Saif Khan and Shobhit Agrawal at Anand and Anand analyse anti-counterfeiting remedies
In India the judiciary and law enforcement authorities are well acquainted with the nuances of measures for anti-counterfeiting enforcement. The recognised civil enforcement actions are civil suits with Anton Piller orders and John Doe orders. The former is the preferred action against counterfeiting. By it plaintiffs may seek appointment of court commissioner to visit a defendant’s premises and search and seize counterfeit goods, in addition to ex parte orders of injunction. John Doe orders are extraordinary orders through which the court appoints and authorizes the court commissioner to enter, search and execute seizures in the premises of unnamed defendants suspected of engaging in counterfeiting.
A new commercial courts act has come into effect governing the procedure of commercial cases and disputes involving intellectual property come within its ambit. The most significant development under the act is the introduction of summary disposal of cases when one party can show that the other party has no chance of succeeding. Anti-counterfeit lawsuits are perhaps the best cases for invoking summary proceedings, especially in successful Anton Piller cases. Under it, cases can be decided without trial immediately after service of notice on defendants. This significantly reduces the lifecycle of the case.
Criminal prosecution: Counterfeiting is a criminal offence that is punishable with six months’ to three years’ imprisonment and a fine ranging from ₹50,000 to ₹200,000 (US$765 to US$3,060). Offences are cognizable in nature and the police can take action without a court warrant.
Since criminal trials are lengthy and time consuming, criminal cases can be expedited in plea bargaining proceedings, whereby offenders accepts their guilt and courts convicts them by imposing heavy costs payable to rights holders, but with no imprisonment. Most rights holders have embraced this procedure, as it facilitates early disposal of the cases with favourable orders.
Law enforcement agencies face challenges as rights holders often fail to follow up on cases once criminal raids have been executed and also with storage of seized counterfeit goods. Synergy between rights holders and law enforcement agencies is needed to find solutions to problems faced on the ground.
It is imperative that once criminal action has been initiated, rights holders must follow up on it with counsel so that the proceedings end favourably.
Border measures: Indian law prohibits import of goods that infringe intellectual property rights. It provides for recording of rights with the customs so that counterfeit goods can be seized at the port. The seized goods are eventually destroyed under the rights holder’s supervision and importers are penalized.
Indian customs currently does not prohibit parallel import of genuine goods. However, if such goods are undervalued, the customs revenue wing can suspend the goods for duty evasion, revalue them and impose the correct duty. Penalties on importers discourage parallel imports as importers do not make undue profits.
Rights holders are often critical of the fact that the rules do not provide for suspension of export of counterfeit goods. However, the parent customs act prohibits their export and thus, aggrieved parties can apply to the customs to suspend these exports.
Anti-counterfeiting online: India’s e-commerce boom and the ease of starting an e-commerce business has driven online counterfeiting. Such goods are usually sold without the manufacturers’ or importers’ name on it.
While there is no distinctions in law between online and offline sale of counterfeit goods, the law specifically provides for liability of internet intermediaries.
In a recent ruling, the Supreme Court evaluated the constitutional validity of certain legal provisions regarding intermediary liability especially on notice and takedown measures. The court ruled that notices to intermediaries to take down content must be pursuant to court orders. Therefore, rights holders seeking to take down online counterfeiters must approach the competent court with intermediaries as defendants. The Supreme Court reasoned that such a requirement is necessary as ensures intermediaries need act only on legitimate requests; if not they would be flooded with takedown requests.
Brand protection through alternate channels: Counterfeiting may trigger violations of multiple laws. Where counterfeit products are adulterated, action can be taken also under the Drugs and Cosmetics Act which provides for seizure and confiscation. In case of food products, the Food Safety and Standards Act empowers agencies to seize and confiscate sub-standard or misbranded goods and suspend the offender’s manufacturing licences.
SAIF KHAN is a partner at Anand and Anand where he heads the enforcement team. SHOBHIT AGRAWAL is a senior associate at the firm. They can be reached at Saif@anand andanand.com and Shobhit@anandandanand.