COVID 19 has adversely affected all business entities across business segments. At the same time it has stretched the law enforcement apparatus as never before. Consequently an environment has been created in which counterfeiters flourish. Therefore it is necessary that IPR infringement and Brand Protection becomes an integral part in the current scenario. We take a look at the options available to Brands to protect their valuable IP in presnt times.
India has experienced a growing number of IPR infringement cases and the same garners specific importance under the current situation. It is highly probable that there would be massive counterfeiting operations running across the country. It has been estimated that the industries across India suffer an annual loss of approximately Rs. 1 Lakh Crores owing to such counterfeiting activities and there is significant apprehension that this figure may rise during the currentconditions.
In view of the same and in consideration of the outbreak of the novel Coronavirus i.e. COVID-19 across the globe, a critical situation has been created for businesses across the globe including within India. In order to mitigate the effects of the outbreak, the Government of India as well as numerous State Governments have implemented notifications as well as advisories whereby making an exception for essential commodities which includes food and other edible items, medicines and medical equipment, manufacturing and selling of which has been permitted by the Government. Consequently, there is a very high likelihood that counterfeit product sellers are supplying their goods in the market under the garb of being permitted by the Government
In light of the aforesaid, IPR infringement and Brand Protection becomes an integral part in the current scenario. With the Hon’ble Courts having limited functioning, and only urgent matters being taken up by the Hon’ble Courts across the country, there is a very high likelihood that entities as well as individuals would not hesitate in using the present time of minimal judicial over watch for their nefarious activities. The said entities or individuals could supply counterfeit and infringing products in the market, whereby making unfair gains for themselves and further causing untoward losses to the well-established players in the market. The same could also deprive established brands from taking stringent actions against such violators and counterfeiters.
In terms of brand protection and anti-counterfeiting, the initial impact of the coronavirus led to a cessation of nearly all commercial activities, excluding activity which was designated as essential. Furthermore as the factories were non-operational the same had an adverse cyclical impact on the respective sector specific supply chains. The said situation provides for a ripe environment for conceiving new forms of counterfeiting scams and ancillary malicious activities with the sole intention to make profits by exploiting the prevalent situation. A layman will not be able to ascertain the veracity and/or originality of a specific product whereby giving counterfeiters with a golden opportunity to sell their products in the market without any sort of deterrent and/or looming threat of being caught.
In light of the aforementioned factual matrix we seek to address the aspect of brand protection/anti- counterfeiting under the following specific heads:
Action Necessitated For Brand Protection/Anti-Counterfeiting Measure For Non-Essential Goods
- With the government having categorized goods that fall under the category of ‘Essential Items’, the sale of goods not falling in that category has been impacted adversely. With the government having rolled back its advisory qua sale of non-essential goods on online platforms counterfeiters may use this as an opportunity to float their products in physical markets. With sales having been adversely impacted and no enforcement mechanism in place, the current precarious situation is a golden opportunity for counterfeiters as well as infringers looking to pass-off their products as originals. At this juncture, it is imperative for brands to be on the look-out for counterfeit and infringing products being floated in the market. Thus the following actions may be necessary to counter any nefarious designs of entities engaged in counterfeiting activities:-
- As various commercial activities have been allowed post 20th April 2020 as per the Ministry of Home Affairs notification, the employees of various brands must immediately initiate internal standard operating procedures/protocols put in place for verifying any infringement of IP or counterfeiting ofproducts.
- It is imperative to ascertain the veracity and originality of the product that has been sold or procured across the supply chain of the wholesaler, distributor and retailer.
- The entire supply chain, wholesaler to retailer must be asked to regularly intimate the Company of any infringement actions that may be noticed by them for which dedicated helplines must be set up.
- Furthermore the said helpline should be used to provide adequate information on the products of the company to not only the wholesaler, distributor and retailer network but also any purchaser who suspects the authenticity of the article that has been purchased.
- Brands which have outsourced manufacturing need to ensure that a strict vigil is maintained upon the manufacturer so as to ensure that no excessive products are manufactured inasmuch as the current situation is such that manufacturers would produce counterfeit products and pass them off in the market as being original.
- Proper identification and markings with added safety features known only to the manufacturer be placed on the products so as to ensure the originality of the products being manufactured and sold in the market. The veracity of the said products should thereafter be regularly tallied and checked at the level of the entire supply chain if possible.
- If any infringing product has found its way into the supply chain then ancillary documentary evidence must be sought from the respective entities.
- Further, many infringers shall also attempt to pass-off their infringing products as originals by relying upon identical packaging, labelling etc. It becomes imperative for brands to ensure strict brand enforcement by being vigilant in respect of advertisements and other material that may be deemed to be infringing.
- Educating consumers and retailers about the differences between original and counterfeit is the first step to ensure prevention of counterfeiting.
- It is also incumbent upon brands to be on the lookout for any sort of Design infringement. With numerous new players having entered the market, it is likely that the design and trade-dress of well-established brands may be copied by entities in order to create confusion in the mind of the layman, whereby encashing upon the reputation and goodwill enjoyed by brands.
- It is also advisable that brands must be on the constant lookout for any fresh filings with respect to Trade-Marks, Copyrights, designs etc. which may be deceptively similar to the IP rights enjoyed by the said brands. Brands should also keep a lookout on any such filings being done under the same category and/or class in order to investigate any Passing-off and/or infringement that may take place during the lockdown period, and accordingly file their oppositions before the concerned Registrar offices recording their opposition towards grant of any such IP rights.
- Further, it is also imperative upon brands to be on the lookout for any sort of disparagement and denigration of brand name by way of comparative advertising. With a view to ensure maximum sales, many entities may resort to such comparative advertising in order to create a prejudice in the minds of the common public. It is therefore advisable that brands may direct their employees as well as agencies dealing in the said sphere to be on constant vigil and lookout for any of the aforesaid activities.
- An example of the same was in the case of Hindustan Unilever Ltd. Vs. Reckitt Benckiser (India) Pvt. Ltd. [COMPIST 300 of 2020] wherein Hindustan Unilever Ltd. filed a suit against Reckitt Benckiser before the Hon’ble High Court of Bombay, for disparagement and injunction, alleging that the advertisement being displayed by Reckitt Benckiser disparaged the product of HUL i.e. Lifebuoy Soap and was a blatant copy of the advertisement of HUL.
m. Business enterprises in certain specific sectors like tobacco, electrical appliances, spare parts for machinery, household products (dishwashers, toilet cleaners and etc.), cosmetics and etc. which are required for day to day would face exposure to counterfeiting activities.
Post receiving information and evidence of any such counterfeit products, brands may then send Legal Notices to vendors and seek damages, or approach the Hon’ble Courts seeking enforcement of their Intellectual Property Rights whilst further seeking exemplary damages against deterioration of their brand integrity, andreputation.
Action Necessitated For Brand Protection/Anti-Counterfeiting Measure For Essential Goods
- With the exemption granted by the Government qua manufacturing and selling of items falling under the ‘Essential’ category, it becomes exigent upon brands to ensure prevention of counterfeiting and selling of fake products. There could be counterfeiting of products which are presently being sold under the essential category eg. Food products , grocery items or dairy products and etc. inasmuch as counterfeiters and infringers intending to sell their products shall utilize the lockdown period in order to gain undue benefits by passing- off their products as originals and by floating counterfeit and defective products in the market. With the law enforcement agencies occupied in maintaining normalcy around the country, the current lockdown period gives such entities and individuals, a golden opportunity to reap undue benefits. In light of the same it is advisable that the concerned entities follow the following procedures in addition to the procedures already elucidated herein-above, in the interest of anti-counterfeiting/brand protection activity:-
- Investigations by the concerned department of the brands as well as independent investigating agencies may be carried out at manufacturing facilities, godowns etc. so as to ascertain whether counterfeit products are being passed-off as originals in the market.
- Further, investigations at various locations, in sporadic intervals with minimal human intervention may also be carried out by brands, albeit it is advised that investigations may be kept as a last resort inasmuch as owing to the current situation, minimum human presence is mandated, and therefore even courts would not be inclined to grant any such prayers of conducting investigations and executing Local Commissions.
- With the FMCG products also being readily available for sale on online platforms, brands may further be on a lookoutfor sale of any such counterfeit products being available on online platforms. A stringent online monitoring program with strategic online protection is mandatorily required; the said activities can easily be out- sourced to specialist investigators with the mandate to ascertain the producer and distributor of the said infringing product.
- A regular surveillance of the said platforms could indicate that counterfeiters are taking advantage of the current precarious situation whereby floating their illicit counterfeit products in the market or seeking to pass-off their products in the open virtual market.
- Brands may also enter into mutual agreements and understandings with such online platforms wherein the products being supplied shall exclusively be procured by the online platforms from verified vendors and stockists.
- Caution Notices may be sent by brands to their Vendors, Stockists as well as online platforms permitted to sell Essential Goods whereby intimating them about the entire quantum of details pertaining to the products being sold by the brand, their IP rights, details of the sellers etc., so as to ensure that vendors, stockists as well as online platforms only deal with original products being sold by the said brand.
- In case of any infringement which comes to the knowledge of the said brand it is imperative that necessary actions be initiated forthwith. The said actions have been illustrated herein- below:-
- the brands may approach the Hon’ble Courts citing extreme urgency, seeking stringent action against the counterfeiters, not only because of the losses, and damage suffered by the respective brands, but further also because the counterfeit goods being sold may adversely impact the health of the person buying them inasmuch as the said counterfeit goods do not comply with the requirements as laid down.
- A Commercial suit would be filed under the provisions of The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 and shall lie before the concerned District Court and/or the High Court depending upon the pecuniaryjurisdiction.
- The High Courts in New Delhi, Mumbai, and Madras (Chennai) have original jurisdiction, hence, Commercial suits may be filed directly before the said High Courts depending upon their pecuniary value. The Hon’ble High Court of Delhi has stipulated that in case the grounds of urgency are refused by the Ld. Joint Registrar, the parties may then approach the Hon’ble Judge citing urgency who shall then adjudicate upon the same.
- Owing to the absence of investigation proceedings, brands would be required to procure a minimum of one sample of the infringing/counterfeit product along with a proof of sale to be produced before the Hon’ble Court in order to establish Counterfeiting and/or Passing-off.
- It is highly unlikely that the Hon’ble Courts shall permit raids to be carried out at the premises of the infringers/counterfeiters therefore it is advisable that sealing of the manufacturing as well as the stocking facilities of the infringer/counterfeiter as well as destruction of the entire stock of counterfeit/infringing material be prayed for before the Hon’ble Courts at the very first instance.
- Legal Notices could also be issued to the alleged infringer whereby seeking damages and directing them to restrain from indulging in any counterfeiting and/or infringement of said products. The same would depend on the Brands commercial/corporate decision taking; however from a specific legal standpoint the same is not advisable.
b. In case there is infringement of food and dairy products, the FSSAI governs and regulates the circulation of the said products within the country and stringent action may be initiated against counterfeiters under the Prevention of Food Adulteration Act, 1954 which prohibits manufacturing and sale of ‘misbranded food’ and imposes stringent penalties on the offenders/counterfeiters, therefore appropriate action may also be initiated against the infringers/counterfeiters under the said provision.
c. Criminal action may also be initiated against the infringers/counterfeiters under Sec. 103 and 104 of the Trademarks Act, 1999. A Police complaint may be filed by the concerned brand under the relevant sections as aforesaid, or the brands may directly approach the Hon’ble Courts by filing a criminal complaint under Sec. 190 of the Code of Criminal Procedure, 1973. The same is advisable as the same would have an extreme deterrent value added to it.
Specific Urgent Action For Brand Protection/Anti-Counterfeiting Measure Specific Products (Medical Devices And Ancillary Equipment)
- With the outbreak of the Novel Coronavirus, there has been a sudden and massive requirement of numerous medicines, ventilators, Personal Protection Equipment, Sanitizers etc. in the market. The healthcare category, albeit the most important, is massively susceptible to counterfeiting and infringement. There have been numerous reports of counterfeiting of PPE’s, hand sanitizers, Face-Masks etc. which has a direct impact on not only people suffering from ailments but also on the health of the Front-line workers i.e. the medical staff working day in day out. More than 3 dozen such premises have been identified by the government in the past 10 days. For instance, a huge racket of fake hand sanitizers was caught by the Hyderabad Police, right before the country wide lockdown was imposed by the Government. Further, the Police in Bengaluru raided 2 premises in the city wherein they caught manufacturers selling thermometers without any labelling being sold in the market at exorbitant prices. In light of the same it is advisable that the concerned entities follow the following procedures in addition to the procedures already elucidated herein- above, in the interest of anti-counterfeiting/band protection activity:-
- It is advisable for brands dealing with products falling in the Healthcare category to send advisories/ notices to the government and its agencies procuring the said products, whereby intimating them about the entire quantum of details describing their products, the manufacturing process, the vendors etc.
- Brands may enter into exclusive understandings with government agencies whereby only providing products through their own manufacturing and/or supply facilities.
- It is also advisable that brands may appoint an officer who can deal with the government as well as other agencies of the State qua any sort of counterfeiting.
- Counterfeiting of products falling in the healthcare category can be easily ascertained from the discarded material and/or products which are not utilised in treatment.
- The protection as stated herein-above in respect of filing of Commercial Suits would be available to the concerned entity and a commercial suit may-be preferred before a Court of competent jurisdiction seeking punitive damages, exemplary costs, confiscation, destruction/erasure of said material and recall of products.
- Counterfeiting of medical equipment, inasmuch as is a serious menace prevalent in the current scenario not only attracts penalties as envisaged under the IPR laws of the country as have already been elucidated herein above, also attracts strict penal action under the provisions of the Indian Penal Code, 1860.
- IPC Sections 324 (voluntarily causing hurt by dangerous weapons or means),
- 274 (adulteration of drugs),
- 275 (sale of adulteration of drugs),
- 276 (Sale of drug as a different drug or preparation),
- 420 (cheating and dishonestly inducing delivery of property) are some of the provisions under which complaints can be lodged with the jurisdictional Police Station for further prosecution.
- Since counterfeiting of medical equipment not only causes losses and damages to the brands, but also jeopardizes the health of patients as well as the medical staff, extreme urgency may be cited before the Hon’ble Courts by brands so as to obtain relief against the counterfeiters. The Hon’ble Courts may further be inclined to take the strictest possible action against any such counterfeiters owing to the massive risk that they pose to the society, by floating counterfeit products.
SOCIAL MEDIA AS A TOOL FOR BRAND PROTECTION:
The growth of the Internet inasmuch as is an opportunity for promotion of brands has also proven to be an effective and useful tool for counterfeiters and infringers. There has been an immense increase of counterfeiters and infringers selling their products on social media platforms. A large number of counterfeiters and infringers have utilized social media since it provides them with a huge user base wherein they can easily sell their products with anonymity since these platforms require none to negligible verification.
The privacy features that such platforms offer including secret and private groups wherein such infringers/counterfeiters can float their products are difficult for law enforcement agencies and/or brands to access whereby making identification of such counterfeiters/infringers difficult to say the least. Numerous counterfeiters float their products whilst responding to posts published by brands, whereby creating confusion in the minds of the common public responding to such posts inasmuch it becomes difficult for the common public to ascertain the veracity of the products being sold by the counterfeiters, which ultimately tarnishes the goodwill and reputation of the brands.
Privacy features essentially turn sections of social media into hiding places for such counterfeiters. Secret and private groups offering counterfeit products for sale can be difficult for brands or law enforcement to access. Many counterfeiters/infringers stick to directly messaging group members, as this is a more difficult way to identify the counterfeiters, Impersonators, fake reviews and fraudulent posts.
The said aspect attains further significance with reference to the current situation; as there has been a massive increase of social media usage across the globe. Messaging alone on Facebook across the US and Italy has increased by 2.5% and 1.9% respectively since February, 2020, whereby making it clear that with the increased usage of social mediaacross the globe, there is going to be an increase in counterfeiting and infringement on such platforms as well. In light of the same, brands can initiate the following steps in order to curb any such counterfeiting/infringement:
- Increase presence across social media platforms- Linking pages across various platforms, regular posts and updates, interaction with public across social media platforms, addressing their comments and issues is an important step that brands should take in the current situation. Brands should also provide information about their verified sellers so as to ensure that the common public is not tricked into buying counterfeit products.
- Constant monitoring of pages across various platforms that cause deception in the minds of the common public. Brands need to be on the lookout for pages that use variations of their brand names. There are instances when such pages/accounts are simply marketing tools for counterfeiters. It is advisable that brands claim important names as per the policies of the platform.
- Counterfeiters have been using different keywords and hash-tags on social media to attract shoppers to their sites. Constant monitoring of hash-tags and trends. A simple search of the reporting trends as well as hash-tags with terms such as #counterfeit #fake #fraud in relation to end purchaser and #cheap #original #bargain for counterfeiters are examples of a few hash-tags commonly used.
- Brands must also look out for any hash-tags mentioning the product associated with the brand or the brand name itself as the same would easily identify any sale of such counterfeit products, as well as making it easy for the brand to directly address the issue with the end user to be able to ascertain the details regarding any such product.
- Utilization of reporting tools. Every social media platform allows its users to report content that infringes upon IP rights of a brand. It is advisable that brands should be on constant vigil and report every such page and/or post that contains counterfeit and/or infringing material. Further, brands should also educate their employees to be on the lookout for any infringing posts and/or content across social media platforms and report the same, since it is the very first step of IPR enforcement on social media platforms. An example of such a tool is as following:- Facebook uses The Commerce & Ads IP Tool which allows its Artificial Intelligence platforms to enable the Brand to sort and filter search results and specifically to target the content to be reviewed, it further allows the entity to report that content individually or in bulk for counterfeit, trademark or copyright reasons.
- Brands may further create anonymous social media profiles in order to infiltrate private groups prevalent on such social media platforms. Numerous counterfeiters/infringers ply their trade on such private groups, and by way of anonymity, brands may be able to enter into such groups and take appropriate action against such counterfeiters/infringers.
The Hon’ble High Court of Delhi has taken a stringent view against such counterfeiting/infringement being prevalent on social media platforms. In Facebook Inc. Vs. Surinder Malik [CM(M) 1263/2019], the Hon’ble High Court directed social media giants Facebook and Instagram to remove the impugned trademark ‘DA MILANO’ from its platform upon intimation by the Plaintiff in accordance with Rule 3(4) of the Information Technology (Intermediaries Guidelines) Rules, 2011, within 36 hours of receipt of such intimation.
COUNTERFEITING AND INFRINGEMENT IN THE INTERNATIONAL SCENARIO:
With numerous countries having lifted and/or eased relaxations on the lockdowns that were imposed, trade and businesses have started to slowly pick up and gain force in the international markets. In light of the same, it is imperative for brands to ensure strict implementation of their IPR rights across countries.
Multi-national Brands need to work in consonance with the different jurisdictional Law enforcement agencies as well as private investigative agencies in the said local markets so as to apprise them of the exports and the entire quantum of their product ranges.
European Countries have stringent laws in place with respect to export of counterfeit products and the enforcement agencies are on a constant vigil and lookout for the same. However, the same level of scrutiny by enforcement agencies is not prevalent in China and certain jurisdictions in South East Asia. Further, investigations across ports need to be carried out so as to ensure that any such counterfeit products are seized at the ports before they make their way into the markets. It is also advisable that brands start obtaining IPR registrations across countries where the brand has market penetration. It is relevant to note that without any IPR registrations including trademarks, copyrights, domains etc.; brands may be unable to claim any infringement and at best can file a suit for the trot of passing-off, which would therefore only embolden counterfeiters.
Thus, with the current scenario unlikely to change in the coming months, it is incumbent upon brands across the world to ensure that they take every step necessary in order to curtail any sort of counterfeiting and/or infringement of their IP rights.
By Simranjeet Singh, Partner and Aadhar Nautial, Associate at Athena Legal