4
SPONSORED ARTICLE | INDIA DECEMBER 2014/JANUARY 2015 WWW.MANAGINGIP.COM 54 How serious is the problem of counterfeiting in your jurisdiction? Please give an overview of the situation. The low barriers to the market entry and infiltration has led to rampant infiltration of counterfeit and pirated products across all industries including medicines, auto and aeroplane parts, electrical components, toys, and food and beverage. Apart from the significant economic loss to the government (for example, in terms of sales tax, excise tax, income tax and customs duty, and loss of jobs), the counterfeit products pose risks to millions of individual consumers in terms of health and safety and even leads to child labour, money laundering and human trafficking. It also puts the reputation of the brand owners at risk, where they not only loose brand value and revenue but also lose consumer patronage, sales and profitability. How robust are the laws that are in place to tackle counterfeiting? Please summarise the key pieces of legislation. To meet the interest of customers, ensure incentives for companies investing in research and development and encourage continued innovation, India has designed a strin- gent framework of laws and the Government has intro- duced several legislative policy reforms and regulations to block counterfeiting and prevent the movement of smuggled goods in the trade channels. The key piece of legislation are as follows. The Trademarks Act of 1999 provides for statutory regis- tration and protection of trade marks of right holders. Under this Act, the penalty for selling or applying false trade marks or trade descriptions includes from six months’ to three years’ imprisonment in addition to a fine of at least Rs50, 000 ($808) up to Rs200,000. The Copyright Act 1957 defines offences and penalties, including imprisonment for at least six months and up to three years, in addition to a fine of at least Rs50,000 and up to Rs200,000. The Information Technology Act 2000 provides legal recog- nition for transactions carried out by means of electronic data interchange and other means of electronic communication. It also provides penalties for damage to computers and comput- er systems, for example. The Drugs and Cosmetics Act 1940 empowers certain gov- ernment agencies to not only inspect but also seize and confis- cate any product that is found to be “adulterated”, “spurious” or “misbranded” (the definitions of which are provided under the Act). To counter the spread of fake drugs in India and their export to other countries, the drug controller general of India stipulated procedures in 2011. New strategies to combat counterfeiting In this sponsored Q&A article, Lucy Rana and Nidhi Chopra of S. S. Rana & Co. discuss how counterfeiting in India is harming its public and offer suggestions as to what more can be done Nidhi Chopra is an associate in the litiga- tion department of SS Rana & Co. She obtained her BBA and LLB from the Symbiosis International University, Pune. She is well versed and regularly advises clients on trade marks, copyright, and arbi- tration. Nidhi has a flare for writing and regularly submits articles and journals, and writes for the firm’s weekly newsletter IPConnect. Nidhi Chopra Lucy Rana is the managing associate advocate of SS Rana & Co, a premier intellectual property law firm in India. She read law at the University of Delhi special- ising in intellectual property and is enrolled with the Bar Council of Delhi (2007).She spearheads the firm’s IP team managing IP portfolios of several national and international corporations and advises clients on a range of contentious and non-contentious IP matters. Working for over 17 years in the legal and corporate world, she has an in-depth understanding of the micro and macro factors influencing businesses and aptly provides practical business legal advice to clients. She also holds a bachelors degree in Japanese language from Jawahar Lal Nehru University, New Delhi. Additionally, she holds an executive diploma in International Business Management with specialisation in Foreign Trade from the Indian Institute of Foreign Trade (IIFT), New Delhi (2004). She is actively involved in raising awareness of IP rights by penning articles and speaking on IPR issues in sem- inars organised by trade bodies and organisations such as FICCI. She was nominated as “Rising Lawyer of the Year” by Legal Era, a leading national IP Journal. She is a member of several national and international IP organisations such as International Trademark Association (INTA), Asian Patent Attorneys Association (APAA), Inter Pacific Bar Association (IPBA), International Association for the Protection of Intellectual Property (AIPPI), Supreme Court Bar Association and Delhi High Court Bar Association. She is also an avid adventure sports enthusiast and likes to play the piano in her spare time. Lucy Rana

New strategies to combat counterfeiting in India · SPONSORED ARTICLE | INDIA 54 DECEMBER 2014/JANUARY 2015 How serious is the problem of counterfeiting in your jurisdiction? Please

Embed Size (px)

Citation preview

Page 1: New strategies to combat counterfeiting in India · SPONSORED ARTICLE | INDIA 54 DECEMBER 2014/JANUARY 2015 How serious is the problem of counterfeiting in your jurisdiction? Please

SPONSORED ARTICLE | INDIA

DECEMBER 2014/JANUARY 2015 WWW.MANAGINGIP.COM54

How serious is the problem of counterfeiting in yourjurisdiction? Please give an overview of the situation.The low barriers to the market entry and infiltration has ledto rampant infiltration of counterfeit and pirated productsacross all industries including medicines, auto and aeroplaneparts, electrical components, toys, and food and beverage.Apart from the significant economic loss to the government(for example, in terms of sales tax, excise tax, income tax andcustoms duty, and loss of jobs), the counterfeit products poserisks to millions of individual consumers in terms of healthand safety and even leads to child labour, money launderingand human trafficking. It also puts the reputation of thebrand owners at risk, where they not only loose brand valueand revenue but also lose consumer patronage, sales andprofitability.

How robust are the laws that are in place to tacklecounterfeiting? Please summarise the key pieces oflegislation.To meet the interest of customers, ensure incentives forcompanies investing in research and development andencourage continued innovation, India has designed a strin-gent framework of laws and the Government has intro-duced several legislative policy reforms and regulations toblock counterfeiting and prevent the movement of smuggledgoods in the trade channels. The key piece of legislation areas follows.

The Trademarks Act of 1999 provides for statutory regis-tration and protection of trade marks of right holders. Underthis Act, the penalty for selling or applying false trade marksor trade descriptions includes from six months’ to three years’imprisonment in addition to a fine of at least Rs50, 000 ($808)up to Rs200,000.

The Copyright Act 1957 defines offences and penalties,including imprisonment for at least six months and up to threeyears, in addition to a fine of at least Rs50,000 and up toRs200,000.

The Information Technology Act 2000 provides legal recog-nition for transactions carried out by means of electronic datainterchange and other means of electronic communication. Italso provides penalties for damage to computers and comput-er systems, for example.

The Drugs and Cosmetics Act 1940 empowers certain gov-ernment agencies to not only inspect but also seize and confis-cate any product that is found to be “adulterated”, “spurious”or “misbranded” (the definitions of which are provided underthe Act).

To counter the spread of fake drugs in India and theirexport to other countries, the drug controller general of Indiastipulated procedures in 2011.

New strategies to combat counterfeitingIn this sponsored Q&A article, Lucy Rana and Nidhi Chopra of S. S. Rana & Co. discuss howcounterfeiting in India is harming its public and offer suggestions as to what more can be done

Nidhi Chopra is an associate in the litiga-tion department of SS Rana & Co. Sheobtained her BBA and LLB from theSymbiosis International University, Pune.She is well versed and regularly advisesclients on trade marks, copyright, and arbi-tration. Nidhi has a flare for writing andregularly submits articles and journals, and

writes for the firm’s weekly newsletter IPConnect.

Nidhi Chopra

Lucy Rana is the managing associateadvocate of SS Rana & Co, a premierintellectual property law firm in India. Sheread law at the University of Delhi special-ising in intellectual property and isenrolled with the Bar Council of Delhi(2007).She spearheads the firm’s IP teammanaging IP portfolios of several national

and international corporations and advises clients on arange of contentious and non-contentious IP matters.

Working for over 17 years in the legal and corporateworld, she has an in-depth understanding of the micro andmacro factors influencing businesses and aptly providespractical business legal advice to clients.

She also holds a bachelors degree in Japanese languagefrom Jawahar Lal Nehru University, New Delhi.Additionally, she holds an executive diploma in InternationalBusiness Management with specialisation in Foreign Tradefrom the Indian Institute of Foreign Trade (IIFT), New Delhi(2004). She is actively involved in raising awareness of IPrights by penning articles and speaking on IPR issues in sem-inars organised by trade bodies and organisations such asFICCI. She was nominated as “Rising Lawyer of the Year”by Legal Era, a leading national IP Journal. She is a memberof several national and international IP organisations such asInternational Trademark Association (INTA), Asian PatentAttorneys Association (APAA), Inter Pacific Bar Association(IPBA), International Association for the Protection ofIntellectual Property (AIPPI), Supreme Court Bar Associationand Delhi High Court Bar Association.

She is also an avid adventure sports enthusiast and likesto play the piano in her spare time.

Lucy Rana

Page 2: New strategies to combat counterfeiting in India · SPONSORED ARTICLE | INDIA 54 DECEMBER 2014/JANUARY 2015 How serious is the problem of counterfeiting in your jurisdiction? Please

Is it possible to register your trade marks with Customs and,if so, what procedures need to be followed to do this and whatfees are involved?In order to limit the adverse affects of counterfeit and unau-thorised imports, the Intellectual Property Rights (ImportedGoods) Enforcement Rules 2007 was issued by theGovernment of India. This provides a mechanism for registra-tion of Intellectual Property Assets (patents, trade marks,copyright, designs and geographical indications) with theCentral Board of Excise and Customs (CBEC). Registrationwith CBEC empowers the Customs Authority to intercept,seize, and confiscate goods found to be or suspected to beinfringing IP rights registered and in force in India by any per-son other than the IP rights holder or without permission orauthorisation of the IP rights holder.

Under the said Rules, registration is obtained by filing anotice for protection of IP rights with the commissioner ofCustoms to suspend the clearance of infringing or counter-feit goods. Once registered, the Customs Authority storesthe IP rights in their electronic database which is flashedacross all entry points in India. Custom officials can detainthe counterfeits before they enter circulation, either on thebasis of the registration appearing in the electronic databaseor even suo motu in the interest of the trade and protectionof IP rights.

By making one application, the applicant can cover all theCustom air cargo complexes, seaports and land Customs sta-tions through which importation or exportation of piratedarticles in India is suspected.

How effective is the civil enforcement system? Are ex-parteorders or evidence preservation orders available?The statute and the precedents with respect to orderspassed in cases of counterfeiting reflects that the civilenforcement system, in cases of counterfeiting, is proactiveand effective.

The civil remedies which can be availed by a right holder incase of counterfeiting are: injunction; damages; rendition ofaccounts; and, delivery of goods.

Section 135 enumerates the types of relief available to aright holder in case of infringement. It states that an order ofinjunction may include an ex-parte injunction for the discov-ery of documents, and the preservation of infringing goods,documents or other evidence, to restrain the defendant fromdisposing of or dealing with their assets in a manner whichmay adversely affect the plaintiff.

Therefore, the law provides for ex-parte orders in cases ofcounterfeiting and in some cases the judiciary has implement-ed the same. For example, in the recent cases of Philip MorrisProducts v Sameer and Microsoft Corporation v Jayesh, thecourts granted immediate relief to the plaintiff by passing anex-parte order against the defendants, thereby restrainingthem from selling, exhibiting or offering for sale any infring-ing goods.

Therefore, the Indian judiciary has time and again support-ed the need for prompt action in cases of infringement (in par-ticular counterfeiting) and has supported the issuance of ex-parte orders and injunctions.

Is it possible to use the criminal law to tackle counterfeiting?If so, please give details of how widely the criminal system isused and how it functions.Yes, along with civil remedies, criminal remedies are availableunder law for tackling counterfeiting.

The Trademark Act 1999, though not specifically address-

ing the offence of counterfeiting, enumerates the offences of“falsifying a trade mark” and “falsely applying a trade mark”,which may be seen to overlap with the nature of trade markcounterfeiting.

Is internet-based infringement a big problem in yourjurisdiction? What tools are available to track down and fightcounterfeits being sold online?E-commerce in India is experiencing remarkable growth andchanging the way people do business. The internet has becomea strategic platform for the sale of counterfeit goods, as itserves as an attractive additional channel to promote and sellforged products. The anonymity and flexibility to move acrossjurisdictions that it provides to counterfeiters has spurred thegrowth of counterfeit sales online.

Online portals usually take several measures to address theissue of anti-counterfeiting on the internet.

Websites incorporate comprehensive terms of service andsales which specifically prohibit counterfeiting by advertisers.They also discourage infringing activity through strict take-down policies on receiving complaints from IP owners.

Authentication procedures are adopted to enable sites toensure that third party sellers who want to advertise on theirwebsites are marketing genuine products, thus maintaining thegenuineness of its seller’s listing.

An easily understandable and publicly visible process are

SPONSORED ARTICLE | INDIA

WWW.MANAGINGIP.COM DECEMBER 2014/JANUARY 2015 55

Offence Penalty

Falsifying a trade mark, falselyapplying a trade mark orapplying a false trade descrip-tion

Imprisonment for at least six months,and up to three years, in addition to afine of at least Rs50,000 and up toRs200,000 (section 103).

Intentionally selling goods orproviding services to which afalse trade mark or false tradedescription is applied

Same as above.

Subsequent conviction for theabove offences

Imprisonment for at least one year, andup to three years, in addition to a fine ofbetween Rs100,000 and Rs200,000.

Offences Meaning

Falsifying atrade mark

A person will be deemed to falsify a trade mark, who:(a) makes the trade mark or a deceptively similar mark,without the permission or authorisation of owner ofthe trademark; or (b) falsifies any genuine trade mark,whether by alteration, addition, effacement or other-wise (section 102)

Falsely applyinga trade mark

A person will be deemed to be falsely applying a trademark who, without the consent of the proprietor of thetrade mark: (a) applies such trade mark or a deceptive-ly similar mark to goods or services or any packagecontaining goods; or (b) uses any package bearing amark which is identical to or deceptively similar to thetrade mark of such proprietor, for the purpose of pack-ing, filling or wrapping any goods other than the gen-uine goods of the proprietor of the trade mark.

Page 3: New strategies to combat counterfeiting in India · SPONSORED ARTICLE | INDIA 54 DECEMBER 2014/JANUARY 2015 How serious is the problem of counterfeiting in your jurisdiction? Please

SPONSORED ARTICLE | INDIA

DECEMBER 2014/JANUARY 2015 WWW.MANAGINGIP.COM56

available to trade mark owners, clearly indicating the stepsand time the website will take to complete the action under theprocess.

Online retailers often advise and warn users about the con-sequences of violating the applicable policies and laws, includ-ing a permanent loss of access to the service and being report-ed to the appropriate law enforcement officials.

In addition, other best practices can be adopted. Shoppingwebsites should educate users about their policies and proce-dures, so that people are not caught unaware; trade mark

owners can release a list of authorised dealers from time totime and send notices to online shopping portals of identifiedcounterfeiters; and trade mark owners can give offer insightinto their mark or logo by pointing out indicators to showwhich products are genuine and which are fake.

Has the government handed down any new legislation in thelast 12 months that was designed to deal with the problem ofcounterfeiting?Aimed at simplifying export procedure, the self-certificationbar-coding for drug firms has been introduced by theGovernment of India. Such a coding aids in tracking and trac-ing the origin of drugs and therefore helps in identifying spu-rious and substandard drugs.

The Drugs and Cosmetics (Amendment) Bill 2013, which ispending, proposes the establishment of a Central DrugAuthority that will subsume the existing Central DrugsStandards Control Organisation. It also envisages provisionsto ensure a standard quality of drugs, cosmetics, and medicaldevices and specifies conditions under which they will be con-sidered misbranded, adulterated, and spurious. It also specifiespenalties and offences for the same.

The Department of Industrial Policy and Promotion is allset to draft the National IPR Policy. The Policy will identifythe areas in intellectual property where study needs to be con-ducted to provide possible implications of demands by negoti-ating partner countries, to keep the government informedabout recent developments taking place in IP cases, and toreport on the best practices adopted by foreign countries. Itwill also help the Government to take steps to improve theinfrastructure of IP offices and tribunals.

Have there been any important court decisions handed downin the last 12 months that concern counterfeiting?In Microsoft v Jayesh 2014, the case of the plaintiff was thatit is the owner and manufacturer of a gaming console soldunder its registered trade mark Xbox. The plaintiff allegedthat the defendant infringed its registered trade mark by sell-ing counterfeit and pirated versions of its Xbox gaming con-

soles. Therefore, the plaintiff asked for an injunction torestrain the defendants from infringing their trade mark rights,for the delivery of the infringing goods and the rendition ofaccounts.

In view of damage being caused to the plaintiff, the courtpassed an ex-parte ad interim injunction in favour of the plain-tiff and appointed a local commissioner to visit the premises ofthe defendant and inspect gaming consoles bearing the plain-tiff’s trade mark.

On the basis of commissioner’s report and evidenceadduced by the plaintiff, the court heldthat it was an established case for thegrant of a permanent injunctionrestraining the defendants from sellingor distributing Xbox gaming consolesthat are unauthorised imports, andpirated or counterfeit versions of theXbox games.

In Philip Morris v Sameer 2014, the case of the plaintiff wasthat it has been the seller and manufacturer of cigarettes bear-ing the registered trade mark Marlboro since 1924. The plain-tiff alleged that various retailers in the Fort and Colaba area ofMumbai were indulging in the sale, stocking and distributionof counterfeit and grey-market versions of the plaintiffs’ prod-ucts. The plaintiff asked for the grant of an injunction, torestrain the defendants from the sale and distribution ofinfringing goods, an order for the rendition of accounts andthe delivery of all infringing goods.

The Court granted ex-parte injunction to the plaintiff andalso appointed local commissioners to investigate the case.Based on the trans-border reputation and goodwill of theplaintiff’s mark along with the local commissioner’s report, thecourt granted relief to the plaintiff and made the followingobservation:

Counterfeits, which are not the genuine products manu-factured by the plaintiffs/ affiliates but are sold by the saiddefendants under the suit trade marks as plaintiffs’ origi-nal products, indeed infringe plaintiffs’ rights in the suittrade marks under section 29 of the Act. They are sellingthe impugned cigarettes, bearing the suit trade marks, tothe patrons of the plaintiffs’ brand of cigarettes, who buythese cigarettes in question from their stalls believing themto be the genuine ‘Marlboro’ cigarettes, ie the products ofthe plaintiffs. Thus, the counterfeit products of the saiddefendants are being passed off as the cigarettes of theplaintiffs.

What steps would you like to see the government take totackle counterfeiting?The Government, industry and right holders must all ensuretechnological collaboration in anti-counterfeiting and anti-piracy measures so that existing rules and legislation and lawscan be implemented against the entities engaged in piracy andcounterfeiting.

Capacity building programmes to educate officials and thegeneral public to distinguish between a fake and real productshould be facilitated by government and trade organisations.

Counterfeit products pose risks to millions ofindividual consumers in terms of health andsafety

Page 4: New strategies to combat counterfeiting in India · SPONSORED ARTICLE | INDIA 54 DECEMBER 2014/JANUARY 2015 How serious is the problem of counterfeiting in your jurisdiction? Please