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Trademark counterfeiting : a notion

November 01, 2021
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This article is written by Shreya Singh, from Gitarattan International Business School, IPU. The write-up deliberates on the abstraction of counterfeiting of trademarks.

Introduction

It might be arduous to accept the fact that the term ‘counterfeiting’ has not been defined anywhere in the Indian Trade Marks Act, 1991. An act of producing, selling, or offering to sell a product or service that has been identified to the legally registered brand/trademark can be termed counterfeiting. Tendering it into simple words we can say that, counterfeits are illegal products or services that are fabricated or commercialized towards transgression of a trademark, copyright, patent, or other intellectual property rights (IPRs). 

The Global Brand Counterfeiting Report, 2018 talks about the difficulty of the proliferation of trademark counterfeiting. As per this report “the amount of total counterfeiting globally has reached to 1.2 Trillion USD in 2017 and is bound to reach 1.82 Trillion USD by the year 2020.”

Organizations like WIPO (World Intellectual Property Organisation) and the INTERPOL (International Criminal Police Organisation) are working on a plan of action to fight the proliferated rate of counterfeiting.

What is trademark counterfeiting

Oscar Wilde once said that “imitation is the sincerest form of flattery that mediocrity can pay to greatness,” but in the real world the imitation is a matter of scale, especially under the IP laws.

Trademark counterfeiting is when an established trademark is placed on a product or service that is not one of the legitimate goods offered by the trademark owner.

It can be defined as any known manufacture, distribution, or intent to distribute items bearing counterfeit trademarks. The item will be considered to bear a counterfeit trademark if it contains any mark that identifies as it is coming from a source that is normally associated with the distribution of the product but it does not come from that source. The enforcement of trademark counterfeiting laws is to protect potential consumers as is the case with all trademark policies. 

Trademark law extends protection to marks that haven’t been registered as long as they need to be employed in commerce. The enforcement of counterfeiting laws is contingent upon the mark having been registered with a governing law office, this provides extra incentive to trademark holders to register their marks. Finding an intent to distribute is often an essential element to establish a trademark counterfeiting claim. 

Section 102 of the Trademark Act says that “Falsifying of Trademark is when a person without the assent of the proprietor of the trademark makes a trademark or a deceptively similar mark”. 

It won’t be impromptu to say that we all have spotted products from the various luxurious brands like Versace, Brahmin, Gucci, Prada, Armani, etc. at the roadside or in the street shops that at very represent the real-life example of trademark counterfeiting.

Counterfeiting as per the IP Rights Enforcement Rules, 2007

The import of goods infringing intellectual property rights is prohibited under the Customs Act 1962, read with the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007.

Any merchandise that is created, reproduced and placed into circulation or otherwise utilized in breach of the holding law in India or outside India and while not the consent of the proper holder or someone punctually authorized to try and do so by the proper holder is going to be coated underneath this rule. 

As per the regulations, an IP rights holder while registering their rights with customs, shall by writing a notice to the commissioner of custom or any custom officer authorized, request for suspension of clearance of products suspected to be infringing intellectual property rights at port thereof.

As Customs Act considers counterfeit goods intrinsically as prohibited goods, they can suspend the clearance of goods on their initiative as well as where it is prima facie evident or reasonable grounds exist to believe that the import of specific goods may infringe the intellectual property rights. 

Forbye, the import of allegedly infringing goods into India shall be deemed as prohibited within the meaning of Section 11 of the Customs Act 1962 only after the grant of the registration of the notice by the Commissioner on examination.

The rule excludes baggage and de-minimis imports.

Difference between counterfeit and infringement

“Counterfeiting is always trademark infringement but trademark infringement is not always counterfeiting.”

They may prima facie look identical but a thin line of difference exists between both the terms. Counterfeiting means to emulate something with the intent to deceive an individual into believing that the product is identical to the trademark validly registered in respect of such goods and which thereby infringes the right of the owner of the trademark in question. Whereas, a trademark is infringed once, marks crash into each other which is probably going to steer to shopper confusion concerning sources, support, or affiliation.

Counterfeiting will mean it is a trademark deceptive infringement that is taking a trademark that’s registered with the patent and trademark workplace and somebody creates a spurious imitation of that mark. If you have registered a trademark that is however counterfeited you’ll have potential remedies.

The legal obligation here as the case suggests can be understood by a Latin maxim semper necessitas probandi incumbit ei qui agit,” which means “the necessity of proof always lies with the person who lays charges.” Thus, the ‘Onus Probandi’ or burden of production in counterfeit goods lies on the plaintiff wherein with a mere manifestation of the product they can sue the defendant. Always, in an action for infringement, the burden remains with the opponent to prove that the registration of the trademark of the applicant will create confusion and deception in the market and would harm the goodwill of his business.

Trademark infringement is catholic and a more far-flung concept up against counterfeiting. In the context of counterfeiting, remedies can be subjugated to IP regulations in India under Section 63 of the Copyright Act, 1957, or Section 135 of the Trademark Act. Moreover, the criminal remedy can also be availed under Section 102 and 103 of the Trademark Act and Section 476 of the Indian Penal Code, and in the event of trade infringement, civil remedies of injunction and damages can be solicited.

Position overseas 

According to Forbes, in 2018 counterfeiting was the largest criminal enterprise in the world.

Product counterfeiting is not confined to national borders and organized networks of counterfeiters often operate across several countries. This international production in counterfeits often involves organized criminals with extensive international networks. The amount of total counterfeiting globally has reached 1.2 Trillion USD.

Although some bodies like Interpol and the WCO step up to fight against counterfeit products. The World Customs Organization and Interpol plan to promote cooperation between enforcement agencies to stop the proliferation of counterfeit products in international trade. Furthermore, a not-for-profit membership organization, Counterfeiting Intelligence Bureau (CIB) was formed within ICC Commercial Crime Services to fight against the production and distribution of counterfeit goods.

The influence of counterfeiting on the economy 

Counterfeit products pose a serious threat to the health and safety of consumers, economies, and national security. It’s a big problem that not only affects the producer of genuine items but also involves big socio-economic costs, the ultimate victim being the consumer who receives the poor quality of goods at an excessive price.

Counterfeiting has affected worldwide. It is estimated that the total value of international trade in counterfeit and pirated goods in the year 2022 will be around US$2.3 trillion which is a big problem. 

The way counterfeiting harms the business, economy, and society is delineated below:

India has no enactments dealing specifically with the issue of counterfeiting and piracy. The initiative has been taken by the cabinet and various statutes providing for various civil, criminal, and administrative remedies as anti-counterfeiting have been introduced. Getting into a statutory framework governing counterfeiting we have:

Remedies against counterfeiting in IPR

Trade Marks Act, 1999

It’s the principal legislation governing trademarks in India. Anyone looking for countermeasures under this Act can solicit to go for either civil or criminal remedies against the infringement of the trademark. Section 29 of the Act makes provision for the protection of registered trademark in case infringed by someone and insulate rights of an unregistered proprietor or licensee also. The burden of proving the assent of the proprietor in a situation of falsifying and falsely applying for trademark lying on the accused is provided under Section 102. Furthermore, Section 103 and Section 105 act as penalty clauses, providing for false trademarks, trade description, etc., and thereby subsequent conviction of anyone already convicted under Section 103 and 104 before. Meanwhile, civil remedy for the same is charted in Section 135 which lays down relief in suits for infringement or passing off providing for injunction orders, damages, or an account of profit, together with or without any order for delivery of infringing labels.

Copyright Act, 1957

Copyright, as the name suggests, is a property right that gives the owner of that work the right to reproduce, publish, or sell their original work of authorship. The statutory provisions for copyright infringement include both civil and criminal remedies which include:

Section 55 of the Copyright Act, 1957 provides for civil remedies for infringement of copyright which put in remedies of injunction, damages, accounts, and otherwise as are or may be conferred by law for infringing the right.

Section 64 provides for seizure of infringing copies of the work, wherever found and thus be confiscated, as shortly as practicable.

Section 53 provides for administrative remedies consisting of moving the registrar of copyright to ban the import of infringing copies in India which is by such importation.

Offenses under the Trademark Act 1999 and the Copyright Act 1957 may without the adjudication of a magistrate upon the issue be investigated by the police. And to put this into effect, an opinion from the registrar of trademarks is compulsory as under Section 115(4) of the Trademark Act 1999. Moreover, criminal action can be brought up against an unknown person as well that is disclosing the infringer’s identity is not necessary.

Designs Act, 2000

To protect the original or authentic design from getting copied and thereby causing loss to proprietors, this Act calls for civil remedy only in cases of piracy of the registered design.

Section 22 of the Act defines the liabilities of a person who infringes the design making him blameworthy to pay for the recovery of infringement a sum up to ₹ 50,000 per registered design. Furthermore, an interim injunction can be obtained to stop the fabrication of imitated products thereof.

Information Technology Act, 2000

The Act’s provision provides claimants with both civil and criminal rights for any infringing activities carried out by a means of electronic commerce. Civil remedies consist of penalties and compensation for technology-related crimes. In criminal cases, the offense is cognizable and non-bailable and is investigated by specialized IT and cyber crimes teams.

In Domain Name Dispute Resolution Policy (INDRP)

Domain names are technically not a form of intellectual property but domain name dispute resolution practice is being done by almost every IP boutique firm in India due to strong interconnection with trademark law.

The domain name is the internet equivalent of a telephone number or address which helps to locate a particular web page and send emails. Eg. The web address for Google is www.google.com. As the internet is an immensely popular and highly preferred platform for business and information of all types, protecting the domain name is more important than ever. 

A person aggrieved by registration of a ‘.in’ domain may file a complaint to seek remedy and is thereby required to prove that no right or legitimate interest in domain name lies for the registrant. Remedies available to a complainant according to any proceeding before an arbitrator shall be limited to praying for the cancellation of the Registrant’s domain name or the transfer of the Registrant’s domain name registration to the complainant.

Montblanc Simplo Gmbh v. Gaurav Bhatia & Ors. (2017)

It is one of the leading cases in the offence fight with the counterfeit menace and innards regarding damages in trademark law. Here the Delhi High Court in its judgment has dictated a permanent injunction and further passed restraining orders against the sale of counterfeits which were being represented to be bona fides to the original one stating it to be in infringement of trademark legislation. 

In addition, the Court while dismissing the plea for damages to the plaintiff also addressed the fundamental question as to when and how much of the damages should be granted and further stated that the court may refuse to grant damages on lack of sufficient evidence of forfeiture or as the case may be. 

Conclusion

Counterfeiting is a big business incontrovertibly. It’s an organized crime that hurts legitimate companies, especially small businesses, and forbye encumber the health and safety of consumers, economies, and national security. It further tries to deprive the government of revenues and consigns a burden to taxpayers. Anti-counterfeiting laws are providing policies for better surveillance preventing risk associated with counterfeiting goods.

References

  1. https://www.lawyersclubindia.com/articles/counterfeiting-of-trademarks-definition-effects-and-legal-remedies-10990.asp
  2. https://www.researchandmarkets.com/reports/4438394/global-brand-counterfeiting-report-2018
  3. https://www.mondaq.com/india/trademark/504312/shifting-of-onus
  4. https://selvams.com/blog/trademark-infringement-and-counterfeiting/
  5. https://blog.ipleaders.in/counterfeit-different-trademark-infringement/
  6. https://www.lawyersclubindia.com/articles/counterfeiting-of-trademarks-definition-effects-and-legal-remedies-10990.asp
  7. https://legaldesire.com/remedies-to-combat-counterfeits-in-indian-laws/
  8. https://www.worldtrademarkreview.com/anti-counterfeiting/procedures-and-strategies-anti-counterfeiting-india
  9. https://www.redpoints.com/blog/what-are-the-economic-effects-of-counterfeit-goods/
  10. https://www.businesswire.com/news/home/20171222005383/en/Global-Brand-Counterfeiting-Report-2018-Value-of-Counterfeited-Goods-in-2017-Amounted-to-1.2-Trillion—Research-and-Markets

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