India: Judicial Analysis Of Order Of Abandonment

Last Updated: 18 September 2017
Article by Martand Nemana


Intellectual Property has always been seen an exclusive set of rights which command protection for the moral and economic rights of the original creator. While the major emphasis of these rights is to entrust legal protection, the rights also ensure in creating healthy opportunities for the right holders to developing financial assets and also gain favorable incentives for further progress. These legal rights, most commonly in form on patents, trademarks and copyright, protect the creativity and dissemination of their work. Infringement has been defined as "the action of breaking the terms of a law, agreement, and violation." Intellectual Property rights are infringed when a product, creation or invention protected by laws is exploited, copied or otherwise used without having the proper authorization, permission or allowance from the person who owns those rights. The motives for protecting the IP rights are a matter of crucial interest to both company and consumer. From a practical perspective "Intellectual Property Crime" refers to counterfeited and pirated goods, manufactured and sold for profit, without the consent of the patent or trademark holder1; it also has been defined as:

Criminal IP offences are also known as "IP crime" or "counterfeiting" and "piracy". Counterfeiting can be defined as the manufacture, importation, distribution and sale of products which falsely carry the trade mark of a genuine brand without permission and for gain or loss to another. Piracy, which includes copying, distribution, importation etc of infringing works, does not always require direct profits from sales wider and indirect benefits may be enough along with inflicting financial loss onto the rights holder.

Trading standards are primarily responsible for enforcing the criminal IP laws, with support from the police, and with investigative assistance from the IP rights owners. Private criminal investigations and prosecutions may also be launched by the right owners in some cases. Criminal IP offences can take place in a variety of ways2, they include:

  • employees selling copies of protected works or supplying fake goods within the working environment
  • company servers and equipment being used to make available (i.e. uploading) infringing content to the internet with the knowledge of management " using the work intranet to offer for sale infringing products to colleagues
  • external visitors entering your premises, to sell counterfeit and pirated items
  • using unlicensed software on business computer systems with the knowledge of management


There are over seventy Central Laws covering many offences apart from those in the Indian Penal Code. To prevent and punish violations under economic offences, there are large numbers of agencies with investigative and quasi-judicial powers. As the magnitude of economic offences is enormous, it is essential to make rigorous laws and strengthen the regulation, investigation and enforcement systems adequately.

IP and Cyber Crime: IP theft (copyright, trademark) industrial / commercial secrets, cyber squatting etc., the cost of which runs to a few hundred billion dollars every year in the US alone.

Technology and Crime: With increasing e-commerce, there is an increase in cyber economic crimes. For every economic crime, there is a cyber version with much more potential, larger profits and lesser risks. While the e-commerce, as a system is speedy and efficient, its speed and efficiency are creating problems.

The Internet has made all borders and legal jurisdictions absolutely obsolete. Criminals can remain in one jurisdiction and commit crimes elsewhere and avoid prosecution. Therefore, a high degree of co-ordination to prevent crime and co-operation to prosecute and punish crime become essential especially as the proceeds of these crimes go into further crimes including drugs and arms. All such definitions would include all contemporary economic crimes, would also cover the persons who are outside an organization and would not be confined to just non-violent white-collar crimes.

This would also include Corporations and members of professions such as the Law, Accounting, Management etc., and would cover both Banking and non-Banking financial frauds, violations of the Stock Market, Smuggling, Money Laundering, and Intellectual Property Rights (IPR) related offences, Insurance and Health frauds, IT related offences (cyber-crimes), Telecommunication, Theft and misuse of Credit card & identity and Corruption.


Law enforcement agencies have to recognize that Intellectual Property Crime is not a victimless crime. Because of the growing evidence that terrorist groups sometimes fund their activities using the proceeds generated from IPC, it must be seen as a very serious crime with important implications for public safety and security3. The links between IPC and terrorist financing can be categorized as follows:

Direct involvement: Where the relevant terrorist group is implicated in the production, distribution or sale of counterfeit goods and remits a significant proportion of those funds for the activities of the group. Terrorist organizations with direct involvement include groups who resemble or behave more like organized criminal groups than traditional terrorist organizations.

Indirect involvement: Where sympathizers or militants are involved in IPC and remit some of the funds, knowingly to terrorist groups via third parties. Terrorist organizations whose sympathizers are involved in IPC and who use some of the funds generated from this activity to support the terrorist group. In many cases the funding is further attenuated, involving unrecorded movements of cash via third parties.


Several cases that directly link terrorist groups with counterfeiting and piracy activities have been reported through various reports4. The following are some of these:

  • Interpol seized US$1.2 million worth of counterfeit German brake pads in 2004. Later, investigations revealed that these were to be used to support the Lebanese terrorist organization Hezbollah.
  • Based on evidence with FBI, the terrorists who bombed the World Trade Center In 1993 used funds channeled from counterfeit textile sales in New York.
  • It was found that Chechen rebels were financing their operations by selling pirated CDs.
  • According to New York's Police Commissioner, the Madrid train bombing incident was funded through the sale of pirated CDs.
  • According to an interview, published in French daily Le Monde, of the head of a French security agency, Afghan terrorist groups have been found to use the proceeds of duplicates of credit cards and counterfeit designer products.
  • A suspect, Faruk Aksu, who is allegedly linked to several terrorist groups, was arrested in Turkey with US$3.2 million fake US dollars, which he had obtained from Iraq. These dollar notes used the paper used by the US Government and incorporated all the security features of a real US dollar.
  • Al Qaeda training manuals recovered in 2002 reveal that the organization recommends the sale of fake goods as a means of fundraising for cells.

In testimony before the House Committee on International Relations in 2003, Interpol's Secretary General stated that the link between organized crime and counterfeit goods (also known as intellectual property crime) was long established, but announced that the international law enforcement body was "sounding the alarm that Intellectual Property Crime is becoming the preferred method of funding for a number of terrorist groups."5

An intangible significant impact is seen on the long generated goodwill and reputation of the product which ends up paying the opportunity cost for the activity. It also has to emphasized and looked into; as the general customer is getting affected and an irreversible damage is being caused in the process. The companies involved in the other hand have no clue of the transactions and before any whiff is gained the damage has already occurred. The underlying bottom line is that the act leaves no room for the product to rejuvenate and this becomes the breeding criterion for terrorist groups involved in such activities. The ripple generated from the insurgence of the impact continues to affect and absorb all relative industries while the main prey being film and audio industry with all the concerned and dependent electronic distribution channels.

While it comes to the injection of counterfeit goods into the market for making quick money, it clearly strikes the death knell for the product manufacturers. Surprisingly majority of the producers and the consumer accessing / buying the product are not aware of the defect in authenticity of the product and its impact. The high end retails brand shopping chains which play host to the top of the line world class goods easily fall prey to the benevolence of goods in disguise only to later ascertain that not only has the money generated been pooled for financing an act of terror but also has created a dent in the lustrous market value of the product.


India inherited the present system of classification of offences from its colonial rulers more than 140 years back, in which the police are the primary enforcers of the law. Considering the nature of the impact of colonial law making, suffice it to say that it is time to reexamine and reframe the laws as appropriate to the twenty first century Indian society and its emerging complexities. Many countries in the world have started their own initiatives in improving their domestic Criminal Justice Systems. England, USA and Australia are all in the process of charting out reforms. As societies continue to change, crimes become complex and new crimes emerge, it is imperative for India to work out a comprehensive Criminal Justice System, suited to the ethos of this country.

The basis for the classification of crime is that contained in the Indian Penal Code (IPC) and the Criminal Procedure Code (CrPC). But, over a period of time, various statutes have been added with different provisions about evidence, burden of proof etc., and often, the crimes themselves are not of the kind covered in the IPC; in fact, many of the special laws relate to social inequities. All these have only added to the burden of work on the Criminal Justice System. Further, with the changing views of what constitutes crime all over the world and not just in India, unless there is a relook at the classification also, it will be difficult to work out appropriate prevention and detention strategies for different kinds of offences which are now clubbed together as crime. The economic and other Offence Code would include all economic offences, like tax fraud, money laundering, stock market scams and also offences like cyber crimes, intellectual property violation, etc.

The challenge lies in assigning priority of execution and operation; as, if the options are to decide between critical objectives like rural empowerment, healthcare, provision of medical facilities and intellectual property code violation; there is no scope for second thought. However this alarming situation being on a constant rise highlights the immediate need to frame redressal mechanism and update the present statues, as the vacuum of which is reflected in form of billions of dollars which drastically affects the financial and economic standard of the Country.


1 The Organized Crime Task Force, Annual Report 2005, Serious and Organized Crime in Northern Ireland, p 27

2 Intellectual property crime and infringement – Published 22nd February 2016 – Accessed on 29th March 2016.

3 Northern Ireland Organized Crime Task Force, The Threat Assessment 2002: Serious and Organized Crime in Northern Ireland. Available at

4 Counterfeiting and Organised Crime, Report by Union des Fabricants, Links between terrorism and other forms of crime, Foreign Affairs Canada and the United Nations Office on Drugs and Crime, April 2004

5 Ronald K. Noble, "The links between intellectual property crime and terrorist financing" Testimony before the U.S. House Committee on International Relations, July 16th 2003, available from

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