribed by the CGA, which we submit is contrary to law and the Constitution;

·         a right-holder can initiate such a “seizure” by means of writing a simple letter. It does not need to satisfy the person seizing the goods that they are counterfeit by stating so under oath and providing reasons for the conclusion;

·         the goods are to be moved to a counterfeit goods depot on the initial detention of the goods, or if the rightholder has not made such arrangements, by the Customs officer at the right holders expense. These depots are not under Customs control. Counterfeit Goods depots may only be used, once goods are seized in terms of the Counterfeit Goods Act.

·         the CGA provides for a criminal complaint to be lodged within 3 days after the date of the seizure notice. The inspector is governed by section 7(2)(b) of the CGA in this regard. This section conflicts with 78D(1);

·         the proceedings contemplated, given that the definition of “counterfeit” is as defined in terms of the CGA must, of necessity, be proceedings in terms of the CGA. However, such proceedings cannot be brought unless the provisions of the CGA have been complied with (certain notices issued and other procedural steps taken etc);

·         reference is only made to an “application to court” whereas proceedings in terms of the CGA are not limited to applications only. In practice, such proceedings are generally brought by way of action;

·         no provision is made for the right-holder to be able to lodge a criminal complaint only. If civil proceedings are not instituted, the goods will be released. By contrast, the CGA specifically makes provision for a right-holder to choose to lay only a criminal complaint;

·         under 78D(5) it is contemplated that the goods on a request  of the Commissioner must be released from the Counterfeit goods depot to the affected party. SARS has no control of these depots and a request this can only be as the depots are not answerable to SARS where the depots are designated and administered by the Department of Trade and Industry.


Although not expressly stated, the proposed amendments therefore appear to be subject to possible amendments to the CGA.


This is problematic because, firstly, we believe that without seeing the proposed amendments to the Counterfeit Goods Act, it is impossible for a decision to be made on the appropriateness and legality or otherwise of the proposed amendments. These amendments cannot be assessed in isolation, outside of their context. Secondly, as the amended Chapter XB is drafted, no provision is made stating that this chapter will only come into operation on a date to be determined and/or subject to certain amendments to the Counterfeit Goods Act.


Thirdly, even if the CGA is amended so as to exclude any reference to Customs & Excise (ie. so that Chapter XB of the Customs & Excise Act becomes the only legislation dealing with Customs powers to stop counterfeit goods), we submit that the amended Act will still conflict with the CGA insofar as, for example, a right-holder will be required to bring proceedings in terms of the CGA without the various procedural requirements of that Act having been met.




Further Objections : Time Periods



The Chapter envisages that a detention will arise when the goods have been examined.  Samples will be drawn and sent to the right holder. The time period stipulated in the Chapter for the right holder to take action is 10 days from the date of the detention. The sample will only be sent after the detention notice has been issued and, depending from which border post it is to be sent and the nature of the sample, we are concerned that it may take more that 10 days to reach the right holder.  Often a sample needs to be examined in a foreign country, especially where the nature and sophistication of counterfeits has improved. This process, using courier services and with no delays, may easily result in the right holder not being able to give the required notice within the 10 days, as prescribed. There may also be situations where that right holder's expert is unavailable.  No provision in terms of 78D(2) is made for extensions on good cause shown, as is a fundamental principle of our law.


A possible amendment would be to calculate the time period for lodging the letter from the date of receipt of the sample. Either way, provision should be made for extensions.


In addition, it is unclear who will pay for and arrange the dispatch of such samples. The onus as it stands is on SARS at their cost.