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This article is written by Swapna Gokhale, pursuing the Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho. The article has been edited by Prashant Baviskar (Associate, LawSikho) and Smriti Katiyar (Associate, LawSikho).

Introduction 

“All IP infringements are not crimes but all IP crimes are infringements.” In India, Intellectual Property is governed under the Patents Act, 1970; Trade Marks Act, 1999; Copyright Act 1957; Designs Act 2001. Unlike recognition of rights intangible properties like land, flat etc., IPR is generally considered a negative right. The interesting and apparent reason is the protection granted to the holder of these rights, is particularly to preclude the third person from enforcing it. 

In general terms, the IPR is defined as rights attached to the creation of the mind and restricted to only the creator or person authorized by him. A famous maxim “Ubi jus, ibi remedium”, means where the law has given the right, there should be a corresponding remedy for its breach in its place. In the case of intellectual property, violation of rights is typically termed as IPR infringement and it ultimately affects the reputation, identity and goodwill of the rights holder. The prohibitory injunction is the most common and significant civil remedy available for the IPR holder. However, the question that hits my mind is whether IPR wrongdoers can be prosecuted by criminal machinery? What are the criminal implications of IPR infringement? Which types of IP crimes are there? And what are the pros and cons of availing criminal remedies for IP infringement in India? Who can initiate criminal action and under what circumstances?  We will discuss all these questions in this article.

Criminal implications in IPR infringement  

In IPR violation, generally, people rob the ideas, inventions, expressions, creativity etc. to gain money, by exploiting the same. In this era of digital technology, such types of wrongdoings are not uncommon. The most popular remedy for IPR infringement is a permanent injunction order from the court which is a civil remedy. As we know, IPR infringement is a violation of the IP rights in personam, which means violation of rights of a particular person/entity and that particular rights holder can take an action against the infringer. But crime is an offence against rem i.e. against the state or nation. That state or nation takes action against the offender. Thus, an interesting question that arises here is whether a criminal remedy is available for IPR infringement? Well, the answer is yes. IPR rights can be protected by both civil and criminal mechanisms. However, only the trademark act and copyright act have provided criminal remedies in case of infringement.

Though there is no clear distinction under IPR law provided stating what type of IPR violation will be termed as a criminal offence. But generally, when IPR violations are in the form of counterfeiting and piracy, the criminal remedy is specified for it. Counterfeiting involves willful infringement of the rights like trademark, design etc. In this type of crime, mostly small-scale vendors are involved who are a part of the chain in the business network which involves unauthorised exploitation of IP for gaining money. In the case of piracy, willful infringement of copyright, patent etc. is involved. IP crimes are not new for the world. Due to technological advancement, such businesses are spread across the world.

Criminal provision under IP law

Under IP law, only the trademark act and copyright act prescribes the criminal provisions. Patent and Design law doesn’t have a criminal remedy for violation of rights. 

  • Trademark Act 1999, Section 103-108, provides for imprisonment and fine as punishment for infringement of trademark on various grounds. Section 115 also gives power to police officers for search and seizure. However under the proviso of S. 115(4) “Provided that the police officer, before making any search and seizure, shall obtain the opinion of the Registrar on facts involved in the offence relating to trade mark and shall abide by the opinion so obtained.” Thus there is a catch of this provision for police officers before doing any such things.  
  • Copyrights Act 1957, Section 63-69 gives provision of imprisonment as a punishment for copyright infringement.

Both, the Trade Marks Act, 1999 and the Copyright Act, 1957 provide for search and seizure powers to the police under Section 115 and Section 64 respectively, for the effective implementation of the provisions relating to infringement and passing off action of the trademark and copyright.

Types of IPR crimes 

IPR infringement 

Your IP rights may have been infringed upon if your intellectual work that is protected under the respective IP laws is copied or otherwise used or exploited without your permission. It involves unauthorized usage of your mark for the product. Besides exact imitation of marks, IP infringement would also include the use of confusingly similar or deceptively similar marks. Thus, infringement is a wider concept that encompasses everything from mere deception to exact replications.  

IPR counterfeiting 

Counterfeiting is a fraudulent imitation of something. eg. a trademark can be counterfeited by anyone by using the same for the exactly or substantially similar product, showcasing it originated from the original source. Counterfeiting includes exact imitation, whereby the genuine and the counterfeited products become substantially indistinguishable. Counterfeiting is more serious in nature. It is a cognizable offence and punishable under the Indian Penal Code. Some of the most common examples of counterfeit goods include counterfeit handbags, clothing, accessories, perfumes, and electronics.

IPR theft

Theft involves robbing someone’s property without his consent. Intellectual property is not the subject of theft in the literal sense due to its intangible nature. However, theft in the case of intellectual property can be of some physical property associated with the infringement of IP wherein infringer steals someone’s idea, inventions, creative expressions, trade secrets etc. which are valuable intangible intellectual assets for him. Though theft is the subject matter of criminal proceedings, IP theft can be remedied by both civil and criminal procedure. Criminal procedures are mandatory when the TM counterfeiting or copyright piracy is willful in nature and on a commercial scale.

Cyber theft 

In today’s age, a major challenge in IPR crimes is cybercrime due to its constantly changing face. Cybercrimes involve; stealing of ideas, trade secrets, copyright, patents using computers and the internet. Amongst other IPs, trade secrets and copyrights are the frequently misused IPs by the robber. eg. stealing of famous recipes, website interfaces, designs, business strategies etc. generally these materials are sold to the rival companies to huge consideration who then exploit it for their own benefit. The fast-growing “G” technology in effect has paved the way for IP theft using surprising ideas. A person can misappropriate anyone’s IP by sitting in one place using the computer and internet.  Piracy, which is also an IP theft, is very common in India. People can easily manage to get pirated copies of books, movies, software etc. which results in huge revenue loss for the copyright owner/ holder.  It becomes a tedious job to trace such thieves to punish them as they easily disappear and remove the data from the computer. 

Both counterfeiting and piracy are recognized as criminal offences under the Indian legislations i.e., Indian Penal Code 1860, Trademarks Act 1999, Copyright Act 1957 and Information Technology Act, 2000.

Government measures 

In the 21st century, countries’ progress is accelerated through their knowledge economy which depends upon the nation’s policy for creative support and innovations. In India, DPIIT (Department for Promotion of Industry and Internal Trade) is the nodal department for nurturing IPR in the country. In India, the legal framework for IPR is fairly well developed. While strengthening the IPR policy to gain economic and social benefit on a higher scale, it’s not sufficient to create an IP ecosystem but an effective adjudicating mechanism for protecting those IPs is equally important.  The Indian government has undertaken several measures to prevent and mitigate cyber security incidents. National Cyber Coordination Center (NCCC) is an operational cybersecurity and e-surveillance agency in India. Similarly Indian Cyber Crime Coordination Centre (ICCC) is an initiative of the Ministry of Home Affairs (MHA) to combat cybercrime in the country.

States/UTs are primarily responsible for the prevention, detection, investigation and prosecution of crimes through their law enforcement machinery. Therefore, in 2016, India’s first cyber crime unit was set up in Telangana state. Thereafter, Maharashtra also followed the same by setting up a Maharashtra Cyber Digital Crime Unit (MCDCU) for fighting digital piracy. This unit has taken down many sites having infringing content. Thereafter Mizoram state also set up a similar unit.  

Additionally, the government enacted the Commercial Courts Act, 2016 in order to reduce delays and increase expertise in judicial IP matters. Though Indian law, vide Section 63-B, does criminalise the knowing use of an infringing copy of a computer program on a computer, not all copied digital content is termed as a criminal offence i.e. movie and audio files downloaded from the internet etc. The punishment stipulated can be anywhere between seven days and three years, and the fine, anywhere between fifty thousand and two lakh rupees. 

Criminal remedies for IPR infringement in India  

Under Part II of Schedule I of the CrPC, those offences which are punishable with imprisonment for less than three years or with a fine only, are bailable and non-cognizable. However, offences punishable with imprisonment for three years and upwards but not more than seven years, are non-bailable and cognizable. Section 63 of the Copyright Act and Section 103 of the Trademark Act, provides punishment for certain offences with imprisonment for not less than 6 months and may extend to 3 years. Therefore, the contestable issue was whether the words ‘may extend to three years’ under copyright act and trademark act can be equated with the words ‘three years and upwards’ used in CrPC? 

Recently, Hon’ble Bombay High court in Piyush Subashbhai Ranipa v. The State of Maharashtra, anticipatory bail application No 336 of 2021 while rejecting the bail applicant has decided this issue. The Hon’ble court opined that the offences under Section 63 of the Copyright Act and under SE 103 of the Trademark Act are non-bailable. It has considered the relevant provisions under copyright law and trademark law which clearly prescribes punishment up to three years. That means the possibility of imposing a sentence of exactly three years is there.  And therefore, such offences would be non-bailable. Accordingly, the Court held that the offences under Section 63 of the Copyright Act and 103 of the Trade Marks Act are non-bailable and cognizable.

The Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007

While making the law more stringent in order to restrict the IP infringing activities, the government also expects cooperation from the IP rights holder. Hence the government had framed the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 with the aim to restrict counterfeiting and infringing the goods from being imported into the Indian market. In this custom recordal procedure, any IP right holder can record their IP rights i.e. trademark, designs, copyright, GI online with costumes authority through the Indian customs IPR recordation Portal. Upon filing such recordal of rights, the customs officials keep a close watch for any infringing/illegal goods at the entry point only on reasonable doubt and the same are seized and confiscated. Thereafter, the customs officials inform both the parties i.e. importer and the right holder about the suspension of clearance of goods.

Earlier, the patent was also there in this list but subsequently, it was removed by the new IPR Amendment Rules’ 2018 by which the government revoked the power of custom authorities to seize goods imported, merely receiving the infringement complaints by the patent holder. This procedure under the customs department plays a vital role as a gatekeeper in the present advanced technology in the IT field. 

Criminal procedures

Being cognizable category of offences, an offence under the Trade Marks Act, 1999 and the Copyright Act, 1957 can be investigated and inquired by the police by mere registration of an FIR without the adjudication by the Magistrate upon the issue. Further under Section 115(4) of the Trade Marks Act, 1999, an opinion from the registrar of TradeMarks is compulsory for a criminal action with regard to trademarks. But the same involves several procedures. Thus, instead of filing an FIR before a police officer, a direct criminal complaint before the magistrate would be a more effective option wherein the prerequisite of obtaining an opinion from the Registrar of TradeMarks can be waived off. Further, under Section 93 and Section 94 of the Code of Criminal Procedure, 1973 one can request for initiation of a search and seizure proceedings against known and unknown persons. 

Criminal remedies v/s civil remedies in India 

Criminal remedies Civil remedies
Criminal action bangs general deterrence even though it is initiated against certain known or unknown infringers or violators.A civil action is directed towards a particular individual.
Imprisonment/fine or both is provided. An injunction order is provided.
More severe action.Less severe action as compared to criminal remedy.
It required some form of criminal intent such as willfulness, mens rea etc.Even unintentional acts of infringement may attract civil action. 
Counterfeiting, piracy, cyber theft is a criminal offence.infringement, violation, unauthorized usage of IPR generally comes under civil wrong. 
The social criticism and embarrassment attached to facing the police.Police action not involved. 
It may involve the loss of tangible assets of the IP rights holder.Loss of tangible assets is not there.
Can be initiated against unknown persons.Can not be initiated if the identity of the infringer is unknown.
Request for initiation of a search and seizure proceedings against a known or unknown infringer can be prayed, under Section 93 and 94 of the C.R.P.C.No such request of search and seizure proceedings can be prayed against an unknown infringer.
Punitive damage can be awarded in a criminal action. The chance of getting punitive damage against the infringer is very less.
Criminal action can be initiated against wrongdoers by state or nation in absence of a complaint by the IP right holder. Only IP rights holders can initiate civil action against wrongdoers. 
Non- registration of IP rights does not bar initiation of criminal remedy.Non-registration of IP rights holders cannot initiate infringement suits, but they will have the remedy of passing off action under common law.

Who has the right to take action against IP crimes?

An interesting issue raised in connection with Section 63, before Hon’ble Supreme court in  State of Andhra Pradesh v. Nagoti Venkataramana, Civil Appeal Nos. 1644-45 of 1996(Arising out of SLP (Crl.) Nos.2002-03 of 1991) decided on, 20 August 1996, is whether the identification of the owner of the copyright is a precondition for violation of the provisions of Section 63 or 68-A, as the case may be under this provision. This case arose in the context of mass-scale video piracy, where the defendant was arrested for unauthorized reproduction and rental of cinematograph films in the ‘video cassette’ medium. Defendant took up the plea that the copyright owners of these cinematograph films had not complained against his conduct, and in the absence of such a complaint, he could not be held liable. Rejecting this contention, the Supreme Court held that it would be unnecessary for the prosecution to trace out the owner of the copyright to come and adduce evidence of infringement of copyright. 

Whether registration of IP rights mandatory before invoking criminal remedy?

Criminal remedies as provided in the relevant law nowhere contains the word registered or registered only in order to start criminal proceedings against the offender.  In a number of judgments, it is laid down that the registration of copyright or trademark is mere recordal of fact of ownership but the same cannot be a precondition for initiation of criminal action. Hence, holders of an unregistered trademark can also take recourse to criminal action. However, the non-registration may operate as a bar only in respect of initiation of a civil infringement action and does not bar initiation of a passing-off action which is a common law remedy. Nevertheless, registration of IP is always recommended and is of tremendous help to obtain urgent orders.

Conclusion

In view of the Indian government’s initiative through Atmanirbhar Bharat, the necessity of strengthening the IP regime has gained further significance. To become a self-reliant and economically powerful country, the strict enforcement mechanism for IP rights is equally important to achieve the very object behind the relevant IP laws. In the 21st century computers and the internet brought digital and technological revolution which naturally increased the variety of IP assets. But at the same time, it has given birth to a variety of ideas of IP infringement. Our Indian law provides both civil as well as criminal remedies for IP offences. In civil cases, the IP owner can get an injunction order. But this can be obtained if the wrongdoer is traced. In case of offences like IP theft, counterfeiting, piracy, cyber theft etc. it is a very difficult task to discover the identity of the offender. But in such scenarios, criminal action becomes more helpful wherein police authorities have various powers including search and seizure, against known and unknown persons. The very fundamental characteristics of a criminal remedy, that is, IP holders can initiate the penal proceedings against known/unknown wrongdoers and the deterrent effect of social stigma makes it a more fruitful and advisable remedy for IPR infringement in India. And for initiating the same, IP registration, though advisable, is not a mandatory precondition. However, not every infringement can be termed as a crime. 

Though the criminal remedy for IP infringement is less costly and quicker than civil remedy, it does not give compensation to the IP holder. Also, the specialization of criminal court as well as investigation agencies in IP crimes is not separately given under the law and in absence of that, all the effort for availing the criminal remedy may go into vain.  Apart from criminalisation, if misused, it may have counter effects. Thus, though criminal remedy is the most effective remedy, the same is a double-edged sword that needs to be used cautiously.  

References

  1. https://www.mondaq.com/india/trademark/30279/intellectual-property-crime
  2. https://www.mondaq.com/india/trademark/444510/ipr-criminal-remedies-in-india-civil-vs-criminal-remedy-in-ipr-search-seizure-raids-by-police
  3. https://www.mondaq.com/india/trademark/749724/criminal-civil-prosecution-for-copyrighttrademark-violation
  4. https://www.privacyshield.gov/article?id=India-Protecting-Intellectual-Property
  5. https://www.mondaq.com/india/trademark/444510/ipr-criminal-remedies-in-india-civil-vs-criminal-remedy-in-ipr-search-seizure-raids-by-police
  6. http://www.iplawsindia.com/enforcement
  7. https://www.wipo.int/export/sites/www/dcea/en/meetings/2012/albania/national_workshop_for_judges_on_enforcement/files/Remedies.pdf
  8. https://blog.dennemeyer.com/what-is-intellectual-property-theft-and-how-to-avoid-it?utm_source=Mondaq&utm_medium=syndication&utm_campaign=LinkedIn-integration
  9. https://www.mondaq.com/trademark/990102/what-is-intellectual-property-39theft39-and-how-to-avoid-it
  10. https://www.squirepattonboggs.com/-/media/files/insights/publications/2013/11/civil-and-criminal-remedies-for-intellectual-pro__/files/civilandcriminalremedies/fileattachment/civilandcriminalremedies.pdf

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