With the increasing globalization of our economy and the adoption of numerous brands and products, the possibility of parties infringing, diluting or passing off valuable brands, increase day by day.
Trademark infringement is a violation of the exclusive rights attached to a registered trademark without the authorization of the trademark owner or any licensees. Section 29 and 30 of the Trade Marks Act, 1999 (“the Act”) deal with the infringement action as a remedy against unlawful and unauthorized use of a trademark. A trademark is diluted when the distinctiveness of a famous mark is blurred or tarnished by the association with another similar mark or trade name, irrespective of the goods or services it is applied to. Besides infringement and dilution, courts in India also recognize passing off as a remedy under common law. Passing off is a tort actionable under common law and is mainly used to protect the goodwill attached with unregistered trademarks, and is covered under Section 27 of the Act.
Indian Trademark Law provides civil, criminal, as well as administrative remedies for taking action against infringement, dilution and/ or passing off of a trademark. This note discusses the types of remedies available, and examines the best approach in different scenarios.
A. CIVIL REMEDIES
A lawsuit may be initiated for passing off or for infringement under the Act depending on whether the trademark is registered, pending registration or unregistered. It is recommended that legal action be initiated against the infringer as promptly as possible in order to establish the seriousness of the rights holder’s intent before the Court. Delay in initiating action may affect chances of obtaining an injunction. However, if there is a continuing cause of action, courts have considered such “new” knowledge as a fresh matter, and proceeded on that basis.
Trademark owners and courts have always found it difficult to quantify the damages caused by infringement. Further, the process of determining damages on the basis of actual or potential loss suffered is cumbersome, so rights owners would usually relinquish their claim. Now, increasingly, though, Indian courts have started imposing financial penalties in the form of damages to ensure that intellectual property (IP) rights are not violated.
Civil remedies can be enforced by filing a suit for infringement in a competent court. The following forms of civil reliefs are available:
a. Interlocutory/ Temporary/ Ad-interim Injunction – A discretionary relief that is offered to the Plaintiff, prohibiting an action by a party to a lawsuit until the disposal of the suit;
b. Mareva Injunction – A specific kind of interim injunction that is granted to restrain the defendant from disposing off their assets until the trial ends or the judgment is delivered;
c. Anton Piller Order – These orders allow the Plaintiff to enter the premises of the Defendant and take inspection of relevant documents and articles and take copies or remove them for safe custody, to ensure that relevant documents and infringing articles are not removed or destroyed by the Defendant;
d. John Doe Order – These are orders issued by a Court to search and seize against unnamed/ unknown Defendants;
e. Permanent/ Perpetual Injunction – The final order that a person be refrained from specified (infringing) activities permanently or take actions in perpetuity;
f. Damages or Accounts of Profits – Damages granted to the Plaintiff to compensate for losses suffered on account of the Defendant’s acts. Accounts of profits are an equitable remedy which requires the Defendant to hand over to the Plaintiff the actual amounts of profits made due to the infringing activities; and
g. Delivery up and Destruction – The Defendant hands over the infringing goods to the Plaintiff or destroys them altogether.
Civil actions are arguably the most effective form of remedy available in trademark suits. But awarding heavy punitive damages is rarely enough, as the challenge usually lies in the process of the actual recovery of the damages from the infringing party. While Courts have become increasingly liberal in granting large damages, they have not really addressed the latter problem, or recovering the sum from the other side. This weakens the effectiveness of the remedy considerably.
B. CRIMINAL REMEDIES
The Act lists numerous offences for falsifying and falsely applying a trademark, making or possessing instruments for falsifying trademarks, applying false trade descriptions, etc. Punishment for the various offences vary, but the maximum punishment can be as high as imprisonment up to 3 years, with or without fine.
Offences under the Act are cognisable. Thus, the police at the time of raids are empowered not only to seize infringing goods, but also arrest the accused. Complaints seeking criminal remedy are filed under Sections 103 and 104 of the Act. A complaint can be filed at the Magistrate Court seeking an order to direct the police to investigate and carry out raids. Once a complaint is filed, the Magistrate records the evidence of the complainant and issues an order with appropriate directions to the Police.
While the order is a direction to the Police to investigate, the complainant is obligated to locate the infringers and direct the Police to them. A single complaint against “unknown persons” can be used to carry out raids against different and unconnected parties. It is the sole responsibility of the complainant to follow up with the Police after the raids have been carried out and prove that the products seized are counterfeit.
C. ADMINISTRATIVE REMEDIES
The following administrative remedies are available against trademark infringement:
a. Opposition against a similar mark
Any right holder or third party who believes that a trademark published in the trademarks journal might create confusion or deception amongst the public can oppose the mark within four months from the publication date. Thereafter, evidence is submitted by both parties to support their claims, and a decision is taken if the trademark ought to remain on the register.
b. Rectification of a registered mark
An aggrieved party can file for the rectification, or cancellation of registration, or removal, of a registered trademark, if that person believes that the mark is wrongly remaining on the trademarks register. A mark may be wrongly remaining on the register even though it is not being used, or it has expired, or has been registered without considering its similarity with an earlier mark. In such cases, the Act provides for the procedure to correct or rectify an error or an omission that has been made in the register.
c. Recordal with Customs to prevent the import or export of goods bearing the infringed trademark.
Enforcement under the (Indian) Customs Act, 1962
Section 11 of the Indian Customs Act, 1962, empowers the Government to prohibit the import or export of goods for the protection of intellectual property rights. Goods imported in contravention of this provision or any other law are liable to be confiscated. A customs officer is empowered to inspect any premises, conveyance, x-ray any person and effect search and seizure, if they have reason to believe that the goods are contraband. They can also investigate or interrogate and arrest any person, if they have reasonable doubt of the involvement with the counterfeit goods.
Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007
These rules comply with border measures as required by the Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) empowering Customs officials to enforce IP rights over imported products. Under these Rules, rights owners can record their registered trademarks with Customs authorities. These rules authorize Customs officials to seize goods infringing the trademarks of the rights holder at the border without obtaining any orders from a court, provided they have prima facie evidence or reasonable grounds to believe that the imported goods are goods infringing the trademarks of the rights holder.
Under these Rules, a notice by way of an application has to be filed along with supporting documents stating grounds for the suspension as well as details of the consignment. Upon receipt of the application, the Customs Authorities may register the complaint and enforce appropriate border control measures. These rules also empower Customs officials to destroy the suspended goods under official supervision, or to dispose them outside the normal channels of commerce, after it has been determined that the goods detained have infringed the trademarks of the rights holder, and that no legal proceeding is pending in relation to such determination.
CONSIDERING AN APPROPRIATE ROUTE FOR TRADEMARK ENFORCEMENT
In recent years, with the implementation of an “IPR regime” by the Government, as well as a significant progress in setting up special IPR cells to counteract the manufacture and sale of counterfeit goods, trademark enforcement has been stepped up considerably. That said, even though the impact of a raid may seem more practical and alluring, in practice, a poor understanding of IP laws by the Police has made the process of seeking criminal remedies fairly tedious. Furthermore, slow prosecution, extensive timelines and limited exit options, are some factors which IP owners must keep in mind when deciding between civil and criminal remedies. Generally, IP enforcement still remains tilted towards filing civil actions.
Choosing the criminal route is effective where the rights holder wants to consider carrying out a market search to weed out infringing products and seize goods through raids. This would create an impact in protecting one’s brand but would also be time-consuming, as well as a drain on monetary resources.
A few factors to be considered while selecting this route are as follows:
a. Recovery of damages
In recent cases, Courts have awarded both punitive as well as compensatory damages. It is well-regarded that the quantum of damages must be directly proportionate to the seriousness of the infringement. Therefore, the holder of statutory and common law rights in a trademark is likely to find it easier to recover costs and damages through civil action.
b. Choice of Court
The choice of court in which to file a suit is an extremely important factor to consider, as quite a few Courts, particularly district courts, are not experienced in, or well-versed with, IP laws. Further, even though recent years have seen cases being tried in a more systematic and effective manner, the tremendous backlog of cases mostly results in delay. In a criminal action, if the suit is presented before a Magistrate who lacks sufficient knowledge with regard to specialized IP matters, the matter is likely to be delayed further.
c. Disclosure of information and lack of knowledge
A criminal action requires close monitoring and follow up with the Police. While working with the Police in conducting a raid, there may be an additional drain on monetary resources. Further, there is always a concern that information about the raid may be leaked, or that the infringer is somehow made aware of the impending raid. In such cases, the infringer may either close operations altogether and move locations, or destroy a few infringing goods to hide evidence. Further, the Police are usually not experienced with intricacies of IP law and may not handle the raid in an effective manner.
d. Loss of Evidence
On account of numerous adjournments and delays in action, essential evidence may be lost in the process, due to which the entire case may end up being a waste of resources where the rights holders are unable to prove their claims.
Thus, choosing between the pursuit of civil and criminal actions in trademark matters is a matter of assessing the situation at hand, and the resources available to the rights holder. A careful consideration of all factors before filing a suit can affect the outcome in the long run.