India: What If AI Starts Infringing IP Rights?

Counterfeiting has been a menace for brand owners, right-holders, governments and public alike which has only been compounded by the permeation of e-commerce and digital media. Over the years, a collaborative approach of judicial, police, administrative and industry remedies and mechanisms has helped to mitigate counterfeiting to a large extent, however, since the technology travels faster than law, it often becomes hard to eradicate the problem and find a straitjacket solution. With the advent of Artificial Intelligence (AI) in diverse applications, there is renewed interest in the role it will play in generating intellectual property (IP) as well as in the pitfalls associated with "taking over" various functions and decision-making processes. One such issue is the creation of AI generated counterfeits leading to the violation of the rights of IP owners. ChatGPT, which has advanced AI one step further into this conundrum, is one of the most renowned uses of AI. Consequently, owners of intellectual property are now presented with formidable new hurdles, such as AI-generated counterfeiting and infringement.

In cases of AI-generated counterfeiting and infringement, two probable scenarios can play out. One in which the natural person/prompt engineer uses the AI tool and provides highly specific instructions with the knowledge or awareness that such instructions given will most likely lead to the violation of someone else's IP right; and the other being where the natural person/prompt engineer gives a very general/generic instruction, which although leads to the infringement or creation of a counterfeit product, however, no knowledge or awareness of the likelihood of such infringement or counterfeiting manifesting can reasonably be ascribed to him/her. The Indian laws meant to protect IP rights would deal with these two scenarios differently as the crucial point of difference would be a matter of intention or mens rhea. Nevertheless, in each of the two scenarios, restraining the act of generating infringing content / counterfeits through the use of AI or otherwise, would be a common legal outcome in favour of the IP right holder.

Existing laws in India which may be extended to AI-generated works

Presently, India has no specific enforceable laws or legislative provisions tailormade to pointedly deal with AI generated counterfeiting or infringement of IP rights. However, the interpretative scope of the existing laws can certainly be broadened to take into their purview the issue of counterfeiting and infringement through the use of generative AI. In any event, at this stage, criminal intention, mens rhea or culpability for such counterfeiting and infringement through the use of generative AI can only be ascribed to a natural or juristic person making use of the AI in question and not the AI itself. Likewise, the concept of abetment and/or authorization has to be seen in the context of liability of only such natural or juristic person, which currently does not include AI by definition.

Indian Penal Code, 1860:

The legislature has defined counterfeit under section 28 of the Indian Penal Code, 1860 as an action done to cause one thing to resemble another with an intention to practice deception, or with a knowledge that such action would be likely to cause deception. In the context of this section, an exact imitation of the original thing is not required to establish counterfeiting. The provision further clarifies that, unless proved otherwise, a resemblance of the counterfeit with the original thing that is sufficient to cause deception creates a presumption of an intention to practice deception on behalf of the counterfeiter.

Specifically, Sections 479 to 483 pertain to falsification of property marks, and counterfeiting by way of applying such falsified marks. The punishment for counterfeiting entails imprisonment of up to three years and fine, or both.

A charge of cheating can be booked against a person committing the offense of counterfeiting under Section 415 of the Indian Penal Code. The explanation (b) under Section 415 specifically illustrates that putting a counterfeit mark on the article does amount to cheating.

The above provisions may be applied to AI-generated infringement or counterfeiting especially where criminal intention to defraud and violate the IP right of the right holder can be established and ascribed to the user of the AI /prompt engineer.

The Trade Marks Act, 1999:

Trademark laws safeguard and prevent the unauthorized or deceptive use of marks on products and services offering stronger protection for trademarks, and ensuring that businesses and individuals can establish, maintain, and defend their distinctive marks, logos, and brand identities. An act of counterfeiting also constitutes infringement of a registered trademark under Section 29 of the Act. Use of the mark includes acts such as affixing the mark to goods or the packaging thereof, offering or exposing goods for sale, putting them on the market, stocking them for such purposes, importing or exporting or using the registered trademark on business papers or in advertising. Additionally, the Act also protects the rights of unregistered trademarks, which are actionable under the tort of passing off.

In a scenario involving the creation/adoption of trademarks using generative AI, questions would arise regarding the mark's originality and the potential for it to be perceived as a counterfeit or an infringing mark. This situation necessitates a thorough examination to determine whether the AI-generated mark is genuinely unique or if it bears resemblance to any pre-existing trademarks, thereby warranting scrutiny under trademark law and potential legal actions.

Section 135 (1) of the Act provides reliefs in terms of injunction, damages or accounts of profits, and delivery-up of the infringing goods for destruction or erasure. Further, Section 135 (3) of The Trade Marks Act, 1999 states as follows:

Notwithstanding anything contained in sub-section (1), the court shall not grant relief by way of damages (other than nominal damages) or on account of profits in any case–

(a) where in a suit for infringement of a trade mark, the infringement complained of is in relation to a certification trade mark or collective mark; or

(b) where in a suit for infringement the defendant satisfies the court—

• that at the time he commenced to use the trade mark complained of in the suit, he was unaware and had no reasonable ground for believing that the trade mark of the plaintiff was on the register or that the plaintiff was a registered user using by way of permitted use; and
• that when he became aware of the existence and nature of the plaintiff's right in the trade mark, he forthwith ceased to use the trade mark in relation to goods or services in respect of which it was registered; or

(c) where in a suit for passing off, the defendant satisfies the court—

• that at the time he commenced to use the trade mark complained of in the suit he was unaware and had no reasonable ground for believing that the trade mark of the plaintiff was in use; and

• that when he became aware of the existence and nature of the plaintiff's trade mark he forthwith ceased to use the trade mark complained of.

In order to apply Section 135(3) to AI generated infringement/counterfeiting, it would be necessary to understand the intention of the human user of AI. As mentioned above, there are two situations to consider with respect to AI generated content/work. In either scenario, an injunction/restraint against the offending act would be granted to the trademark owner whose rights have been violated. However, whether the owner is eligible for damages, or a statement of accounts, would depend on the intention and knowledge of the person using such AI that leads to the infringement/counterfeiting complained of.

In cases where the person using the generative AI can substantiate his/her lack of awareness and absence of reasonable grounds to believe that another party's trademark was registered or would be infringed or passed off, as the case may be, and subsequently upon discovering the existence of the other party's trademark rights, he/she also promptly ceases its use, then the court will refrain from awarding substantial damages or account of profits to the plaintiff/trademark owner. However, the plaintiff/trademark owner may be entitled to nominal damages as a recognition of the infringement/violation of its rights.

Additionally, Sections 102 to 104 of the Trade Marks Act, 1999 provide a criminal remedy for falsifying trademarks as well as selling goods with falsified trademarks. The penalty includes imprisonment for a term of six (6) months to three (3) years, as well as a fine of fifty thousand rupees (Rs. 50,000/-) to two lakh rupees (Rs. 2,00,000/-). Additionally, Section 111 provides for forfeiture of the impugned goods in relation to the offence of falsification of mark. The Police are also empowered to act on complaints received and conduct search and seizure of infringing goods.

The Geographical Indications of Goods (Registration & Protection) Act, 1999:

Similar to the Trade Marks Act, 1999, the GI Act also provides civil and criminal remedies for infringement of Geographical Indications. An act of counterfeiting a registered GI also constitutes infringement under Section 22 of the Act.

Section 67(1) of the Act provides reliefs in terms of injunction, damages or accounts of profits, and delivery-up of the infringing labels for destruction or erasure. Further, Section 67 (3) of the Act states as follows:

Notwithstanding anything contained in sub-section(1), the court shall not grant relief by way of damages (other than nominal damages) on account of profits in any case--

(a) where in a suit for infringement the defendant satisfies the court--

(b) where in a suit for passing off, the defendant satisfies the court--

Therefore, it can be seen that similar to the corresponding provisions of the Trade Marks Act, this Act also differentiates the two scenarios i.e., one where knowledge/awareness/intention can be ascribed to the person using the AI leading to violation of the GI; and the other where no such knowledge/awareness/intention can reasonably be ascribed to the satisfaction of the court. In both scenarios, an injunction/restraint against the offending act would be granted to the GI owner(s). However, in the latter scenario, in cases where the AI user also promptly ceases violative use of the GI upon gaining awareness of the existing GI right, the court would refrain from awarding substantial damages or account of profits to the GI owner(s). However, the plaintiff may be entitled to nominal damages as a recognition of the violation of its rights.

Additionally, Sections 38 to 40 of the Act provide a criminal remedy for falsifying GIs as well as selling goods with falsified GIs. The penalty includes imprisonment for a term of six (6) months to three (3) years, as well as a fine of fifty thousand rupees (Rs. 50,000/-) to two lakh rupees (Rs. 2,00,000/-). Additionally, Section 46 provides for forfeiture of the impugned goods in relation to the offence of falsification of GI. The Police are also empowered to act on complaints received and conduct search and seizure of infringing goods.

The Copyright Act, 1957:

The Copyright Act, 1957 is the legislation that protects original literary, dramatic, musical and artistic works, cinematographic films and sound recordings. The bundle of rights constituting copyright under each category of work lies in the expression and not in the idea of the owner. The concept of infringement in copyright is covered under Section 51 of the Act. A copyright is deemed to be infringed when a person without the permission of the owner does any act which the copyright owner is exclusively entitled to do. Similarly, counterfeiting of copyrighted original works would also constitute infringement of copyright under Section 51 of the Act. The Act also provides civil reliefs such as injunction, damages, accounts and otherwise as laid down under Section 55 of the Act. However, for Section 55 to be implemented in case of infringement by AI, one needs to understand the intention of the natural person/prompt engineer behind it. As discussed above, there can be two scenarios that can be put in use in order to ascertain the type of relief in case of infringement or counterfeiting by AI. In any such case the relief of injunction will, logically, always follow in favour of the copyright owner. However, to ascertain whether the owner would additionally be awarded damages or account of profits, it would depend on the intention of the natural person/prompt engineer behind the AI-generated work. The right way to interpret Section 55 in case of infringement or counterfeiting by AI would be to read the proviso of Section 55(1) which talks about the intention of the defendant which can be interpreted as the intention of the user of AI/natural person/prompt engineer. The said proviso basically states that where the defendant proves that at the time of infringement, he/she was unaware and had no reason to believe that there subsisted a copyright in the work, in such a case, the plaintiff/author/copyright owner would not be awarded damages. However, the copyright owner will be entitled to an injunction and a decree at the discretion of the court for the whole or part of the profits made by sale of such infringing copies of the copyrighted work.

Further, under Section 63 of the Act, criminal remedies in case of infringement of copyrighted work is provided which includes imprisonment up to 3 years and fine of up to Rs. 2,00,000/-. In the similar sense as stated above, one can interpret this provision regarding infringement or counterfeiting as caused by AI. The section reads "any person who knowingly infringes or abets the infringement...". This can be interpreted in the manner that if the human user of AI had the intention to infringe or create a counterfeit through the use of AI in violation of a copyrighted work, then he/she shall be held liable. In this case, the intention of the abetter/human user needs to be proved beyond a reasonable doubt. Further, under Section 64, the power to seize without warrant, all copies of the work, and all the plates used for the purposes of making infringing copies of the work, has been provided to the police.

The Patents Act, 1970:

The Patents Act grants exclusivity under Section 48 to a patent holder to prevent third parties, who do not have his/her consent, from making, using, offering for sale, selling or importing a patented product in India or a product that is obtained directly by a patented process in India. Typically, only civil remedies are granted in suits for patent infringement such as injunction/restraint on the infringing acts, damages or an account of profits and/or seizure, forfeiture or destruction of infringing goods as per Section 108 of the Patents Act, 1970.

For infringement of a patent by the use of AI where the user has given any specific instructions, which give reason to believe that such user had knowledge or awareness that the infringement complained of would be the necessary result, culpability can be ascribed to such user. In such a scenario, the reliefs that the Indian law can provide would be an injunction as well as damages / an account of profits. Where, however, any knowledge, intention and/or awareness of probable infringement cannot reasonably be ascribed to such user of the AI, for instance in cases where instructions given to AI are generic or general in nature, the relief of injunction would still be the logical outcome. However, in this scenario the user may escape liability from an award of damages or account of profits as per Section 111 if he/she is able to prove that at the date of the infringement he/she was not aware and had no reasonable grounds for believing that the patent existed. The explanation to Section 111 also states that "a person shall not be deemed to have been aware or to have had reasonable grounds for believing that a patent exists by reason only of the application to an article of the word "patent", "patented" or any word or words expressing or implying that a patent has been obtained for the article, unless the number of the patent accompanies the word or words in question." Thus, where the user of generative AI is able to prove that at the time of infringement, he/she was not aware of the existence of a patent or where the number of the patent was not marked by the right holder on the patented article, then the relief of damages/account of profit cannot be awarded to the right holder.

The Designs Act, 2000

Section 22 of the Designs Act protects against piracy of a registered design and provides for civil remedies including injunction, damages and account of profits.

The Designs Act provides requirements under Section 15(b) to be fulfilled by the proprietor before selling any items with a registered design that each article must be appropriately marked with the designated symbol or relevant figures signifying the registration of the design. Failure to do so will preclude the proprietor from seeking penalties or damages in cases of copyright infringement in the design unless they can demonstrate either a sincere effort to mark the article or that the infringement occurred after the infringing party / guilty person had knowledge of the existence of copyright in the design.

Individuals who infringe upon the copyright of a registered design will be obligated to pay to the registered design proprietor, for every contravention, a sum of money not exceeding twenty-five thousand rupees (Rs. 25,000/-). This sum of money will be recoverable as a contractual debt. In the event the registered design owner opts to initiate a legal proceeding/suit for the recovery of damages for any such contravention/imitation/piracy, and for an injunction to prevent future violations, then the amount recoverable from the violator/defendant will not exceed fifty thousand rupees (Rs. 50,000/-).

As regards any infringement of a registered design by the use of AI where the person/ user of the AI has given any specific instructions, which gives reason to believe that such user had knowledge or awareness that the result which would be generated from the AI module would be similar to an already existing registered design, culpability can be ascribed to such user. In such a scenario, the reliefs that the Indian law can provide would be an injunction as well as damages. Where, however, any knowledge, intention and/or awareness of probable infringement/piracy cannot reasonably be ascribed to such user of the AI, for instance in cases where instructions given to AI are generic or general in nature, the relief of injunction would still be the logical outcome. However, in such cases, the relief of damages would not be awarded to the right holder.

Information Technology Act, 2000

The Information Technology Act provides a legislative framework for the electronic governance in India. The Act also defines the term "computer" and "computer source" which when seen with a perspective of futuristic growth of the electronic/digital world, may include the definition of AI. The Act further defines "intermediary", in respect of any electronic records, as a person who on behalf of another person receives, stores or transmits that record/data or provides any service with respect to the record/data. Thus, by widening the scope of interpretation of these definitions, the infringement or counterfeiting by AI can be brought under the scope of this Act as well as the activities, responsibilities and liabilities of an intermediary having or employing the use of AI tools or AI driven features. However, culpability and criminal/wrongful intention can only be ascribed to the natural/juristic person being the user of such AI on a case-by-case basis and not to the AI per se.

Further, as per Section 45 of the Act which provides for Residuary Penalty, it covers any person who contravenes the provisions of the Act and for which any penalty is not specifically provided. In case of any such contravention, that person shall be liable to pay a compensation not exceeding twenty-five thousand rupees to the person affected by such contravention or a penalty not exceeding twenty-five thousand rupees (Rs. 25,000/-).

Information Technology (Intermediary Guidelines & Digital Media Ethics) Rules, 2021:

The Guidelines are comprehensive and provide structured dos and don'ts to intermediaries, including setting up detailed grievance redressal mechanism, appointment of local Chief Compliance Officer, Grievance Officer and Nodal Contact Person each with defined roles and duties. The Guidelines also prescribe publication of monthly compliance reports by certain categories of intermediaries. The Rules also define the terms "content", "content descriptor" and "online curated content" which when seen with a perspective of futuristic growth of the electronic/digital world, can include AI generated content. The Rules explain the due diligence that needs to be taken into account by the intermediary and also provides for a grievance mechanism related to online content. This can include the content created by AI and can be acted upon if it infringes any IP right. The grievance redressal mechanism of an intermediary, as per these Rules, directs the grievance officer of such intermediary to acknowledge any complaint within 24 hours and resolve such complaint within a period of 15 days from the date of its receipt.

In the future, it may technologically be possible to have a built-in framework within the AI module to identify and notify the human user of the existence of any IP right and of the possible violation of such right if the outcome were to be achieved in view of the instructions given to it. This may, at least, be helpful in preventing or ceasing violation of the concerned IP right, especially where the human user of the AI has no knowledge/awareness/intention to cause any such violation, and such a notification by the AI would alert the user to stop the activities, which may otherwise lead to the violation.

Nevertheless, there is a growing need to have appropriate laws and regulations in place to deal with the myriad of scenarios where violations of IP rights can be caused by the use of AI. A holistic approach to standardize responsible AI and even promote the adoption of the best practices and governance to deal with AI is the need of the hour.

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.