In order to deal effectively with the problem of counterfeiting and piracy, ad hoc solutions will not work. Rather, a comprehensive strategy for a coordinated approach involving all stakeholders (eg, brand owners, digital marketplaces, law enforcement and the government) is required. Developing a well-thought-out strategy at the beginning of a campaign is crucial; if the objectives are clearly spelled out from the start, the enforcement is organised and has clear direction.

Pareto principle

To combat counterfeiting, in India civil enforcement is preferred over the criminal route. A civil action is transparent, whereas in a criminal action the rights holder must work with the police, which consider IP rights infringement to be a soft violation. There are also issues of corruption and information leaks, which deter brand owners from choosing a criminal action. A civil action has the advantage of injunctions and damages (both compensatory and punitive) – these remedies are absent from the criminal route.

Although civil actions for IP infringement are preferred, if a strong signal needs to be sent to a particular market a criminal action can be used.

Brand owners should follow the Pareto principle – 80% civil and 20% criminal actions.

Strategy for court actions

At the outset of an anti-counterfeiting campaign, the brand owner should strengthen the brand and, in turn, the campaign by targeting smaller parties and quickly settling matters with them in order to establish a line of court precedent. Smaller parties are unlikely to challenge the validity of the IP right involved and often typical counterfeiting cases are uncontested. Therefore, this strategy minimises risk before escalating the campaign to target the major infringers.

Secrecy

Most brand owners sue with the intention of not only sweeping counterfeit goods off the market, but also seeking damages, which can be achieved by successful seizures of counterfeit goods. When an ex parte interim injunction order is obtained, secrecy should be maintained until the search and seizure action takes place. An effective way of preserving secrecy is to make a formal request to the court to defer publication of the order on the court’s website until the action has been executed. Only through practical experience can a brand owner become familiar with every step of the process, from obtaining an order to conducting a raid. Confidentiality must be preserved throughout – this is probably the single most important precaution.

John Doe orders

For more notorious markets involving various fly-by-night operators, each offering small quantities of counterfeit goods, an effective strategy is to execute a John Doe order, which empowers a plaintiff to bring an action against unnamed or unidentified defendants. This type of order empowers a court officer during a search and seizure action to identify any other parties (apart from the named defendants) involved in infringing activities and seize their counterfeit goods. A unique variation of a John Doe order is for it to be operative for a set period (eg, three months), as opposed to a one-off order. If any infringing activity is detected during that period within the area to which the order applies, the plaintiff can add the infringer to the action.

Asset determination

Courts around the world, including in India, are now granting major damages settlements. Therefore, a thorough investigation to determine a party’s assets is crucial and goes far in a civil action. On January 4 2016, as part of a new regime under the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, the Delhi High Court granted Rs10 million damages in a counterfeiting case (Cartier International AG v Bhatia CS (OS) 1317/2014). The confidentiality of an investigation is imperative and therefore trustworthy investigators should be used. This means that the people working for the investigator, who are often given ‘on the ground’ responsibility, should be interviewed to assess their credibility.

Settlement

In India, it is important for a rights holder not to reject outright a settlement proposal, as doing so will attract penalties under the new regime. In fact, rights holders should be seen by the courts to be reasonable and open to the option of settlement, although they should not insist on merely token damages.

Diverse remedies

Rights holders should choose the right remedy on a case-by-case basis. The time revolution, which stemmed from the Supreme Court’s decision in Glenmark Pharmaceuticals Ltd v Merck Sharp & Dohme Corp – in which it issued precedential direction expediting a patent lawsuit – has recently supplemented the remedies revolution, in which the courts have granted multiple remedies such as Anton Piller orders, Mareva injunctions, Norwich Pharmacal orders, John Doe orders and punitive and exemplary damages.

Strategic actions

Another strategy is constantly to try to innovate and lay down unique principles of law that will benefit future cases. For example, in Louis Vuitton Malletier v Khurana (CS (OS) 1668/2013, judgment pronounced on August 20 2015) the Delhi High Court stated as follows: “It is apparent that where [Louis Vuitton] goods are found to be sold outside the exclusive [Louis Vuitton] stores, an adverse inference is to be drawn under the Indian Evidence Act, 1872 that the goods are counterfeit beyond any doubt whatsoever.”

Experts and technology

Increasingly, counterfeit products are hard to distinguish from original products. In such cases, an expert affidavit can be provided in court, setting out the discrepancies and characteristics identifying the counterfeit nature of the product (eg, distorted logos, defective stitching, unworkable zippers and fading leather).

The use of technology has become part and parcel of effective brand monitoring and enforcement. As well as using detection technology, brands should liaise with the government to ensure that internet service providers (ISPs) and marketplaces are given more responsibility to prevent counterfeiting and piracy, which are both capable of eroding businesses and taking their profits (the global economic and social impact of counterfeiting and piracy is estimated at approximately $1.7 trillion).

Tackling online piracy

In India, courts have begun to acknowledge the practical challenges arising from enforcing IP rights against piracy. Although broadly parties have been successful in protecting and enforcing their broadcast reproduction rights and copyright, websites hosting pirated content are using creative ways to circumvent liability. ISPs often rely on the safe harbour provisions of the Information Technology Act 2000. Safe harbours are not available in some cases, such as when knowledge can be imputed to the ISP (see Super Cassetes Industries Ltd v Myspace Inc CS (OS) 2682/2008). Websites and their owners mask their identities by:

  • providing fake ownership details;
  • concealing their server hosting provider details;
  • jumping ISPs; and
  • switching their virtual private networks.

To tackle these issues, courts are allowing plaintiffs (and plaintiffs should seek) to avail the assistance of the Department of Telecommunication and Department of Electronics and Information Technology by relying on the licence agreements that they have with the host ISPs, whereby the ISPs must ensure that content that infringes IP rights is not carried on their networks. While blocking entire websites may be an effective solution in some instances, the issue of putting a name and face to the infringing website remains a challenge.

Working with Customs

Strategically, it is also important to work with Customs to deal comprehensively with the problem of counterfeit goods. Registering IP rights with Customs will ensure that brand owners are notified of any infringing consignment that enters the country. To complement this, rights holders should educate customs officers about their brands in order to assist the detection of counterfeit goods. By using unique bar codes, universal product codes, radio frequency identification or hologram stickers, counterfeit goods can be detected easily. Therefore, these technologies should be adopted.

Well-known brands

In India, well-known brands should obtain a declaration from a civil court recognising the brand as well known. The court’s recognition of the brand as well known can be used to incorporate the brand into the list of well-known trademarks maintained by the Trademarks Registry. This will make the examination process considerably easier, enabling the examiner to refuse applied-for marks that are identical or confusingly similar to the well-known trademark.

Contempt and discovery

If a defendant violates an injunction order, the contempt jurisdiction of the court should be invoked. This includes punishing the infringer through imprisonment or the sealing of its premises. Therefore, a civil action can achieve the same goal as a criminal action, as well as securing remedies over and above what a criminal action may provide. Similarly, discovery applications should be used to find important details which will help the rights holder to determine damages in a suit.

Comment

Brand owners should adopt a strategy which ensures coordinated efforts between all stakeholders in the piracy and counterfeiting arena. Infringers are using increasingly sophisticated techniques to escape detection, but being creative and thinking outside the box may mean the difference between success and failure.

Dhruv Anandand Shamim Shahin Nooreyezdan

This article first appeared in IAM. For further information please visit www.iam-media.com.