India: Counterfeit & Passing Off

Last Updated: 5 June 2002
Article by Narinder S. Kainth
Globalisation and global competition are not new. The policy of liberalization of economy adopted by India almost a decade ago has given impetus of trade and industry. By virtue of it, the proliferation of production and marketing of variety of consumer products has given rise to the need for the protection of Intellectual Property Rights. The mushrooming growth has also given rise to despicable marauding activity, which is nothing but piracy. Piracy in a common trade parlance would mean the unlawful acquisition by a person of the property of another person without his consent. In commercial business, Piracy is also linked to Counterfeiting or Passing off well-known brands. Such Piracy inter-alia has amongst other the following reasons: -

  • Well-known brands have mushroomed in recent years {well known brand means a mark which have acquired reputation not only in the country where it originates but also gained goodwill world wide and referred to as Trans-border reputation}.
  • Easy for unscrupulous persons to make quick gains by piggy backing on someone’s reputation.

Impact Of The Counterfeiting /Passing Off

Worldwide it is a big menace and a direct loss of business to the tune of 500 billion U.S.Dollars. In India the direct loss to FMCG industry is also not less than Rs. 200 million. In India a survey was conducted to estimate the size of counterfeit of FMCG products and the survey revealed the stark reality that FMCG companies having maximum loss upto 40% and an average loss around 20% of their market share of their well known products. Masquerading products result into the consequences set out as under: -

  • Provides marginal dent to the revenue collection to the Government;
  • Consumer is the main victim since not able to gets right product;
  • legitimate industries suffer - illegitimate organised activities flourish;
  • dilution of brand value – since third rate products come in the guise of well known brands;
  • Snowballing effect on other areas.

In order to counter the aforesaid activities, it has become a need of the hour that Industry should join hands and strives hard to achieve the amongst other the following objectives: -

  • free trade must be free with a combination of what is ethical and legal.
  • to combat the commercial theft since large number of factors goes into a brand building.
  • Unscrupulous persons pocketing something which belongs to someone else and also piggybacking on someone else’s reputation.
  • to bring awareness amongst society since these counterfeit products deceive the gullible consumers, as the consumer does not have a deep eye to differentiate between the original vis-a-vis counterfeit.

Difficulty In Combating Aforesaid Menance: -

  • Police and other administrative authorities have their own priorities and they consider such type of offences as petty crimes.
  • lack of political will
  • low consumer awareness
  • law enforcement is weak
  • unscrupulous operators may have political protection
  • unscrupulous fly- by- night operators operate in small rooms and in a position to clean up everything on receiving prior intimation.

Need For A Paradigm Shift

Indian Government and other statutory bodies should take active interest for the protection of legitimate business and provide whole- hearted support to the Industry at large by considering following suggestions for making an amendment in the Trademark law: -

  • make counterfeit or look alike a cognizable offence.
  • impose minimum damages of Rs. 2.00 million or value of goods seized whichever is higher.
  • the damages so awarded should be deposited in the Consumer Welfare Fund and should be utilized for anti-counterfeit activities and consumer awareness programs.
  • suspension of license of spurious product manufacturer;
  • expulsion from Trade Associations
  • extensive publicity of offender’s name in various media.
  • involvement of Excise Department and other statutory bodies at the time of raids.
  • harmonisation of specific sections of Drugs & Cosmetics Act, 1940 to include the definition of counterfeit and fake.

Intiatives By Fmcg Companies In India

A joint effort is made by FICCI and the leading FMCG Companies to bring all companies together to initiate a war against such menace. It is a Brand Protection Committee (BPC) and the foremost objectives amongst other are mainly as under: -

  • trade channels must be free with a combination of what is ethical and legal.
  • to combat the commercial theft since large number of factors goes into a brand building.
  • unscrupulous persons pocketing something which belongs to someone else and also piggybacking on someone else’s reputation.
  • to bring awareness amongst society since these counterfeit products deceive the gullible consumers as the consumer does not have a deep eye to differentiate between the original vis-à-vis counterfeit.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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