Impediments in Criminal Enforcement of Trade Marks & Copyright:

• Cultural Diversity: MC being a heritage of multi linguistic and diverse communities with varied cultural differences – Most of the Court proceedings is conducted in local language which is difficult to understand, interpret and to represent the matter to the right holder seeking enforcement of his rights from distant territory. MC is a country having maximum number of languages which has their varied dialects that change from the region to region. The difference in the procedural language becomes hindrance for initiating action at the defendant place of business.

• Legal Impediments (Judiciary):

o Jurisdiction: No court inferior to that of Metropolitan Magistrate or Judicial Magistrate of First Class shall try offence under the Trade Marks Act 1999 as provided by Section 115(2).

o Enforcing Rights at Accused Place of Business: In most of the cases if the accuse is outside the jurisdiction of the Police Authorities, the complainant has to file complaint before the Police Officer in whose jurisdiction the Accused is situated. The right holder finds it difficult to represent or to interpret the facts of the case to the Court properly – especially in the passing off matters in respect of unregistered trademarks where the cause of the action arrises where the defendant usually resides or carry on the business.

o Abuse of process of Law: In most of the cases there is gross abuse of the process of law by the Advocates to delay the matter by filing Exemption Applications at the initial stages before the proceedings or by resorting to the remedy of Section 482 by invoking the provisions of the inherent powers of the High Court to quash the criminal proceedings by alleging that the proceeding are illegal and fraudulent against the principles of natural justice or by challenging the jurisdiction of the Court or by asserting illegality in the proceedings.

o Lack of awareness of provisions of the Act: The Judicial Authorities in remote area are sometimes unaware of the existence of Trademarks Act to protect the interest of the commercial community interest.

For Instance: Complainant was showing that it was a case of making use of false trademark, counterfeiting a trademark and selling goods with a counterfeit trademark. Complainant was mentioning in complaint under section 482 and 483, IPC. These sections were removed from the IPC after enactment of the Trade and Merchandise Mark Act 1958. It was held that it was not correct for the Magistrate to frame charge only under section 482, IPC Case was not covered by Sec 482 No charge having been framed for use and application of false trademark and selling goods with counterfeit mark fresh trial was ordered – Shameen Ahmed v. Mohal Lal, AIR 1967 ALL 346.

o Lack of expertise knowledge: In remote areas the frequency of IPR cases coming before Courts is too low so most of the courts are inexperienced or lacks expertise knowledge about the provisions of Act and latest developments having binding precedents of the Apex Court.

o Transfer of Magistrates: In many cases due to delay in expediting the process of trial long period of time lapses and the transfer of Magistrates may occur with further delay in trial.

• Administrative Impediments (Police Authorities):

o The Offences under Section 103 or 104 or 105 are cognizable under the provisions of the Section 105(3). Even then the Police Officers direct the Complainant to approach the Courts by giving excuses like they don’t have time; there is no cause of action; the offender’s premises beyond their jurisdiction and no action can be taken as the trademark is unregistered.

o Wrong interpretation: Provisions of the Trademark Act 1999 is wrongly interpreted especially Section 27(1) “No action for infringement of unregistered trademark” – which is usually interpreted to mean that “the Police Officer do not have to take an action for infringement of Unregistered Trademark” without referring to the other provisions of the Act like Section 29. Usually when the police authorities approach The Registrar of Trademarks to seek their opinion for further course of action the Registrar usual quote Section 27 without giving the proper interpretation of the provision of the Act or direction as to the course of action to be resorted.

o The Police Officers are not qualified for these type of commercial offences – Under the provisions of the old The Trade and Merchandise Marks Act 1958 the police sub inspector was authorised to conduct the raid and investigation in these matter as a result of which most of the offence were not detected and investigated properly and in many instances the accused are set free for lack of proper cognate evidence. To overcome this problem under the provision of new trademarks Act 1999 Dy.SP is appointed. The Police Officers are unaware of the principles and interpretation of the provisions of the Trademarks Act 1999. They are untrained, have no extra human resources, they are overburdened with the administrative and security work, there is no ex-officio initiative on their part as there is no appreciation for good work.

o The Police Authorities sometimes have to work under the political pressure in discharging their duties. The counterfeiters may use their political influence to pressurise the police authorities to delay the enforcement work or to create false evidence.

• Procedural Impediment:

o No Judicial Intervention: The Offences under Section 103, or 104, or 105 are cognizable so the Courts are reluctant to entertain the Private Complaint and direct the Complainant to the Police Authorities for registration of FIR and further investigation.

o Section 115(4): Additional procedure to be followed for Search and Seizure:

 Person Authorised: Any Police Officer not below the rank of Deputy Superintendent (Dy.SP) (in Mumbai Asst. Commissioner of Police (ACP)) or Of the equivalent grade. In most of the territories of MC Special Enforcement Cell’s are constituted to initiate action against the infringers. There is no co-operation from the Police Officers of the other states with these Special Enforcement Cells to initiate action against the infringers in their territory. The Enforcement Officers are designated amongst the existing Police Officers having no specialised knowledge, technique and skill to put the infringers beyond the bars.

Limitations:

• The Dy.SP is over burdened with the administrative work. They consider these offences as less serious.

• The Dy.SP is reluctant to personally conduct raid.

- The Search and Seizure may be allowed only if Dy.SP is satisfied that the offences under Section 103, 104 or 105  is being  or is likely to be, committed.

If the complainant approaches the Dy. SP, he advices to file criminal Complaint with the Judicial Magistrate First Class or with the Metropolitan Magistrate, as the case may be. – Reasons being not satisfied with the Complainants case or Accused is beyond his jurisdiction.

Simultaneous raids are refused: If the one of the premises to be raided is outside the jurisdictional limit, Raid (search and seizure) is simply refused and the Complainant is asked to file fresh Complaint with the jurisdictional Police Authority for the same cause of Action with repetition of the same procedure.

o Filing fresh complaint before the other Police Authority delays the enforcement.

o If the information is leaked, the infringers get opportunity to dispose of the infringed material and to destroy evidence.

o The Complainant has to wait for obtaining registrars opinion.

Even if the Raid is arranged on satisfaction of the Dy.SP the Police Authorities of the other jurisdictions are reluctant to co-operate with the Special Enforcement Officers.

o They delay the raid by offering reasons of unavailability of the backup resources for conducting Raid.

o It is mandatory for the Police Officer of Special Enforcement Cells to inform the Officer in charge of the Police Station of other jurisdiction before conducting the Raid. The likelihood of leakage of information increases as the Police Officer of the other jurisdiction may have hands with the infringers.

o Warrant: The Dy. SP can conduct the raid without warrant within his jurisdiction but the necessity of the Warrant may arise if the raid has to be conducted outside his jurisdiction – this again delays the enforcement till the time of getting the warrant. For obtaining warrant the place of business and name of the accused has to be mentioned in the application, so this disclosure is enough for the corrupt officer to misuse the power and information and frustrate the enforcement. In one of the case it was held that --- If the criminal complaint is made under section 103 and 104 of the Act against unknown persons and magistrate orders for police enquiry and general search warrant, when complainant was aware of petitioners business, is liable to be quashed and set aside under the inherent power of the High Court when exercisable on interlocutory orders. – Pramod Kumar Bhandari v. State and Ashok Bhandari (1997) IPLR 171 at 177 (Del).

o No Time limit for bringing the infringing goods before the Court: The Provision of section 115(5) provides that the Police Officer can search and seize without warrant the goods, die, block, machine, plate, other instruments or things involved in committing the offence, wherever found and all the articles so seized shall, as soon as practicable, (no maximum time limit is prescribed – yet another opportunity to delay) be produced before Court.

o No Availability of space for safe keeping of the infringing material and the goods so seized before they are brought to the Court and the matter of release of the goods is decided on priority. The Complainant is made to have the proper custody of the seized goods. In the event of it being damaged or destroyed the complainant is made liable for the same.

o No Proper valuation of the cost of infringing material and goods.

o Opinion From Registrar u/s.115(4): The opinion of the registrar of the trademarks has to be obtained before conducting search and seizure. It is mandatory for Police officer to obtain opinion. The opinion has to be obtained before conducting search or seizure. Opinion has to be obtained with regards to the facts (rights of the holder of the trademarks) involved in the offence.

• The Police officer has to disclose the facts of the case to the designated officer of the Trademarks Registry with regards to Complainant and the allegations of infringement against the accused.

• The opinion has to be obtained with regards to the existence of the trademarks right of the Complainant which supersedes that of the accused.

The Opinion is obtained with regards to the deception and confusing similarities of the trademarks of the Complainant and the Accused.

 The Police officer has to abide by the opinion so obtained.

o There is undue delay in getting the opinion although the Rules provide that the opinion has to be given within the period of 7 working days under Rule 110 of The Trade Marks Rules, 2002.

o There is no proper and fixed designated person to tender the Opinions on which the criminal action is to be based.

o The Designated Officer’s are saddled with the routine administrative work.

o Most of their time is wasted in attending the Court matter where they have to provide explanations to the court for the mistakes or the opinions given by the previously designated officers.

o The designated Officer are usually the Jr. Examiners of the Trademark Registry. They are inexperienced. They have no practical knowledge and expertise in the field. Some senior independent personnel with expertise knowledge should be deputed for giving the opinion. Preferably the person of the rank of the Deputy Registrar or Joint Registrar.

o The Opinion are ambiguous and confusing –

Opinions are not suggestive to take direct actions against the fraud. Opinion are not direct they are diplomatically given to avoid further trouble of attending the Courts by the designated officers.  Sometimes to shift the burden of the legal action on the Police Officers for their timely acts. Opinions are not clear and are usually wrongly interpreted – Specifically the provision of section 27 of the Trademarks Act 1999.  There is likelihood of leakage of information before Raid.

• Composite Offences: The question may arise as to who is the authorised person to take the cognizance of offence when the act of Counterfeiting infringes both the trademarks and Copyrights of the Complainants?

o According to Section 115 of Trademarks Act 1999 the Police Officer not below the rank of Dy.SP has to take the Cognizance and

o under the provision of Section 64 of the Copyright Act any police officer not below the rank of Sub-inspector is authorised to take cognizance and search and seizure.

• Release of Seized Materials 115(5): The Opportunity is given to the Accused or any person interested to apply to the Court for restoration of the material so seized within 15 days and the Magistrate decides the fate of the seized infringing material before the commencement of trial on hearing the prosecution and the Applicant.

• No Deterrence Punishment: Though the Offences under the provisions of the Trademarks Act are Cognizable, Warrant triable, Non-Bailable and Non-Compoundable. The penal provisions of the Act are not deterrent as it should have been considering the mentality of the criminals.

o For the commission of the offence at first instance the punishment is imprisonment for minimum 6 months which may extend to 3 years and with fine of minimum Rs.50,000/-.which may extend to Rs.2,00,000/- as provided in Section 103 and 104.

o For the commission of the offence for second time the punishment is enhanced to imprisonment for the term of minimum 1 year and which may extend to 3 years with fine of minimum Rs.1,00,000/- which may extend to Rs.2,00,000/- as provided in Section 105.

o The punishment of the fine is negligible where the offender earns in Crores. Fine is no way deterrence to these type of commercial offences.

o The punishment or fine is imposed on conviction and on proving of the guilt. There is lapse of long period from the time of initiation of the Criminal Complaint till the time of conclusion of the trial. In most of the cases where the Complainant is the company if the authorised person prosecuting the Complaint switches over to other company, the matter is forgotten and not represented then it stands dismissed due to non attendance of the Complainant and the counterfeiters are discharged.

o In some of the cases the Offenders tries to compromise the matter out of the court as the matter is compoundable by submitting the undertaking to the Court with the consent of the Complainant. And where in respect of infringement of a trademark both the civil and criminal proceedings are launched and the parties arrive at a settlement in the civil proceedings, the criminal proceedings are quashed.” Kewal Krishan kumar v. khush Dil Kapoor (1999) PTC 31(P & H)

o The Act impliedly presumes the likelihood of commission of these offences most frequently even on the prior convictions. The Act has provided for enhance punishment for second and subsequent offence. It indicates as though Act has impliedly allowed second subsequent infringement of the trademarks with slight increase of punishment. The punishment should be increase to minimum of 7 years extending it to life imprisonment with regards to counterfeiting of Food, Drugs and other necessities which may have disastrous impact on the health of public.

o Till the time of conviction for offence the offender is free to deal and trade in the counterfeit products. He may delegate the work of counterfeiting to some other member of his lobby. He may abscond.

o “The Money is the might and prevails over the right”. The counterfeiters may use their Vitamin-M (Money) to tamper the evidence, to purchase the witnesses and to influence the prosecution. The fact of corruption in MC cannot be overlooked.

o During the pendency of trial their may arise situation where Magistrates may be transfer and it delays the trial.

• Mentality and Background of the Criminals:

o The act of Counterfeiting is Organised Crime. Its intentional act done to defraud. The persons engaged in these types of the activities form their lobby and are aware of the acts done by the others in their business circles. In most of the cases it is found that these illegal activities are done by the business partners or by some person from business relations like loan licensee who has complete knowledge of the business. Some of them get involved in these businesses due to discontinuation of business relations.

o The persons involved in this type of offences are normally business minded, greedy for money and are willing to go to the extreme limit for sake of earning money. Their motive is to earn rapid money with no efforts at all.

o They simply have to counterfeit a product and reap benefits of the hard earned goodwill and reputation enjoyed by the honest business house. These offences are done intentionally to encash profit with no efforts.

o They are aware of the consequences which may ensue due to their illegal acts. They engage decoy owner of the business so that they can get the benefit of the provisions of the section 114(1) of the Trademark Act provides that if the offence under this Act is committed by Company,

 the Company as well as every person in charge of, and responsible to, the company for the conduct of its business at the time of the commission of the offence shall be deemed to be guilty of the offence and shall be liable to be proceed against and punished accordingly;

Defence: No such person shall be liable to any punishment if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence. The bonafide Counterfeiter simply has to pay money to one person to bear the consequences of the offences by acting as the Manager of the firm or company and accepting the guilt. In this country there are many unemployed youths who may and are willing to undertake such tasks.

For Instance: This may serve as valid defence - the mere fact that the accused was present at the time of search of factory and recovery of articles there from is inconclusive in showing that he was responsible for the running of the factory or for the falsification of the trademark or for the use of the false labels. In the absence of cognate evidence the Court was justified in acquitting the accused – A. N. Deen v. Jacob, 1992 Cri L J 2089.

• Agency Work: In MC there are many small scale factories operating in remote areas where they run with shortage of work and have spare capacity of production. These factories are willing to undertake jobs of manufacturing the counterfeit product from the unknown Agents with no legal formalities and awareness of rights in the trademarks or copyrights. They execute the work on job work bases and are compensated for their processing work. When such innocent manufacturers are booked for commission of offence they have nothing to prove as there is no legal document to prove relationship with the absconding Agent or to say that they were unaware of the rights in the trademarks. The burden is on the manufacturer to prove that he acted without intention to defraud as provided in section 103 - “unless he proves that he acted without intend to defraud” and section 104(a) (b) and (c).

• Servants Exempted: The provision of Section 151(C) state nothing in Chapter XII be construed so as to render liable to any prosecution or punishment any servant of a master resident in India who in good faith acts in obedience to the instructions of such master, and on demand made by or on behalf of the prosecutor has given full information as to his master and as to the instructions which he has received from his master.

• Slight Dis-similarities of Artistic Work: The raid is sometimes refused because of slight dissimilarities in the artistic work where the matter comprises of composite offences of infringement of the trademarks and copyright. The Police Officers fails to understand the basic principles of interpretation of trademarks law held by the Courts.

o It is the settle law that the material similarities are to be considered and not the dissimilarities to arrive at the conclusion that the marks are confusingly and deceptively similar which the Police Officers fail to understand. They only consider the dissimilarities and refuse to take action.

o The two marks are to be compared as whole for determining the confusing and deceptive similarities.

o There must be a similarity that an unwary customer may not be able distinguish one from the other
especially when sees the one without the other having before him (Giridharilal v Emperor AIR 1936 Pat 579 –Criminal Revision (Sec 482 of IPC )

o The proper test for determining whether the mark used by the accused is a counterfeit trade mark is to consider whether an ordinary unwary purchaser would be deceived (Ashwini Kumar v Emperor AIR 1930 Cal 72 DB )

o The word ‘infringement’ has not been defined in the Trade Marks Act. But infringement means the use of a Trade Mark by a person who is not the Registered Proprietor or the Registered User of the mark and the mark in question is identical with or deceptively similar to the registered trade mark. (Indo Parma Pharmaceutical Works Ltd. v. Citadel Fine Pharmaceutical Ltd. AIR 1998 MAD 347)

o The main element to be considered is the probability of deception (Vikas Manufacturing Co. vs. Bhoraj Manufacturing Co. AIR 1980 P&H 127).

o Type of infringement: The question whether use of a trade mark by the defendant constitutes infringement of registered trade may be determined by  whether the defendants trade mark is identical with the Plaintiff ’s trade mark; whether the trade mark of the defendant contains or consists of the whole or any essential or leading features of the Plaintiff ’s mark combined with other matter; and  whether the mark of the defendant is identical with any of them in Plaintiff ’s mark (Tata Oil Mills Co. Ltd vs. Wipro Ltd.AIR 1986 DEL 346)

o The decision of the apex court in R.G. Anand v M/S Delux Films where the Court observed: “Where the same idea is being developed in a different manner, it is manifest that the source being common, similarities are bound to occur. In such a case, the Courts should determine whether or not the similarities are on fundamental or substantial aspects of the mode of expression adopted in the copyrighted work with some variations here and here. In other words, in order to be actionable the copy must be a substantial and material one which at once leads to the conclusion that the defendant is guilty of the act of piracy”.

• Lack of Awareness of Rights amongst the Business Community: No efforts is done by the business community to protect their rights by proper registrations as per the statutory provisions.

• There is lack of awareness of the existence of the law in remote villages where the business is conducted in traditional way.

• There no statutory protection sought to protect the rights so there exist no the question of enforcing the rights. The rights are not sought and not enforced.

• Defences: The Complainant has to prove his case. ONUS of establishing criminal liability of the accused is on the prosecution

o Defences available to the accused are –

• Denial of allegation of infringement made by prosecution

• Acted without intent of defraud.

• Section 112 – Exemption of persons employed in ordinary course of business. This is good as far as the employees are concerned. But what about the Decoy owners who may then turn their plea that the real owner is out of the territory or is NRI.

• Section 113 –

a) Adjournment of proceedings for 3 months where accuse satisfies the Court by prima-facie plea that the trademarks registration of the Complainant is not valid. This provision may only be used to make false allegation to delay the proceeding or to flew away from the jurisdiction of the court.

b) The Accuse then files rectification petition for the Complainant trademark before the Appellate Board within 3 month and on submitting the proof of such application the Court then stay the proceeding before it till the disposal of such petition. Yet another way to have time. The Accused may file rectification petition on false and baseless grounds. The time limit should be specified within which such rectification petition has to be decided specially by the constitution of the special
bench of the Appellate Board.

c) This provision of Section 113 (c) further provides that if the accused fails to make application for rectification within period of 3 month it will be presumed that the registration is valid and the matter will be preceded. It may so even happen that the Accused may delay the proceedings by misrepresenting the Court by false pleadings and challenging the validity of the Complainants
trademark.

• Section 114 – if offence is committed by company – defence for the person responsible for conduct of the business is that he had no knowledge of the commission of the offence or that he exercised all due diligence to prevent the commission of the offence or that the offence was committed with out his consent or connivance.

• Cost of Proceedings: The criminal remedy is usually resorted if some prompt action needs to be initiated to prevent the commission of the offence. When the goods are likely to be distributed, destroyed or damaged or is likely to be exported. The Complainant has to resort to civil suit for recovery of damages or for accounts for profit and to restrain the accused by perpetual order of injunction of the court.

• Information as to commission of offence: Any Officers whose duty is to take part in enforcement shall not be compelled to tell when he got the information of commission of the offence. This provision may be abused by the officer to delay the investigation or to take cognizance of the offence under the provisions of the Act.