Since it doesn’t come with ribbons and greeting cards, not many would have known that World Intellectual Property Day just came and went. According to the World Intellectual Property Organization (WIPO), the day is celebrated ‘to promote discussion of the role of intellectual property in encouraging innovation and creativity’. This year’s theme was ‘Get Up, Stand Up. For Music’. Not surprising: the music industry continues to balance itself delicately between innovation and piracy. However, the focus on music reinforces the tendency, particularly in popular discourse, to relate IPR awareness predominantly with the creative arts. I will do my bit for IPR Day by writing about more humdrum matters: counterfeit soaps and detergents, creams and shampoos.
The fake syndrome is rampant in the fast-moving consumer goods (FMCG) market in India — almost five per cent of all FMCG products sold in the country are counterfeit. Industry insiders insist that in reality the figures are more alarming. This is as raging an ‘IPR issue’ as any other, with legal teams of FMCG corporations fighting to protect their brands and trademarks.
The counterfeit FMCG industry is driven by small operators across the country. The first task is to locate them. Most of the larger corporations now engage investigating agencies on a full-time basis to unearth these operations. The counterfeit production units are often no more than a 300 sq ft factory-cum-storage-room tucked away in a basement in a small town. Discovering them is the primary challenge. Then comes the part of bringing them to task.
‘Counterfeit’ in this context does not mean ‘fake’ per se, but includes ‘lookalikes’. ‘Colgate’ becomes ‘Collegiate’, ‘Lakmé’ becomes ‘Like-Me’, ‘Camay’ becomes ‘Cameo’. Add to this packaging and a colour combination that is often indistinguishable from the original product. Being ‘deceived’ into believing that you’re buying the ‘original’ is one part of the problem; the more worrying aspect is applying ‘Collegiate’ on your teeth and ‘Like-Me’ on your skin. Majority of these lookalikes are targeted at rural and semi-urban markets. Students of marketing find this practice a fecund field of study — how retailers are complicit in this process and are therefore both customer and competitor for the brand; shelf-placement of the lookalikes; negative (or positive?) impact on brand innovation — but students of law have a single-point agenda: find the nearest IPR-friendly court and harangue it for an order of injunction.
The owner of a registered trademark has the option of seeking both civil and criminal remedies in cases of counterfeit products. It would seem that a criminal action would be more of a deterrent, but that is not always the case. More often than not, people in the counterfeit business know the precariousness of their business. They establish a relationship with the local police; this ensures that a raid is often preceded by a cordial phone call. Even otherwise, the police are hesitant to take action if the infringing product is a lookalike. If it is not an outright fake, they usually ask the original manufacturer to obtain a court order — through a civil suit — that holds the lookalike product to be infringing the original. Most manufacturers now prefer to take the civil action route.
The Trade Marks Act specifically provides for a method of seeking relief in cases of infringement of a registered trademark. For unregistered trademarks, the plaintiff can obtain a remedy under common law against an action of ‘passing off’. A plethora of judicial decisions govern when a court should pass such an order — broadly, the test is that a product has to be ‘deceptively similar’ to the original, so an unwary purchaser of average intelligence and imperfect recollection would be deceived. The test is not to do a side-by-side comparison and spot the differences in packaging, but rather to stress on the overall similarity (phonetic, visual or otherwise) between the two products.
However, almost all such cases turn on whether or not the court is willing to pass an interim order of injunction. The plaintiff makes it a point to go all out for an ex-parte order (one where the defendant is not informed about or allowed to contest the hearing) and seek the appointment of an officer of court. The officer visits the factory/storerooms of the defendants and takes symbolic possession (making an inventory and keeping them aside) of the infringing goods or packets. The significance of the ex-parte aspect cannot be emphasised enough: if the defendant is put on notice, he usually has enough time to either remove the goods or, worse still, flood the markets with the goods before the date of hearing. Not getting an ex-parte order often defeats the whole purpose; if the court officer reaches the premises to be welcomed by an empty storeroom, virtually nothing remains of the suit. As of today, an ex-parte order of injunction in a civil suit is the most potent remedy available to FMCG companies; they are forever hoping to find themselves before a court that is sympathetic to the ex-parte cause.
If such an order is passed, the defendant, almost always, agrees to settle the matter. But they often resurface. A proud counterfeiter once told me (when he’d come to sign a deed of settlement with a client) that “it is only natural to follow the leader”. He said, “If a company has found success, obviously I will sell my product in a similar packet and hope that people mistake my product for theirs.” He added that he takes existing packets of reputed brands to local ‘computer shops’ and gets them to churn out four or five ‘similar options’ for about ₹2,000. Then he chooses the one that appeals to him the most. After this narration, he signed the deed. I doubt if I have seen the last of him.
It is in this context that the first draft of the National IPR Policy circulated by the Ministry of Commerce and Industries might provide a remedy beyond an injunction. The section ‘Enforcement and Adjudication’, among other things, mentions developing a list of known IP offenders and working closely with State governments for the establishment of IP cells and inclusion of IP crimes under their special laws. This is encouraging. There is also mention of integrating IP with government initiatives like ‘Make in India’. Hopefully, the integration is with the right kind of makers.
Arunabha Deb is a partner at Avijit Deb Partners LLP
( The views expressed in the article are his own )