Open Access Research Article
THE RISE OF COUNTERFEIT GOODS AND THE CHALLENGES OF BRAND PROTECTION
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THE RISE OF
COUNTERFEIT GOODS AND THE CHALLENGES OF BRAND PROTECTION
AUTHORED BY
- DEVISHI SHARMA
ABSTRACT
In the age when a new substitute product is launched in the market just
after a new product is made, it is very essential for the inventors and makers
of the product to pay due attention to the procedure to legally safeguard and
protect the innovations. On the one hand, we see the benefits of
digitalization; on the other hand, we see the repercussions of it. Today,
counterfeit goods have flooded the marketplace and are appealing to the young
generation and the lower strata of society. A reputed product is often taken as
an opportunity by small manufacturers, who use the goodwill of the product to
sell duplicates to consumers. This indeed violates the rights of consumers as
well as damages the reputation and trust that the company has created.
INTRODUCTION
With the rise in luxury brands and
the societal connotation of associating a person’s first impression with the
products he have is creating a vicious circle for the need of every person to
own a luxury product. Although luxury
associations are now forming partnerships to address the concerns, the luxury
industry has historically not taken a united approach to tackling
counterfeiting. Historically, this reticence may stem from an inherent secrecy
about design and production methods that pre-dates the emergence of the
industry as a global economic force.[1] Counterfeiting
is a crime involving the theft of someone’s trademark. Businesses use trademark
to help its prospective and existing consumers to identify and differentiate
their products.
As per the International Trademark
Association, “Counterfeiting is the illegal production and sale of goods
(including packaging) bearing
without authorization a trademark that is identical to a validly registered
trademark or that cannot be distinguished from such a trademark. [2]
Counterfeiting,
in the Black’s Law Dictionary, is defined as an act of producing or selling an
item that looks like a reproduction of a trademark in order to deceive a
consumer into thinking that they are buying the original trademark goods.[3]
One of the main goals of the luxury
sector has been globalization, which has ushered in the emergence of global
luxury companies with a global reputation. A sophisticated, networked
generation of counterfeiters has emerged thanks in part to the Internet. These
individuals adapt rapidly and distribute items in ways that are more difficult
to identify and stop than those sold through more conventional channels.
Furthermore, a report found
that counterfeit products found in Pharmaceuticals are up to 20 per cent,
in Consumer Durables up to 17 per cent, and 16 per cent in Agrochemicals. Even
after discovering that the product is fake, consumers take close to negligible
action about reporting it.[4] Another
report states that Counterfeiting is most prevalent in apparel (31%), FMCG
(28%), and automotives (25%) are the top segments where consumers came across a
counterfeit product, followed by Pharmaceuticals (20%), consumer durables
(17%), and agrochemicals (16%)[5].
Counterfeiting is not just a financial loss. The substandard components and
parts used in fake products also constitute a health and safety risk. Fake
medicines, in particular, are potentially devastating to public health and put
lives in danger.[6]
LEGAL PERSPECTIVE
It is unethical and unlawful to
practice counterfeiting. Owners of trademarks are entitled to take legal action
against any instances of trademark or copyright infringement.
The Indian Penal Code,1860 defines ‘counterfeit’ who causes one
thing to resemble another thing, intending by means of that resemblance to
practise deception, or knowing it to be likely that deception will thereby be
practiced. In other words counterfeiting into account, anti-counterfeiting may
be step to prevent the counterfeiting of any goods/things.
Section 28 of the Indian Penal
code,1860 mentions about counterfeiting, a person is said to counterfeit when he/she
causes one thing to resemble another thing which will be causing deception and
is most likely to deceive the user of the product. In addition to this, section
486 of the code describes the punishment when selling counterfeit products with
imprisonment for one year, with fine or both. The section mentions proviso for
the same in case the act is unintentional, that is there was no mens rea also,
reasonable precautions were taken by the person to prevent any such issue.
Although the term 'counterfeit' is
not defined in the Trademarks Act, the Act attempts to safeguard potential
customers and provides remedies for trademark infringement. Trademarks are
valid for ten years. Section 19 [7]makes
provision for the safety of registered marks in the case violated by anyone and
insulates the rights of unregistered owners and includes the licensee also. Under
section 102[8], a
person shall be deemed to have counterfeited a trade mark if he creates the
mark or a similar misleading mark, or alters a valid mark by alteration,
addition, etc., without the consent of the trade. The section mentions that the
burden of evidencing the owner’s assent in the condition of wrongfully or
falsely applying for trademark untruthful is on the accused. The punishment for falsely or erroneously
applying a trade mark on any goods and products, as expressed in Section103, is
detainment for a term that will not be under a half year yet may stretch out to
3 years and a fine that may not be not as much as INR 50,000 yet not surpass
INR 2 lakhs. Furthermore, section 105 throws light on the fact that on
subsequent illegal acts mentioned in the above sections, the imprisonment shall
not be less than 1 year and can extend to 3 years, also the fine can exceed to INR
2 lakhs. Section 134 of the act mentions about the jurisdiction to file the suit
.[9]Furthermore,
the Supreme Court clarified about the question of jurisdiction with respect to
technological conflicts, in case websites are copied particularly the URL when name of two websites coincide or sound
the same case can be instituted.[10]
Section 135 of the Trademark Act
includes civil reliefs, which allow the court to grant an injunction, damages,
and an account of profits in any complaint for trademark infringement or
passing off, along with or without an order for delivery-up of the infringing
labels and marks for destruction or erasing it.
It is pertinent to mention over here
that trademark counterfeiting and trademark infringement though sound same for
a layman by there is a thin line of difference between the two. Counterfeiting
is a trademark deceptive infringement that is taking a Trademark that is
registered with the trademark and patent work area and someone creates a false
copy of that mark. Trademark infringement is a wide term and includes wide-ranging
and more extensive idea up against counterfeiting.
The Copyright Act,1957 provides legal
protection and the enforcement of copyrights in India. Section 13 throws light
on what copyright includes, it shall include original literary, dramatic,
musical and artistic work, cinematograph films, and sound recordings. The
validity of a copyright is 60 years. In case of any infringement both civil and
criminal remedy is available. The copyright offence is a strict liability
offence. Section 63 of the act provides
for punishment for the infringement, i.e, imprisonment which shall not be less
than 6 months but can extend up to 3 years and can also include fine not less
than INR 50,000 and can exceed upto INR 2 Lakhs. [11]
The Geographical Indications of Goods
(Registration and Protection) Act,1999 aims to protect the geographical
indications relating to goods. Geographical Indications are used on products
that have a specific geographical origin and possess rare qualities. It cannot
be registered by an individual but by any association of persons or producers,
or any authority. Section 22 of the Geographical Indications of Goods Act
provides provision for infringement of a registered geographical indication
when the purpose of usage is to mislead people. Moreover, when there is an infringement,
there shall be consequences as per section 38 of the act.
The Intellectual Property Rights (Imported
Goods) Enforcement Rules,2007 aims to strengthen protection of intellectual
property rights at the borders.
Also, The Drugs and Cosmetics Act, 1940
aims to regulate the import, manufacture, and sale of drugs and cosmetics. The
act provides for cases when imitation of a product is done or there is illegal sale
of the same. The Act defines a spurious drug as one that is created under a
name that belongs to another drug or is an imitation or substitute for another
drug, misrepresenting the product's provenance. Offering to sell contaminated
pharmaceuticals is punishable by imprisonment for seven to ten years, but can
be extended to life in certain cases, as well as a fine of at least one million
rupees or three times the value of the narcotics confiscated. In Drugs
Inspector & Anr v M/s Fizikem Laboratories Pvt Ltd & Anr, the Supreme
Court ruled that Viagra is an allopathic medicine and cannot be considered
Ayurvedic. Selling this medicine as one of the ingredients in the Ozomen pill
and failing to show the name in the appropriate manner was a violation of the
Drugs and Cosmetics Act, 1940. It was also determined that an inspector
nominated by the national or state government via notification in the Official
Gazette may inspect any premises where any drug or cosmetic is manufactured.[12]
BRAND PROTECTION
In the business world, a brand is
something other than a name or a logo; It is a representation of the identity,
values, and reputation of a business. It is shielding a brand from abuse,
encroachment, or pantomime is of central significance. Brand is a unique name
or symbol by which prospective customers of a product are able to identify the
product. A legally protected brand is one that has secured its intellectual
property rights through legal means, ensuring that its distinctive aspects,
such as its name, logo, slogan, and other distinguishing features, are
protected against unauthorised use or infringement. This is achieved through
trademark registration, copyright, patents, trade secrets, contractual
agreements, etc. In order to combat infringement, companies must be vigilant to
combat infringement.
Brand protection is the safeguarding
of a company’s intellectual property(IP) against bad actors seeking to illicitly
profit from its IP, including its trademarks, domain names, design marks, trademarks
and patents, regardless of where they are located online [13]
In the digital age, counterfeiting
for brands has emerged as one of the most serious brand violations. Brand
imitation ranges from fraudulent product listings on e-commerce sites to
copycat profiles on social media platforms. While some argue that imitation is
the purest form of flattery, legitimate brands see it as a direct threat to
their company reputation. Trademark infringement and copyright infringement are
two of the most prevalent legal difficulties that firms encounter, particularly
design-focused companies.
These infringements are frequently
committed by high-profile infringers who operate in the shadows of the black
market, supplying illicit market knowledge and counterfeit products.
Such abusive registration techniques
have the potential to deceive consumers, leading them to hazardous websites
rather than real products. Furthermore, the advent of social media platforms
has made it simpler for counterfeiters to market and sell their phoney items,
blurring the distinction between genuine and counterfeit goods for the typical
consumer.
This not only impacts the sales of
authentic businesses but also tarnishes their reputation, especially when
people end up with inferior products, thinking they’ve acquired the real thing.
While all businesses are vulnerable, those with a strong internet presence or
items that are simple to reproduce are frequently hit the hardest. However, it
is not all doom and gloom.
In today's increasingly competitive
business market, trademark protection is critical to a company's long-term
success. Trademark registration is an important technique for protecting brand
identification, granting exclusive rights, nationwide and global protection,
deterrent effects, strengthened legal remedies, and opening up licencing
options. Businesses who register their trademarks exhibit a dedication to the
integrity of their brand while also gaining crucial legal protections that
assist sustain consumer trust, brand awareness, and long-term profitability.
Investing in trademark registration is a proactive strategy that strengthens a
company's position and secures its long-term success in the market.
Infringement of trademarks usually
happens with luxury goods. The key concept to this fact is “credence goods”.
These are goods whose quality is difficult to assess before or after purchase
and use. Many luxury products fall in this category. Technically unsophisticated
consumers cannot be certain of their quality even after purchase. Their value
is dependent on the credence given to them by others. [14]
There exists the problem of high quality counterfeits, where one is unable to
identify whether it is original or not.
CHALLENGES FACED IN BRAND PROTECTION
The challenge of protection brand in
India is the main issue which the people and companies face. The concept lacks
understanding even to the educated strata of the society. This lack of
understanding helps the infringers to commit the crime by taking advantage of
minute details which can be a loophole in the law. That in fact changing a
letter or two doesn’t lead to infringement by it surely becomes an opportunity
for the one who is doing the deceptive act by knowingly but also showing that
they are innocent, they use the goodwill, marketing efforts of the original
company.[15] That
there exists a void on the part of law as well which fails to clearly demarcate
the line of boundary beyond which the act is considered a crime. Advancements
in technology, notably the emergence of deepfake technology, pose a new
challenge to trademark protection. Deepfakes can be used to generate realistic
but wholly created content, which can harm a brand's reputation. Brands must
remain ahead of technology changes by investing in tools and tactics for
detecting and combating the spread of deepfake material. The digital era has
brought about unprecedented opportunities for businesses to connect with
consumers, but it has also given rise to new threats in the form of online
infringement and cybercrime. Phishing, domain squatting, and social media
impersonation are just a few examples of tactics employed by cybercriminals to
exploit brand identities. Developing effective strategies to combat these
threats requires constant vigilance and collaboration with cybersecurity
experts. Furthermore, the concept of first copy, second copy is putting the
reputed companies at stake, today the copies are so identical that a common man
cannot identify the original product.
CONCLUSION
To summarise, the proliferation of
counterfeit goods poses a significant problem to brand protection in today's globalised
and digitally driven marketplace. As we negotiate this complex landscape, it
becomes evident that combating counterfeiting demands a multifaceted and
proactive approach.
The increasing sophistication of
counterfeiters, along with the ease of reaching a large consumer base via
internet channels, necessitates a complete plan for organisations. Companies
must invest in modern monitoring and detection systems, coordinate with law
enforcement and regulatory entities, and conduct public awareness campaigns to
educate customers about the risks of counterfeit products.
Furthermore, promoting collaboration
within and between businesses is critical. Businesses can fight counterfeiters
more effectively if they share intelligence, best practices, and resources.
Furthermore, governments and international organisations play a critical role
in developing and implementing legislation to promote intellectual property
protection.
Brand protection initiatives must
evolve in tandem with technological advancements. Embracing innovation, such as
blockchain for supply chain transparency and artificial intelligence for
counterfeit detection, can help keep one step ahead of counterfeiters. In the
face of these problems, brands must not only secure their products, but also
create a strong and trustworthy brand image. Consumers are increasingly valuing
authenticity, and firms that demonstrate a commitment to brand protection
develop long-term trust with their customers.
In the ongoing battle against
counterfeit goods, perseverance, collaboration, and technological innovation
are the keys to success. Brands that prioritize these elements will not only
protect their intellectual property but also contribute to the creation of a
marketplace where authenticity and integrity prevail.
[1] (No date) Responding to the hidden threat: How luxury brands are fighting back ... Available at: https://www.cov.com/~/media/files/corporate/publications/2014/02/responding_to_the_hidden_threat_how_luxury_brands_are_fighting_back_against_counterfeiting.pdf (Accessed: 13 January 2024).
[2] Counterfeiting - International Trademark Association. (2021, July 30). International Trademark Association. https://www.inta.org/topics/counterfeiting/
[3] Black’s Law Dictionary - Free Online Legal Dictionary. (2022, August 3). The Law Dictionary. https://thelawdictionary.org
[4] Counterfeit Products 25 30 Of The Market In India Report. (n.d.). BW Defence. https://bwhealthcareworld.businessworld.in/article/Counterfeit-Products-25-30-Of-The-Market-In-India-Report/24-01-2023-463110/
[5] Anand, S. (2023, January 25). Almost 25-30% products sold in India spurious with counterfeiting: Report | Mint. Mint. https://www.livemint.com/industry/retail/almost-25-30-products-sold-in-india-spurious-with-counterfeiting-report-11674655725574.html
[6] India: counterfeiting remains a serious concern in both physical and online markets. (n.d.). World Trademark Review. https://www.worldtrademarkreview.com/global-guide/anti-counterfeiting-and-online-brand-enforcement/2022/article/india
[7] Intellectual Property Attorneys Association v. Controller General of Patents, Designs, Trade Marks & Anr.
[8] 102falsifying and falsely applying trade marks (no date) LAWGIST. Available at: https://lawgist.in/trade-marks-act/102 (Accessed: 16 January 2024).
[9] Indian Performing Rights Society Ltd v. Sanjay Dalia and Anr., Civil Appeal Nos. 10643-44/2010 (arising out of Civil Suit FAO (OS) No. 359/2007) and Civil Appeal arising out of SLP [C] No. 8253/2013
[10] Banyan Tree Holding (P) Limited vs A. Murali Krishna Reddy & Anr. on 23 November, 2009. (n.d.). https://indiankanoon.org/doc/151685239/
[11] Rastogi, A. (2013) Warner Bros. Entertainment Inc. and Ors. V. Santosh V. G., Indian Case Law. Available at: https://indiancaselaw.in/warner-bros-entertainment-inc-and-ors-v-santosh-v-g/ (Accessed: 16 January 2024).
[12] M/S. Fizikem Laboratories Pvt. Ltd. & Anr. v. The Drugs Inspector, Karimnagar & Anr., Andhra Pradesh High Court, Judgment, Law, casemine.com. (n.d.)
[13] What is Brand Protection? (2022, September 12). LexisNexis Intellectual Property Solutions. https://www.lexisnexisip.com/solutions/brand-protection/what-is-brand-protection/
[14] Hilton, B., Choi, C. J., & Chen, S. (2004, December 1). The Ethics of Counterfeiting in the Fashion Industry: Quality, Credence and Profit Issues. Journal of Business Ethics. https://doi.org/10.1007/s10551-004-0989-8
[15] Banyan Tree Holding (P) Limited vs A. Murali Krishna Reddy & Anr. on 23 November, 2009. (n.d.). https://indiankanoon.org/doc/151685239/
Article Information
THE RISE OF COUNTERFEIT GOODS AND THE CHALLENGES OF BRAND PROTECTION
Authors: DEVISHI SHARMA
- Journal IJLRA
- ISSN 2582-6433
- Published 2024/01/30
- Issue 7
About Journal
International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
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