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February 6, 2023

Enforcing IP Rights in Cambodia: Available Customs Measures

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The available options for enforcing intellectual property (IP) in Cambodia have steadily increased over the past years, and both enforcement authorities and IP owners have gained valuable experience in enforcement operations. This experience, alongside new legal developments, has contributed to an increase in successful IP enforcement cases—most notably those involving the police or the courts in Cambodia.

Targeted government policies have further fostered a more robust IP enforcement framework in Cambodia for both local and foreign IP owners alike. These owners collaborate with government actors in a bid to protect their IP in Cambodia and ensure that quality goods reach Cambodia’s consumers. Cambodia’s obligations under the Regional Comprehensive Economic Partnership (RCEP) related to IP and especially IP enforcement will lead to even more positive developments.

Customs Enforcement

Recently, many IP owners have shown particular interest in enforcement opportunities involving Customs in Cambodia, as these IP owners recognize Customs as a key authority in fighting the inflow and outflow of infringing goods.

Customs (officially named the General Department of Customs and Excise) is responsible for monitoring the import and export of goods at border checkpoints, and levying duties and taxes on imports and exports. They facilitate trade, which is key for the private sector and government alike, and they collect taxes that can be used for the government and the public good.

In this role, Customs is an important agency in fighting infringement, either by stopping imports so that the infringing goods do not reach consumers in Cambodia, or by taking action against exports, thereby making Cambodia less desirable as a manufacturing or transit hub for infringing goods. Besides improving the reputation of the country as a destination for investment and business, it can benefit the public as well, because infringing goods are often smuggled or misdeclared to avoid duties and taxes, resulting in a loss for the Cambodian economy.

Although Cambodia does not yet have a Customs trademark recordal system in place, there are still a number of ways Customs can play a key role in any enforcement strategy.  Below we address these available Custom enforcement options with a focus on imports, but most measures also apply for export of goods.

Shipment Clearance Suspension

A very welcome development in recent years is a prakas that covers suspension of shipment clearance for goods that violate intellectual property rights. Prakas No. 196 on the Policy for Suspension of Customs Clearance Procedure of Imports and Exports violating Intellectual Property Rights was issued on March 29, 2021, by the Ministry of Economy & Finance (MEF)—in which Customs is a department.

The prakas specifically addresses goods violating trademarks, geographical indications, copyrights and related IP rights. It sets out how Customs is to handle a request for suspension filed by an IP owner, and it clarifies Customs’ ex-officio powers to suspend shipment clearance for goods they suspect are in violation of intellectual property rights, without the need for a prior complaint or request from the IP owner. These clearly defined ex-officio powers are a great tool for Customs to use in the fight against infringing goods.

After a suspension action based on either a complaint or an ex-officio action, Customs may invite the IP owner to inspect and confirm whether the goods violate their IP rights. If there is sufficient evidence of counterfeiting or other infringement, Customs may initiate a dispute resolution process or refer the matter to court for further action. Customs clearance of the concerned shipment remains suspended pending the outcome of the matter, and the goods may be eventually seized and confiscated by Customs during the process, or by an order of the court, which can also order the destruction of infringing goods in most cases.

While Customs officials arguably already had the power to take ex-officio action, the clarification of this power in Prakas No. 196 gives Customs officer much more legal certainty to take ex-officio action. This should contribute greatly to curbing the flow of infringing goods into and out of Cambodia.

Lastly, the prakas addresses security bonds. In the past there was uncertainty about the legal support to both request a bond and the formula to calculate the bond.. Under the new prakas, Customs has clear legal authority to request a security bond from IP owners for shipments suspended in relation to IP infringement, at 30% of the value of the goods in the suspended shipment (or higher for perishable goods).

Customs has issued official instructions to its officers, including the related forms and guidelines to request suspension of Customs clearance based on the new prakas, marking Customs’ increased focus on fighting the import and export of infringing goods.

In short, the Prakas is a very notable step forward for Customs, as it provides a clear legal framework for them to take action against infringing goods. Moreover, Customs officers have expressed willingness to implement the measures, and they welcome complaints from IP owners.

Parallel Imports and Recording an Exclusive Distributorship

Cambodia’s legal framework prohibits parallel importing of trademarked goods, as per the Law Concerning Marks, Trade Names and Acts of Unfair Competition. Accordingly, this presents an additional enforcement avenue in which Customs can play a key role.

To enforce their IP rights against parallel importing, owners must record an exclusive distributorship in Cambodia with the Ministry of Commerce. This recordal is done by making a series of straightforward filings, which then provides the IP owner and its appointed exclusive distributor with an exclusive and enforceable right to import and distribute the relevant trademarked goods in Cambodia.

A recordal is valid for two years and can be renewed. Notably, IP owners may withdraw a recordal at any time if they wish to terminate the exclusive distributorship.

Once a distributorship is recorded, enforcement actions can be taken when goods are parallel imported or distributed in Cambodia by any entity or individual other than the registered exclusive distributor. The current regulations do not prohibit exclusive distributors from appointing subdistributors, so that effectively the exclusive distributor actually only functions as an exclusive importer, with further distribution rights given to other entities in Cambodia. In such a scenario, the agreements covering these distribution networks should be clearly drafted to evidence what rights the IP owner has given to the exclusive distributor and its subdistributors.

After recording an exclusive distributorship, the Ministry of Commerce shares the recordal information with Customs, which adds the information to the Customs information database they refer to when inspecting shipments.

Checking the importing entity’s name against the database with recorded exclusive distributorships is an easy and straightforward process. Customs officers do not have to verify if the goods are genuine or counterfeit—which can be a difficult determination for officers not familiar with the particular brand of goods. Rather, the officers merely check the name of the importer against the database, and if the goods are not imported by the recorded exclusive distributor, the shipment can be suspended, pending further action.

A welcome practical effect is that measures meant to stop parallel imports may also stop infringing goods imported by parties other than the recorded exclusive distributor. Customs may, in its efforts to curb parallel imports, stop shipments not for the exclusive distributors, and these shipments may very well turn out to be infringing goods, such as counterfeits. Customs may then take action either under the regulations prohibiting parallel imports, or under Prakas No. 196 based on the import of infringing goods, as discussed in the previous section, depending on the circumstances.

This removes the need to make a (sometimes difficult) determination on the genuine or counterfeit nature of the goods. A shipment not imported by the recorded exclusive distributor can be suspended based on potential parallel importing, followed by an invitation to the actual IP owner (or exclusive distributor) to make the determination on the nature of the goods. If the goods are infringing, appropriate action can be taken in accordance with the law. If the goods are parallel imports, Customs can take action against them as well, under a different set of rules.

Engagement with Customs

Although formal Customs recordal is not available in Cambodia, IP owners with information on checkpoints that are often used by shipments of infringing goods can contact the relevant Customs office at the checkpoint to cooperate with the officers there.

If there is sufficient information, Customs may exercise its ex-officio powers to suspend suspect shipments, followed by the IP owner filing an official complaint if the products are confirmed as infringing.

Local Customs officers are generally open to working with IP owners if the information is strong enough to justify suspending or more closely inspecting shipments. However, it is not possible to make a general request that Customs inspect all shipments for an IP owner’s trademarked goods. Nevertheless, with specific information, an IP owner can initiate cooperation and information sharing with Customs, which can be an effective way to stop shipments of infringing goods.

Conclusion

Customs now has additional legislative tools—and the required experience and practice—to increase their enforcement efforts against shipments of infringing goods in Cambodia. Both parallel imports and infringing goods can be stopped if IP owners cooperate with Customs on information sharing and other matters, act promptly on inspection requests, file complaints in support of Customs actions, and provide security bonds as requested under Cambodian law.

Cambodian Customs has shown an eagerness to implement the latest developments and to take action, especially when IP owners actively engage with them. In short, Customs has become a valuable tool in the enforcement arsenal available to IP owners in Cambodia over the past years. Owners may find considerable benefits from including Customs enforcement in their strategy for protecting IP rights in Cambodia.

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