Criminal & Civil Prosecution for Copyright/Trademark Violation

23rd October, 2018 - 1:21 pm Categories: Trademark Litigation 0 Comments

If any brand’s product is genuine & original, then it enjoys a substantial amount of recognition in the eyes of its potential customer, therefore it is necessary to protect the commercial value of any product offered by such brands and the said protection is provided through Intellectual Property Rights associated with the product i.e. Trademark, copyright etc against the logo, name, tagline, design of the product etc.

But many a time, counterfeit products which mean fake or unauthorized replica of the original product is sold in the market. The purpose behind this is to take advantage of the superior value and recognition of the original, then create fake products and sell them in the market. Counterfeit products tend to have fake company logos and brands (resulting in copyright or trademark infringement in the case of goods), have a reputation for being lower quality. This act harms Original products reputation and profits. The Frontier Economics study commissioned by ICC BASCAP found that the total global economic value of counterfeit and pirated products was as much as US$650 billion in 2008. This figure got doubled to US$1.7 trillion by 2015, due to the rapid increase in physical counterfeiting and piracy.

The Trademark Act, 1999 and Copyright Act, 1957 provides for remedies and action against the Infringement of Intellectual Property Rights.

Protection Under Trademark Act

Section 103 and 104 provides for imprisonment for a term not less than six months which may extend up to three years and fined not less than fifty thousand rupees which may extend up to two lakh rupees in case of  false application of trademark and selling of goods to which false trademark has been applied.  Section 115 (4) of the Act talks about the powers of police for the process of search and seizure of any such products which calls for action against infringement of the trademark. The catch in this provision is that the police officer before making any such raids and takeover has to obtain a certificate of opinion from the registrar on the facts of the case and shall abide by the opinion made. The registrar, although is not obliged to give any such opinion and also the database made available to the Registrar of Trade Marks is not adequate, as it fails to recognize the device marks or symbols or labels, which constrains the Registrar from giving a full proof opinion owing to the non-availability of the entire database comprising word marks as well as device marks or symbols or labels. This provision many a time’s delays the process of conducting a raid and in meanwhile maker of the counterfeit product continues to sell such products and gain profit and it might also run away after selling the product.

For the purpose of taking fast forward action against any infringement, the proprietor should take Criminal action. The proprietor should file a criminal complaint under Section 156 of the code of criminal procedure. Subsection 3 of Section 156 provides that in case of refusal by the police to lodge an FIR or initiate criminal action, the aggrieved party can file a complaint before the Magistrate, procedure w.r.t. which is laid down in section 190 of the Code of Criminal Procedure, 1973.

A search warrant can be obtained by directly approaching the magistrate court, the procedure of which has been laid down under Section 93 of Code of Criminal Procedure, 1973.

• In the case of Sanyo electric Co Vs State of Delhi (CRL. REV. PETITION NO. 154/2010), an order passed by magistrate regarding issue of search warrant related to trademark Infringement was challenged, alleging that order passed by the magistrate violates the requirement of Section 115(4) of the Trademark Act i.e. search warrant shall not be executed until the opinion of registrar has been obtained by the investigating officer. The Delhi High court decided that a search warrant issued by the court under Section 93 of the Code can be executed without the requirement stipulated in the proviso to Section 115(4) of the Trademark Act. The court may or may not seek the opinion of the registrar depending on the factual matrix of a particular case.

Many a time it may also happen that the identity of the manufactures and the distributors of the infringing material are not known to the complainant and the same operates as an obstacle in the initiation of criminal action. The said issue is addressed under Section 93 and 94 of the Code of Criminal Procedure, 1973 under which one can request for initiation of a search and seizure proceedings against known and unknown persons.

Protection under Copyright Act, 1957

Logos and designs, which are used as brand identities for representing businesses, are protected as trademarks. If they are original artworks that have an element of creativity, they are also entitled to be protected as copyrights as well.

• In case there is any infringement of the said mark, the proprietor can take action Under Section 63 of Copyright Act, 1957 which contains the provision of punishment of Six months imprisonment which can be extended up to 3 years and also fine can be imposed of fifty thousand rupees which can be extended to 3 lacs.
• The main advantage of taking action under Copyright law is that Under Section 64 (1), a Police officer not below the rank of Sub-inspector has the power to seize without warrant, infringing copies of a work. The infringement of Copyright was decided as a Cognizable offense in the case of State Govt. of NCT of Delhi vs. Naresh Kumar Garg 52011(46)PTC114(Del). The court, in this case, cited a Judgment of the Gauhati High Court in Jitendra Prasad Singh v. State of Assam 2003 (26) PTC 486 (Gau) where the offense under Section 63 of the Act was held to be cognizable and non-bailable. The court was of the view that it would be fruitful to refer to the provision of Section 64 of the Act, which empowers a police officer not below the rank of Sub-Inspector to seize the infringing copies of any work.
• In case of cognizable offenses, the investigating officer has the power to make an arrest and start the investigation without a court order in accordance with (Section 156 (1) of Code of Criminal Procedure, 1973. The proprietor, whose mark is said to be infringed, should file a criminal complaint citing charges mentioned under Section 420 of IPC along with Section 63 of the copyright act. The provision of Section 420 of IPC preciously talks about cheating by the way of false representation of property to some other person.

By filing for copyright against Logos and Designs, similar charges under the Copyright Act could be framed against the offenders instead of bringing an action for a trademark infringement. Still, if there is involvement of only trademark infringement, then the proprietor should press for carrying out a raid at the right time for such counterfeit products before taking an opinion from the Registry which is required only at the evidence stage or before filing the charge sheet.

One should also register Fir under Section 420 and simultaneously the evidence is collected and then the additional charges under the Trademark and Copyright Act could be added before the trial. In such a way, Proprietor can initiate a possible swift action against the offenders and also include the IP infringement charges against them.

Civil Remedies in case of Violation of Trademark

 There is a lacuna in filing a criminal case against the seller of the counterfeit product, Till the time of conviction for the offense the offender is free to deal and trade in the counterfeit products. He may abscond. Police Investigations and Charge sheet filed by Police hardly ever finds/uncovers the whole supply chain of infringing Goods. The possible step proprietor can take is to file a civil suit simultaneously along with the criminal complaint in a particular case where infringement of trademark has been done. The advantage of doing this is that the by initiating a criminal complaint, seizure of counterfeit product can be done while civil suit helps to restrict the sale of the same while the matter is pending before the court.

Order of Injunction from Court

For the purpose of stopping the manufacturer of counterfeit product from its Sale, A civil remedy can be obtained by the proprietor where a court can issue Order of Injunction in which a person is required to perform or restrained from performing, particular Act. This helps the proprietor to restrain the manufacturer from selling counterfeit products till the matter is disposed of by the competent court. The general rules governing the grant of an injunction are contained in Sections 36 to 42 of the Indian Specific Relief Act, 1963 and Order XXXIX Rules 1 & 2 and Section 151 of the Code of Civil Procedure, 1908.

Damage cost

Any proprietor whose trademark has been infringed by the sale of Counterfeit products, the said person can claim compensation from the opposite against the profit made out from the sale of the counterfeit product through unauthorized use of trademark belonging to the proprietor.

Protection against IPR infringement under Customs Act, 1962

The provisions of this Act talks about the prohibition of Import and Export of such goods which are in the context of Infringement of patents, trademarks, copyrights, designs, and geographical indications in accordance with Section 11. Section 113 gives authority to the competent officer for the purpose of confiscation of infringed goods to be used for export and also in accordance with Section 112/114, penal action can be taken against any such importer or exporter of infringed goods.

Preservation of Brand from Counterfeit in India

Most of the people involved in making and selling of counterfeit products in India are not well aware of the fact that this activity creates liability for criminal and civil action. The common perception amongst such traders is that it is a mere art form of advertising and selling goods.

The Legal process relating to counterfeit products contains several shortcomings which have been mentioned below:-

Abuse of legal proceedings

Lawyers of defense side try to delay the proceedings by questioning the FIR filled and the raid conducted by the investigating officer. They claim remedy provided under Section 482 of Code of Criminal Procedure, stating that the FIR was fake and no police action/seizure ever took place or by invoking that the proceeding is illegal and fraudulent against the principles of natural justice or by challenging the jurisdiction of the Court. However according to the procedure mentioned in the law, there shouldn’t be more than three adjournments of proceedings of court but in general, this principle is completely ignored.

Investigation by the Police

It is the duty of Police officer under competent authority to conduct raids at the place where the sale of counterfeit products is taking place. Police many a times fails to prove the findings of the raid conducted due to half-baked Investigation conducted by them. The name of witnesses mentioned in the charge sheet filed either go missing or turn hostile due to a pro-long stretch of criminal cases in the court. The investigating officer also lacks adequate knowledge regarding the components of IPR infringements and proceedings to be followed for quick action.

Obstacles by Manufacturers and Police

People who are involved in manufacturing and sale of counterfeit products have strong political connections as they are part of large domestic markets. Most of these people have strong unity in the market and they use their connections to pressurize Police officer to not to conduct any investigation or seizure proceedings.  The police officer also makes excuses like the offense of the Infringement is not cognizable, they don’t have time; there is no cause of action; the offender’s premises are beyond their jurisdiction or no action can be taken as the trademark is unregistered.

Police Officer ignores two Important points:-

1. Registration is not a mandatory requirement for police action under Copyrights Act 1957. Copyright comes into existence as soon as a work is created and no formality is required to be completed for acquiring copyright & registration is discretionary (section 45).
2. In matters of Cognizable Offenses, the Police are bound to register a fir and start an investigation without being concerned about any authority in place. According to Section 64 of Copyright Act, Police Officer should only need to be convinced that infringement an infringement has taken place. Papers can be given any time before the filing of the charge sheet and at the most, an affidavit or an undertaking from the complainant should suffice.

Refusal of conducting multiple raids

The business of sale of the counterfeit product is expanded over multiple locations. The police officer refuses to carry out simultaneous raids stating lack of jurisdiction and the Complainant is asked to file fresh Complaint with the other jurisdictional Police Authority for the same cause of Action. This results in repetition of same proceedings which further delays Investigation proceedings.

Failure of Police in recognizing dissimilarities

The raid to be conducted is sometimes refused because police fail to recognize minute differences in artistic works in case of a matter of copyright and trademark infringement.

Long Time period between initiation of criminal complaint till the conclusion of the trail

In the matter where the Complainant is the company and if the power of attorney holder leaves the company, the matter is not represented then it stands dismissed due to non-attendance of the original Complainant and the counterfeiters are discharged. The biggest concern for the complainant is due to this, the counterfeiters are discharged and the duplicate material also comes back in the market for sale.

Author:  Mr. Amit Ranjan, Intern at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at pratistha@iiprd.com