Nepal: Trademark Infringements: The Big Problems Faced By Foreign Brands In Nepal

Last Updated: 19 May 2017
Article by Shilpi Saxena

The government of Nepal is notorious for policy and procedural time wasting as far as providing services to businesses is concerned. The same has resulted in problems for businesses and industries to continue operating in Nepal. Among the several problems faced by them trademarks infringement of reputed foreign brands and multinational brands has become a major issue in recent years.

Going by the data of the Department of Industry (DoI), the government body falling under the Ministry of Industry which looks after the registration of industrial and intellectual property, 546 complaints of trademark violations has been registered till June 15, 2016 with most of the cases currently in the court. According to DoI, 90 disputes have so far been settled.

None the less, the sources reveal that the number of such cases can be as high as 1,200 with some of the cases continuing to go undecided for more than 15 years. Some of the trademark disputes include cases of Panparag, Dhara Oil, Rajanighandha, Havells, Pepsico and Kansai Nerolac, many of these are currently in court. Looking at these disputes it is clearly evident that most of the trademark infringement cases are of top Indian brands. Sources say that, these disputes have increased since 2003 after Nepal joined as a member of the World Trade Organisation (WTO). Experts point out that there is absence of proper policies and laws is the reason for the increasing number of trademark infringement cases.

As the current Design and Trade Mark Act, 2022 lacks clarity on security and registration of trademarks, among other things, the counterfeiting and theft of trademarks of globally recognized brands is on the rise, the experts say.

According to the Act, the ownership and rights are only established after the registration of trademarks in Nepal. "Using this provision, local companies here are registering and holding the trademarks of MNCs," the expert says. According to the experts, this trend has been on the rise over the last decade.  There are several instances of registration of copied trademarks of Multi National Companies. When the true owners of the trademarks arrive in Nepal, they discover that their trademarks are already registered here by someone else.

The reasons for it are:

The wrong practice regarding the registration of duplicate or copied trademarks happens for several reasons. "The Market value of trademarks is the prime reason. A well recognized and established brand earns reputation and goodwill among the customers globally," says the expert. This culture is increasing as the people involved are getting financial benifits. Those people who have got registered trademarks of foreign companies can bargain the ownership of the brands in Nepal.

Similarly, it is quite easy for the people involved in effortlessly accessing the already been established market by global reputed brands. The consumers usually do not purchase items or goods by going into the brand details. They are satisfied by buying items which look similar to original brands. "Many goods & items of globall brands are available in the local market without the registration of trademarks," the expert says. Don't care attitude of the true owners is also another reason for the increase in trademark infringement cases as they don't register their trademarks in Nepal in time. The negligence of Department of Industry is also resulting in infringement of trademarks. "The department officials register the globally recognised trademarks without proper investigation of the ownership,".

The Legal Weaknesses

The weak legal provision in Nepal is giving a fertile arena for malpractice regarding the trademarks registration. According to the Patent, Design and Trade Mark Act of 2022 counterfeiting and using of already registered trademarks is illegal. But, the law is weak when it is about punishment. According to the existing legal provisions, DoI can fine up to Rs 100,000 and seize related items from those people which are involved in trademark violations. "However, there are few instances in the past where people were punished for such deeds," expert says, adding, "A well known case is the infringement of trademark of Goldstar brand shoes when the involved people were slapped with hard punishments."

Inability to Reform Existing Law

The reason for trademark disputes directly relates to inability of Nepal in the formulation of policies with respect to the Paris Convention for the Protection of Industrial Property. In 2001, Nepal became a signatory of the landmark global deal. It constitutes definite provisions for protection of trademarks.  Even the international treaty was signed fifteen years back, the existing Act has not yet been amended or reformulated inline by the government.

The central agenda of this International treaty was the provision of protection to trademarks and services in Nepal. The popular trademarks are protected under the article 6bis of the treaty  without having to register in the signatory countries. Irrespective of this, the famous trademarks are suffering, due to the lack of appropriate legal provisions. On this, Senior Advocate, Sushil Kumar Pant argued that  "It clearly shows that our government and lawmakers either do not know the importance of these international treaties or are totally ignoring the significance of the conventions signed by the country," at the law firm Jurist and Company. He also pointed out that the reasons for this are corrupt practices and dishonesty prevailing in the bureaucratic and political levels which hinders the formulation of policies to implement such essential international conventions.

Nepal has been given extension thrice for the implementation of the convention but it has already missed it twice. It missed the first deadline in 2006 thereafter it was provided the extension for the duration of 2007-2015. Again after missing it, now the country is provided with the extension upto 2021 for updating and reformulating its existing law.

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