Combatting Counterfeiting: The Importance of Brand Protection and IPR in India

Author: The author, Lieutenant Col Amit Sharma, SM, is a President-awarded veteran working in operational logistics, facility management, corporate affairs, and physical & corporate security functions, as well as technical convergence. He provides strategic advisory and solutions at all levels of management functions in a consulting role. Lieutenant Col Amit Sharma is available for designing and implementing anti-fraud strategies.

Introduction

Intellectual Property Rights (IPR) is an umbrella term that encompasses various legal frameworks protecting the creations of the human mind, such as patents, copyrights, trademarks, designs, and geographical indications. While the IPR framework is essential for promoting innovation, creativity, and economic growth, as it ensures that the creators are duly recognized and rewarded for their efforts the Brand protection is a crucial aspect of the IPR framework, as it helps businesses safeguard their brand reputation and goodwill. Let us see their constituents in brief:

• A patent is a legal document that gives the inventor the exclusive right to use, manufacture, and sell an invention for a certain period. In India, patents are granted under the Patents Act, 1970. The Act provides for the grant of patents for new inventions, including product and process inventions, and for improvements to existing inventions. The term of a patent in India is 20 years from the date of filing.
• Copyright is a legal right that protects the expression of ideas in literary, artistic, musical, and other creative works. In India, copyright protection is provided under the Copyright Act, 1957. The Act provides for the protection of original literary, dramatic, musical, and artistic works, as well as cinematographic films and sound recordings. Copyright protection in India lasts for the lifetime of the author plus 60 years.
• A trademark is a symbol, word, or combination of both used to identify and distinguish the goods or services of one business from those of another. In India, trademarks are protected under the Trademarks Act, 1999. The Act provides for the registration of trademarks, as well as the protection of unregistered trademarks under common law. Trademark protection in India lasts for a period of 10 years, which can be renewed indefinitely.
• Brand protection involves the protection of a company’s brand identity, which includes its trademarks, logos, and other distinctive elements. In India, brand protection is governed by the Trademarks Act, as well as other laws such as the Consumer Protection Act, 2019, and the Competition Act, 2002. Brand owners can protect their rights by registering their trademarks and taking legal action against infringement or unauthorized use of their brand.
• Geographical Indications (GI) is a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin. In India, GI protection is provided under the Geographical Indications of Goods Act, 1999. The Act provides for the registration and protection of GIs, which can be used to promote the economic and cultural interests of the producers of such goods.

The Legal Framework

The broad legal framework governing IPR include the following:

The Patents Act, 1970

Some of the key provisions of the Patents Act, 1970 are:

• To be eligible for a patent, an invention must be new, involve an inventive step, and be capable of industrial application. The invention must also not fall under any of the categories of inventions that are excluded from patentability.
• The process of grant of patent involves the filing of a patent application, examination of the application, and grant of the patent. The examination process involves determining whether the invention meets the criteria of novelty, inventive step, and industrial application.
• The patentee has the exclusive right to make, use, sell, and import the invention for a period of 20 years. The patentee can also license the patent to others to use the invention.
• Under certain circumstances, such as public health emergencies or non-working of the patented invention, the government can grant compulsory licenses to third parties to use the invention.
• If someone uses the patented invention without the permission of the patentee, it is considered an infringement. The patentee can take legal action to prevent infringement and seek remedies such as damages or injunctions.
• The Patents Act, 1970 follows the international agreements such as the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the Patent Cooperation Treaty (PCT).

The Copyright Act, 1957

The Copyright Act, 1957 is an Indian law that governs copyright protection in India. It replaced the Indian Copyright Act of 1914 and came into effect on January 21, 1958. The purpose of the Act is to protect the rights of creators of literary, dramatic, musical, and artistic works, as well as cinematographic films and sound recordings. The Act defines “copyright” as the exclusive right, subject to the provisions of the Act, to do or authorize the doing of any of the following acts in respect of a work or any substantial part thereof, namely:

• In the case of a literary, dramatic, or musical work, to reproduce the work in any material form, including the storing of it in any medium by electronic means.
• In the case of an artistic work, to reproduce the work in any material form, including the depiction in three dimensions of a two-dimensional work or in two dimensions of a three-dimensional work.
• In the case of a cinematograph film, to make a copy of the film, including a photograph of any image forming part thereof.
• In the case of a sound recording, to make any other recording embodying it.
• The Act also defines the term “author” as the person who creates the work. In the case of a work of joint authorship, the author of the work is the person who was the author of the work at the time of its creation.
• The Copyright Act, 1957 provides for both civil and criminal remedies for copyright infringement. Under the Act, any person who infringes copyright is liable to pay damages to the copyright owner. The Act also provides for the seizure of infringing copies of the work and the destruction of those copies.
• The Act grants certain rights to the copyright owner, including the right to reproduce the work, distribute copies of the work to the public, perform the work in public, and communicate the work to the public. These rights are subject to certain limitations and exceptions, such as the “fair use” doctrine, which allows for the use of copyrighted material for purposes such as criticism, comment, news reporting, teaching, scholarship, or research.
• The Copyright Act, 1957 also establishes the Copyright Office, which is responsible for the administration of copyright law in India. The Copyright Office maintains a register of copyright and issues licenses for the use of copyrighted works.

The Trademarks Act, 1999

The Trademarks Act, 1999 is an important legislation that governs the registration, protection, and enforcement of trademarks in India. The Act was enacted to provide for better protection of trademarks, which play a crucial role in identifying and distinguishing goods or services of one person from those of others. Here are the notable features of The Trademarks Act, 1999:

• The Act defines a trademark as a mark capable of being represented graphically and capable of distinguishing the goods or services of one person from those of others. A trademark can be in the form of a word, name, symbol, device, label, numerals, shape of goods, packaging or combination of colours, or any combination thereof.
• The Act provides for the registration of trademarks by the Controller General of Patents, Designs and Trademarks (CGPDTM). The registration process involves filing an application for registration of a trademark along with the prescribed fee. The application is examined to determine its registrability, and if it meets the requirements of the Act, the trademark is registered.
• Once a trademark is registered, it is protected under the Act against any unauthorized use, infringement, or passing off. The Act provides for civil and criminal remedies against infringers of trademarks, including injunctions, damages, and even imprisonment in certain cases.
• The registration of a trademark is valid for ten years from the date of filing the application. The registration can be renewed for successive periods of ten years by filing a renewal application with the prescribed fee.
• The Act allows for the assignment and licensing of trademarks. An assignment is the transfer of ownership of a trademark from one person to another, while licensing is the permission granted by the owner of a trademark to another person to use the trademark in exchange for payment of royalty or other consideration.
• The Act recognizes well-known trademarks and provides for their protection, even if they are not registered in India. The Act defines a well-known trademark as a mark that has gained substantial reputation through its use in India or elsewhere.

Geographical Indications of Goods Act, 1999

The Geographical Indications of Goods Act, 1999 is an Indian law that aims to provide a framework for the registration and protection of GI in India. The law recognizes that certain goods are known for their unique qualities and reputation due to their origin in a specific geographic region. The law seeks to protect such goods from unauthorized use, imitation, or misappropriation. For instance, if a company were to label a cheese as “Parmesan” but it was not actually made in the Parma region of Italy, that would be a violation of the GI for Parmigiano Reggiano cheese. This would be considered a false claim of origin and a violation of the Geographical Indications of Goods Act, 1999. Geographical Indications GI refer to a sign or symbol that identifies goods as originating from a particular territory or region, where the quality, reputation, or other characteristics of the goods are attributed to their geographical origin. A GI can be a name, symbol, or logo associated with a particular geographical area or region, which distinguishes it from similar goods produced elsewhere. The Geographical Indications of Goods Act, 1999 provides a legal framework for the registration, protection, and enforcement of GIs in India. The act establishes the Geographical Indications Registry, which is responsible for maintaining a register of GIs and processing applications for their registration. The act provides for the registration of GIs for goods that are agricultural, natural, or manufactured. To be eligible for registration, a GI must satisfy certain criteria, such as being distinctive and possessing qualities or characteristics that are attributable to its geographical origin. Once registered, the GI is protected from unauthorized use, imitation, or misappropriation by others. The act provides for both civil and criminal remedies for infringement of GIs. A registered GI can be enforced through a civil suit or by filing a complaint with the police, who can initiate criminal proceedings against infringers. The act also provides for the establishment of a GI tag, which is a certification mark that can be used by registered users of a GI to indicate the origin of the goods. The GI tag is intended to help consumers identify and choose products based on their origin and unique qualities.

The Consumer Protection Act, 2019

The Consumer Protection Act, 2019 aims to provide a strong legal framework for consumer protection and empower consumers to seek redressal against unfair trade practices. The introduction of product liability, higher penalties, and the establishment of a Central Consumer Protection Authority (CCPA) are major changes that will strengthen consumer protection in India. The notable features of the Consumer Protection Act, 2019 are as follows:

• The act defines a consumer as a person who buys goods or services for personal use or for commercial purposes.
• It recognizes six basic consumer rights, including the right to be protected against marketing of goods and services that are hazardous to life and property, the right to be informed about the quality, quantity, potency, purity, standard, and price of goods and services, the right to seek redressal against unfair trade practices and restrictive trade practices, the right to be heard and to be assured that consumer’s interests will receive due consideration, the right to consumer education, and the right to a healthy environment.
• The act establishes a CCPA to promote, protect, and enforce consumer rights. The CCPA will have the power to investigate, recall, and impose penalties on companies that violate consumer rights.
• The new act introduces the concept of product liability, which means that manufacturers, sellers, and service providers will be held liable for any harm caused to consumers due to defective products or services. Consumers can seek compensation for damages caused by such products or services.
• The new act promotes mediation as a dispute resolution mechanism. Consumers can approach mediation cells to resolve disputes with companies.
• The act specifically addresses issues related to e-commerce, such as misleading advertisements, unfair trade practices, and the obligation of e-commerce companies to provide complete and accurate information about products and services.
• The act introduces higher penalties for manufacturers and sellers who violate consumer rights. The penalties can range from a fine of up to Rs. Ten lakhs to imprisonment for up to seven years.

The Competition Act, 2002

The Competition Act, 2002 plays a crucial role in promoting and protecting competition in the market and safeguarding the interests of consumers. It ensures a level playing field for all enterprises, promotes innovation, and facilitates economic growth. The Competition Act, 2002 consists of six parts and has a total of sixty-six sections. The following are the major provisions of the act:

• The act establishes the Competition Commission of India (CCI) as a regulatory body to enforce the provisions of the act. The CCI is responsible for investigating and penalizing anti-competitive practices and ensuring fair competition in the market.
• The act prohibits any agreement between enterprises that has an appreciable adverse effect on competition (AAEC) in India. Such agreements may include cartels, price-fixing, bid-rigging, and market-sharing agreements.
• The act prohibits an enterprise from abusing its dominant position in the market. An enterprise is said to be in a dominant position if it can operate independently of market forces or to affect its competitors, consumers, or the market in its favour.
• The act regulates mergers, acquisitions, and amalgamations that may cause an AAEC in India. The act mandates that enterprises must notify the CCI of any such combination above a certain threshold before implementing it.
• The act promotes competition advocacy by the CCI to create awareness among consumers, businesses, and other stakeholders about the benefits of competition.
• The act provides for penalties and remedies for contravention of its provisions. Penalties may include fines and imprisonment, and remedies may include cease and desist orders, divestiture orders, and compensation to the affected parties.

Above are some of the major laws that govern IPR in India, but there are others as well, depending on the specific area of IPR that is being dealt with. Some of these include:

• The Designs Act, 2000 provides for the registration and protection of designs in India. For instance, if a company creates a new and unique design for a product, and they register it under The Designs Act, 2000, they have the exclusive right to use and sell that design in India. If another company copies that design without the owner’s permission, it would be considered a violation of the owner’s rights and could lead to legal action.
• The Semiconductor Integrated Circuits Layout-Design Act, 2000 provides for the protection of layout designs of integrated circuits.
• The Protection of Plant Varieties and Farmers’ Rights Act, 2001 provides for the protection of plant varieties and the rights of farmers.
• The Biological Diversity Act, 2002 provides for the conservation and sustainable use of India’s biological resources. For instance, suppose a company or an individual collects plant species, microorganisms, or any other biological resource from a protected area without prior permission from the National Biodiversity Authority (NBA) or the State Biodiversity Board (SBB). In that case, it would be considered a violation of the Act.
• The Information Technology Act, 2000 provides for the protection of electronic records and digital signatures.
• The Cinematograph Act, 1952 provides for the certification of films and regulates film exhibitions.
• The Performers’ Protection Act, 1958 provides for the protection of performers’ rights.
• The Trade Secrets Act, 2016 provides for the protection of confidential business information e.g., imagine that a software company called TechCo has developed a new algorithm that helps them optimize their production processes and increase efficiency. TechCo considers this algorithm to be a trade secret and takes steps to keep it confidential, such as requiring employees to sign non-disclosure agreements and limiting access to the algorithm to only those who need it to do their jobs. However, one of TechCo’s employees, named Alice, is unhappy with her job and decides to quit. Before leaving, Alice copies the algorithm onto a USB drive and takes it with her. She then goes to work for a competing company, called RivalTech, and shares the algorithm with her new colleagues. Alice’s actions would be considered a violation of the Trade Secrets Act, 2016, as she has knowingly misappropriated a trade secret belonging to her former employer and disclosed it to a third party without authorization. TechCo could bring a legal action against Alice and RivalTech for damages and injunctive relief.

Counterfeiting

Counterfeiting is a major threat to the IPR framework, as it involves the production, distribution, and sale of fake or unauthorized goods and services. Counterfeiting not only harms the rightful owners of the IP, but it also poses a significant risk to consumers, who may end up buying low-quality or unsafe products. It is important to note that the punishment awarded in counterfeiting cases varies depending on the severity of the offense and the applicable laws. In some cases, the punishment may include imprisonment, fines, or both, while in other cases, the punishment may be a warning or a cease-and-desist order. Examples related to some well-known companies are given below:

• In 2015, the food safety authorities found that the popular snack Maggi Noodles contained excessive levels of lead. The manufacturer, Nestle, was accused of selling substandard and counterfeit products.
• In 2016, a major gutkha fraud was uncovered in which several companies were found to be involved.
• In 2017, the police arrested several people for allegedly manufacturing and selling counterfeit FMCG products, including detergents and toiletries, under the brand name of Hindustan Unilever Limited. The accused were sentenced to imprisonment for varying periods and fines were imposed on them.
• In 2017, the Khadi and Village Industries Commission (KVIC) filed a case against a garment company for allegedly selling counterfeit Khadi products.
• In 2018, the Indian police arrested several people for allegedly manufacturing and selling counterfeit automotive parts, including airbags and brake pads, under the brand names of leading companies like Toyota and Honda.
• In 2018, the Delhi police arrested four people for allegedly producing and selling counterfeit Nike and Adidas products worth millions of dollars.
• In 2019, Welspun India Ltd., a leading textile manufacturer, discovered that some of its bedsheet products were being counterfeited and sold under its brand name.
• In 2019, the police arrested several people for allegedly manufacturing and selling counterfeit electrical equipment, including circuit breakers and switches, under the brand name of Schneider Electric.
• In 2019, the police arrested several people for allegedly manufacturing and selling counterfeit consumer electronics products, including smartphones and power banks, under the brand names of leading companies like Apple and Samsung.
• In 2020, the police busted a major racket involved in the manufacture and sale of fake medicines under the brand names of leading pharmaceutical companies like Cipla and Ranbaxy. The accused were arrested and charged with various offenses under the Indian Penal Code and the Drugs and Cosmetics Act.
• In 2021, the police arrested several people for allegedly manufacturing and selling counterfeit luxury goods, including handbags and watches, under the brand names of leading companies like Louis Vuitton and Rolex. The accused were charged with various offenses under the Indian Penal Code and the Trademarks Act.
• January 2023: “Counterfeiting activities are impacting the sustainable growth of the major industry in India, including Pharmaceuticals, FMCG, Automotives, Apparel, Consumer Durables/Electronics, and Agri products, according to a new report released by ASPA & CRISIL. This assessment was based on an independent survey conducted with consumers and retailers covering twelve Indian cities (Delhi, Agra, Jalandhar, Mumbai, Ahmedabad, Jaipur, Indore, Kolkata, Patna, Chennai, Bengaluru, and Hyderabad) to gauge their perception of counterfeiting in several key sectors. An important finding of the survey was that consumer perception pegged the extent of counterfeiting at 25-30% of the market, higher than the general industry expectations. Counterfeiting is most prevalent in FMCG, Apparel, and Agrochemical sectors (~30%), followed by the pharmaceutical, automotive, and consumer durables sectors (20-25%). The survey also reveals that almost 89% of consumers acknowledge the presence of fake products in the market and are often compelled to buy counterfeits for reasons such as sensitivity to price, demand-supply gap, desire to buy luxury brands, peer pressure, and social motivations. However, 27% of the consumers were unaware that the product was counterfeit at the time of purchase, making it more important to spread awareness about the issue and identification methods in fighting fakes. Apparel (31%), FMCG (28%), and Automotives (25%) are the top segments where consumers came across a counterfeit product, followed by Pharmaceuticals (20%), Consumer Durables (17%), and Agrochemicals (16%). Even after discovering that the product is fake, consumers take close to negligible action about reporting it.”- https://www.aspaglobal.com/report-for-nation

Brand Protection

Brand protection measures may include trademark registration, anti-counterfeiting strategies, brand monitoring, and legal enforcement.

Recent Developments in IPR Landscape

The landscape of IPR and brand protection in India has seen significant developments in recent years, especially since 2015. Here are some key highlights:

• In 2015, India launched the National IPR Policy, which aimed to strengthen the country’s IP regime and make it more effective in promoting innovation and creativity. The policy included various measures, such as improving IP awareness, streamlining IP registration processes, and enhancing enforcement mechanisms.
• India has made considerable progress in trademark registration, with the introduction of online filing and processing of trademark applications, reducing the time and cost involved in the registration process.
• The government has taken several initiatives to tackle counterfeiting, such as the launch of the ‘Operation Clean Money’ campaign, which aims to crack down on illicit cash flows and curb counterfeiting activities.
• Companies are increasingly adopting brand protection strategies, such as trademark registration, brand monitoring, and legal enforcement, to safeguard their intellectual property and brand reputation.
• The government has introduced several regulations to govern e-commerce platforms, such as the Consumer Protection (E-commerce) Rules, 2020, which require e-commerce platforms to take measures to prevent the sale of counterfeit products.

However, despite these efforts, counterfeiting remains a significant challenge. According to a report by the Organisation for Economic Co-operation and Development (OECD), India is one of the top five producers of counterfeit goods in the world. The problem is particularly acute in sectors such as pharmaceuticals, consumer goods, and automotive parts. To address the issue, it is crucial that the government, industry, and civil society work together to raise awareness about the harms of counterfeiting, improve enforcement mechanisms, and promote a culture of respect for intellectual property. Only by taking a comprehensive and collaborative approach can we effectively protect the IPR framework and promote innovation, creativity, and economic growth in India.

Conclusion

IPR are legal frameworks that are designed to protect several types of creations of the human mind, such as inventions, artistic works, literary works, brand identity, and geographical indications. The purpose of these frameworks is to promote innovation, creativity, and economic growth by ensuring that creators are recognized and rewarded for their efforts. Patents are a form of IPR that protect inventions and provide the inventor with exclusive rights to use, make, or sell the invention for a specific period. Copyrights, on the other hand, protect literary, artistic, and musical works, including books, movies, songs, and photographs. Trademarks protect brand identity, including logos, slogans, and other distinctive elements, and prevent others from using similar marks that may lead to confusion among consumers. Designs protect the visual appearance of a product, while geographical indications protect products that have specific qualities or a reputation that are due to their origin. Brand protection is an essential aspect of IPR as it helps companies safeguard their brand identity and reputation. Companies can protect their brands by registering their trademarks and taking legal action against anyone who uses their marks without authorization. Brand protection is especially crucial in today’s global marketplace, where counterfeit products are prevalent. Counterfeiting is a significant threat to the IPR framework as it involves the production, distribution, and sale of fake or unauthorized goods and services. Counterfeiting harms the rightful owners of the IP by stealing their profits and damaging their reputation. Moreover, counterfeit products can pose significant risks to consumers, such as health hazards and product failures. Therefore, it is crucial for brand owners and consumers to be aware of the risks of counterfeiting and take necessary precautions to safeguard their rights and interests.

The prevalence of counterfeit products in India is a significant problem that affects various industries, including Pharmaceuticals, FMCG, Automotives, Apparel, Consumer Durables/Electronics, and Agri products. Consumers and retailers have reported that the extent of counterfeiting is higher than industry expectations, with consumer perception pegging it at 25-30% of the market. Counterfeiting is most prevalent in FMCG, Apparel, and Agrochemical sectors, followed by the pharmaceutical, automotive, and consumer durables sectors. Despite the awareness of counterfeit products, consumers are often compelled to buy counterfeits due to several reasons, such as sensitivity to price, demand-supply gap, desire to buy luxury brands, peer pressure, and social motivations. Therefore, spreading awareness about the issue and identification methods is crucial in combating fakes. Additionally, there is a need for stricter regulations and law enforcement to prevent counterfeit activities and hold perpetrators accountable for their actions.

The consequences of counterfeiting can be severe, ranging from imprisonment and fines to civil lawsuits and seizure of goods. In many countries, counterfeiting is a criminal offense that can lead to severe punishment. Therefore, brand owners should take proactive measures to protect their IP by registering their trademarks, monitoring the market for counterfeits, and taking legal action against counterfeiters.