Can In-transit Counterfeit Goods Be Seized in Uruguay?
February 7, 2008 By Cikato Lawyers
The in-transit merchandise, if it is a counterfeit, shall and may be seized since, as it is in Uruguayan territory, law 17011 is applicable. The jurisprudence also shows that this position has been widely accepted by our Criminal Judges.
I) In-transit merchandise. Concept
The answer to the above mentioned question is affirmative and the purpose of this article is to explain the reasons.
As an introduction, we will begin establishing that the Uruguayan Customs Code defines transit as “..the regime through which merchandise which is subjected to Customs control, are transported within the customs territory, being or not destined abroad”. Furthermore, article 5 of Decree 424/984 states that: “merchandise which is in customs transit are free of imports and exports duties, notwithstanding payment of the taxes due to rendered services”.
As explained by Accountant Beatriz Alvarez, in the Seminar: Uruguay, Transit Country, in 2000, we can group in transit operations in three types:
- International transit, which is the origin and has a third country as destination.
- Intra port transit, which includes all those operations that are performed within the port, but do not leave to the interior of the country.
- The transit that has as origin and /or destination the Uruguayan territory. For doing so the creation of DUA customs document is requested.
As to taxes, as there is no imports of merchandise, the customs code is clear when it establishes that no local tax is levied on this type of merchandise.
All in all, in transit merchandise differs from the rest of the merchandise that circulates in our country, regarding the taxes it levies. However, referring to its condition of authentic or false, the regime is the same. Therefore, a product “is false” whether it is in “transit” or for sale at a store in Montevideo and said characteristic is inherent. Both of them are in Uruguayan territory, and the Uruguayan laws are applicable to them.
II) Application of trademark Act Nº 17.011
The Trademark Law Nº 17011 dated 27/05/98, in articles 81 to 84, refers to the applicable criminal actions regarding counterfeiting, enabling seizure in certain specific cases. Art. 81 “ He who with the purpose of profit-making or causing damage, uses, manufactures, forges, adulterates or imitates a mark which is registered at the Registry corresponding to another person, shall be punished with six-month to three-year imprisonment”. Article 81 establishes as constraints of marks offenses: the aim to make profits or cause damage. The aim to make profits reveals the offender’s intent to get an economic benefit and to cause harm refers to those cases of unfair competition in which a businessman forges products identified with a competitor’s mark to the effects of harming the mark’s image and value in the market.
Art. 83 establishes that “He who knowing, manufactures, stores, distributes or commercializes merchandise identified with the marks to which the previous articles refer to, shall be punished with three-month to six-year imprisonment”. Article 83 refers to the circulation of counterfeit merchandise and establishes as a condition that that he who participates in the commercialization has knowledge (“he who knowing”). Here there is no reference to the aim of profit-making or the intent to cause damage, but the subjective fact is that he who commercializes counterfeit merchandise knows or should know said fact. Also, article 83 is applicable to the case of in transit counterfeit merchandise since we are dealing with a case of merchandise circulation. It is merchandise that comes from abroad which circulates in our country, “in transit” with destination to another country.
Just by circulating in Uruguay, by being in customs jurisdiction, despite not paying tariffs, it implies, due to the principle of territoriality, that the regulations in force should be applied in our country.
Therefore, if this merchandise is false, it shall be retained, seized and the offenders shall be subjected to the punishments established in the law. Nevertheless, it shall not be a ground for exemption the fact that the merchandise has been manufactured abroad since this article is applied to merchandise circulation. It shall not be a ground either the fact that the merchandise has not entered the country yet or is not “destined to Uruguay”, as offenders generally state.
Furthermore, in these cases the position of the Customs dispatchers is important. In general, they do not need to know that the merchandise which is the object of the dispatch is false since they are governed by the information furnished by the client. Therefore, they are initially not liable. However, I understand that in those cases in which customs dispatchers repetitively intervene in events of counterfeit merchandise dispatches, they shall have to take the necessary precautions to avoid so or otherwise, in my opinion, they should be liable.
The criminal proceeding follows the same regime of the merchandise found in the Uruguayan territory, that is, imported to our country. The criminal complaint is filed. The exports reports are carried out in case they are necessary. Finally, a decision is taken in compliance with article 84 of law 17011, if the merchandise is destroyed or bequeathed. In case of bequest, it is necessary to explain that there should be no reference to the mark under the control of the mark’s owner.
III) Practical cases
In our country, law 17011 is applicable to the in transit counterfeit merchandise and as a consequence, it can be seized. To these effects, I will comment on some practical cases:
i) Seizure of counterfeit shirts
Dated July 27, 2002, as per order of the Criminal Judge of 14th Term, Att. Anabella Damasco, the opening of a container with counterfeit shirts with the mark: Polo Ralph Lauren was carried out. They came from Thailand with destination to Free Zone of Florida. The Customs Dispatcher stated that his client had not informed the shirts mark and that he got to know about this topic when the Customs held the container. On the other hand, the offender stated that he bought it as authentic since he paid for them the price of US$ 6 each. (It is important to state that the authentic ones are sold at an average of US$ 60 each)
The State Attorney Att. Enrique Moller requested the defendant’s prosecution and imprisonment, since he/she had committed a prima facie the crime provided for in art. 83 of law 17011. Despite knowing, he stored with the aim of distributing merchandise which was illegal under mark that were not authorized by its owner. It is clear that the bargain price paid for these clothes at stores is very high as well as no disclosure in the statement presuppose malicious intent of the agent’s behavior.
Dated December 19, 2002 the prosecution judicial decree was passed considering that there are sufficient elements to attribute the illegal mark act to the defendant (art. 60 of the Criminal Code and 83 of law 17011). It is considered that the price paid for each unit of unmarked merchandise inclines the Judge sharing the opinion of the State Prosecutor to presuppose malicious intent in the agent’s behavior. The merchandise is still at the Court’s disposition.
ii) Seizure of counterfeit sneakers, hand bags and watches in the Free Zone of Nueva Palmira
The proceeding was carried out on April 26, 2004 in the Free Zone of Nueva Palmira, Colonia. The merchandise of Chinese origin came from United States via Carrasco airport, in transit to Brazil. It was seized in the Free Zone of Nueva Palmira, for counterfeit in the form of storage. At present, there is no order to be destroyed.
iii) Seizure of counterfeit cigarettes identified with the mark CHESTERFIELD
Dated June 1, 2004, at the Port of Montevideo, by order of the Criminal Judge of 19th Term, Att. Luis Charles, the opening of a container with 319 boxes with 100 cartons each, with cigarettes under mark: CHESTERFIELD and 40 hand bags, was carried out. The container was declared as furniture. Once it was opened, it was observed that first there were jute bags, and under them, boxes with false cigarettes.
They came from Paraguay with destination to the city of Malaga in Spain. The seized product was stored by the owner of the mark and dated October, 14, 2004, as per order of the Criminal Judge, it was destroyed.
iv) Seizure of NIKE sneakers, SHOX model, at Carrasco airport
Dated July 8, 2005, at Carrasco airport, 5308 false pairs of NIKE sneakers, SHOX model, were seized. They were of Korean origin and were in transit to Brazil. The amount declared at the Customs was US$ 65000 on FOB price per pair of US$ 12 when the FOB price of the authentic one is US$ 32. It was shown that the products were a counterfeit, among other things because the codes which identified them corresponded to women’s footwear, however, all the seized sneakers correspond to men’s models.
v) Seizure of False NIKE Sneakers at the port.
Proceeding dated August 10, 2005, in which a container of false NIKE sneakers, of Chinese origin, with destination to the Free Zone of Nueva Palmira, was seized. The declared FOB was US$ 2 when the authentic one is US$ 23 approximately. The products were a counterfeit since they were not packed in the original package, but in bags and inside labels with which NIKE identified that their colors did not match the color of the sneakers, apart from using the same code number for different articles. The proceeding is still pending.
IV) Conclusion
The in-transit merchandise, if it is counterfeit shall and may be seized since, as it is in Uruguayan territory, law 17011 is applicable. The jurisprudence also shows that this position has been widely accepted by our Criminal Judges.
ABOUT THE AUTHOR: Dra. Virginia Cervieri
Dra. Virginia Cervieri is the Head of the Anti-Counterfeiting and Unfair Competition Department at Cikato Lawyers. She is a speaker in various international seminars. She wrote a number of books related to Unfair Competition Law.
Copyright Cikato Lawyers
More information about Cikato Lawyers
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
The answer to the above mentioned question is affirmative and the purpose of this article is to explain the reasons.
As an introduction, we will begin establishing that the Uruguayan Customs Code defines transit as “..the regime through which merchandise which is subjected to Customs control, are transported within the customs territory, being or not destined abroad”. Furthermore, article 5 of Decree 424/984 states that: “merchandise which is in customs transit are free of imports and exports duties, notwithstanding payment of the taxes due to rendered services”.
As explained by Accountant Beatriz Alvarez, in the Seminar: Uruguay, Transit Country, in 2000, we can group in transit operations in three types:
- International transit, which is the origin and has a third country as destination.
- Intra port transit, which includes all those operations that are performed within the port, but do not leave to the interior of the country.
- The transit that has as origin and /or destination the Uruguayan territory. For doing so the creation of DUA customs document is requested.
As to taxes, as there is no imports of merchandise, the customs code is clear when it establishes that no local tax is levied on this type of merchandise.
All in all, in transit merchandise differs from the rest of the merchandise that circulates in our country, regarding the taxes it levies. However, referring to its condition of authentic or false, the regime is the same. Therefore, a product “is false” whether it is in “transit” or for sale at a store in Montevideo and said characteristic is inherent. Both of them are in Uruguayan territory, and the Uruguayan laws are applicable to them.
II) Application of trademark Act Nº 17.011
The Trademark Law Nº 17011 dated 27/05/98, in articles 81 to 84, refers to the applicable criminal actions regarding counterfeiting, enabling seizure in certain specific cases. Art. 81 “ He who with the purpose of profit-making or causing damage, uses, manufactures, forges, adulterates or imitates a mark which is registered at the Registry corresponding to another person, shall be punished with six-month to three-year imprisonment”. Article 81 establishes as constraints of marks offenses: the aim to make profits or cause damage. The aim to make profits reveals the offender’s intent to get an economic benefit and to cause harm refers to those cases of unfair competition in which a businessman forges products identified with a competitor’s mark to the effects of harming the mark’s image and value in the market.
Art. 83 establishes that “He who knowing, manufactures, stores, distributes or commercializes merchandise identified with the marks to which the previous articles refer to, shall be punished with three-month to six-year imprisonment”. Article 83 refers to the circulation of counterfeit merchandise and establishes as a condition that that he who participates in the commercialization has knowledge (“he who knowing”). Here there is no reference to the aim of profit-making or the intent to cause damage, but the subjective fact is that he who commercializes counterfeit merchandise knows or should know said fact. Also, article 83 is applicable to the case of in transit counterfeit merchandise since we are dealing with a case of merchandise circulation. It is merchandise that comes from abroad which circulates in our country, “in transit” with destination to another country.
Just by circulating in Uruguay, by being in customs jurisdiction, despite not paying tariffs, it implies, due to the principle of territoriality, that the regulations in force should be applied in our country.
Therefore, if this merchandise is false, it shall be retained, seized and the offenders shall be subjected to the punishments established in the law. Nevertheless, it shall not be a ground for exemption the fact that the merchandise has been manufactured abroad since this article is applied to merchandise circulation. It shall not be a ground either the fact that the merchandise has not entered the country yet or is not “destined to Uruguay”, as offenders generally state.
Furthermore, in these cases the position of the Customs dispatchers is important. In general, they do not need to know that the merchandise which is the object of the dispatch is false since they are governed by the information furnished by the client. Therefore, they are initially not liable. However, I understand that in those cases in which customs dispatchers repetitively intervene in events of counterfeit merchandise dispatches, they shall have to take the necessary precautions to avoid so or otherwise, in my opinion, they should be liable.
The criminal proceeding follows the same regime of the merchandise found in the Uruguayan territory, that is, imported to our country. The criminal complaint is filed. The exports reports are carried out in case they are necessary. Finally, a decision is taken in compliance with article 84 of law 17011, if the merchandise is destroyed or bequeathed. In case of bequest, it is necessary to explain that there should be no reference to the mark under the control of the mark’s owner.
III) Practical cases
In our country, law 17011 is applicable to the in transit counterfeit merchandise and as a consequence, it can be seized. To these effects, I will comment on some practical cases:
i) Seizure of counterfeit shirts
Dated July 27, 2002, as per order of the Criminal Judge of 14th Term, Att. Anabella Damasco, the opening of a container with counterfeit shirts with the mark: Polo Ralph Lauren was carried out. They came from Thailand with destination to Free Zone of Florida. The Customs Dispatcher stated that his client had not informed the shirts mark and that he got to know about this topic when the Customs held the container. On the other hand, the offender stated that he bought it as authentic since he paid for them the price of US$ 6 each. (It is important to state that the authentic ones are sold at an average of US$ 60 each)
The State Attorney Att. Enrique Moller requested the defendant’s prosecution and imprisonment, since he/she had committed a prima facie the crime provided for in art. 83 of law 17011. Despite knowing, he stored with the aim of distributing merchandise which was illegal under mark that were not authorized by its owner. It is clear that the bargain price paid for these clothes at stores is very high as well as no disclosure in the statement presuppose malicious intent of the agent’s behavior.
Dated December 19, 2002 the prosecution judicial decree was passed considering that there are sufficient elements to attribute the illegal mark act to the defendant (art. 60 of the Criminal Code and 83 of law 17011). It is considered that the price paid for each unit of unmarked merchandise inclines the Judge sharing the opinion of the State Prosecutor to presuppose malicious intent in the agent’s behavior. The merchandise is still at the Court’s disposition.
ii) Seizure of counterfeit sneakers, hand bags and watches in the Free Zone of Nueva Palmira
The proceeding was carried out on April 26, 2004 in the Free Zone of Nueva Palmira, Colonia. The merchandise of Chinese origin came from United States via Carrasco airport, in transit to Brazil. It was seized in the Free Zone of Nueva Palmira, for counterfeit in the form of storage. At present, there is no order to be destroyed.
iii) Seizure of counterfeit cigarettes identified with the mark CHESTERFIELD
Dated June 1, 2004, at the Port of Montevideo, by order of the Criminal Judge of 19th Term, Att. Luis Charles, the opening of a container with 319 boxes with 100 cartons each, with cigarettes under mark: CHESTERFIELD and 40 hand bags, was carried out. The container was declared as furniture. Once it was opened, it was observed that first there were jute bags, and under them, boxes with false cigarettes.
They came from Paraguay with destination to the city of Malaga in Spain. The seized product was stored by the owner of the mark and dated October, 14, 2004, as per order of the Criminal Judge, it was destroyed.
iv) Seizure of NIKE sneakers, SHOX model, at Carrasco airport
Dated July 8, 2005, at Carrasco airport, 5308 false pairs of NIKE sneakers, SHOX model, were seized. They were of Korean origin and were in transit to Brazil. The amount declared at the Customs was US$ 65000 on FOB price per pair of US$ 12 when the FOB price of the authentic one is US$ 32. It was shown that the products were a counterfeit, among other things because the codes which identified them corresponded to women’s footwear, however, all the seized sneakers correspond to men’s models.
v) Seizure of False NIKE Sneakers at the port.
Proceeding dated August 10, 2005, in which a container of false NIKE sneakers, of Chinese origin, with destination to the Free Zone of Nueva Palmira, was seized. The declared FOB was US$ 2 when the authentic one is US$ 23 approximately. The products were a counterfeit since they were not packed in the original package, but in bags and inside labels with which NIKE identified that their colors did not match the color of the sneakers, apart from using the same code number for different articles. The proceeding is still pending.
IV) Conclusion
The in-transit merchandise, if it is counterfeit shall and may be seized since, as it is in Uruguayan territory, law 17011 is applicable. The jurisprudence also shows that this position has been widely accepted by our Criminal Judges.
ABOUT THE AUTHOR: Dra. Virginia Cervieri
Dra. Virginia Cervieri is the Head of the Anti-Counterfeiting and Unfair Competition Department at Cikato Lawyers. She is a speaker in various international seminars. She wrote a number of books related to Unfair Competition Law.
Copyright Cikato Lawyers
More information about Cikato Lawyers
View all articles published by Cikato Lawyers
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
