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Intellectual property

Following India becoming a signatory to the WTO TRIPS Agreement, with effect from 1 January 1995, Indian intellectual property (IP) laws were amended to make them more consistent with globally accepted IP norms and practices. These amendments coupled with better enforcement of the law have significantly improved the IP protection regime.

To protect their trademarks and brands, franchisors will normally also register their trademarks in India. They enter into contractual arrangements with the franchisee, such as trademark licence agreements or by including detailed provisions in the franchise agreement.

i Brand search

The process of searching for protected trademarks and other IP relevant to franchises (such as image rights) is quite simple. This can be done using the public search engine for trademarks on the Ministry of Commerce and Industry website. For a franchisor considering India as a franchising destination, this search engine can be helpful as it enables a potential franchisor to identify commonly known marks and prohibited marks, while also showing business images that are currently trademarked in India.

ii Brand protection

To register a trademark, the proprietor of the mark must make an application in the prescribed form. Applications for registration of trademarks are examined by the Registrar of Trade Marks. If the Registrar decides to accept the application, the application is published in the official gazette, the Trade Marks Journal. Following publication in the gazette, any person can, within a specified period, file an opposition. Where oppositions are filed they must be dealt with according to the procedure prescribed and the decisions of the Registrar may be appealed before the Intellectual Property Appellate Board. If no opposition is filed within three months, the trademark proceeds to registration. Registered trademarks are protected in perpetuity subject to renewal of the registration after every 10 years.

iii Enforcement

If a trademark is infringed, civil remedies can be pursued under the law of passing off or under the Trade Marks Act 1999 (the Trademarks Act) depending on whether the trademark in question is registered, pending registration or unregistered. Further, in respect of registered trademarks, criminal remedies set out by the Trademarks Act may also be available. Typically, in cases of trademark infringement, provided the court is satisfied, interim injunctions may be obtained to stop the infringing conduct until the infringement suit is decided. Such injunctions are normally granted at an early stage of the trial.

Indian courts have generally been good at recognising the international reputation of trademarks whether registered or not in India. There have been numerous examples of courts stepping in to protect unregistered trademark holders; for example, in the Calvin Klein case. More recently, courts have dealt with issues relating to liability of online retailers for selling spurious and infringing goods. Recently, Skechers USA and its affiliates obtained a permanent injunction restraining defendants from infringing their trade dress and passing off the defendants' shoes as Skechers shoes. This case was also noteworthy as significant costs were awarded in favour of Skechers.

In addition to the Trademarks Act, customs laws prohibit import of infringing goods into India. Holders of registered trademarks may notify Indian customs authorities of goods infringing their IP rights. Customs authorities are empowered to suspend clearance of infringing goods and take certain other actions as are specified in the relevant rules.

Know-how belonging to a franchisor may also be protected under the Indian Copyright Act 1957 or the Patents Act 1970 if it is capable of protection under those laws. If statutory protection is not available, contractual remedies will still be available to the franchisor and it is usual to see detailed provisions in the franchise agreement dealing with protection of know-how.

iv Data protection and e-commerce

Customer data is important for companies looking to market or cross-sell their products. India's data protection provisions are not located in one cohesive piece of legislation. This can therefore be an area that needs careful consideration by lawyers reviewing the types of personal data that may be collected by the franchisee or the franchisor and the impact that legislation such as the Information Technology Act 2000 (the IT Act) and the Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules 2011 (the DP Rules) may have on the manner in which personal data is collected, handled, stored and processed.

On a strict reading of the DP Rules, difficulties can arise in determining whether the DP Rules apply to personal data that is not sensitive personal data and to companies that are not based in India. The pragmatic view is that consent should be obtained to collect, process, store, handle and export personal data. In addition to the DP Rules, Indian law, including through recent judgements of the Supreme Court of India, generally recognises the right to privacy of an individual and a person who discloses personal data in violation of their contractual obligations commits an offence under the IT Act.

So far as sensitive personal data is concerned (which includes bank and credit card information), the DP Rules would generally apply. Under the DP Rules, sensitive personal data must not be exported to a country that does not afford the same level of data protection as offered by the DP Rules, although export is permitted if the transfer is necessary for performance of a contract or if consent for the transfer has been obtained from the data controller or the data subject.

The IT Act also deals with cybercrime such as hacking, identity theft, tampering with computer records, and prescribes penalties and offences in respect of those matters.

Currently, India is looking to enact comprehensive data protection legislation, a draft of which was tabled for public comments in 2018.