Author: VS Warrier
A Trademark is a type of intellectual property, and typically a name, word, phrase, logo, symbol, design, image, or a combination of these elements. A Trade Mark is a visual symbol in the form of a word , a device ,or a label applied to articles of commerce with a view to indicate to the purchasing public that is a good manufactured or otherwise dealt in by a particular person as distinguished from similar goods dealt or manufacture by other persons. A Trademark is a distinctive sign or indicator used by an individual, business organization, or other legal entity to identify that the products or services to consumers with which the trademark appears originate from a unique source, and to distinguish its products or services from those of other entities.
Object of the Trademark is to deal with the precise nature of the rights which a person can acquire in respect of a TM-The mode of acquisition of such rights -the method of transfer of those rights to others-the precise nature of infringement of such rights-and the remedies available in respect thereof. The main functions of a Trademark are; (1) It identifies the product of its origin. (2) It guaranties its unchanged quality. (3) It advertises the products. (4) It creates an image for products. In India rights of a Trademark owner is protected under the Trademarks Act, 1999.
Examples of well-known Trademarks is: The Apple logo and the Nike “swoosh” Coca-Cola, Rolls-Royce, Tata, etc. A counterfeit is an imitation, usually one that is made with the intent of fraudulently passing it off as genuine. Counterfeit products are often produced with the intent to take advantage of the established worth of the imitated product. Counterfeiting is the practice of producing goods, often of inferior quality, and selling them under a brand name without the brand owner’s authorization.
Generally, counterfeit goods are sold under a mark that is identical to or substantially indistinguishable from a mark that is registered for the same goods, without the approval or oversight of the trademark owner. Many famous brands, such as COCA-COLA®, MARLBORO®, and MICROSOFT®, are the subject of counterfeiting, as are brands associated with products ranging from peanut butter to aircraft parts. Counterfeiting should be distinguished from trademark infringement or passing off, which involves the use of confusingly similar indicia. Counterfeiting is most prevalent in developing countries with a strong manufacturing capability, including such nations as China and Brazil, although counterfeit goods are produced and sold around the globe.
TRADEMARK COUNTERFEITING IN INDIA
The 2006 United States Trade Representative (USTR) Special 301 Report identified extensive counterfeiting activities or inadequate laws or enforcement in the following countries: Russia, China, Argentina, Belize, Brazil, Egypt, India, Indonesia, Israel, Lebanon, Paraguay, Turkey, Ukraine, and Venezuela. A FICCI survey of 2005 has estimated the loss of revenue to the Indian exchequer by way of taxes to be roughly around Rs 1,000 crore a year. FMCG, software, automobile, packaged water, and garments sectors are the most affected by IPR violations.
Following provisions of the Indian Trademarks Act, 1999 deal with the issues of trademark counterfeiting: Section 28 of the Act, 1999 confers certain rights to those who had registered their trademark. This provision of the Act provides an exclusive right to the use of the trade mark in relation to the goods or services in respect of which the trade mark is registered and to obtain relief in respect of infringement of the trade mark in the manner provided by this Act, to the registered proprietor of the trade mark.
Section 102 of the Act, 1999, deals with Falsifying and falsely applying trademarks. Under this provision if a person who is not the proprietor of the registered trademark makes or utilizes any trademark without the consent of the registered proprietor, then such act amounts to falsifying or falsely applying trademarks. Section 103 provides for Penalty for applying false trademarks, trade descriptions, etc. That a person without intent to defraud, be punishable with imprisonment for a term which shall not be less than six months but which may extend to three years and with fine which shall not be less than fifty thousand rupees but which may extend to two lakh rupees: Provided that the court may, for adequate and special reasons to be mentioned in the judgment, impose a sentence of imprisonment for a term of less than six months or a fine of less than fifty thousand rupees.
Section 1048 deals with the Penalty for selling goods or providing services to which false trademark or false trade description is applied and Section 1059 deals with enhanced penalty on second or subsequent conviction.
In, Adobe Systems, Inc. and Anr. v. Mr. Mahindra Saxena and Anr.the Defendants were allegedly infringing the copyrights/trademarks of the Plaintiffs by using pirated software programs of the Plaintiffs on the computer system used at their premises for their day to day business activities. The Delhi High Court held that the use of counterfeited and duplicate software by the defendants is clearly illegal and in violation of legal rights of the plaintiffs. It causes financial damage not only to the plaintiffs but also amounts to deception to the public at large. At the same time, the government is also losing huge revenue because of such illegal activities as it is a known fact in this trade that the counterfeiters do not maintain any account books nor pays any taxes and in case damages are not granted in counterfeiting cases, they will be encouraged.
The plaintiffs were therefore granted punitive/exemplary damages against the defendants. In Microsoft Corporation v. Mr. Kiran and Anr., the Delhi High Court held that the plaintiff enjoys the ownership and the exclusive right to use the trade mark ‘Microsoft’ which is a registered trade mark. The defendants have attempted to counterfeit the products of the plaintiff and pass off its goods as that of the plaintiff. The defendants have no right to use this trade mark and trade name that too in respect of same goods. It is not only infringement of the plaintiff’s trade mark but also a clear case of counterfeiting or piracy. This has not only caused loss of profits to the plaintiff, but also resulted in inferior products being made available to the public at large who have been deceived by the conduct of the defendant by making the public to believe that the marks the defendants used were the valid and the incontestable Microsoft marks.
The court was of the opinion that there cannot be a clearer case of consumer confusion than the instant case where the defendant being in the same line of business sold the counterfeit products on which the plaintiff’s registered marks appear in their entirety. The court further held that the computer industry is a high investment industry not only in terms of money but also in terms of the valuable time, skill and effort which goes into the development of new and advanced computer programs and software, therefore, it becomes imperative that the illegal trade activities of traders like the defendants are restrained and the dangerous growth of the computer software piracy be stemmed. And since the plaintiff is the world leader in this field, it tends to be the main target of such counterfeiting and piracy.
Therefore, damages were granted.In La Chemise Lacoste and Anr. v. R.H. Garments and Ors. the court held that the plaintiffs’, in the facts and circumstances and on the basis of the documents produced and the deposition of their witnesses, have been able to make out a case for grant of permanent injunction against the defendants from using their trade mark LACOSTE and/or CHEMISE LACOSTE and/or CROCODILE device. It is also inevitable to infer, in the facts and circumstances that the plaintiffs shall suffer irreparable loss in case the defendants are not restrained from manufacturing counterfeit products and any monetary compensation will not adequately compensate the loss which is caused to the plaintiffs. Considering the facts and circumstances, it is apparent that inconvenience cause to the plaintiffs shall be much more in case the injunction as prayed for by them is not granted restraining defendants from using and infringing their trade mark and artistic device and defendants’ passing off their goods as that of plaintiffs.
Therefore, a decree of perpetual injunction was passed against the defendants restraining them from using the trade mark LACOSTE and/or CHEMISE LACOSTE and/or CROCODILE device in respect of any goods manufactured, selling or offering for sale, marketing, advertising, promoting, displaying, using the trade mark of the plaintiffs without any permission and consent and license of the plaintiffs and infringing the rights of the plaintiffs in any manner and passing off their goods as the goods of the plaintiffs and in any way incorporating the plaintiffs’ trade mark in any manner whatsoever.
In Hero Honda Motors Ltd. v. Shree Assuramji Scooters, the defendants were manufacturing motorcycle parts and other items bearing the plaintiff’s trademark, HERO HONDA and the logo with the result that there was not only loss of profit, but the brand equity of the plaintiff was affected on account of inferior quality of the product sold in the market by such traders. The public was also stated to be, thus, a direct sufferer of the same. The plaintiff purchased the product of the defendant and found that apart from infringing the logo and the mark of the plaintiff, the product was of poor quality in finish and packaging.
The court held that the plaintiff had the exclusive right to use their trademark HERO HONDA and the logo as also the packaging material in question. The defendant is attempting to counterfeit the products of the plaintiff and pass off its goods as that of the plaintiff. This not only causes loss of profits to the plaintiff, but results in inferior products made available to the public at large who are deceived by the conduct of the defendant. In view of the aforesaid position, a decree for permanent injunction was passed in favor of the plaintiff and against the defendant restraining the defendant from selling motorcycle parts bearing the trademark HERO HONDA with or without the logo or any other trademark deceptively similar to the plaintiff’s mark HERO HONDA and logo as also selling such goods in the packaging identical or deceptively similar to that of the plaintiff.
In Hawkins Cookers Ltd. v. Rakesh Kumar, Mukesh Kumar and Ors, it was established that the defendant has been selling pressure cooker parts in packets on which mark ‘Hawkins’ has been embossed. It, therefore, stood conclusive established that the defendant has been marketing its product as that of the plaintiff. The court held that a case of counterfeiting, a much graver version of the offence of the infringement of trademark or passing of.
Evidence on record established that the defendant is marketing its own produce as that of the plaintiff. In any case, defendant would have no right to use the trade mark/name ‘Hawkins’ as the proprietary interest therein vests with the plaintiff by virtue of the fact that the plaintiff holds registration in its favor. Therefore, a permanent injunction was granted.
Apart from the provisions under the Trademarks Act, 1999 counterfeiting is an offence under Sections 480 and 482 of the Indian Penal Code, 1860. In Haveli Ram v. The State, the plaintiff had certain well-known brands of soap known as the “Sun-Light” soap, ‘Lux’ and the ‘Lifebuoy’ soap. The names and the labels of these soaps are registered under the Trade Marks Act. The defendant’s soaps were marked with the imprint of ‘Sunlight’ soap with wrappers of the same description and three dozen cakes of soap with the imprint and wrapper of ‘Lifebuoy’ soap along with two cakes of genuine ‘Sunlight’ soap were recovered from his shop.
The court held that the facts and circumstances of the case and evidence on the record, establish an offence under Section 480, I. P. C. punishable under Section482, I. P. C. The test is not that the trade-mark in question is an exact or substantial copy of the trademark used by the complainant, but whether the imitation of the trade-mark of the complainant has been done in a manner likely to cause the trade-mark in question to be mistaken for the trade-mark of the complainant. It is the totality of impression which is likely to be left by the trade-marks in the mind of a probable purchaser that has to be considered. The differences on non-essential points are not important.
COUNTERFEITING AND DAMAGES
Section 135 introduced in the Trademarks Act, 1999, gives statutory powers to the courts to grant ex-parte relief in appropriate cases. The courts are empowered to grant ex-parte injunctions against infringers restraining them from selling counterfeit goods, etc., and ex-parte order for discovery of documents, preserving of infringing goods, documents or other related evidence, and restraining the defendant from disposing of his assets in a manner which may affect plaintiff’s ability to recover damages.
This provision will cause financial damage to counterfeiters by restraining the disposal of any asset of the counterfeiters even if the same are not related to the infringing activity. In Microsoft Corporation v. Ms. K. Mayuri and Ors the court held that the defendants were indulging in piracy leading to both copyright and trade mark violation of the plaintiff “MICROSOFT”. Relying on section 135 of the Trade Mark Act, 1999, the Plaintiff were held entitled to the award of compensatory damage, exemplary/punitive damages as well as damages on account of loss of reputation and damage to the goodwill because of sale of spurious and pirated goods by the Defendants in the name of the Plaintiff’s company.
In order to provide a timely relief to the victim of piracy, the courts have started granting “John Doe” orders. These orders operate against infringing goods which may be seized wherever they are located and would operate against any potential defendant who is subsequently identified as the counterfeiter/infringer and the court order is served on him. One such `John Doe’ order was granted by the Delhi High Court in Taj Television Limited v.Rajan Mondal.
The court in the case of Time Incorporated v. Kiran, has expressly recognized third type of damages as punitive damages apart from compensatory and nominal damages. The Court has made some relevant observations discussing the aspect of punitive damages. The court held that:The award of compensatory damages to a plaintiff is aimed at compensating him for the loss suffered by him whereas punitive damages are aimed at deterring a wrong doer and the like minded from indulging in such unlawful activities.
The Court further held that it had no hesitation in saying that the time had come when the Courts dealing actions for infringement of trademark, copy rights, patents etc. should not only grant compensatory damages but award punitive damages also with a view to discourage and dishearten law breakers who indulge in violations with impunity out of lust for money so that they realize that in case they are caught, they would be liable not only to reimburse the aggrieved party but would be liable to pay punitive damages also, which may spell financial disaster for them.
In Adobe Systems, Inc. and Anr. v. Mr. P. Bhoominathan and Anr, the Delhi High Court with respect to the damages in counterfeiting cases the court relied on Meters Ltd. v. Metropolitan Gas Meters Ltd. (1911) 28 RPC 157 (UK), and held that in the case of an infringement of patent, damages were computed as follows :
(No. of infringing articles) x (the sum that would have had to be paid in order to make the manufacture of that article lawful)
The court further held that where the defendants were acutely aware of the implications of their act and committed them willfully and intentionally in flagrant violation of the plaintiff’s copyright and trademark, substantial additional damages are awarded.
Article 61 of the TRIPS Agreement provides that Members shall provide for criminal procedures and penalties to be applied at least in cases of willful trademark counterfeiting or copyright piracy on a commercial scale. Under the U.S. federal criminal statute enacted in 1984, the act of counterfeiting covers the manufacture, distribution and sale of a product that bears a mark calculated to be indistinguishable from a genuine trademark. However, it is generally not only the trademark that is copied.
The products that bear counterfeit marks are also often designed to closely simulate the style, appearance and construction of the genuine product associated with a genuine mark. The counterfeiting extends from the initial manufacture of the counterfeit product to the final sale of the fake to end consumers, including all intermediate steps in the distribution chain, such as exporting and importing the products. Counterfeiting in the trademark context includes the unauthorized use of a protected mark on goods that are manufactured, distributed and sold to consumers and falsely presented as the genuine product.
The range of counterfeiting activities spreads far and wide, and has a significant impact on many aspects of the global marketplace. Trademark counterfeiting is a subset of trademark infringement. All counterfeiters infringe, but all infringers do not necessarily counterfeit. In both counterfeiting and infringement cases, likelihood of confusion is the critical inquiry. The key difference is that, in counterfeiting cases, the defendant’s mark is impossible or extremely difficult to tell apart from the plaintiff’s.