Customs and Cross-border measures


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    2. 2. IP Enforcement-Remedies Civil  Infringement  Passing off Criminal Administrative Technological measures
    3. 3. Civil Litigation- Objective To provide compensation to the right holder To prohibit future infringement Appropriate disposal of infringing material and all tools/ plates / dyes used for manufacturing the same.
    4. 4. Civil Action: Reliefs Injunctions against violations Raids & Seizures Damages OR Accounts of Profits Delivery up/ Discovery of infringing material / documents Preservation of assets Copyright owner- Infringing material is deemed to be his property.
    5. 5. Interim / Interlocutory Injunction Often the real remedy Objective: To maintain status quo Time is of essence Factors considered in granting :  Prima facie case  Balance of convenience  Irreparable injury if injunction not granted Gujarat Bottling Company v. Coca Cola 21 IPLR 201
    6. 6. Interlocutory injunction Statutory recognition Importance is also recognized by the judiciary  Landmark Supreme Court judgments
    7. 7. Wander Ltd. & anr. vs. Antox India P. Ltd.(1990 (2) ARBLR 399 SC, 1990 Supp (1) SCC 727)Supreme Court on interlocutory injunctions:“Usually, the prayer for grant of an interlocutory injunction is at a stage when the existence of a legal right asserted by the plaintiff & its alleged violation are both contested… The object is to protect the Plaintiff against injury by violation of his rights for which he could NOT adequately be compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial.
    8. 8. Wander Ltd. & anr. vs. Antox India P. Ltd. 1990 (2) ARBLR 399 SC, 1990 Supp (1) SCC 727Supreme Court on Balance of Convenience:“The need for such protection must be weighed against the corresponding need for the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately be compensated. The Court must weigh one need against another and determine where the balance of convenience lies.”
    9. 9. Midas Hygiene Industries P. Ltd. V. Sudhir Bhatia & Anr.(2004 (73) DRJ 647, 2004 (28) PTC 121 SC)Supreme Court…“…in cases of infringement either of trademark or of copyright normally an injunction must follow. Mere delay in bringing the action is not sufficient to defeat grant of injunction in such cases…the grant of injunction also becomes necessary if if it prima facie appears that the adoption of the mark itself was dishonest”.
    10. 10. Lakshmikant V. Patel vs. Chetanbhat Shah(December, 2001)Supreme Court: “In an action for passing off it is usual, rather essential to seek an injunction, temporary or ad-interim”“proof of actual damage is not essential… likelihood of damage is sufficient”“an absolute injunction can be issued restraining the defendant from using or carrying on business under the Plaintiff’s distinctive trademark”.
    11. 11. Enforcement of IPRs - Trademarks Indian Courts have applied and expanded principles of trans-border reputation even if:  The Plaintiff has no presence in India  The goods of the defendant are entirely dissimilar (dilution principle recognized)  Provided knowledge of the mark acquired through various sources of trans-border reputation
    12. 12. Enforcement- Domain names M/s Satyam Infoway Ltd. V. Sifynet Solutions Pvt. Ltd. (2004) 6 SCC 145  SC has held that domain names are subject to the legal norms applicable to other intellectual properties, such as trademarks. Yahoo Inc. v. Akash Arora 1999 PTC 201  SC applied general trademark law to the internet.
    13. 13. Ex Parte Order When the matter is extremely urgent At a preliminary hearing of the interim application without notice to the answering defendant. Granted before the motion for interim injunction is fully heard but for a limited period only. After grant of ex parte injunction, the Court must proceed with disposal of the interim injunction application after the defendant has
    14. 14. Ex Parte Orders Injunction; Discovery of documents; Preserving of infringing goods, document of other evidence related to the subject matter of the suit; Restraining the defendant from disposing off his assets in a manner which may adversely affects rights of the IP owner to claim damages, costs or other pecuniary remedies.
    15. 15. Anton Pillar Order Anton Pillar v. Manufacturing Process (1976) RPC 719 Similar to ex parte interlocutory order After a hearing, Court authorizes plaintiff to inspect premises of defendant and take inventory of the offending material
    16. 16. Anton Pillar Orders Sensitive in nature Pre conditions for grant:  Extremely strong prima facie case  Damage (potential or actual) very serious  Clear evidence that defendants have in their possession, incriminating document/ material which they may destroy.
    17. 17. John Doe Order Court appointed commissioners to enter the premises of any suspected party and collect evidence of infringement. Suspected party may not be named in the suit. Indian Courts have conferred expanded powers to commissioners- Roving commissioners Ardath Tobacco Co. Ltd. vs. Mr. Munna Bhai & Ors.
    18. 18. Mareva Injunction Freezing order Prevents the infringer / offender from removing / disposing of assets in which the gains from infringement have been invested. Aim- unjust enrichment of the defendant and to ensure payment of damages to Plaintiff
    19. 19. Final injunction To ascertain rights of the parties Remedies for Breach of injunction  Police assistance  Assistance of administrative bodies  Contempt proceedings
    20. 20. Damages / Account of Profits These are mutually exclusive alternative remedies Account of profits- An equitable relief  Plaintiff adopts defendant’s acts as his own. Damages- for the losses suffered by the Plaintiff on account of the defendant’s acts
    21. 21. Damages- recent trends Time Inc. vs. Lokesh Srivastava  Punitive damages awarded for the first time – Rs 5 lakhs  Distinction between compensatory damages and punitive damages was made out.
    22. 22. Time Incorporated vs. LokeshSrivastavaDelhi High Court:“The award of compensatory damages to a plaintiff is aimed at compensating him for the loss suffered by him whereas, punitive damages are founded on the philosophy of corrective justice and as such, in appropriate cases these must be awarded to give a signal to the wrong-doers that law does not take a breach merely as a matter between rival parties but feels concerned about those also who are not party to this but suffer on account
    23. 23. Damages- recent trends Microsoft Corporation vs. Yogesh Papat & anr. 2005 (1) CTMR 424  Highest costs and Damages ever awarded for IP infringement by Indian Courts  Approximately Rs 20 lakhs
    24. 24. Criminal Remedies- TM Falsification of Trademarks / Infringement of copyright is a criminal offence A complaint may be filed before a Magistrate; OR Police can register an FIR and prosecute directly; (statutory requirement to obtain the Registrar’s approval. Registration is not a requirement.
    25. 25. Criminal Remedies- TM/ CR Cognizable offence Imprisonment- 6 months to 3 years Fine- Rs 50,000 to 2 lakhs Enhanced penalty on subsequent convictions. Seizure, forfeiture and destruction of infringing goods/ material for placing before the Magistrate.
    26. 26. Civil vs. Criminal Less hassle for the plaintiff Jurisdictional advantage Interlocutory Injunctions Damages Possibility of settlementHowever… No deterrence No fear factor- no arrest Expensive & lengthy
    27. 27. Administrative Remedies Indian Customs Act, 1962  Deals with import/ export of goods including protection of patents, trademarks and copyrights. Confiscation of infringing material by Excise Authorities Restrictions against parallel importation of goods
    28. 28. Technological measures Holograms Electronic devices Encryption Anti-copy devices
    31. 31. IMITATION DOES NOT MEANDUPLICATION-DESIGNJUDGEMENT The landmark CASTROL VS TIDEWATER found the Indian courts uphold a major design justiciablity that mere duplication does not really amount to duplication. HIGH COURT OF CALCUTTA Suit No. 415 of 1993 Ordinary Original Civil Jurisdiction Castrol India Ltd...............Petitioner Versus Tide Water Oil Co. (I) Ltd................Respondents Ruma Pal, J. Decided on : August 26, 1994 • The sequence of the obligation of the court in considering an application for infringement of a design is first to consider whether protection is claimed in respect of a design or of the mode of manufacture. The first is protected by the Design Act 1911 and the second by the law of patents.
    32. 32. INFRINGEMENT BY SUBSEQUENTPATENT?? In the famous landmark case of HINDUSTAN UNILEVER LTD VS LALIT WADHWA 200735 PTC DEL, its was held by the court that the RIGHT OF PATENTEE IS ONLY AN EXCLUSIONARY RIGHT. The court also held under the ambit of sec.64 of Patents Act, that whenever a subsequent patentee brings a suit for infringement then every ground on which it may be revokes under sec 64, all of them shall be availaible as grounds for defence. This means that when a subsequent patentee brings a suit for infringement against an earlierpatent holder, then the earlier patent holder can claim priority date as a valid defence.
    33. 33. COPYRIGHT- IDEA VS.EXPRESSION DICHOTOMY R.G. ANAND V. DELUX FILMS (1978) There can be no copyright in an idea, subject matter, themes, plots, or historical or legendary facts and violation of copyright in such cases is confined to form, manner, and arrangement and expression of idea by the author of copyrighted work. One of the safest and surest test to determine whether or not there has been a violation of copyright is to see if the reader, spectator or the viewer after having read or seen both works is clearly of the unmistakable opinion and gets the impression that subsequent work appears to be a copy of original. As a violation of copyright amounts to an act of piracy it must be proved by clear and cogent evidence after applying the tests of equity.
    34. 34. CONTD.MR. ANIL GUPTA AND ANR. V. MR. KUNAL DASGUPTA AND ORS [97(2002) DLT 257] Court held that the concept developed and evolved by the plaintiff was a the result of the work done by the plaintiff upon the material which may be available in the public domain. However, what made the concept confidential was the fact that the plaintiff had used his brain and thus produced a unique result applying the concept. The Court granted an injunction.KING FEATURES SYNDICATE INC VS SUNIL AGNIHOTRI & ORS ( 1997 PTC (17) In this case there was a dispute on use of BETAAL & PHANTOM wherein the court refused the injunction on the grounds that there is no copyright in an idea/title- defendant inspired only by idea but expression is original.RAJA POCKET BOOKS VS RADHA POCKET BOOKS( 1997 PTC (17) NAGRAJ –NAGESH – DISPUTE ON SIMILARITY OF COMIC CHARACTERS.HINDUSTAN PENCIL PVT LTD VS UNIVERSAL TRADING COMPANY(1999PTC(19)This case law establishes the test of copyright infringement wherein it has been established that in case there are very minor differences between two works and the get-up and colour combination are copied per se then it shall amount to copyright infringement.
    36. 36. NEED FOR CUSTOMS LAWS IN THE FIRST PLACE  Customs is an authority or agency in a country responsible for collecting and safeguarding customs duties and for controlling the flow of goods including animals, transports, personal effects and hazardous items in and out of a country. Depending on local legislation and regulations, the import or export of some goods may be restricted or forbidden, and the customs agency enforces these rules.  In India, the basic law for levy and collection of customs duty is Customs Act, 1962. It provides for levy and collection of duty on imports and exports, import/export procedures, prohibitions on36 importation and exportation of goods, penalties, offences, etc.
    37. 37. CUSTOMS PROVISIONS TO CONTROL COUNTERFEIT MENACE  Customs Act, 1962 prohibits import of goods that infringe intellectual property. Section 11 of the Act empowers the Central Government, for the purposes specified in subsection 11(2), to prohibit import or export of goods of any description by issuing a notification.37
    38. 38. EFFICACY OF 2007 RULES IN GOOD LEGAL MEASURE Cases of suspension of goods by Indian Customs  The Customs department, in July 2008, ordered absolute confiscation of counterfeit goods in the matter concerning the importer M/s. Womens World Jewels Pvt. Ltd., and M/s. Impac Enterprises who imported consignment containing cosmetics, gift items etc., bearing registered trademarks „Nivea‟, „Dove‟, „Sunsilk‟ and „L‟Oreal‟. Commissioner of Customs noting that the act of importing into India and/or market these goods in India without having any authorization from the manufacturers, amounted to infringement of rights of right holders and thus prohibited the importer from importing the goods.38
    39. 39. Contd.  Another order was passed in 2008 against M/s P.S. Grover and Sons for importing cosmetic and toiletries products of registered trademark „L‟Oreal‟ and „Garnier‟ for importing without first having obtained authorization from registered trademark owners M/s L‟Oreal and M/s Laboratoire Garnier & CIE. The Customs Department not only ordered confiscation of imported goods but also imposed huge penalty of Rs 25,000/- on importer and also Rs 5,000/- on partner of importer.39
    40. 40. ISSUES RAISED BY IMPLEMENTATION OF RULES The Ram Kumar Patent Saga  This litigation involves a patent granted to Mr. Soma Sundaram Ram Kumar on a “Mobile telephone with a plurality of SIM cards allocated to different communication networks”. Mr. Ram Kumar sought to enforce the patent rights against a number of multinational and national importers including Hansum India, Samsung and Micromax.  Mr. Ram Kumar filed an application in the Chennai Patent office on March 4, 2002 containing 4 claims and 12 drawings and was allotted Patent Application No. 161/MAS/2002 which was granted in 2008. Mr. Ram Kumar, then filed an application under Rule 3 of the Intellectual Property Rights Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007. Mr. Ram Kumar filed an application on December 8, 2008 with the Officer of Commissioner of Customs under the Customs Notification No. 47/2000 read with Circular No. 41/2007 Customs Circular dated 29.10.2007 called the Instructions for Implementation of Intellectual Property (Imported Goods) Enforcement Rules, 2007.40
    41. 41. CONTD.  The first course of litigation before the Indian Courts was with respect to the constitutionality of the Rules. In this petition, Samsung raised the issue of lack of expertise of the Customs authorities. However, the petition had to be subsequently withdrawn for the lack of territorial jurisdiction.  The second course of litigation was before the Madras High Court, wherein Mr. Ram Kumar sought a restraining order against manufacturers such as Samsung, Micro Electronics and Spice Mobile, restraining them from manufacturing and selling multiple SIM holding mobile phones.  The third course of litigation was before the customs authorities and highlights the concerns on behalf of the importers. The claims related to dual SIM which allowed simultaneous communication multiple headsets41
    42. 42. CONTD.  The Chennai customs authority upheld the contentions of Hansum India Ltd. Holding that the claim 1 of Mr. Ram Kumar patent had limited scope. The claims, therefore, were held not to be infringed by the cell phones manufactured by Hansum since these cell phones used a single headphone/earphone jack. Similarly, the New Delhi customs authority, in an order dated 8th June, 2009, by J.P. Kundu, the Assistant Commissioner of Customs, found that claim made by Mr. Ram Kumar was vexatious and the impugned goods were covered by the prior art declared by him.  Against the orders of customs authorities, Mr. Ram Kumar filed writ petition in the Madras High Court, dismissing the petition, held that the proper forum for the redressal was the Customs Appellate Tribunal, an authority envisaged as the appellate authority under the Customs Act, 1962. Therefore, at present, the orders of the Customs administration allowing the clearance of the goods from the Mumbai, Chennai and Delhi ports stand affirmed and, the stand of the importers has been upheld.42
    43. 43. FAMOUS CISCO ADJUDICATION  The case involving parallel imports and trademarks in India, Cisco Technology Vs Shrikant (2005 PTC 538 DEL.) the plaintiff‟s employed sec. 29(6) (c) of custom act read with sec 140 defense and were successful in getting an exparte order directing the customs authorities to notify all ports to bar imports of defendant goods and also appointing a local commissioner to seize all goods bearing the mark in issue and inventory the same.43
    44. 44. PARALLEL IMPORTS- A TRADE MENACE  A parallel import is a non counterfeit product imported from another country without the permission of the intellectual property owner. Parallel imports are often referred to as grey product, and are implicated in issues of international trade, and intellectual property.  Parallel importation infringes the right of the right holder who has the exclusive right to trade in such goods under the trade mark in a particular area.44
    45. 45. OLD SAMSUNG CASE(2006)  In the Judgement of the Delhi High Court in Samsung Electronics Company Ltd. & Anr. vs G.Choudhary & Anr(( MANU/DE/3161/2006) defendants, who were the parallel importers were held liable for infringement of Trademark. The registered owner of the Trademark “Samsung” filed a suit against the defendants for importing from China and selling in cartridges and toners branded “Samsung” manufactured by the plaintiff itself in China. The plaintiff argued that although the products are genuine, they were not meant for Indian markets. The reasons by the plaintiff included that the descriptions that accompanied the products were in Chinese, there was no warranty offered and that the use of these products were likely to constitute a breach of warranty of other legally purchased machinery.45
    46. 46. THE NEW SAMSUNG CASE(2012)  In FEB 2012, the Delhi High Court, in the famous SAMSUNG ELECTRONICS VS KAPIL WADHWA AND ORS CASE, ruled that selling genuine imported products in India without the rights holder‟s consent constitutes infringement. If the Division Bench of the Court upholds that decision – in favour of Samsung – brand owners should find it easier to stop grey goods reaching the Indian market. IP owners and lawyers have welcomed this ingenuous ruling.  The 1st plaintiff in the case, was Samsung Electronics Company Limited, Korea and the 2nd plaintiff was its Indian subsidiary and exclusive licensee in India. The 1st plaintiff produced records to show 7 registrations for the mark “SAMSUNG” across46 classes 7, 9 and 11.
    47. 47. CASE HIGHLIGHTS & KEY LAW FACTS  The questions primarily arising were:  1. Does sale of imported, genuine products without consent of the right holder in India, constitute infringement under section 29(1) read with 29(6)?  2. Does section 30(3) recognise national exhaustion or international exhaustion?  3. Does meta tagging and deep hyperlinking of a registered trademark constitute infringement?47
    48. 48. Law facts  In answering the first question, the Court held that any importer who is not a registered proprietor or permissive right holder, even if importing genuine products, is culpable of infringement. There is also an interesting observation that had the legislative intent been to facilitate free movement of goods, section 29(6) would have not existed at all. These fetters on the right of importation of genuine goods, is justified on the basis of section 29(1), which does not provide any distinction between genuine and non-genuine goods. In the absence of any legislative provision or exception for genuine imported goods, such importation is48 deemed to be an act of infringement.
    49. 49. Exhaustion theory  In answering the second question, the Court held that section 30(3) recognizes only national exhaustion in India. The section is interpreted to mean that once goods are acquired by a person from the registered proprietor within the same market, the registered proprietor cannot turn around and state that there in an infringement of his trademark on the count that there is change of ownership by way of an assignment between the registered proprietor and some other person and seek prohibition on the dealings of the goods. This cannot subsume in favour of a person acquiring goods from a foreign market. The implication and effect of section 30(3) is stated to be limited to acquisitions within the domestic market. Section 30(3) permits an exception only on those goods which bear registered trademarks, and are acquired lawfully, and the word “lawfully” is to include the trademark law in force. The only “market” for the purpose of section 30(3) is deemed to be the Indian market. The Court unequivocally held that section 30(3) does not recognize any concept of international exhaustion, and the section operates only within the market where the registration of the mark extends. There is also considerable discussion on the UK, EU and American concepts of exhaustion. The Xerox case is distinguished on the basis that it dealt with second hand imported goods and is on a different set of facts and circumstances.49
    50. 50. HYPERLINKING AND META- TAGGING  On the issue of meta tagging and deep hyper linking of registered trademarks, the Court held that the promotion on the basis of the same in order to take advantage of the plaintiff‟s registered trademark cannot in any manner be categorized as fair use, and would tantamount to an act of infringement.50
    51. 51. WARNER CASE In another landmark case, the Delhi High Court, in the TimeWarner Inc. vs Lokesh Srivastava & Another(2005 (30) PTC 3 (Del.).), awarded punitive and exemplary damages, in addition to compensatory damages for flagrant infringement of trademarks and copyrights. This stringent action was taken by the court to highlight the fact that the breach of IPRs was a wrong done not only to the plaintiff but also to the society at large and the consumers who suffer on account of that deception.
    52. 52. DELL CASE- CONJURINGCONTROVERSY Recently, it has been reported that the Commissioner of Customs has not only allowed the parallel imports of Dell computers into the country but also ordered Dell to pay demurrage & warehousing charges to the importers whose goods had been seized for over two months due to a complaint made by Dell. The DELL order has whipped up controversy wherein the Customs Commissioner has allowed the parallel import of Dell computers into India on the grounds that the Trade Mark Act, 1999 did not forbid such imports.
    53. 53. DELL CASE FACTS The basic facts of the case are simple. Three Indian importers, by the names of Venktron Digital Systems Pvt. Ltd., M/s Sapphire Micro System & Momentum Technologies Inc. Pvt. Ltd. were in the process of importing approximately 450-500 Dell laptop computers into India. During the process of clearing the consignment at Customs, an alert was registered under the IPR Import Rules for possible trademark infringement, due to a prior registration, under the IPR Import Rules, 2007 for the mark „Dell‟, by Dell India Pvt. Ltd.
    54. 54. CONTD. After the clearance of the consignment was suspended under the IPR (Imported Goods) Enforcement Rules, 2007, a representative of Dell India was allowed to inspect the consignment to confirm possible infringement after which a formal hearing was held where both, the importers and Dell India were afforded an opportunity to be heard. During the course of the hearing before the Customs Commissioner, the Delhi High Court pronounced its order in the Samsung case prohibiting parallel imports under the Trade Marks Act, 1999. Apart from the Samsung order, the „rights holder‟, Dell, also brought to the attention of the Court several other judgements from Indian and foreign courts on the subject of parallel imports being barred under Indian law. The Defendants for their part discussed several case law- including the new Samsung case, supporting their defence that Section 30(3) of the Trade Marks Act, 1999 allowed for parallel imports.
    55. 55. ISSUE OF CONCERN The major issue however with the Delhi High Court‟s Samsung order was that it had been appealed and the Division Bench hearing the appeal had passed a series of orders during the course of the appeal, which by the way is still pending final arguments. While the importers tried to argue that the Samsung order had been stayed by the Division Bench, the „rights-holder‟ tried to argue that the Division Bench had not yet stayed the operative part of the Samsung order.
    56. 56. DELL ORDER
    57. 57. INTERNATIONAL FOCUS ONCUSTOM IMPORT RULES Various countries in the world have of late been focusing on formulation and implementation of stringent rules in order to control counterfeit trade. International organisations like the World IntellectualProperty Organisation (WIPO), the WCO and theInternational Criminal Police Organisation (INTERPOL),along with the business community, are toiling hard multilaterally to determine new strategies to fight against
    58. 58. Principle Socio-economic Effects ofCounterfeitingINNOVATION & GROWTH Reduction in incentives to innovative - Possible negative effects on medium and long term growth ratesCRIMINAL ACTIVITY Increase in flow of financial resources to criminal networks, thereby increasing their influence in economiesENVIRONMENT Sub-standard infringing products can have negative environmental effectsEMPLOYMENT Shift of employment from rights holders to infringing firms. Child labour
    59. 59. CHINA MILK CONTROVERSY-HEALTH HAZARD OFCOUNTERFEITANCE The 2008 Chinese milk scandal was a food safety incident in the Peoples Republic of China, involving milk and infant formula, and other food materials and components, adulterated with melamine. By November 2008, China reported an estimated 300,000 victims, with six infants dying from kidney stones and other kidney damage, and a further 860 babies hospitalised.The chemical appeared to have been added to milk to cause it to appear to have a higher protein content. This is clearly an incident of poor quality additives to ,milk causing huge health damages.
    60. 60. IMPACT OFCOUNTERFEITANCE The major effects of counterfeiting and piracy on governments are foregone tax revenues in the form of Sales Tax, Excise Tax, Income Tax and Customs Duty and so on. Tax revenue losses are particularly high in certain sectors like tobacco and alcoholic beverages where excise taxes are high. The ASSOCHAM found that counterfeiting and piracy has robbed the Indian government of US$31.25bn in lost tax revenue. Also, supplementary expenses are linked with fighting counterfeiting wherein huge amount of costs are spent with customs and related law enforcement agencies and related judicial proceedings. Besides, significant costs are incurred while handling seized goods.
    61. 61. WTO ON COUNTERFEITING The World Trade Organisation (WTO) Trade Related Aspects of Intellectual Property Rights (TRIPs) Agreement incorporates provisions intended to address the problem of counterfeit goods in international trade. The preamble of the TRIPs Agreement indicates that members recognise the need for a multilateral framework of principles, rules and disciplines dealing with international trade in counterfeit goods. In fact, Article 51, footnote 14 of TRIPs, defines the term counterfeit trademark goods as any goods, including packaging, bearing without authorisation a trademark which is identical to the trademark validly registered in respect of such goods or which cannot be distinguished in its essential aspects from such a trademark and which thereby infringes the rights of the owner of the trademark in question under the law of the country of importation.
    62. 62. AIM BEHING ANTI-COUNTERFEITDRIVE To raise awareness on the problems associated with counterfeiting and piracy; Promote better legislation and enforcement; Enhance cooperation and co-ordination; build capacity; and Promote solutions, particularly in the key focus area of health and safety risks related to counterfeit products.