The counterfeit market is a matter of serious concern for a growing economy like India. According to a recent study conducted by FICCI, the estimated loss because of this menace is more than 1 Lakh Crore Rupees across seven manufacturing sectors in 2014, of which the FMCG personal goods sector is around 32%.
Counterfeit products are easily available in the retail as well as unorganized market, resulting in continuous growth of the market due to the advantages it gives to the dealers of such products, in terms of profit generation and earnings. Due to heavy discounts, pricing becomes a decisive factor for the unsuspecting consumers to purchase these products.
Largely imported from China, counterfeit lookalike products (indistinguishable from a genuine product) are often masked as another product category during the transportation, thereby avoiding detection at customs. These products easily penetrate the market as traditional trade enjoys greater margins, in comparison to sourcing from the company’s authorized supply chain. Also, Counterfeits attract unsuspecting customers because of the import tag and pocket friendly pricing.
Counterfeits impacts the brands by damaging brand equity and goodwill. When you have a product that commands a premium price and is high in demand, which is available at a discounted price in the grey market, it affects consumer loyalty, revenue and reputation. Moreover, the quality and authenticity of these products is questionable, which poses a threat to consumer safety and it can disrupt a company’s strategy for development, marketing and pricing of the product. Thus, counterfeits impacts not just the brands, but consumers too.
The counterfeit menace is continuous and growing because of various reasons such as no research & development, advertising and marketing costs borne by counterfeiters, low investment, high profit margins, lack of consumer awareness and inability to distinguish from a genuine product thus boosting the counterfeit trade in India
Companies dealing with counterfeiting have to work closely with law enforcement agencies and take legal measures targeting counterfeiters through raid and seizure actions. With regard to imported counterfeits, Customs authorities are increasingly confiscating goods and passing orders for destructions in consultation with the Right Holders, for safeguarding their interests. Indian courts are inclined to issue directions to Customs, to not release the consignment of counterfeit/infringing goods imported by the infringer into the market.
Convenience of internet has also resulted in proliferation of counterfeit sale through online channel by unscrupulous internet vendors posing significant chance of potential to surpass the sales volume in traditional trade. While Counterfeiters are increasingly active on market platforms on ecommerce sites, brand owners are increasingly resorting to lawsuits to check the significant shift in the new trend in online counterfeiting. Courts are also proactive in protecting IPRs and taking an aggressive position by directing the government authorities to enforce the IP Rights of globally renowned right holders.
In Fox Star Studio India Ltd. Vs. John Ceedge & Ors., 2015 (61) PTC 134, the Hon’ble Delhi High Court while issuing directions to Department of Telecommunications (DOT) and Department of Electronics and Information Technology (DEITY) apart from the Registrar of the websites and the hosting service provider also issued additional directions to the defendants that not only registered websites and URL shall be blocked but all other such websites that may be get registered or made alive by the defendants at a later point of time should also get blocked as and when the same be notified by the plaintiff.
In Zino Davidoff SA vs. Aircouture Inc. & Ors. case (2016) the District Court ordered the websites to refrain from selling, advertising, displaying the infringed products on their websites that were found to be violating Intellectual Property Rights of popular brands and selling fake goods of such brands and also directed the DOT and DEITY to ensure that the web pages/URL of the above impugned websites were blocked and support withdrawn. They were directed to get the same done by issuing appropriate directions, as per the set guidelines to the Internet Service Providers (ISPs), operating in India.
These are landmark orders, setting unprecedented support in favor of the right-holders. These orders given by the Court are an indication that the judiciary has been vigilant and has been making effective endeavors to curb and regulate counterfeiting.
Brand owners need to work together and join hands with the regulatory bodies in strengthening protectionfor registered Trademarks. The Trademark Rules, 2017have been framed with the intention of simplifying and expediting the procedure for registration of Trade Marks in India and the overall process of trademark administration. Procedure for recording a mark as “well-known” has been laid out including publication of a well-known mark for objection by a third party before granting coveted status of “well known” mark. Prior to these rules, a trademark had to be recognized as a well-known trademark by a court in a proceeding related to trademark infringement. Renowned Brands having global presence and international reputation can take benefits of this rule by recording their marks as well-known trademarks in India in order to be recognised by Indian Courts and various enforcement bodies without proof of establishing use and reputation in the mark. Recordial of mark as well-known Trade Mark will be considered as mark being prima facie evidence of validity both at the interlocutory stage as also during evidence/trial proceedings. The said exercise will extensively reduce cost/expenses incurred at the time of trial/evidence proceedings in any litigation or anti-counterfeit actions.
The brand owners need to invest time and manpower in fighting against the counterfeit menace by periodically monitoring the sales of goods (both online and retailers) to verify that the products being sold are genuine products. Three simple factors to examine the product include price, packaging, and location where the products are being sold. If you find counterfeit goods, take the appropriate legal steps to stop the counterfeiters. An important part of enforcement is taking immediate and prompt action. – Consumers need to be more aware and only buy products from reputed stores & websites hence consumer awareness is imperative.
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