India: Nippon Steel & Sumitomo Metal Corporation vs Kishor D Jain & Anr – Trademark Counterfeiting

Last Updated: 6 June 2019
Article by Khurana And Khurana
  1. BACKGROUND

The Bombay High Court has passed an order in Nippon Steel & Sumitomo Metal Corporation Vs Kishor D Jain & Anr[1] imposing costs of INR 5 Crore to be paid by the defendants who were caught counterfeiting the Plaintiff's mark and goods.

In a global economy, counterfeiting activity is a challenge that impacts business and industry, including consumer goods, industrial goods, luxury goods, apparel, pharmaceuticals, and food. Counterfeiters are both willing and able to identify and misappropriate intellectual property[2]. Industry estimates suggest that 7-10% of all products sold in the Rs 3 lakh crore FMCG (fast-moving consumer goods) market in India are counterfeit. This is despite strong laws to regulate the infringement of IPR. Companies including L'Oréal, Tommy Hilfiger, Lacoste, Calvin Klein, Levi's and Superdry have helped confiscate thousands of fake apparels through court-aided raids on warehouses over the past three years. [3]

The present case also relates to Trademark counterfeiting where Plaintiff is a steel producer who has global presence and one of its offices is located in New Delhi (India). The Defendants admitted on producing unbranded pipes from the local markets/manufacturers and imprinting the Plaintiff's registered trademarks upon the same. These counterfeit goods were then exported by the Defendants to Saudi Arabian company- YANBU Steel Company to be used for laying pipes in oil plants. So, the suit for permanent injunction against the defendants was based on a complaint by YANBU regarding the quality of certain carbon seamless pipes for use in oil plants that it had sourced from the defendants, believing the same to have been manufactured by the plaintiff. The pipes supplied by the defendants were accompanied by fabricated inspection certificates issued in relation to the counterfeit goods to show that the same emanate from the Plaintiff as it was bearing plaintiff trademark and logo.

The Plaintiff submitted that the pipes in question are specialized seamless pipes which are used in the oil industry and can have disastrous consequences if the same do not meet the required standards of safety. The Plaintiff submitted that apart from causing serious damage to its goodwill and reputation coupled with possibility of accidents, the acts of the Defendants have in fact brought disrepute to the reputation of the Country and therefore heavy and unprecedented costs should be imposed on the Defendants.

  1. QUESTION

Whether the defendants be liable for counterfeiting plaintiff logo under the Trademark Act,1999?

  • DECISION

By an ex-parte order dated 26 March 2019, the Bombay High Court has restrained Kishor D Jain & Anr (Defendants) from infringing the registered trade-marks `Nippon Steel' and its variants owned by Nippon Steel & Sumitomo Metal Corporation (Plaintiff).

The court took cognizance of the fact that the plaintiff's products are used in extremely sensitive areas where quality of apparatus is of utmost importance and that the defendants' illicit activities were bound to have disastrous consequences. Going further, the court observed that the reputation of the nation is also affected by such activities. Determined to convey that the courts in India are no longer willing to tolerate such activities and shall deal with them with an "iron hand", the judge awarded punitive costs of  5 Crore which was directed to be paid to a charitable organisation called   the Tata Memorial Hospital, Mumbai – a specialist centre for the prevention, treatment and research on cancer.

  • LAW

The Trade Marks Act, 1999 provides penalty for applying false trademark and/or trade description, etc. with imprisonment from 6 months up to three years and fine ranging from fifty thousand to two lakh rupees.[1] Section 102 of the Trademarks Act 1999 defines as to what constitutes falsification of a trade mark and falsely applying a trade mark. sub-section (2) of Section 102 deals with falsely applying/using an existing trade mark or its deceptively similar variant without the assent of its proprietor. Sub-section (3) of Section 102 classifies both a falsified trade mark and a falsely applied trade mark under the category of "false trade marks". Further, sub-section (4) of Section 102 takes the position that when an accused is confronted with the use of a false trade mark, the lack of the proprietor's consent shall be presumed and the burden is on the accused to rebut the said presumption.[1] Further, the Trademark Act empowers the court to grant ex-parte injunctions in appropriate cases in order to restraint the infringers from selling counterfeit goods and for discovery of documents or other related evidence. Further, the statute provides for civil relief including injunctions, rendition of accounts of profits and delivery up of infringing products for its destruction.[2] The Penal Code,1860  sets out punishments for cheating, counterfeiting and possession of instruments for making counterfeits etc. under chapter XII of the Act.

CONCLUSION

Such decision really helps in reducing counterfeit and other kinds of IPR infringements. This is the first time that the Bombay High Court has imposed such heavy costs upon a defendant in a trade mark counterfeiting case. In this case the defendant has used false trade mark by falsely applying the existing trademark of the plaintiff for defendant own benefit and affecting the reputation of the plaintiff in the global market. Since low quality goods were exported, so this also affected reputation  of the nation. That's why Court understood that it is need of the hour to take strict penal actions which includes heavy compensation amount. This decision would act as a deterrent for someone who undertakes such kind of trademark counterfeiting in future.

References:

[1] (Notice of Motion (L) No 810 of 2019 in COMIP (L) No 383 of 2019)

[2] Recent trends in counterfeiting cases, lawline, https://www.lawline.com/course/recent-trends-in-counterfeiting-cases-update, accessed on 3rd May 2019

[3] PR & trademark violation: HUL steps up legal action to curb counterfeit menace, Maulik Vyas & Sagar Malviya, The Economic Times, Apr 24, 2019, https://economictimes.indiatimes.com/industry/cons-products/fmcg/ipr-trademark-violation-hul-steps-up-legal-action-to-curb-counterfeit-menace/art, accessed on 3rd June 2019

[4] Section 103 Trademark Act, 1999

[5] Distinction between Falsification and Falsely Applying a Trademark,The demanding mistress, Sunday, August 24, 2014, http://thedemandingmistress.blogspot.com/2014/08/distinction-between-falsification-of.html, accessed on 3rd June 2019

[6] Section 135, Trade Mark Act, 1999

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