What legal remedies exist when counterfeit products appear in local markets?

Introduction

Recently, the Delhi High Court granted a permanent injunction in favour of Hindustan Unilever Ltd. (HUL) and Procter & Gamble (P&G). The plaintiffs have also been awarded damages of 2.5 lakh. This has restrained the defendant from manufacturing and selling counterfeit Fast-Moving Consumer Goods (FMCG). But what are counterfeit products? It refers to the goods that are sold in the market under the unauthorised name of any brand, trademark, or logo. In layman’s terms, it refers to the fake goods that are copies of original brands. Manufacturing or selling counterfeit goods is a criminal act, and it is a theft of the trademark of another party.

Why Do Counterfeit Goods Appear In The Market?

Today, this problem of counterfeit goods is proliferating rapidly in the Indian market. It has become a significant impediment to the growth of a healthy market, as counterfeit products are the cheap copy of original brands, which significantly lowers the quality and standard of the goods. Consequently, this is not only harmful for trademark owners, as their right is infringed, but also for consumers, as they are the ones who ultimately use these products. The rise in online platforms and high demand for affordable products are the driving forces behind this problem.

Legal Framework Governing Counterfeit Products in India

As the counterfeit products challenge the intellectual property rights of people, it is majorly governed by the Trademarks Act, 1999. Further, some provisions of the Copyright Act, 1957, and Bharatiya Nyaya Sanhita (BNS), 2023, also provide some insights into counterfeit products.

Legal Remedies under the law

There are various civil and criminal remedies available under the law against the sale of counterfeit goods in the market. These are as follows:

Remedies available under the Trademark Act, 1999, are:

Section 29 - It deals with the infringement of a registered trademark by an unauthorized use of a deceptively similar mark, which can cause confusion and harm the reputation of the registered proprietor. This section provides the legal basis on which the proprietor can take an action.

Section 103 - It prescribes criminal penalties for counterfeiting activities. It provides imprisonment of a minimum of 6 months, extending up to 3 years, with a fine of 50 thousand rupees to 2 lakh rupees.

Section 135 - According to this, a court can grant a permanent injunction, damages, or an account of profits. This section applies to both the infringement of registered trademarks and passing off unregistered marks.

Remedies Available under the Copyright Act, 1957:

Section 55 - This section dictates that when copyright is infringed, then the owner can opt for civil remedies, which include injunctions, damages, and accounts of profits.

Section 58—This section provides the right to the owner to claim the ownership of all the infringing copies of any work and all plates used for the production of such work.

Section 63 - It makes the infringement of copyright a criminal offense. Any person who intentionally infringes the copyright or abets the infringement shall be punishable with imprisonment of not less than 6 months, which may extend to 3 years, with a fine of a minimum of 50 thousand rupees, which may extend to two lakh rupees.

Remedies Available under BNS, 2023:

Section 347 - It punishes anyone who counterfeits a property mark used by another with imprisonment, which is extended to 2 years, a fine, or both.

Section 349 - It punishes anyone who sells or possesses counterfeit goods with imprisonment, which is extended to one year, or a fine, or both.

Case Study—Hindustan Unilever Limited v. Ashok Kumar and Others

In this case, the plaintiffs, Hindustan Unilever Limited and Procter & Gamble Company of the USA, filed a suit against the defendant, Ashok Kumar, against the production and sale of fast-moving consumer goods (FMCG) in 2018. It was alleged that the defendants were involved in the manufacturing and selling of fake shampoos, detergents and cosmetics under established brands such as Lakme, Ariel, Clinic Plus, etc.

The Delhi High Court eventually found that the defendants were guilty and passed a decree restraining the defendants from manufacturing and selling counterfeit products. The court also awarded the damages of Rs. 2.5 lakhs along with interest.

Conclusion

The issue of counterfeit goods is becoming colossal day by day. Although the legal framework exists for the protection of the trademark rights of proprietors, there is still a greater need for the effective enforcement of these laws. Further, a consumer awareness program should be organised to raise awareness among consumers. E-commerce platforms should be consistently monitored by the government, as the rise in online platforms has given a push to the practice of selling counterfeit products in the market. There are many civil and criminal remedies available against the manufacturing and selling of such products. As this problem is compounding in the market, there is a pressing need to implement robust strategies to mitigate the effect of this issue.