This article is written by Neelam Yadav. This article discusses Section 104 of the Trade Marks Act, 1999 in detail addressing all the clauses, penalties, the importance of Section 104 and the penalties provided under Chapter XII of the Act.
Table of Contents
Introduction
Trade marks are specially made signs or symbols that businesses use to show that their products or services are different from others. These signs can be words, pictures, logos, designs, slogans, shapes of goods, packaging, colour combinations, or any combination. The main purpose of the trade marks is to prevent their consumers from getting confused about their product so that they can recognise their product. However, sometimes trade marks are misused or counterfeited which can harm both businesses and consumers. To stop these unfair practices, the Trade Marks Act, 1999, was enacted.
This Act provides for the provisions for the registration, protection, and enforcement of trade marks and penalties for violations in India for example, Section 104, which penalises the sale of such goods and services to which false trade marks and descriptions are applied.
What is Section 104 of Trade Marks Act, 1999
Section 104 provides that if anyone does any of the following acts:
- Sells, rents, or offers for sale, goods or services with a fake trade mark or description.
- Possess goods for sale or services with a fake trade mark or description.
- Provides or rents services with a fake trade mark or description.
- Fails to label goods with the required origin or manufacturer information under Section 139.
The person who commits such act shall be punishable with at least 6 months which may extend up to 3 years of imprisonment and fine of at least 50,000 rupees which may extend up to 200,000 rupees except if they prove that-
- They took all reasonable steps to avoid committing an offence and they had no reason to suspect that the trade mark or description was fake or that any offence had been committed with respect to the goods or services.
- They provided all the information they had about the person from whom they obtained the goods, things, or services when asked by the prosecutor.
- They had no intention of committing an offence and acted without any knowledge of the wrongdoing.
The proviso to this Section further provides that the Court may punish with imprisonment of less than 6 months or a fine of less than 50,000 rupees for adequate or special reasons to be recorded in judgement.
Detailed explanation of Section 104 of Trade Marks Act, 1999
Section 104 of the Trade Marks Act, 1999, deals with penalties for activities such as selling goods or things, letting those on rent, exposing such goods for sale, or possessing them with the intent to sell, trade or manufacture, that have a false trade mark, false description, or lack the required indications under Section 139.
False trade mark
A false trade mark means any mark that is used on goods or services without the permission or consent of the owner of the trade mark. It includes counterfeit marks that are very similar to the original trade mark which can confuse the customers and deceive them.
For example, if anyone makes products that look like popular brands, like “Nike” shoes or “Puma”, and the person making those products uses a logo or a trade mark sign that looks similar to the original logo of the original brand to make people believe that they are buying original Nike or Puma products but they are actually buying fake shoes, this is called as use of False trade mark.
The use of such false trade marks can cause a loss to the consumer because they might pay a lot of money for something that is not original and is of lower quality. It can also harm the trade mark owner, as it damages their goodwill and brand’s reputation and can also lead to loss of sales.
False trade description
A false trade description is defined under Section 2(1)(i) of the Trade Marks Act, 1999, which refers to any description, statement, or indication that misrepresents the nature, quality, or origin of the goods or services. It includes false claims about the features of the product or its place of manufacture.
A false trade description is when a company uses labels on their product such as “100% organic” when in reality it contains non-organic ingredients or does not contain 100% organic ingredients. For example, a food company might advertise a cereal as “100% organic” to attract health-conscious consumers but if the cereal contains some non-organic ingredients then this would be a false trade description.
This misleads consumers and makes them believe that they are purchasing a fully organic product that can affect their buying decisions and also their trust in the brand. It can also lead to legal consequences for the company making the false claim.
Requirement under Section 139 of the Trade Marks Act, 1999
To apply an indication of the country or place in which they were made or produced or the name and address of the manufacturer, a person for whom the goods are manufactured or services provided as the case may be.
If a company imports and sells electronic gadgets such as smartphones and labels them as “Made in India” but they were actually manufactured in another country like China. In this case the company gives a false indication of the place of origin of the products. This misrepresentation can deceive consumers into believing that they are buying goods that are produced in India which may affect their decision.
In the case of Geoffrey Manners and Company Ltd. vs. The State of Bombay (1951), the Supreme Court addressed the issue of whether a product label constituted a “false trade description” under Section 6 of the Indian Merchandise Marks Act, 1889 or not. The product in question was a facial cream that was labelled as “Anne French Cleansing Milk 4, Old Bond St. London W1” which suggested that it was manufactured in London whereas it was actually manufactured in India.
The Bombay High Court then convicted the company and its directors for applying a false trade description which led to an appeal before the Supreme Court. The Supreme Court upheld the decision of the Bombay High Court of conviction of the company under Section 6 of the Merchandise Marks Act, 1889, and concluded that the label indeed misled consumers into believing the product was made in London. The Court found that a false trade description can be established through circumstantial evidence and not just direct proof.
Exceptions/Defences to Section 104 of TMA
The person will not be punished if they can prove any of the following defences:
- That the person took reasonable steps to avoid committing the offence and had no reason to doubt the authenticity of the trade mark or description at the time of the alleged offence.
- That the person cooperated fully with the authorities by providing all available information about the source from which they obtained the goods or services.
- That the person acted without any wrongful intent or knowledge.
Penalties under Section 104 of TMA
Imprisonment for a term which shall be at least six months and may extend to three years and with a fine which shall be at least fifty thousand rupees and may extend to two lakh rupees.
Proviso under section 104 of TMA
The proviso to this Section gives authority to the court to impose a lesser punishment i.e., imprisonment of less than six months and a fine of less than fifty thousand rupees for adequate and special reasons that should be mentioned in the judgement.
Importance of Section 104 of Trade Marks Act, 1999
Section 104 plays a vital role in maintaining the integrity of the market. Here are some of the reasons why this section is important:
Consumer protection
False trade marks and trade descriptions can easily be used to fraud consumers which can make them buy fake or unsafe products by mistake instead of the brands they want. Section 104 helps in protecting consumers from getting tricked by such fake trade marks or wrong descriptions in the product information. When companies use false trade marks, it confuses consumers and leads them to buy goods which are fake and not what they expect. This can be harmful especially if the product is inferior or unsafe. Section 104 makes it illegal to use false trade marks so consumers can trust that what they see on the label is true.
For example, Levi’s is a company that makes jeans of high quality and has a trademarked logo that shows their jeans are original. If someone makes clothes with a similar logo of Levi’s then people may think they are buying real Levi’s jeans. But these fake jeans could be poorly made. Section 104 helps prevent such scenarios by penalising those who use false trade marks and thereby protects consumers from deception.
Brand protection
A trade mark represents the brand’s identity and reputation. When a business invests in creating a brand it builds a reputation based on quality and trust. The use of false trade marks can damage their reputation by introducing fake or substandard products into the market, which can result in significant financial losses for the legitimate brand owner. Section 104 helps in protecting the rights of brand owners by imposing penalties on those who use false trade marks thus protecting the brand’s reputation and financial interests. This legal protection by this section encourages businesses to invest in their brands without fear of false use of their trade mark or damage to their reputation.
For example, a luxury brand like Rolex is famous for its high-quality watches. If another company starts selling watches with a similar logo or name then consumers might confuse these fake watches with genuine Rolex watches. This can harm Rolex’s reputation if the fake watches are of poor quality. Additionally Rolex could also suffer from financial losses if customers believe that those poor quality watches are of Rolex and this can affect their trust in the brand. In these cases Section 104 helps by imposing penalties on those using false trade marks ensuring that genuine brands are protected from such detrimental practices.
Fair competition
When businesses use false trade marks or misleading trade descriptions then an unhealthy and unfair competition is created in the market allowing dishonest and fraudulent businesses to get an unfair advantage. This not only affects fair competition but can also harm consumer trust in the market. Section 104 also contributes to maintaining fair competition by penalising those who engage in deceptive practices of trade marks and trade descriptions.
Let’s suppose if a small company has developed a unique and successful product under a particular trade marked name and if a competitor begins selling a similar product using a misleadingly similar trade mark then the competitor might gain market share by deceiving consumers into thinking that they are buying from the original and reputable company. This not only harms the original company’s sales but also distorts competition in the market.
Encouragement of innovation and investment
Businesses invest a lot of time and money to create and improve their brands, products and their services. They need to be sure that their trade marks are protected so that others cannot copy their ideas and take advantage of their hard work. When businesses know that the law will protect their trade marks they feel more confident in investing in new and better products. Section 104 here helps by allowing businesses to take legal action against anyone who misuses their trade marks. This protection encourages companies to keep innovating and improving knowing that their efforts would not be wasted due to counterfeit products.
For example, a tech company might spend millions on research to develop a new gadget. If they know that their brand name is protected by law, they are more likely to invest even more in improving the gadgets and developing new technologies. If someone starts selling fake versions of that tech company’s gadget using their trade mark the company can go to court to stop them and get compensation.
Other penalties under Chapter XII of the Act
Chapter XII of the Trade Marks Act, 1999 deals with “offences, penalties, and procedure.” This chapter provides for the offences related to trade marks, the penalties for such offences, and the legal procedures dealing with them. Given below are the penalties and offences related to trade mark infringement:
Penalty for applying false trade marks, trade descriptions, etc
Section 103 provides that if anyone who does any of the following acts:
- Make a false trade mark.
- Falsely applies a trade mark to goods or services.
- Makes, disposes of, or possesses instruments like a die, block, machine, or plate for falsifying a trade mark.
- Applies a false trade description to goods or services.
- Applies a false indication of origin (such as country, place, name, or address) to goods where such indication is required under Section 139.
- Tampering with, altering, or removing an indication of origin on goods where such indication is required under Section 139.
- Causes any of the above actions to be done.
Such an act shall be punishable with at least 6 months which may extend up to 3 years of imprisonment and fine of at least 50,000 rupees which may extend up to 200,000 rupees except in the case it is proved that the Act was not intended to defraud.
Proviso to this section further provides that the Court may punish with imprisonment of less than 6 months or fine of less than 50,000 rupees for adequate or special reasons to be recorded in judgement.
Enhanced penalty on second or subsequent conviction
This Section 105 provides that if anyone is convicted for the second and every subsequent time for an offence under Section 103 or 104, they shall be punishable with at least one year which may extend to three years of imprisonment, and a fine of at least one lakh rupees which may extend to two lakh rupees. However, the proviso to this section further provides that the court may punish with imprisonment of less than 6 months or a fine of less than 50,000 rupees for adequate or special reasons to be recorded in judgement and any convictions made before the commencement of this Act will not be considered for this enhanced penalty.
Penalty for falsely representing a trade mark as registered
Section 107 provides for punishment to someone if they-
- Claims a mark is registered when it is not.
- Claims part of a registered trade mark is separately registered when it is not.
- Claims a trade mark is registered for goods or services but it is not actually registered for.
- Claims a trade mark registration gives exclusive rights in circumstances but it does not.
Such an act shall be punishable with up to three years of imprisonment or fine or both.
Penalty for improperly describing a place of business as connected with the trade marks office
Section 108 provides that if anyone uses words on their business, documents or elsewhere that can make people believe that their business is connected with the trade marks office shall be punishable with up to two years of imprisonment or fine or both.
Penalty for falsifying entries in the Register
This Section 109 provides that anyone who makes or causes a false entry in the trade marks register, creates a false copy of any entry, or knowingly uses such false entries or copies as evidence shall be punished with up to two years of imprisonment or fine or both.
Relevant case laws
P. Manikam vs. State represented by Assistant Commissioner of Police, Video Piracy and Copyrights, Chennai (2017)
In this case, P. Manikam was accused of selling counterfeit “beedies” i.e., traditional Indian cigarettes under the brand name “Syed Beedi” which was already being sold by a company. The company claimed that P. Manikam used labels that looked very similar to their own which caused harm to their brand’s reputation and misled their consumers. After the investigation, P. Manikam was charged with offences under Sections 103 and 104 of the Trade Marks Act, 1999, and Section 318 read with Section 3(5) of the Bhartiya Nyaya Sanhita, 2023 (Section 420 read with Section 34 of the Indian Penal Code, 1860) for applying false trade marks and cheating.
The main issue in this case was whether the investigation was conducted properly according to the law. The court agreed with the petitioner’s counsel that the proviso to Section 115(4) of the Trade Marks Act, 1999, was mandatory, which requires the investigating officer to take the opinion of the Registrar of trade marks before conducting any search and seizure. In this case the investigation was conducted without obtaining the opinion of the registrar which was necessary and thus vitiated the proceedings.
Since the procedure mandatory by law was not followed the court found that the prosecution for offences under Sections 103 and 104 of the Trade Marks Act, 1999, was not legal. The Madras High Court dismissed the entire case including the related charges under the IPC.
Laxmikant V.Patel vs. Chetanbhat Shah & Anr (2002)
In this case the plaintiff was operating his business Muktajivan Colour Lab and Studio in Ahmedabad since 1982 and had developed a goodwill associated with this name. He expanded his business to new locations through his wife and her brother. The defendants were previously operating under the name Gokul Studio and planned to start a new business under the name Muktajivan Colour Lab and Studio. The plaintiff then filed a lawsuit seeking an injunction to prevent the defendants from using that name.
The Trial Court initially issued an ex-parte injunction but later on dismissed the plaintiff’s request for a permanent injunction and held that the businesses were situated 4 to 5 kilometres away and that there was no likelihood of confusion. The High Court upheld this decision arguing that the defendants’ business was already in operation by the time the suit was filed and that the plaintiff did not have any interest in the locations managed by his wife and brother-in-law.
On appeal, the Supreme Court held that the Trial Court and High Court had made an error in their judgement and observed that the plaintiff had a prima facie case due to the established goodwill of the name Muktajivan. The distance between the businesses was deemed insufficient to prevent confusion and the use of the name “Muktijivan” by the defendants could harm the plaintiff’s business. Therefore, the Supreme Court granted an ad-interim injunction to prevent the defendants from using the name and awarded costs to the plaintiff.
Rajesh Garg vs. Tata Tea Ltd. & Another (2011)
In this case, Tata Tea Ltd. filed a complaint against unknown individuals for using its registered trade mark “TATA TEA” on counterfeited tea pouches under Section 78 and Section 79 of the Trade and Merchandise Marks Act, 1958, which penalised applying false marks and selling goods with false trade marks respectively. Proviso to Sections 78 and 79 also provided that if someone commits an offence involving drugs (as defined under Section 3(b) of the Drugs and Cosmetics Act, 1940) or food (as defined under Section 2(v) of the Prevention of Food Adulteration Act, 1954), they shall be punished with imprisonment up to three years. These acts are now penalised under Sections 103 and 104 of the Trade Marks Act 1999 except for the proviso. The police conducted a raid and discovered the fake products then registered an FIR against Rajesh Garg. However the Additional Chief Metropolitan Magistrate (ACMM) invalidated the investigation and held that the police had acted without court’s permission and thus discharged Rajesh Garg from all the charges.
Tata Tea Ltd. challenged this decision arguing that trade mark violations which involve food items are cognisable offences which means the police can investigate without any prior approval of the court. The Additional Sessions Judge (ASJ) agreed stating that tea qualifies as a food item under the Prevention of Food Adulteration Act, 1954 and therefore the actions of the police were legal. This decision was based on the need to protect public health from counterfeit food products. Rajesh Garg contested the ASJ’s ruling claiming that tea should not be classified as food under trade mark law. The Delhi High Court, however, upheld the ASJ’s decision highlighting the potential harm to consumers from counterfeit tea.
Under the updated Trade Marks Act, 1999, the penalties for trade mark violations involving food are stricter, and police officers have clear powers for search and seizure which the court affirmed were properly utilised in this case.
Conclusion
Section 104 of the Trade Marks Act, 1999, provides for punishments to those who sell or offer services with fake trade marks or trade descriptions that can make customers confused about the original product or services and can also harm genuine and popular brands. The penalties include imprisonment and fines to prevent dishonest practices by the inferior businesses. This section ensures that customers can trust what they are buying and that businesses can compete fairly. This section also gives some discretion to the judges to allow lighter punishment in special cases. The importance of this section is that it helps protect both the consumers and businesses from fake trade marks and trade descriptions and helps keep the market honest and fair.
Frequently Asked Questions (FAQs)
What constitutes a “false trade mark” under Section 104?
A false trade mark refers to a trade mark that is falsely applied that either:
- Imitates or resembles a registered trade mark which can create confusion, or
- It is used without proper authorization or registration which can mislead the consumers.
What are the penalties under Section 104?
The penalties for selling goods or providing services with a false trade mark include:
- Imprisonment for a term which may not be less than 6 months but may extend to three years.
- Fine which shall not be less than ₹50,000 and which may extend to ₹2,00,000.
Are there any exceptions to Section 104?
Yes, if the person can prove that they acted without intent to defraud or that they took all reasonable precautions to not commit any offence under this section then they may get exempted from penalties.
Can a person be prosecuted under Section 104 if they unknowingly sold goods with a false trade mark?
If the person can prove that they had no knowledge of the false trade mark and had taken reasonable steps to ensure the authenticity of the goods then they might not be held liable under Section 104. However, this is subject to judicial discretion.
What is the difference between Section 104 and Section 103?
Section 104 specifically deals with penalties related to the sale and distribution of goods or services under a false trade mark whereas Section 103 deals with the application of false trade marks including falsifying or falsely applying trade marks to goods or services.
What is the difference between trade mark and trade description?
A trade mark is a symbol, word, phrase, design, or combination of these that identifies and distinguishes the source of goods or services from others. It is a way to signify the origin of goods or services and to build brand reputation and loyalty. For example, Nike, Puma, Reebok etc. On the other hand trade description refers to the information provided about goods or services that describes their nature, quality and other characteristics. It is meant to give consumers a clear understanding of the products that they are purchasing. For example, if a product is labelled as “organic” the description should reflect that it meets organic standards.
References
- https://www.scconline.com/blog/post/2023/07/15/application-of-false-trade-description-can-be-proved-by-circumstantial-evidence-sc-legal-news/
- https://www.mondaq.com/india/trade mark/193982/a-trade mark-falsified-or-falsely-applied-is-a-cognizable-offence
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