To counterfeit means to imitate something. Counterfeit products are fake replicas of the real products. Counterfeit products are often produced with the intent to take advantage of the superior value of the imitated product. Counterfeit activity is a threat to all modern businesses, affecting their profits, their reputation and, in some cases, the safety of their consumers.
Counterfeiting is punishable by criminal law as well as civil law, with penalties ranging from injunctions and seizures to block the trade in counterfeit products to damages and even imprisonment.
Counterfeiting is not a victimless crime. Counterfeiters often prey on consumer desire for low prices. But that cheap price comes at a high cost to yourself and others:
- It’s Dangerous: Counterfeit goods are often made using cheap, substandard, and dangerous components that put the health and safety of consumers at risk.
- It’s Illegal: Counterfeiting is illegal and purchasing counterfeit products supports illegal activity.
- It Supports Organized Crime: The profits from counterfeiting sales have been linked to funding organized crime, drug trafficking and even terrorist activity.
- It Hurts Legitimate Companies: Legitimate manufacturers devote significant resources to research and development of products and building a reputation for quality among consumers. Counterfeiters, in turn, seek to profit unfairly off of another company’s good name. The lost sales and profits that result from this unfair competition translate directly into lower wages and lost jobs, as well as higher prices for consumers.
- It Could Cost You: Purchasing from counterfeit websites puts you at risk for identity theft and credit card fraud when you provide a counterfeit merchant with your information.
Counterfeits in Intellectual Property
Counterfeiting tends to have a precise meaning related to trade mark violation in the world of Intellectual Property.
Definition read in WTO TRIPS agreement, which refers only to “Counterfeit trade goods”
‘counterfeit trade mark goods’ shall mean any goods, including bearing without authorization a trademark which is identical to the trademark validly registered in respect of such goods, or which cannot be distinguished in its essential aspects from such a trade mark and which thereby infringes the right of the trademark inquestion under the law of the country of importation.
India has no legislation dealing specifically with counterfeiting and piracy, but statutory, civil, criminal and administrative remedies do exist in various statutes, including:
The Trademarks Act 1999,
The Copyright Act 1957,
The Patents Act 1970,
The Designs Act, the Geographical Indications Act 1999,
The Customs Act 1962.
The Drugs and Cosmetics Act 1940,
The Prevention of Food Adulteration Act 1954,
The Consumer Protection Act 1986,
The Indian Penal Code, the IT Act 2000.
India is more likely to find small and medium-sized infringers who, although individually insignificant, collectively make a big impact. Counterfeiting in India varies from sophisticated operations that target overseas markets to small re-filling operations. Typically, re-filling operations involve a chain where ‘rag pickers’ bring in used bottles that are produced by the original manufacturer. The printing of fresh labels is outsourced, and in an overnight operation the used bottles are re-filled and sold in the market as fresh products. Rising consumerism and an increasing appetite for branded goods among the Indian middle-class combine to provide a ready market for counterfeit products in India. It is now common, in fact, to find markets developing for a specific type of counterfeit product
In this scenario, the role of investigators in helping IP owners combat counterfeiting has become very important. IP owners should investigate all links in the counterfeiting chain to devise a practical strategy and determine the most effective enforcement option (civil or criminal).
Remedies available for counterfeiting: Trademarks
Civil Remedies in case of Trade Mark infringement, sec 134 (2) of the Act also allows a right holder to file suit for Trade Mark infringement where the registered Trade Mark owner, carries on business or personally works for gain.
Sec. 135 of the Trade Mark Act gives the Court Statutory Powers to grant ex- parte relief in appropriate cases. The courts are empowered to grant ex- parte injunctions against infringers to prevent them from selling counterfeit goods and ex- parte orders for the discovery of documents or other related evidence.
Criminal Remedies in case of Trade Mark infringement, sec 103 of the Trade Mark Act provides that the application of a false Trade Mark or false trade description is punishable by up to three years imprisonment and fine.
Remedies available for counterfeiting: Patents
Sec. 104 of the Act provides that a suit for infringement shall not be instituted in any court inferior to a District Court having jurisdiction to try the suit. In appropriate cases where the High Court has original jurisdiction to try the suit, the suit shall be instituted in the High Court when an action for infringement has been instituted in a District Court and the defendants make a counter claim for revocation of the patents, the suit is transferred to the High Court for decision because High Court has the jurisdiction to try cases of revocation. Section 104A provides for burden of proof in case of suits concerning infringement. The procedure followed in conducting a suit for infringement is governed by the provisions of code of civil procedure.
Remedies available for counterfeiting: Copyrights
The Copyright Act 1957 makes provision for strict punishment of copyright infringement. In terms of civil remedy, a copyright owner can bring an infringement action where it has sufficient evidence to prove it has been aggrieved. Section 55 provides for various remedies, including injunctions, damages and account of profits.
Section 64 empowers police officers – not below the rank of a sub-inspector – to seize all copies of infringing works and plates used in their creation. Section 53 authorizes the registrar of copyrights to prevent the import of infringing copies, and to enter any ship, dock or premises where such infringing copies are alleged to be found and order their confiscation. Section 63 provides for punishment of up to three years imprisonment and fine.
Border measures against Counterfeiting
The import and export goods are regulated in Sec. 44 – 51 of the customs Act. The import of goods that infringe IP rights is prohibited under Sec. 11 of the Custom Act. Sec 11 empowers the central government to prohibit or restrict the import or export of goods. The Act empowers the government to prohibit the import and export of goods to protect Patents, Trade Marks and Copyrights under sec 11 (2) (n).
Thus notification 49/2007 was issued to prohibit the import of goods infringing Patents, Trade Marks, Copyrights, Geographical Indications and Design. Notification 49/2007 prohibits the import of any goods that feature false Trade Mark as specified in Sec. 102 of the Act.
The Anti- Counterfeiting Trade Agreement (ACTA) seeks to co-ordinate international co-operation on Intellectual Property Rights enforcement practice to tackle counterfeit and pirated goods.
ACTA have three main objectives.
- Better co-ordination of international co-operation.
- Establishing best practice in enforcement methods.
- Providing a more coherent legal frame work.
According to participants, ACTA do not intend to create new Intellectual Property Rights but will focus on better enforcement of already established Intellectual Property Rights and will be consistent with the WTOs TRIPS Agreement. Rather the intention is to create improve international standards on how to take action against large scale infringements of Intellectual Property Rights.
Many of the concerns over ACTA arose from the lack of transparency in the negotiation process which made some observers suspicious about the nature of the provisions being negotiated. In response of the concerns a draft text was released in April 2010 a consolidated and largely finalized text of the proposed agreement was published after a final round of negotiations in Tokyo.
In term of content, critics tended to focus on the provisions relating to copyright and the internet. As regards access to medicines the concerns very largely coincided with those relating to the detentions of medicines, and in this regard the key question on whether ACTA would include the enforcement of patent rights and more specifically the detention of goods in transit because of patent infringements. This is because the EU wanted to introduce into ACTA provisions in particular to cover goods in transit and to widen the scope beyond piracy (copyright) and counterfeiting (trademark infringement) to all other Intellectual Property Rights. A broader suspicion was that this was part of the strategy of developed countries to ratchet up Intellectual Property Rules in ways that go beyond TRIPS, and that these rules would subsequently be imposed on non- ACTA Signatories and ultimately led to a reduction in the legitimate trade in generic medicines.
In the event, the nearly final agreement does cover patents along with other IPRS covered by the TRIPS agreement, but the parties have agreed that the patents are not within the scope of the contentious section on border measures.
What is counterfeiting?
Counterfeiting is a crime, involving the manufacturing or distribution of goods under someone else’s name, and without their permission. Counterfeit goods are generally made from lower quality components, in an attempt to sell a cheap imitation of similar goods produced by brands consumers know and trust.
What types of goods can be counterfeited?
Counterfeit goods span across multiple industries including everything from apparel, accessories, music, software, medications and cigarettes, to automobile and airplane parts, consumer goods, toys and electronics.
What are the benefits of a criminal action?
Criminal proceedings offer a number of advantages to the trademark owner. For a start, they are generally much quicker than civil actions. Before prosecution in the court, the police have powers to enter and search premises, and seize goods related to the counterfeiting. Rights holders can request information and evidence from these raids, which can be useful for investigating those further up the supply chain or for making a civil claim against the defendant.
What can brand owners do to protect their products and brands from counterfeiting?
Brand owners can call upon a variety of tools to act against counterfeit activity once it has been identified, but tools and techniques to prevent and identify activity are of particular importance. This includes, for example:
- Registering key brand and product names as trademarks, and innovative design features as design rights, so that you can seek legal redress for any unauthorized use of those trademark or design rights (e.g. for the manufacture, distribution and sale of trademarked goods).
- Raising awareness of the issues within your business by educating your staff, business partners and customers.
- Actively monitoring the online and offline market, recording, reporting and carefully analyzing the findings.
- Working closely with law enforcement authorities such as the Border Force (Customs) and local offices that have a statutory duty to enforce the criminal provisions of The Trademarks Act.
- Taking enforcement action where appropriate.