In the case of Kenya Revenue Authority v Doshi Iron Mongers & another  eKLR, the Court of Appeal was called upon to determine whether Section 5 of the Customs and Excise Act gives an officer of the Appellant (KRA) under the Act powers, rights and privileges akin to those given to a police officer in execution of his duties under Cap 84 of the Laws of Kenya, in particular that such an officer can enforce intellectual property (IP) rights including raids, arrests and seizure of goods not listed under Schedule 8 of the Customs Act.
In the lower court, the respondents had complained that their warehouses in Mombasa and Nairobi were raided between 1996 and 2006 by the appellant for no rhyme or reason, purporting to search for counterfeit, substandard and uncustomed goods particularly ‘BIC’ biro pens, battery cells, and other items at the behest of companies such as Haco Industries who were the assigned users of the trade mark.
On two occasions following such raids, the respondents were hauled to court and charged with various offences of “offering to supply goods for sale to which a false trade description is applied contrary to the Trade Descriptions Act, Cap 505 of the Laws of Kenya. In other words, the respondents were being accused of dealing with “counterfeit goods”
The respondents claimed that the seizure and detention of it’s goods made by the Appellant on the premises that such goods were/are “counterfeits” were both unlawful and based on a misapprehension of the enabling statutes of the appellant.
The lower court sided with the respondents finding the appellant’s action and use of the Customs Form F. 89 are ultra vires the Customs and Excise Act and ordered that the respondents be awarded general damages in the amount of Kshs. 3.5 million. This finding led to the present appeal by the appellant.
The appeal court agreed with the lower court that under the Trade Descriptions Act, the duty to enforce the provisions of that Act reposes on an Inspector of Weights and Measures appointed under Section 27 of the Weights and Measures Act.Therefore the officers appointed under the Customs and Excise Act had no authority to enforce trade mark or other related infringements as they did in this case.
Further, the appeal court disagreed with the interpretation and application of the Customs and Excise Act by the appellant with regard to counterfeit goods. The court’s judgment reads in part as follows:
“The appellant placed reliance on Section 196 of the Customs and exercise (sic) Act, which, it was submitted, was all encompassing, and a carte blanche for customs officers to enforce ‘any other written law.’ Learned counsel for the appellant posited that this provision gives the appellant power to raid and seize, or enforce any written law.
A careful reading of that section would nonetheless seem to suggest otherwise. It specifically deals with goods that are liable to forfeiture, and proceeds to list them. The list does not talk about counterfeit goods. It talks of uncustomed goods; prohibited goods (which are also listed under schedule eight); restricted goods; and those goods that have been packaged in a manner that is meant to deprive the state of its rightful taxes.
The eighth schedule is the one that talks about “all goods the importation of which is prohibited” under the Customs and Excise Act or under any law “for the time being in force in Kenya”. The word counterfeit is not defined in the Customs and Excise Act, and indeed officers of the appellant are ill equipped to identify counterfeit goods by sight.”
It appears from the case that several officers of the appellant led by one Christopher Kiratu (who is currently a board member of Music Copyright Society of Kenya) were carrying out operations as part of an “Anti-Counterfeit Unit Secretariat” with alleged powers to deal with counterfeit goods. However the Court of Appeal agreed with the High Court’s finding that since the anti-counterfeit secretariat has no legal mandate or statutory foundation, which even if it had it would not be enforceable without a valid or genuine claim by the right holder, it follows that the appellant’s acts were arbitrarily done, capricious and in violation of the respondents’ rights.
As a result the appeal court noted that the lower court had rightly concluded that the purported enforcement of the trade mark in the absence of a complainant, and by an outfit that was not underpinned on any law, was illegal, and unconstitutional, and thus attracted an award for damages to the aggrieved party. In this connection, it is important to note that, in the intervening period of this appeal, the Anti-Counterfeit Act was enacted which established the Anti-Counterfeit Agency with powers to initiate suo moto proceedings against alleged counterfeiters.