Procedures and strategies for anti-counterfeiting: Singapore

Legal framework

In Singapore, the applicable legislation for rights holders to combat counterfeiting and piracy is:

• the Copyright Act (Chapter 63); and
• the Trademarks Act (Chapter 332).

Copyright Act

The Copyright Act is the principal legislation for copyrights in Singapore, with provisions that address copyright infringement and commercial piracy. In particular, Sections 136(1) to 136(4) of the act set out the offences that encompass different types of commercial piracy. This includes the sale or import of infringing copies for commercial purposes. Such offences are punishable by a fine of up to S$10,000 for each infringing article (not exceeding a total of S$100,000), imprisonment for up to five years, or both.

Section 261C of the act further prohibits the unauthorised circumvention of technological access control measures. It targets acts such as the sale of modified game consoles used to run pirated computer games. Any party found guilty of an offence under Section 261C may be liable to a fine of up to S$20,000, imprisonment for up to two years, or both.

Trademarks Act

The Trademarks Act is the main legislation governing trademark infringement and anti-counterfeiting in Singapore. Part VI of the act criminalises the counterfeiting of a registered trademark, falsely applying a registered trademark to goods or services, and making or possessing an article used for counterfeiting. Any party found guilty of these may be punished with a fine of up to S$100,000, imprisonment for up to five years, or both.

The sale or import of goods with a falsely applied trademark also amounts to an offence under the act and carries the penalty of a fine of up to S$10,000 per article to which the trademark is falsely applied (not exceeding a total of S$100,000), imprisonment for up to five years, or both.

Border measures

Singapore serves as a major transit hub for large volumes of imports and exports between Asia and Europe. Shipments of counterfeit goods regularly pass through Singapore’s bustling port in the course of transhipment to a separate jurisdiction. Thus, rights holders are presented with a prime opportunity to disrupt the movement of counterfeit goods on their arrival or departure from Singapore through local customs enforcement actions.

The Copyright Act and the Trademarks Act stipulate border enforcement measures which are intended to restrict the import and export of pirated copies and counterfeit goods into and out of Singapore. As such, Singapore Customs is permitted to seize and detain suspected counterfeit goods at a rights holders’ request or of its own volition in ex officio actions.

To initiate a seizure of imported goods, a rights holder must serve the following on the director general of Customs:

• an objection notice in writing;
• a statutory declaration that the particulars in the objection notice are true;
• a security deposit to reimburse Singapore Customs for any expense or liability incurred from the seizure of goods and to compensate for losses suffered by the importer where infringement proceedings are discontinued or dismissed;
• a letter of undertaking to bear all costs relating to the seizure, transport, storage and disposal of seized goods; and
• an administrative fee of S$200.

The objection notice must state that:

• the rights holder is the owner or licensee of the copyright or trademark in question;
• an import of infringing goods is expected; and
• the rights holder objects to such import.

The rights holder must also furnish sufficient information to prove that the goods are infringing and also to allow customs officers to identify the infringing goods and ascertain the time and place where the infringing goods are expected to be imported.

An objection notice is valid for 60 days from the date of service on the director general of Customs. During this period, customs officers will seize all infringing goods matching the description in the objection notice. A notice of seizure is subsequently issued to the rights holder and the importer when goods are seized to inform the parties of the seizure.

Once the notice of seizure is issued, the rights holder has 10 working days to institute civil proceedings for copyright or trademark infringement and notify the director general of Customs accordingly. The rights holder may request for this deadline to be extended by 10 working days to a total of 20 working days. The director general detains the seized goods pending the outcome of infringement proceedings and rights holders must bear warehousing costs.

If the rights holder decides against instituting infringement proceedings or the applicable period for instituting infringement proceedings has lapsed and proceedings have yet to be instituted, the seized goods are released to the importer unless the importer wishes to forfeit the seized goods for destruction. Rights holders who decide not to institute infringement proceedings should note that they may be liable to pay compensation for any losses incurred while the goods were detained.

Alternatively, customs officers are authorised to detain imported and exported goods that are reasonably suspected of being infringing in ex officio actions. The procedure is similar to rights holders’ seizure requests barring certain timelines. Specifically, infringing goods will only be detained by Singapore Customs for 48 hours immediately after a notice of detention is issued. Rights holders must produce an objection notice to indicate their objection to the import or export, along with a security deposit before this deadline expires. After which, rights holders may proceed to commence a civil action for infringement.

The Intellectual Property (Border Enforcement) Act 2018 was recently passed in line with Singapore’s obligations under the European Union-Singapore Free Trade Agreement to enhance its existing border enforcement measures. The act will be implemented in three tranches, making amendments across key IP legislation – including the Copyright Act and Trademarks Act – to the powers available for rights holders to fight counterfeiting. The first tranche of amendments came into force on 10 October 2018, whereas the remaining two tranches are scheduled to become operational on the entry into force of the trade agreement in early 2019 and within three years of it coming into force respectively.

The amendments will, among other things, empower rights holders and Singapore Customs to obtain information or documents from persons connected with seizures of counterfeit goods for the purpose of enabling rights holders to institute civil infringement proceedings. Rights holders may also request for seizures of infringing exports once the second tranche of amendments come into force; such seizures are currently exclusive to ex officio actions by Singapore Customs.

Case study – liability of freight forwarders

In Louis Vuitton Malletier v Megastar Shipping Pte Ltd ([2017] SGHC 305) the plaintiffs (Louis Vuitton, Gucci, Burberry, Hermès and Sanrio Company) sued a Singaporean freight forwarder (Megastar) for trademark infringement by importing or exporting counterfeit goods after two containers containing counterfeit goods bearing the plaintiffs’ registered marks were seized by Singapore Customs. The containers originated from China and were in the midst of transhipment to Batam via Singapore.

The High Court held that the question of whether a party is an importer of counterfeit goods is “highly fact-sensitive” and found that Megastar did not play an active role in making shipping arrangements, packing or loading the seized containers. The evidence suggested that the freight forwarder merely acted as the agent of an Indonesian third party and had no power to prevent the import of the counterfeit goods by the time that it received instructions to declare transhipment status on the containers. Therefore, Megastar was neither the importer nor the exporter of the counterfeit goods and could not be liable for trademark infringement.

Dissatisfied with the High Court’s decision, Burberry and Louis Vuitton appealed. On appeal, the Court of Appeal broadly agreed with the High Court and dismissed the appeal. The Court of Appeal emphasised that the need for effective enforcement must be balanced against over-extending liability to honest commercial parties incidentally involved in the movement of counterfeit goods and without any knowledge that such goods existed. Megastar was providing a commercial service in the ordinary course of business without knowledge of the counterfeit goods and accordingly was not liable for trademark infringement.

This policy-driven decision drew attention to a difficulty that rights holders frequently encounter in practice. Due to the possibly global and complex nature of a counterfeit supply chain, rights holders are often unable to procure sufficient information to ascertain the right parties to pursue for trademark infringement. The plaintiffs in this case lacked information on the ultimate consignee of the transaction and had little choice but to attempt suing the freight forwarder instead.

Rights holders may take solace in the fact that the freshly enacted Intellectual Property (Border Enforcement) Act 2018 mitigates this by empowering rights holders and Singapore Customs to acquire information from persons connected with seized goods for identifying the right parties to institute infringement proceedings against. The nuanced and fact-specific approach adopted by the Court of Appeal ensures that freight forwarders are not afforded blanket protection against liability for trademark infringement in transhipment cases, allowing rights holders to pursue a freight forwarder that is directly involved in counterfeiting in an appropriate case.

Criminal prosecution

The criminal process is primarily relied on by rights holders in Singapore who seek to enforce their rights against counterfeiters. A criminal action may be initiated by rights holders or police officers from the IP rights branch under the offences relating to counterfeiting and piracy as set out in the Trademarks Act and Copyright Act respectively.

Rights holders typically engage private investigators to conduct groundwork and secure evidence of infringement. Thus, market surveys are often conducted to identify sources of infringing goods. When a source is identified, a ‘trap purchase’ is made by investigators. This is used as evidence of infringement to substantiate a search warrant application for a raid of the infringer’s premises.

Search warrant applications are made by way of a magistrate’s complaint before the state courts and through the rights holder’s representatives. The magistrate must be satisfied that there is reasonable suspicion that evidence of counterfeiting or piracy may be found at the infringer’s premises before a search warrant is granted. Raids are conducted by the rights holder’s representatives along with police officers from the IP rights branch who act in a supervisory capacity. Any goods, materials, articles or documents which are evidence of counterfeiting or piracy will be seized.

After the raid concludes, the rights holder must apply to the attorney general’s chambers for a fiat to privately prosecute the infringer. Once the fiat is granted, the rights holder files a criminal complaint with the magistrate and the state court issues a summons against the infringer. However, most rights holders and infringers reach an amicable settlement before the matter proceeds to trial.

On the infringer’s conviction or the conclusion of a settlement, an order for the disposal of property is made by the court and the seized goods are destroyed.

Civil enforcement

Counterfeiting and piracy are an egregious subset of infringing acts and inevitably constitute trademark or copyright infringement, which allows rights holders to institute civil proceedings against infringers. Since civil and criminal liability are separate and distinct, rights holders are not precluded from initiating civil proceedings in conjunction with or in lieu of criminal prosecution.

A trademark owner who successfully sues a counterfeiter for trademark infringement is entitled to elect from the following remedies:

• a final injunction;
• damages and an account of profits attributable to the infringement that has not been taken into account in computing the damages;
• an account of profits; or
• statutory damages not exceeding S$100,000 for each type of good or service for which the counterfeit trademark was used up to S$1 million in total, unless the rights holder proves that its actual losses suffered exceeds S$1 million.

In awarding statutory damages, the court considers all relevant matters, including the flagrancy of infringement and losses suffered by the rights holder, before concluding on the quantum of statutory damages payable by the infringer. The court also typically makes an order for the delivery and disposal of infringing goods after a finding of infringement.

The remedies available for copyright infringement are similar to trademark infringement, except that the quantum of statutory damages awardable by the court is capped at S$10,000 for each piece of work for which the copyright has been infringed, up to S$200,000 in total.

For urgent matters, rights holders may apply for interlocutory injunctions to prohibit the carrying on of infringing activities. Where there is a real risk that the infringer would destroy evidence before trial, a search order (formerly known as an Anton Piller order) may be obtained for pre-trial seizures of counterfeit or pirated goods and other relevant evidence. The threshold for grant of a search order is higher than a criminal search warrant, hence the criminal process is usually the preferred choice by rights holders in enforcement.

As a practical matter, the first step for rights holders should always be to issue a cease and desist letter. This puts the infringer on notice and negates a subsequent claim of ignorance, which would limit the rights holder to recovering an account of profits but not damages. There are also cost implications if a cease and desist letter is not issued before civil proceedings are instituted. Rights holders should also consider that a non-litigious approach is favourable where remedies unavailable at law are sought, since an out-of-court settlement offers the freedom to craft remedies which are contractually enforceable against infringers.

Anti-counterfeiting online

The advent of the Internet has brought about novel challenges in enforcement for rights holders. Counterfeit and pirated goods are increasingly distributed and sold on various online platforms such as eBay. With the rise in usage and popularity of social media, counterfeits are gradually appearing on such platforms as well. A key issue faced by rights holders online remains the identification of infringers with sufficient certainty – due to the ease of remaining anonymous – to enable further action to be pursued.

The Trademarks Act does not distinguish between counterfeiting online and offline. There is a legal lacuna as no legislation deals specifically with counterfeiting online. Nevertheless, rights holders are equipped with other forms of recourse.

Breach of terms of service

The terms of service for services such as online marketplaces, auction sites and social media platforms prohibit users from engaging in infringing activities on the platform. A breach of the terms of service may lead to account suspension or deletion and online platforms have procedures in place for rights holders to report and take down infringing content. However, the efficacy of such procedures varies between sites, as it is heavily dependent on the online platform treating the removal of infringing content as a priority.

Domain takedowns

Some counterfeiters operate by reproducing a trademark owner’s website in order to trick unwary consumers. Where the domain name used by counterfeiters closely resembles a trademark owner’s registered mark, the Uniform Domain Name Dispute Resolution Policy may be applicable for trademark owners to challenge the domain name registration and cancel or transfer the infringing domain name where the trademark owner is able to demonstrate that:

• the domain name is identical or confusingly similar to a trademark in which they have rights;
• the domain name was registered and is being used in bad faith; and
• the registrant has no rights or legitimate interests in the domain name.

Otherwise, a complaint may be filed with the domain registrar to take down the website for a breach of the registrar’s terms of service by offering counterfeit goods for sale.

Site-blocking order

The Copyright Act was amended in 2014 to hand copyright owners a new tool against online piracy by disabling access to piracy websites.

Section 193DDA of the Copyright Act enables copyright owners to apply to the High Court for an order directing a network service provider (NSP) to block access to a “flagrantly infringing online location” without establishing liability for copyright infringement on the NSP’s part. The court considers a non-exhaustive list of factors in deciding whether an online location is used to flagrantly commit copyright infringement. In 2016 this was successfully used by the Motion Picture Association of America to obtain a dynamic site blocking order against 53 websites, including The Pirate Bay.

Copyright owners that wish to apply for a site-blocking order must send notices to the infringing website’s owner and NSPs to notify them of their intentions before making an application, unless the court dispenses with this requirement. After the application is made, the defendant NSP must be served with a copy of the application and the website owner notified accordingly.

NSP liability

NSPs are exempt under the Copyright Act from copyright infringement liability arising from the creation of electronic copies in the course of the following activities:

• transmission, routing and provision of connections;
• system caching;
• storage on the primary network; and
• connecting users to another online location via information location services.

These exemptions are subject to the NSP fulfilling certain conditions in the Copyright Act and the Copyright (Network Service Provider) Regulations, including expeditiously taking reasonable steps to disable access to allegedly infringing copies of copyrighted material and designating a representative to receive requests to remove infringing material.

Preventive measures/strategies

In the war against counterfeits and fakes, the onus ultimately lies with rights holders to take proactive steps in developing their own practices to prevent counterfeiting.

To accomplish this, rights holders must establish sound intelligence and surveillance networks to monitor and keep abreast of counterfeiting activities both online and offline. This enables effective planning of appropriate enforcement strategies. Unique packaging features that are tough to replicate (eg, special inks, dyes and holographic stickers) may be applied to discourage counterfeiters and assist enforcers in the verification of genuine products on the ground. Proper product training should be provided for customs and enforcement agencies to elevate the potency of ex officio actions. To that end, it is vital that rights holders engage and build strong working relationships with local enforcement agencies.