Catching the counterfeiters

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Abhai Pandey and Omesh Puri on why greater enforcement machinery is vital to fight the fakes

With the advent of online marketplaces and the opening up of international trade on those platforms, counterfeiting in India has repositioned itself. While tremendous efforts have been made in the past two decades to strengthen India’s legal framework to address the issues of counterfeiting and piracy, mostly due to initiatives by the Indian judiciary and as part of India’s obligations under the Trade-Related Aspects of Intellectual Property Rights agreement, major gaps still exist in terms of enforcement. Most of the legal changes, particularly in the Trademarks Act, 1999, and in the Copyright Act, 1957, were focused on declaring counterfeiting and piracy as criminal offences and providing severe penalties, but we did not see corresponding initiatives to create the machinery to implement these legal provisions.

Abhai Pandey
Abhai Pandey

Initiatives by state governments and the metropolitan police in some major cities during early 2000 led to the seting up of specialized branches or wings to combat intellectual property (IP) offences. These include the IP cell in the Economic Offence Wing (EOW) of the Delhi Police, the Video Piracy Cell in Chennai and the allocation of IP cases to the Social Service Branch in Mumbai. However, in recent times we have also seen the dissolution of such specialized branches.

Recently, the IP cell in the EOW of the Delhi Police was dissolved presumably on the grounds that IP offences do not require specialized investigation. Similarly, in Mumbai, the Social Service Branch’s powers were reduced to handle only video and software piracy cases with cases of counterfeiting removed from their jurisdiction. In both these cities, which account for almost 40% of the counterfeits market, IP owners are being directed to file complaints with the regular and already heavily burdened police stations, which are responsible for general law and order and handle day-to-day crimes in their territory. For the officer in charge of a local police station, IP offences are of the lowest priority and presumably cracking such cases does not add any feathers to their cap. Hence there is no incentive or motivation for them to entertain complaints of IP offences.

Secondly, the criminal remedy so far had acted as a deterrent to unorganized or semi-organized counterfeit businesses in India primarily because accused persons were arrested, denied bail and ordered to spend seven to 14 days in jail, or more in some cases. That position is again being diluted as the police rarely ask for the custody of the accused person for further investigation. For the police, the matter ends when action is taken on the information provided by the complainant. We rarely see the police further investigating this kind of case and adding to the information by way of their own analysis or by interrogation/disclosures made by the accused person. This apathetic position has slowly pushed IP owners to shift their focus from criminal remedies to civil ones, i.e. filing a lawsuit for infringement, obtaining an interim injunction and also seeking the appointment of a local commissioner who can conduct on-the-spot inspections at the defendant’s known premises and seize the goods in question. Depending on the nature of businesses involved in counterfeiting (e.g. whether the infringing goods are being manufactured locally, by organized businesses, whether they are sold by a network of retailers in one or multiple cities, etc.) it is prudent to devise more effective strategies which could be civil or criminal actions or a combination of both.

Omesh Puri
Omesh Puri

The issues are much more complex when it comes to the sale of counterfeit goods through online marketplaces, particularly clothing, fashion accessories, fast-moving consumer goods, drugs, electronics, mobile phones and their accessories. These marketplaces assist buyers and sellers and thus the platform owners’ liability in most cases is limited to issuing notices and pulling down offending websites. Some online marketplaces have now developed automated systems to screen and monitor the sale of counterfeit goods and advertise their platforms as “counterfeit free”. The fact that platform owners are now not apathetic to the issue and taking urgent action on notices is certainly a positive change. The problem, however, still persists and the onus of monitoring and screening such platforms still lies with IP rights owners.

One problem that still needs to be addressed is the resurfacing of counterfeit businesses on such platforms in guise of a new online name, possibly with a new address and bank accounts, etc. With the increasing sensitivity of online platforms about the issue of counterfeiting, which is directly linked to the credibility of the platform, we expect a coming together of the industry to make joint efforts in finding stable, long-lasting and sustainable solutions.

Abhai Pandey is a partner and Omesh Puri is an associate partner at LexOrbis. Contact: abhai@lexorbis.com