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COUNTERFEITING AND PIRACY

LEGAL WRITING

SUMBITTED BY-ADEEB UL HASAN

ENROLMENT NO.- A3256118044

PROGRAM - LLB (3 YEARS)

INSTITUTION - AMITY LAW SCHOOL, NOIDA


Acknowledgment

I would like to take this opportunity to thank the people responsible for
me receiving this outstanding and engaging assignment on Judicial
Activism. I would like to thank Dr.ShifaliRaizada (head of institution),
Mr. Alok Verma (guide), Dr.Bhawna Batra (Mentor),Dr. Vijendar Singh
and the library staff .

I would also like to acknowledge the support of my friends and


family, they have helped and guided me through the different stages of
the assignment. This assignment has helped me in learning and
understanding the concept of Counterfeiting and also learn the
importance of the concept in shaping our market and many others all
over the world. It has also helped me to figure out the various
legislations in India against counterfeiting.
Certificate

This is to certify that Adeeb Ul Hasan of Section A, LLB


(3yrs) Program bearing Roll No. A3256118044, of batch
2018-2021 has completed his dissertation on
“Counterfeiting” under my guidance and supervision.

Sign-
Date-
Faculty In charge- Mr. Alok Verma
Institution-Amity Law school, Noida
Contents

1. Abstract

2. Introduction

3. History of Counterfeiting

4. Case Of USA and China

5. Economic Impacts of Counterfeiting

6. Counterfeiting in India

8. Legislations against Counterfeiting

9. Cases Of the Supreme Court

10. Conclusion

11. Bibliography
Abstract

Rapid advances in technology and liberalisation of the


Indian economy has created an ideal market for people
trying to misuse existing brand values that have been
cultivated and nurtured over a period of time.
Counterfeiting is a serious crime. The law punishes
counterfeiters and those who purchase counterfeit goods
(with fines and legal actions). Counterfeiting is often
associated with money laundering and exploitation of child
labour. The first and foremost thing is to know what is a
counterfeit.

The answer is counterfeit is an imitation which is a fake


made usually with the intent to deceptively represent its
content or origins, thus increasing sales appeal due to the
reputation of the imitated product. The word counterfeit
most frequently describes forgeries of currency or
documents, but can also describe clothing, software,
pharmaceuticals, watches, or more recently, cars and
motorcycles, especially when this results in patent
infringement or trademark infringement.
INTRODUCTION

Counterfeiting and piracy are a form of theft. They


involve the illegitimate acquisition and use of
intellectual property (IP). The economic and social
costs of counterfeiting and piracy are thus similar to
those associated with other types of theft (e.g.
personal property theft). Counterfeiting and piracy
divert private and public resources which could
otherwise be used for more productive ends, into the
illegal acquisition of IP, or defending IP from such
illegal acquisition.4
However, the economic costs of counterfeiting and
piracy extend well beyond these traditional costs of
theft.
First, they reduce the returns to innovation. While
there are ongoing debates about the optimal level of
IP protection to balance the rights of innovators
and the users of IP, counterfeiting and piracy hurts
both the innovator and the user. The economic
costs of IP erosion through counterfeiting and
piracy are particularly severe in knowledge-driven
economies.
Secondly, whereas classical analyses of property theft
treat the theft itself as a transfer – and therefore not
in and of itself a cost – in practice, that approach is
not valid in the case of counterfeiting and piracy.
This is because of the close links between
counterfeiting activities and other forms of criminal
activities. Thus, counterfeiting and piracy are a
“cost” not a transfer because they stimulate other
“costs”, i.e. activities that adversely impact on social
well-being.

Counterfeiting and piracy are therefore specific


economic and social “bads”. Measuring the size of
counterfeiting and piracy is therefore important for
several reasons.
First, it helps us to understand the size of
the problem. The extent of these activities
is an indicator of the extent to which IP is
eroded globally, and a measure of the
extent to which productive resources and
consumption are diverted to illicit
activities.
Secondly, measuring the magnitude of
the problem serves as a platform for
measuring related costs. These include
the social costs associated with the
displacement of employment in legal
activities, the economic costs of the erosion
of IP, and the social costs associated with
criminal activities linked to counterfeiting
and piracy.
Thus, measuring the extent of this problem helps us
to draw inferences as to the extent of the economic
and social costs arising from counterfeiting and
piracy. This helps inform policymakers so that they
can target resources appropriately towards combating
counterfeiting and piracy.

In the year 2018 the International Chamber of


Commerce released a report by Frontier Economics
a global leader in the field of economics and
impacts of global legislations on economics. This
report predicted that the total value of counterfeit
products sold all over the world will cross $4.4
trillion by the year 2022, and if that is not an eye
opener for the various countries over the globe,
they should realise that only USA has a federal
budget in the year 2019 that could match the
number.
History of Counterfeiting

Portuguese Bank Note Crisis of 1925

When the British banknote printers Water low and Sons


produced Banco de Portugal notes equivalent in value to
0.88% of the Portuguese nominal Gross Domestic Product,
with identical serial numbers to existing banknotes, in
response to a fraud perpetrated by Alves dos Reis.
Similarly, in 1929 the issue of postage stamps celebrating
the Millennium of Iceland's parliament, the Althing, was
compromised by the insertion of 1 on the print order,
before the authorized value of stamps to be produced (see
Postage stamps and postal history of Iceland).

Counterfeit scandal of Hungary 1926

When several people were arrested in the Netherlands while


attempting to procure 10 million francs worth of fake
French 1000-franc bills which had been produced in
Hungary; after 3 years, the state-sponsored industrial scale
counterfeit operation had finally collapsed. The League of
Nations' investigation found Hungary's motives were to
avenge its post-WWI territorial losses (blamed on Georges
Clemenceau) and to use profits from the counterfeiting
business to boost a militarist, border-revisionist ideology.
Germany and Austria had an active role in the conspiracy,
which required special machinery. The quality of fake bills
was still substandard however, due to France's use of
exotic raw paper material imported from its colonies.

German counterfeit bills during World War II

During World War II, the Nazis attempted to do a similar


thing to the Allies with Operation Bernhard. The Nazis took
Jewish artists in the Sachsenhausen concentration camp
and forced them to forge British pounds and American
dollars. The quality of the counterfeiting was very good,
and it was almost impossible to distinguish between the
real and fake bills. The Germans could not put their plan
into action, and were forced to dump the counterfeit bills
into a lake. The bills were not recovered until the 1950s.
Case Of USA and China

A recent survey from the US has come out with the finding
that worldwide 10 per cent of perfumes and cosmetics, 11
per cent of clothing and footwear and around six per cent
of drugs bought by consumers are fakes. The figure rises to
a staggering 80 per cent in some developing countries.
According to the International Anti-Counterfeiting
Coalition, in the US alone trademark counterfeiting robs
the country of $200 billion (Rs 9, 20,000 crore) annually.
The Anti-Counterfeiting Group (ACG), organiser of a pan-
European survey, put the total loss to the European Union
economy from counterfeiting and piracy at £250 billion (Rs.
20, 00,000 crore) per year; of this £30 billion is lost in
taxes and excise. Polo Ralph Lauren, Gap, Banana
Republic, American Eagle, Abercrombie and Fitch, Guess,
J.Crew, Nautica Timberland are brands which most prone
to counterfeiting. Another estimate says 4,100 jobs are lost
each year in the UK alone because of counterfeiting -
wrecking industries and draining funds which otherwise
would have reached public services,
Counterfeiting in Asia

Talk about counterfeit products and one automatically


thinks of a few countries. While India is not lagging behind
the rest of the pack - mostly developing countries - it is
China that is head and shoulder above others in this
category.

China is the biggest source of counterfeit goods in Asia and


piracy rate in China is more than 90 per cent. As much as
30 per cent of the counterfeit products worldwide is being
made in China. China spurious goods are sold all over the
world including India counterfeit goods is easily accessible
in Indian market.
Countries like Singapore and Hongkong which are regarded
as shoppers paradise are also den for counterfeited goods
brands like Louis Vuitton are most effected also
electronical appliance are the one which are targeted the
most.
Economic Impacts of Counterfeiting

In this section we consider the effects of international


and domestic counterfeiting and piracy on the

(i) displacement of economic activity (lost GDP),

(ii) uncollected tax losses to government and

(iii) displaced or lost employment. Since


counterfeit and pirated products displace
genuine products, and tax is unlikely to
be earned on them, so government tax
revenue is reduced.

Employment involved in producing the genuine


product will also be reduced. We model these
impacts by combining.

(i) estimates of international and domestic


counterfeit and pirated goods by country
and product,

(ii) assumptions on displacement at the


product level, and

(iii) tax and employment data at the country


level.
This approach builds on the methodology developed
in our 2009 study.82 In the 2009 study, industry
expert opinion was used to develop assumptions on
displacement for specific sectors, and the tax and
employment impacts modelled in close detail for UK
and Mexico, and then extrapolated to other G20
countries.

Here we extend the 2009 displacement assumptions


to cover a much wider range of goods (each
‘Comtrade’ HS code) and we use the GTRIC
estimates of counterfeit prevalence for each country,
rather than extrapolate from UK and Mexico. But
due to the large number of countries analysed, and
their different structures of tax systems, it is not
feasible to analyse a country’s tax impact in detail.
Instead, we use some of the relativities of sales,
income, corporation tax and benefits identified in
the 2009 study, and apply these to the displacement
estimates to derive full at the country level.
This analysis estimates the total amount of genuine
economic activity displaced by counterfeit activity83,
and the direct impact on taxes and employment.
These impacts are ‘gross’ in the sense that
counterfeit production will also employ labour and
may pay some taxes (e.g. where taxed inputs are
used). There may also be inter-country effects if, say,
counterfeit exports from country A displace genuine
exports from country B. While it is difficult to arrive
at such net effects, the size of displacement effects
indicates the potential distortions arising from
counterfeiting, with resources allocated away from
efficient and integrated supply chains and into illicit
modes of production.

The first issue on which we focus is the question of


economic growth. More specifically, we wish to
examine to what extent an increase in the level of
counterfeiting and piracy reduces economic growth.
There are several a priori reasons that suggest that
such illicit activities could reduce economic growth:
The erosion of intellectual property rights
weakens the incentives to innovate. This
has a direct impact on well-being by
reducing the range of products and
services consumers can access, and, in
the longer run, by affecting economic
growth. The latter effect operates mainly
through the links between innovation,
technological progress and productivity.
The substitution of activities that fall
under formal frameworks of governance
and regulation, by ones that are not
subject to such control, can undermine
economic growth. This is because of the
close links that such “underground”
activities have with various forms of
criminality make this substitution a
conduit of resources that support the
expansion of these criminal activities.
The substitution effect can also erode tax
revenues and reduce employment, though
the extent to which this is true depends
on whether other sectors in the legitimate
(taxable) economy expand (for example, if
consumers reallocate spending to these
sectors, of if labour displaced by
counterfeiting or piracy in one sector is
reallocated to another sector).

Beyond the effects on economic growth, we consider


a range of other specific macro- economic effects:
effects on employment, effects of tax, and effects on
foreign direct investment. We also consider wider
social costs, including the effects of crime and
health.
Product Displacement rate
Leather clothes 57%
Luggage, handbags 57%
Footwear 51%
Perfume 51%
Watches 46%
Jewellery 57%
Other 51%
Food and beverages 95%
Pharmaceuticals 100%
Software 86%
Source: Frontier Economics / BASCAP 2009 study

Lenient IPR enforcement in a country is likely to make


firms in IPR-sensitive sectors less eager to invest
there. This is because of the vulnerability of
proprietary processes to theft, and/ or that
infringing products are more likley to displace sales
of genuine products. By contrast, enforcing
intellectual property rights can stimulate FDI, and
through that channel improve welfare in the host
country.
A study by the NBER quantifies the impact of IPR
enforcement on FDI and through this on exports. The
study found that stricter enforcement of IPRs increased
exports by up to 20%. For the purposes of our
estimation, we take into account the fact that other
studies have found that the effects of IPRs on FDI
and economic performance may be uneven across
countries. Hence, we adopt a more conservative
approach regarding the effects of IPRs on FDI and
exports. We assume that a country’s exports will be
5% lower as a result of lax IPR enforcement, as it is
less attractive to locate production of IPR-intensive
goods in these countries.
We estimate these FDI impacts by identifying IPR-
sensitive sectors and countries with high rates of
counterfeiting. We draw on evidence from the
European Commission91 in identifying the IPR-
sensitive sectors, which mainly relate to equipment
manufacture, pharmaceuticals, chemicals and
metallurgy. We define as low IPR countries those with a
GTRIC-E score greater than 0.5.
On this basis, the total reduction in FDI is estimated
as $111bn, calculated by applying a 5% reduction to
Comtrade exports in the relevant sectors and
countries. This is associated with lost sales tax of
$18bn.
There are also likely to be wider tax impacts (e.g. on
corporation tax and excise tax), but these vary
according to a country’s specific tax regime. In
addition, there are likely to be further dynamic
impacts on the economy, as there is less exposure to
innovation and R&D spill overs that would be
brought by FDI.

Counterfeiting and piracy are criminal activities in


and of themselves. But they also support the
further development of criminality by providing
crime organisations with funds to support criminal
activities more generally. Socials costs reflect increases
in the impact of criminality brought about by an
increase in counterfeiting. The impacts include the
value of lost lives, the costs incurred in anticipation
of crime, and the physical and emotional
consequences of crime. Estimating these costs
require data on how far counterfeiting increases
criminality, and the dollar value of the impact of
crime.

The 2009 study developed an estimate of the social


costs of crime due to counterfeiting by assuming a
1% increase in the crime rate due to counterfeiting,
and applying this to other estimates quantifying the
value of the cost of crime. Separate valuations were
used for the UK and Mexico, and then extrapolated
to other countries. Applying this approach, global
impacts due to increased criminality are estimated to
be in the region of $60bn per annum.

We caution that these results are preliminary. An avenue for


further research would be to estimate the impact of
counterfeiting on specific forms of criminality, but this
would be a daunting empirical task and it may be difficult
generalising such results to other countries.
Counterfeiting in India

Indian metros have become bases for manufacturing


counterfeit products and account for maximum IPR
violations. Delhi is the hub of counterfeit products in India
as nearly 70 per cent counterfeit products originate there.
A FICCI survey has estimated the loss of revenue to the
Indian exchequer by way of taxes to be roughly around Rs
1,000 crore a year. FMCG, software, automobile, packaged
water, and garments sectors are the most affected by IPR
violations, though there are laws in India against
counterfeiting, their enforcement is tedious. "Lengthy legal
proceedings often yield no results Indian courts are
becoming aware of the need for the Judiciary to develop
progressive and novel methods of granting relief to check
infringers and counterfeiters.
Legislations against Counterfeiting

Trademarks Act 1999

The Trademarks Act is the principal legislation governing


trademarks in India. The act provides both civil and
criminal statutory remedies against the infringement of a
registered trademark. The act also recognises the right of
an unregistered trademark owner under common law to
take action for passing off, even against a registered
trademark, provided that the unregistered trademark
owner is a prior user. Unconventional marks such as three-
dimensional (3D) marks and sound marks are also
protected.

The classification of goods and services specified under the


Trademarks Act is harmonised with the Nice Classification.

The term of protection is 10 years from the date of


application, renewable for further 10-year periods.
Copyright Act 1957

The Copyright Act governs the legal protection and


enforcement of copyright in India. Copyright subsists in
literary, dramatic, musical and artistic works, computer
programs, films and sound recordings. In harmony with
the Berne Convention, registration of copyright is not
compulsory for the purpose of enforcing it, although a
registration serves as ex facie evidence of the particulars
incorporated in the registration certificate. The Copyright
Act provides statutory civil and criminal remedies against
copyright infringement. Possession of plates for making
infringing copies is also a punishable offence.

The term of protection for literary, dramatic, musical and


artistic works is the life of the author plus 60 years from
the beginning of the calendar year following the author’s
death. The term of protection for films, photographs and
sound recordings is 60 years from the beginning of the
calendar year following the work’s publication.
Designs Act 2000

The subject matter of a design can include shapes,


configurations, patterns, ornaments or compositions of
lines or colours applied to any article in two-dimensional
(2D) or 3D form, or both, by any industrial process.
Protection is afforded only to those features in the finished
article that appeal to or are judged solely by the eye.
The term of protection is 15 years in total: an initial 10
years, extendable by a single five-year period.
Remedies are of a civil nature only and no criminal liability
is prescribed.

Geographical Indications Act 1999


The Geographical Indications Act protects distinctive signs
or names that identify products that are typical to and
located in a specific geographical area. However, protection
is not granted to a single entity or enterprise, but rather to
all undertakings located in the area, which may use the
geographical indication on specific goods that they
produce. The act provides for both civil and criminal
remedies.
Indian Penal Code 1860

The Penal Code also sets out punishments for cheating,


counterfeiting and possession of instruments for making
counterfeits, among others. The code’s provisions can be
invoked in criminal actions, in addition to the provisions of
specific statutes.

Information Technology Act 2000

The IT Act seeks to curb illegal infringing activities


conducted through the use of computer systems and
technology. The act’s provisions are extremely stringent
and give the claimant both civil and criminal rights. In
criminal cases, the offences are cognisable in nature and
investigated by specialised IT and cybercrime teams. Civil
remedies carry penalties of up to $170,000.

Punishable offences include:

concealing, destroying or altering any computer source


code or network;
causing wrongful loss or damage to the public, or
destroying, deleting or altering information in a computer
resource or diminishing its value or utility;
publishing obscene information in electronic form; and
breaching confidentiality or privacy
Various measures are being taken by the Indian
government with a view to combating online counterfeiting,
especially by setting up cybercrime cells to investigate and
prosecute offenders.

INDRP

The .in Domain Name Dispute Resolution Policy (INDRP)


provides the legal framework for resolution of a ‘.in’ domain
(ie, the country code top-level domain for India). Any
person aggrieved by registration of a ‘.in’ domain which is
identical or confusingly similar to their name or trademark
may file a complaint before the National Internet Exchange
of India, which is the administrative body for entertaining
complaints under the INDRP. The procedure is a quick and
effective grievance-redressal mechanism against bad-faith
registration of a domain name using the rights holder’s
trademark. The proceedings are in the nature of arbitration
and the domain registrant must submit to the proceedings
upon a complaint.
Drugs and Cosmetics Act 1940

The Drugs and Cosmetics Act stipulates procedures to


counter adulterated, spurious or misbranded drugs and
their export from India. It empowers certain government
agencies not only to inspect, but also to seize and
confiscate any product that is found to be adulterated,
spurious or misbranded.

Food Safety and Standards Act 2006

The Food Safety and Standards Act empowers agencies to


seize and confiscate sub-standard or misbranded goods. It
also gives them the power to suspend the manufacturing
licences of those engaged in such illegal and criminal
activities.

Prevention of Money Laundering Act 2002

The Prevention of Money Laundering Act is the proceeds-of-


crime legislation in India, which has been extended to
certain IP laws – including those governing trademarks,
copyright and geographical indications.
Border measures

The import of infringing goods is prohibited under the


Customs Act 1962, read with the Intellectual Property
Rights (Imported Goods) Enforcement Rules 2007.

The law allows holders of specific IP rights – including


trademarks, copyright, patents, designs and geographical
indications – to record their rights with Indian Customs for
prompt seizure of counterfeit goods at the port. Import of
branded goods will be notified to the respective rights
holder and if the goods are found to be counterfeit, the
goods will be seized and a heavy penalty will be imposed on
all parties that facilitated the import. The seized counterfeit
goods are ultimately destroyed under the rights holder’s
supervision. Rights holders that are not registered with
Customs but receive information of counterfeits being
imported can also notify Customs and apply for registration
within the prescribed timeframe. In certain cases, Customs
has suspended counterfeit goods on the request of the
rights holder even where the rights were not formally
recorded with Customs, since under the Customs Act
counterfeit goods are per se prohibited goods. This pro-
rights holder provision is a highly effective way of curbing
import of counterfeit goods into India.
Customs currently does not treat parallel-imported or grey-
market goods as prohibited goods unless they are being
smuggled or imported outside their original packaging.
However, rights holders aggrieved by the import of grey-
market goods may record their trademarks with Customs.
Such goods may then be detained for duty evasion if they
have been valued by the importer below the authorised
market price in India. The revenue wing of Customs will
revalue the goods and impose the correct duty, which will
act as a deterrent for the parallel import, since the profit
incentive will be lost.

Rights holders often raise grievances that the rules do not


provide for suspension of export of counterfeit goods.
However, the parent Customs Act prohibits even their
export; thus, an aggrieved party can apply to Customs to
suspend the export. The difference in the case of exports is
that the rights holder must provide advance information on
such exports to Customs.

Criminal prosecution
Criminal remedies are provided under the Trademarks Act,
the Copyright Act, the Geographical Indications Act and the
IT Act. Offences under the Trademarks Act, Copyright Act
and Geographical Indications Act are punishable by six
months’ to three years’ imprisonment and a Rs50,000 to
Rs200,000 ($765 to $3,060) fine. However, the court may
reduce these penalties in recognition of special
circumstances. Provision is made for increased minimum
penalties on second or subsequent commission of an
offence. The Code of Criminal Procedure 1973 governs the
procedure applicable to criminal cases. Pursuant to the
extension of the proceeds-of-crime law to IP matters, assets
of entities undertaking transactions while falsely using
another party’s intellectual property may be seized by the
authorities along with arrest.

Under these laws, offences are cognisable in nature, which


means that the police can take action and conduct search
and seizure without a court warrant.

Charges may be brought against an officer of a company


who is responsible for its management if he or she had
knowledge of commission of the offence.

Although under the Copyright Act registration of the work


is not mandatory for enforcement, the police insist on
seeing a registration certificate, as that helps them to
ascertain that the complaint is by a genuine person. The
police have recently been taking action even without
registration if the complainant or author can produce other
proof of ownership over the work.
In case of offences under the Trademarks Act, the police
seek the opinion of the registrar of trademarks before
initiating action, which sometimes delays the proceedings.
A discussion between stakeholders is underway to find a
plausible solution to this problem.

Rights holders are increasingly instigating criminal


enforcement actions, especially to target large-scale
manufacturers or where infringers continue with their acts
despite civil action.

Effective criminal enforcement in India requires ongoing


liaison with the police and a proactive approach both
before and after filing the action. It is imperative that once
a criminal action has been initiated, the rights holder must
follow it up through counsel or representatives so that the
proceedings are adequately concluded with favourable
orders.

Criminal trials are lengthy and time consuming. As a


result, the courts have adopted the practice of plea
bargaining, whereby the offender accepts his or her guilt
and the court convicts him or her by imposing heavy costs
payable to the rights holder, but with no imprisonment.
Most rights holders have embraced this procedure, as it
facilitates early disposal of cases with favourable orders.
Civil enforcement

All of the IP statutes provide for civil remedies in the form


of injunctions and damages or rendition of accounts. A civil
action is initiated by filing a lawsuit before the district
court or high court having territorial jurisdiction. Indian
courts are well versed in the IP laws and even grant ex
parte injunctions at the admission of lawsuit, especially
where counterfeiting is involved.

Rights holders can obtain the following interim reliefs in


civil actions:

Anton Piller orders – the rights holder may seek ex parte


appointment of court commissioners to visit the
defendant’s premises in order to find and seize counterfeit
goods. The goods are returned to the defendant with an
undertaking that the goods will be safely preserved until
further orders of the court.
John Doe orders – this is an extraordinary order through
which the court can appoint court commissioners and
authorise them to enter, search and execute seizures in the
premises of any named or unnamed defendants. This kind
of action is most effective where it is difficult to identify
each and every counterfeiter or where the counterfeiter is
operating out of temporary premises.
Mareva injunctions – in specific cases, an injunction may
be granted against the infringers to freeze their assets until
further court orders.
The procedure for civil cases is governed by the Code of
Civil Procedure 1908. Under the new system for
commercial cases, which includes IP cases, commercial
courts have been established in certain jurisdictions in
India. A civil suit before a commercial court has the
provisions for summary judgment. As per recent trends,
courts have increasingly been resorting to summary
judgment of IP cases. Anti-counterfeit lawsuits, by their
inherent nature, are perhaps the best cases in which to
invoke summary proceedings – especially in successful
Anton Piller cases. Under the system, the case can be
decided without oral evidence immediately after service of
notice on the defendant, thereby significantly reducing the
timeframe of the case.

The dishonest registration of a domain name comprising an


identical or confusingly similar trademark is also
actionable and a rights holder can seek an injunction for
the interim and permanent transfer of the domain name in
a civil lawsuit.
The courts have recognised the need to put in place
deterrents against counterfeiting, which is often resorted to
as an easy money-making exercise; they have thus granted
punitive damages in most large-scale counterfeit cases with
delivery up of infringing goods for destruction.

Mediation is also recommended by the Indian courts in


most IP disputes where the infringers agree to suffer a
decree. An added benefit of mediation is that it entitles the
plaintiff to a full refund of the government court fees
submitted for the institution of the case.

Anti-counterfeiting online
The e-commerce boom in India has resulted in an explosion
of online retailers selling counterfeit goods which are
portrayed as original but with heavy discounts. E-
businesses are relatively easy to start, which helps illegal
operators to flourish. Most such enterprises do not put the
manufacturer’s or importer’s name on the product, making
it easy to deny its sale in case of action. Crucially, these
businesses operate as foreign incorporated companies
which do not name any individuals, making enforcement
even more challenging.

No distinction is made between online and offline


counterfeiting and no law is in place to deal specifically
with online counterfeiting. However, the IT Act specifically
provides for liability of internet intermediaries.

Online strategies
Tackling online counterfeiting requires a sophisticated
investigation strategy. Investigation of online counterfeiting
requires a combination of online surveillance using high-
tech tools and personal visits and physical analysis of the
products.
Online business networks comprise a chain of stakeholders
and rights holders must identify the most effective targets
along the chain, including importers, website owners,
domain hosts, Internet service providers (ISPs) and
payment gateways.

Intermediary liability
The IT Act provides for liability of internet intermediaries.
The definition of an ‘intermediary’ includes ISPs, hosts,
search engines, online payment sites, online auction sites,
online marketplaces and even cyber-cafes.
Intermediary liability is limited by certain exemptions
established through compliance with due diligence
requirements, including notice and takedown.
The Supreme Court has analysed the provisions for notice
and takedown and ruled that any notice to an intermediary
to take down any content must be pursuant to a court
order. Therefore, a rights holder seeking to take down
online counterfeiting must approach the competent court,
name the intermediary as defendant and seek specific
directions against it.
Indian courts have also been proactive in granting John
Doe orders against ISPs and hosts to block access to
websites providing downloads of pirated movies before their
official release.

Preventive measures/strategies
Use of local counsel and investigators
To a large extent, the effectiveness of an anti-counterfeiting
action can depend on the prior investigation. However,
rights holders often make the mistake of relying solely on
the investigators for both the investigation and the
following legal action, without even consulting lawyers.
While the initial role of the investigator is crucial for proper
target identification, legal action should always be initiated
with the involvement of local lawyers specialised in IP
litigation. This is important to ensure the best conclusion
of the proceedings, since an investigator’s interest usually
ends once a raid is conducted, while the case before the
courts continues and may result in adverse orders against
the rights holder if not properly pursued.
Effective use of anti-counterfeiting features
The use of preventative technology (eg, radio frequency
identification, microscopic tags, barcoding, licence
databases, unique identity codes or holograms and seals of
authenticity) can prevent the proliferation of counterfeit
and pirated products. With the increasing sophistication of
counterfeiting, use of multiple features is recommended;
this also helps in establishing infringement before courts
and authorities, since most counterfeits still fail to comply
with all the features.

Third-party monitoring
Most goods go through a series of third-party
intermediaries in their supply chain. Pilferage during one
or more such levels in the supply chain is seen as a major
concern, especially in the case of counterfeit packaging.
Therefore, in addition to strict non-disclosure and
confidentiality agreements, periodic internal checks and
surveillance must be in place.

Role of government agencies


Counterfeiting is increasingly gaining the attention of
government agencies as a serious threat of national
importance. The government recently took a major positive
step in this regard by formulating a national IP rights
policy and establishing a dedicated cell for IP rights
promotion and management for efficient administration
and implementation of the policy. The cell has been
extremely active, having undertaken wide-ranging actions
towards achieving the objectives of the policy within only a
few months of its establishment. The cell has also been
conducting IP rights awareness and training programmes
for enforcement wings such as the police, Customs and
judicial academies, in collaboration with rights holders and
legal practitioners; this has helped to more effectively equip
and educate enforcement wings to combat IP violations.

International collaboration programmes


India is a member of major international groups and bodies
such as the Financial Action Task Force, the Asia Pacific
Group, the Eurasian Group and INTERPOL. India’s Central
Bureau of Investigation has included intellectual property
as one of the modules in its conference and INTERPOL has
co-hosted training seminars on fighting illicit international
trade which received active support from trade bodies and
industry representatives. Various public and private
organisations in India have also collaborated with
organisations such as the International Trademark
Association and the International Chamber of Commerce’s
Business Action to Stop Counterfeiting and Piracy to
highlight the importance of anti-counterfeiting and to
facilitate its effective enforcement.
Cases Of the Supreme Court

The Supreme Court has taken the lead and in the case of
Laxmikant Patel vs Chetanbhat1 Shah held that "once a
case of passing-off has been made out, the practice is
generally to grant a prompt ex-parte injunction followed by
the appointment of a local commissioner, if necessary".
And also authorizing the Court Receiver to seize the goods
whether they are lying at the defendant's factories or at the
premises of their retailers. These are known as roving
orders. The Court Receiver is often authorised to take the
help of the police in conducting the raids. also in case of
Microsoft Corporation Vs.Mr. Kiran and Anr.2

A decree is passed for permanent injunction in favor of the


plaintiff and against the defendants restraining the
defendants from using or otherwise copying, selling,
offering for sale, distributing, issuing to the public,
counterfeit/unlicensed versions of the plaintiff's software,
in any manner, amounting to infringement of the plaintiff's
copyrights in the said computer programs and related
manuals.

1
AIR 2002 SC 275, 2002 (1) ALD 45 (SC)
2
MIPR 2007 (3) 214, 2007 (35) PTC 748 (del)
The punishment for counterfeiting should be both
compensatory and punitive. compensatory to provide for
the damages and punitive to deter wrong-doers , to
emphasis that breach of intellectual property rights was a
wrong not only to the plaintiff, but also society at large and
the consumers who suffer on account of that deception and
to underscore that it is difficult for the plaintiff to prove the
actual damages suffered by him considering that infringers
do not maintain appropriate accounts of their transactions
as they know that the same are objectionable and
unlawful.

And in one such landmark case, the Delhi High Court, in


the Time Warner Inc. vs. Lokesh Srivastava & Anr3 case,
awarded "punitive and exemplary damages," in addition to
compensatory damages, for flagrant infringement of
trademarks and copyrights. Such decision really helps in
reducing counterfeit and other kinds of IPR infringements.
Modern-age counterfeiters are experts. They counterfeit
goods using technologically innovative methods. Delay in
judicial relief has assisted counterfeiters in remaining one
step ahead of the law. In this context, Section 135
introduced in the Trademarks Act, 1999, is significant. It
gives statutory powers to the courts to grant ex-parte (that
is, without notice to the defendant) relief in appropriate
cases. The courts are empowered to grant ex-parte
injunctions against infringers restraining them from selling
counterfeit goods, etc., and ex-parte order for discovery of
3
[2006] 131 CompCas 198 (Delhi), 116 (2005) DLT 599, 2005 (30) PTC 3 (Del)
documents, preserving of infringing goods, documents or
other related evidence, and restraining the defendant from
disposing of his assets in a manner which may affect
plaintiff's ability to recover damages.

This provision will cause financial damage to counterfeiters


by restraining the disposal of any asset of the
counterfeiters even if the same are not related to the
infringing activity. Section 135 of Trademark Act 1999
reads as follow-
(1) The relief which a court may grant in any suit for
infringement or for passing off referred on in section 134
includes injunction (subject to such terms, if any, as the
court thinks fit) and at the option of the plaintiff, either
damages or an account of profits, together with or without
any order of the plaintiff, either damages or an account of
profits, together with or without any order for the delivery-
up the infringing labels and marks for destruction or
erasure.
(2) The order of injunction under sub-section (1) may
include an ex parte injunction or any interlocutory order
for any off the following matters, namely :-
(a) for discovery of documents.
(b) preserving of infringing goods, documents or other
evidence which are related to the subject-matter of the suit.
(c) restraining the defendant from disposing of or dealing
with his assets in a manner which may adversely affect
plaintiff's ability to recover damages, costs or other
pecuniary remedies which may be finally awarded to the
plaintiff.

(3) Notwithstanding anything contained in sub-section (1),


the court shall not grant relief by way of damages (other
than nominal damages) or on account of profits in any case
(a) where in a suit for infringement of a trade mark, the
infringement complained of is in relation to a certification
trade mark or collective mark, or
(b) where in a suit for infringement the defendant satisfies
the court-
(i) that at the time he commenced to use the trade mark
complained of in the suit, he was unaware and had no
reasonable ground for believing that the trade mark of the
plaintiff was on the register or that the plaintiff was a
registered user using by way of permitted use, and
(ii) that when he becomes aware of the existence and
nature of the plaintiff's right in the trade mark, he
forthwith ceased to use the trade mark in relation to good
or services in respect of which it was registered, or
(c) where in suit for passing off, the defendant satisfies the
court-
(i) that at the time he commenced to sue the trade mark
complained of in the suit he was unaware and had no
reasonable ground for believing that the trade mark of the
plaintiff was in use, and

(ii) that when he became aware of the existence and nature


of the plaintiff's right in the trade mark, he forthwith
ceased to use the trade mark complained of.

The most common problem is that manufacturers of


genuine branded products are unable to obtain timely relief
as the identity of the defendant is not easily ascertainable.
This problem has been overcome by the grant of what are
known as "John Doe" orders. These orders operate against
infringing goods which may be seized wherever they are
located and would operate against any potential defendant
who is subsequently identified as the
counterfeiter/infringer and the court order is served on
him. One such `John Doe' order was granted by the Delhi
High Court in Taj Television Limited vs Rajan Mondal4.
This practise is fairly well developed in the UK, New
Zealand and Canada.

While no organisation has come up with such an


assessment in India so far, a FICCI estimate has put the

4
FSR (2003) 407
annual loss of revenue to the Indian companies in excess of
Rs 4,000 crore.

Conclusion

The tide in India is turning against counterfeiters and


infringers. Until now they were undeterred, given the
inability of genuine branded product manufacturers to
cause them financial damage, and the slow judicial
redress. All this is now changing as a result of progressive
judicial pronouncements and legislative amendments. And
with numerous judgments given against the counterfeiters
by supreme court of India and various high courts it can be
easily concluded that India is waging a war against the
people who are into the business of counterfeit with that
said there has not been a major slow down infact the
number of counterfeit products are still entering our
markets in huge numbers. Therefore a combined effort by
the citizens of India along with the Government of India is
required to protect our country. Due to the large sway that
China and India hold in the manufacturing business due to
their large populations and land area it is for these to
countries to lead the fight against counterfeiting and
piracy. The laws in Europe and United States of America
are already very strict and have been very successful in
combating domestic piracy but these markets are then
invaded by the counterfeit products from the Asian
continent and hence the remarkable efforts made by these
countries amount to very little when you compare the final
results before and after the enactment of the anti-
counterfeiting laws.
Bibliography

1. Wikipedia.com
2. Iccwbo.org
3. nationalgeographic.org
4. SSConline.com
5. Indiankanoon.com
6. NCERT.nic.in
7.OCED-library.org
8.britanica.com

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