India continues to adopt strict measures to address counterfeiting and piracy, both of which have increased in India’s growing economy. The most noticeable efforts have come from the pro-rights holder Indian judiciary.
Trademarks Act 1999
The Trademarks Act provides for the registration of trademarks by both Indian and foreign nationals. It expressly provides statutory remedies of a civil and criminal nature against the infringement of a registered trademark. The act also recognises the right of an unregistered trademark holder to take action for passing off, even against a registered trademark, provided that the unregistered trademark holder is a prior user. Unconventional marks such as three-dimensional (3D) marks and sound marks are also protected.
The classification of goods and services specified under the Trademarks Act has now been harmonised with the Nice Classification and applicants are required to specify the Nice class.
The term of protection is 10 years from the date of application, renewable for further 10-year periods.
Copyright Act 1957
According to the Copyright Act, copyright subsists in literary, dramatic, musical and artistic works, computer programs, films and sound recordings. Registration is not compulsory for the purpose of enforcing copyright, although it provides ex facie evidence of the particulars incorporated in the certificate. The Copyright Act provides statutory civil and criminal remedies against copyright infringement. Even possession of plates for making infringing copies is a punishable offence under the act.
The term of protection for literary, dramatic, musical and artistic works is the life of the author plus 60 years from the beginning of the calendar year following the author’s death. The term of protection for films, photographs and sound recordings is 60 years from the beginning of the calendar year following the work’s publication.
Patents (Amendment) Act 2005
The Patents Act 2005 complies with Article 27 of the Agreement on Trade-Related Aspects of Intellectual Property, which deals with patentable subject matter. Under the act, a patent shall be available for any invention – whether a product or process – in any field of technology, provided that it satisfies the three-pronged test of novelty, non-obviousness and industrial applicability.
Unless authorised by the patent owner, the following constitute infringement under the act:
- manufacturing patented products;
- using patented processes;
- offering to sell or selling patented products;
- using products directly created through the patented process for production or business purposes; and
- importing or exporting patented products or products that are created through patented processes.
A patent owner can sue for patent infringement and seek an injunction, damages or an account of profits. The court can also order the seizure, forfeiture or destruction of materials and equipment used to manufacture the infringing goods and the closure of the manufacturing premises. Relief available to the patent owner is primarily of a civil nature. Criminal liability arises where an article is wrongfully represented to be patented or secrecy requirements under the act are breached.
Designs Act 2000
The Designs Act provides that the subject matter of a design can include shapes, configurations, patterns, ornaments or compositions of lines or colours applied to any article in two-dimensional (2D) or 3D form, or both, by any industrial process. Protection is afforded only to those features in the finished article that appeal to or are judged solely by the eye.
The term of protection is 15 years in total: an initial 10 years, extendible by a single five-year period.
Remedies are of a civil nature only and no criminal liability is prescribed.
Geographical Indications Act 1999
The Geographical Indications Act protects distinctive signs or names that identify products that are typical to and located in a specific geographical area. However, protection is not granted to a single entity or enterprise, but rather to all undertakings located in the area, which may use the geographical indication on specific goods that they produce. The act provides for both civil and criminal remedies.
Indian Penal Code 1860
The Penal Code also sets out punishments for cheating, counterfeiting and possession of instruments for making counterfeits, among others. The code’s provisions can be invoked in criminal actions, in addition to the provisions of specific statutes.
IT Act 2000
The IT Act seeks to curb illegal infringing activities conducted through the use of computer systems and technology. The act’s provisions are extremely stringent and give the claimant both civil and criminal rights. In criminal cases, the offences are cognisable in nature and investigated by specialised IT and cybercrime teams. Civil remedies carry penalties of up to $170,000.
Punishable offences include:
- concealing, destroying or altering any computer source code or network;
- causing wrongful loss or damage to the public, or destroying, deleting or altering information in a computer resource or diminishing its value or utility;
- publishing obscene information in electronic form; and
- breaching confidentiality or privacy.
Various measures are being taken by the Indian government with a view to combating online counterfeiting, especially by setting up cybercrime cells to investigate and prosecute offenders.
Drugs and Cosmetics Act 1940
The Drugs and Cosmetics Act stipulates procedures to counter adulterated, spurious or misbranded drugs and their export from India. It empowers certain government agencies not only to inspect, but also to seize and confiscate any product that is found to be adulterated, spurious or misbranded.
Food Safety and Standards Act 2006
The Food Safety and Standards Act empowers agencies to seize and confiscate sub-standard or misbranded goods. It also gives them the power to suspend the manufacturing licences of those engaged in such illegal and criminal activities.
The import of infringing goods is prohibited under the Customs Act 1962, read with the Intellectual Property Rights (Imported Goods) Enforcement Rules 2007.
The rules allow holders of specific IP rights – including trademarks, copyright, patents, designs and geographical indications – to record their rights with Customs. Customs officers are empowered to prohibit the import of counterfeit goods and impose a heavy penalty on anyone that facilitates such imports. The seized counterfeit goods are finally destroyed under the rights holder’s supervision. Rights holders which are not registered with Customs and which receive information of counterfeits of their products being imported can participate by notifying Customs and applying for registration within the prescribed timeframe. This pro-rights holder provision is a highly effective way of curbing the import of counterfeit goods.
Customs does not prohibit the import of parallel-imported/grey-market goods per se. However, where such goods are undervalued far below their official prices, the revenue wing of Customs can suspend the goods for duty evasion and then revalue them and impose the correct duty.
In cases where the rights holder has prior information of a specific consignment of counterfeits being imported, it can notify Customs in advance; Customs will then suspend the consignment for analysis and notify the rights holder.
Criminal remedies are provided under the Trademarks Act, the Copyright Act, the Geographical Indications Act and the IT Act. Offences under the Trademarks Act, Copyright Act and Geographical Indications Act are punishable by six months’ to three years’ imprisonment and a Rs50,000 to Rs200,000 ($765 to $3,060) fine. However, the court may reduce these penalties in recognition of special circumstances. Provision is made for increased minimum penalties on second or subsequent commission of an offence.
Under these laws, offences are cognisable in nature, which means that the police can execute actions such as search and seizure without a court warrant.
Charges may be brought against an officer of a company who is responsible for its management if he or she had knowledge of commission of the offence.
Rights holders are increasingly instigating criminal enforcement actions, especially to target large-scale manufacturers or where infringers continue with their acts despite civil action.
Effective criminal enforcement requires ongoing liaison with the police both before and after filing the action. Rights holders must be proactive and approach the courts promptly in order to direct the police to act immediately.
Criminal trials are lengthy and time consuming. As a result, the courts have adopted the practice of plea bargaining, whereby the offender accepts his or her guilt and the court convicts him or her by imposing heavy costs payable to the rights holder, but with no imprisonment. Most rights holders have embraced this procedure, as it facilitates early disposal of cases with favourable orders.
All of the IP statutes provide for civil remedies to the rights holder, which can file suit seeking actions including an injunction, damages and rendering up of accounts. Indian courts are well versed in the IP laws and grant ex parte injunctions, especially in counterfeiting cases. In civil actions, the courts tend to be pro-rights holder, provided that the rights are legal, valid and subsisting.
Rights holders can obtain the following interim relief in civil actions:
- Injunction orders – courts will often grant ex parte interim injunctions in favour of rights holders, restraining other parties from dealing in any manner with the infringing goods or services.
- Anton Piller orders – in addition to an injunction order, the rights holder may seek the appointment of a court commissioner to visit the defendant’s premises in order to find and seize counterfeit goods. The goods are returned to the defendant with an undertaking that it may not tamper with them and must produce them before the court when called on.
- John Doe orders – this is an extraordinary order through which the court can appoint a court commissioner and authorise him or her to enter, search and execute seizures in the premises of any counterfeiters, without the need to name them when filing suit. This kind of action is most effective where it is difficult to identify each and every counterfeiter or where the counterfeiter is operating out of temporary premises.
Additionally, the court can order infringers to render up their accounts, pay damages and costs to the rights holder and deliver up all infringing material in their possession. The courts have recognised the need to put in place deterrents against counterfeiting, which is often resorted to as an easy money maker; they have thus granted punitive damages against large-scale counterfeiters and pirates.
The e-commerce boom in India has made it increasingly easy to find online shops selling counterfeit or pirated goods at high prices, albeit with heavy discounts. E-businesses are relatively easy to start, which helps illegal operators to flourish. Most such enterprises do not put the manufacturer or importer’s name on the products, making it easy to deny having sold them. Crucially, these businesses operate as foreign incorporated companies which do not name any individuals, making enforcement even more challenging.
No distinction is made between online and offline counterfeiting and no law is in place to deal specifically with online counterfeiting. However, the IT Act specifically provides for liability of internet intermediaries.
The IT Act provides for liability of internet intermediaries. The definition of an ‘intermediary’ includes internet service providers (ISPs), hosts, search engines, online payment sites, online auction sites, online marketplaces and even cyber-cafes.
Intermediary liability is limited by certain exemptions established through compliance with due diligence requirements, including notice and takedown.
In a recent ruling the Supreme Court evaluated the constitutional validity of certain provisions of the IT Act, including those regarding intermediary liability. After analysing the provisions for notice and takedown measures in depth, the Supreme Court ruled that any notice to an intermediary to take down any content must be pursuant to a court order. Therefore, a rights holder seeking to take down online counterfeiting must approach the competent court, name the intermediary as defendant and seek specific directions against it. The Supreme Court further reasoned that such a requirement is necessary as it means that intermediaries need act only on legitimate requests; otherwise, they would be flooded with millions of takedown requests.
Indian courts have also been proactive in granting John Doe orders against ISPs and hosts to block access to websites providing downloads of pirated movies before their official release.
Use of local counsel and investigators
Effective investigation strategies are extremely important for identifying the entities involved in selling counterfeit goods. Further, it is essential to determine the extent and nature of the infringement in order to decide on the best course of action – from sending a cease and desist letter to taking criminal or civil action.
Choosing the best enforcement action
It is important for rights holders to decide on the kind(s) of enforcement action to be taken against the infringer in consultation with local counsel, depending on the desired results. The key factors to consider include:
- market impact;
- the extent and nature of the infringement;
- the ability to obtain damages from the infringer;
- ease of exit from the proceedings; and
Rights holders should also analyse the facts to differentiate between actions depending on the desired results – whether to recover damages, create a good market impression or effect large volumes of seizures.
Effective use of anti-counterfeiting technology
The use of preventative technology (eg, radio frequency identification systems, microscopic tags, barcoding, licence databases, unique country codes or holograms and seals of authenticity) can prevent the proliferation of counterfeit and pirated products. The drug controller general of India has proposed an amendment to the Drugs and Cosmetics Act mandating that every drug manufactured in the country have a unique identifier code and 2D barcode on the packaging, whereby authenticity can be verified by text message.
Most rights holders engage distributors, original equipment manufacturers, licensees and other third parties in their supply chain. Therefore, strict non-disclosure and confidentiality agreements must be in place that clearly spell out the scope of use of the rights holder’s intellectual property by third parties. Further, periodic internal checks and surveillance – especially online – should be conducted to ensure compliance with these agreements.
Tackling online counterfeiting requires a sophisticated investigation strategy. Investigation of online counterfeiting requires a combination of online surveillance using high-tech tools and personal visits and physical analysis of the products.
Online business networks comprise a chain of stakeholders and rights holders must identify the most effective targets along the chain, including importers, website owners, domain hosts, ISPs and payment gateways.
Role of government anti-counterfeiting agencies
The government is increasingly proactive in preventing counterfeiting. Rights holders can conduct training and awareness programmes for various government agencies, such as the police and Customs, to help them to understand the rights and nuances of anti-counterfeiting actions. Further, the courts’ readiness to issue directions to government agencies involved in enforcement has made them more vigilant and active in responding to complaints from rights holders and taking swift and decisive action. Digitisation of government departments and increasing familiarity with technology help with the analysis of data to identify infringers.
International collaboration programmes
India is a member of major international groups and bodies such as the Financial Action Task Force, the Asia Pacific Group, the Eurasian Group and INTERPOL. India’s Central Bureau of Investigation has included intellectual property as one of the modules in its conference and INTERPOL has co-hosted training seminars on fighting illicit international trade which received active support from trade bodies and industry representatives.
Saif Khan and Shobhit Agarwal
This article first appeared in World Trademark Review. For further information please visit www.worldtrademarkreview.com.