Juxtaposition

Juxtaposition of IP and Criminal law

Introduction

When the products of any brand are authentic and original, it receives a considerable amount of recognition in the minds of its prospective buyer. It is important to preserve the market integrity of any product sold by such brands and that protection is granted by the product-related intellectual property rights, i.e. trademark, designs, copyright etc. against the logo, name, tagline, packaging style, etc. However, many a times, false or illegal replicas of the original product are created to take undue advantage of the original products’ superior reputation and popularity.

In India, intellectual property is protected both under civil and criminal law. In practical terms, however, criminal remedies are very successful as a means of defense of rights for intellectual property rights, in comparison to civil remedies. The Anti–Counterfeiting Trade Agreement (“ACTA”) was one means to help curb piracy issues in international trade.

Criminal Suites for IPR Violations

In India, we have seen that criminal protection or the right to begin criminal action against an infringer is only provided for trademarks and copyrights, leaving the other areas of IP with only one way to seek relief.

Criminal Action for Patent Infringement:

Currently, no statutes exist that impose criminal penalties in cases of patent infringement, in India. In the patent field, an interest in criminal sanctions has been observed in certain jurisdictions, and implementation of criminal sanctions has taken place in a number of countries. The EU debated for several years for the introduction of such sanctions and only dropped the idea under great pressure from information technology (“IT”) companies and grassroots organizations.

According to Article 61 of the TRIPS Agreement “Members shall provide for criminal procedures and penalties to be applied at least in cases of willful trademark counterfeiting or copyright piracy on a commercial scale”. Since patents have been conveniently sidelined from the same, it is on the pure will of any member State to adopt similar proceedings for patent infringement matters, which can at most times be cost saving as opposed to civil litigation, as also seen in Global Tech Appliances, Inc. v. SEB S.A., [1] Accommodating criminal sanctions may prevent indulging in business activities on the ground violation of IPRs ; indeed, it has been noticed that the risk behind getting into a criminal case can prevent a company from such activities that the titleholder may argue are violating.  It has been noted that “the risk of facing criminal sanctions may often be strong enough to dissuade a firm from activities that the titleholder may argue are infringing”.[2]

However, practically speaking, along with introducing a criminal action, the need of the hour for patent proprietors is the correct implementation and enforcement of the same. A patent is, if I may dare say, the most technical part of intellectual property as well as being the simplest to infringe given the various grey areas in our Acts, which in many ways dissuades a patent holder from coming forward, spending huge amounts of money and actually filing one.

Criminal Action for Trademark Infringement:

The law of trademark is a latecomer to the world of criminal sanctions. The Trademark Counterfeiting Act of 1984 (“TCA”) USA, criminalized the intentional trafficking of counterfeit goods or services. There are a few  other laws that have sought to impose criminal sanctions for the counterfeiting of trademarks like, adding counterfeiting to the list of unlawful activities under the money laundering statute, in 1994.[3]

The Trade Marks Act, 1999 in India, also provides for a term of imprisonment of not less than six months, which may be extended by up to three years, and a fine of not less than fifty thousand rupees, which may be extended by up to two lakh rupees in the event of a fraudulent application of the mark and of the sale of the items protected by such fraudulent mark. Section 115(4) of the Act deals with the rights of the police to inspect and seize infringing goods only after conforming with an opinion sent by the Registrar.

Section 156 of the CrPC, bravely provides the aggrieved proprietor with the right and opportunity to file a complaint before the Magistrate if and when the police fails to lodge a FIR or initiate criminal action. It can also happen in several cases that the identity of the suppliers and sellers of the infringing content is not revealed to the plaintiff and serves as a barrier to kickstart the criminal proceedings as also seen in Priya Shrivastava vs. State of M.P. and Ors (MANU/MP/2153/2019)

Criminal Action in Copyright Infringement:

Copyright law prevents the unauthorized use of copyrighted works in two ways;first,it provides a civil remedy inclusive of injunctions and damages and second, it defines criminal actions which can be sanctioned for certain violations of a copyright owner’s rights.

The WIPO Copyright and Performance and Phonograms Treaties Implementation Act of 1998, which was Title I of the controversial Digital Millennium Copyright Act (“DMCA”), which prohibited the circumvention of copyright protection systems under threat of not only civil but also criminal sanctions. Through the Anti-counterfeiting Amendments Act of 2004, the law also criminalized trafficking in counterfeit or illicit labels in connection with copyrighted works. The Artists’ Rights and Theft Prevention Act of 2005 provided criminal penalties for the unauthorized recording of motion pictures in theaters. Finally, Title II of the Enforcement of Intellectual Property Rights Act of 2008 strengthened criminal penalties for repeat copyright infringers.106 Recent instances of criminal copyright infringement have resulted in sentences such as eighteen months in prison for selling pirated software worth more than $250,000,[4]and twenty-four months in prison for selling pirated movies and television shows with a combined value of more than $100,000[5].

In India, a proprietor may take action pursuant to Section 63 of the Copyright Act, 1957, which provides for the penalty of six months of imprisonment, which can be prolonged up to three years, and a fine of fifty thousand rupees, which can be increased to three lacs.

Section 64 (1) of the Act (similar to Section 115(4) of the Trade Marks Act) provides for, in detail, the requirements of a police officer/inspector for seizing of infringing work. The IO (investigating officer) appointed holds various rights including making an arrest without having a sanctioned court order

Counterfeiting Issues & Measures

As of 2020, annual losses from counterfeiting in the clothing sector amounted to 26.3 billion euros. Apart from monetary losses to the economy, counterfeiting is also responsible for loss of thousands of employment. Many fashion brands like Zara and Forever 21 have IP and Custom Law experts to help curb this issue.

The Indian government has been hesitant to enforce certain IP standards to protect the interest of Indian citizens. For instance, during a Pandemic, the Government may compel a patent owner to transfer its right to mass-produce an important drug to another entity in an emergency under the provisions of compulsory licensing. Section 3(d) of the Indian Patent Act, which forbids major pharmaceutical firms from ‘evergreening’ or continuing the patent in perpetuity by making small amendments to previous patents, is another controversial question. However, with Consumer Protection E-commerce Rules 2020, the Government has put a robust approach towards misleading sellers and false representation carried out by sellers in the online market sphere.

On similar lines, the Customs department subsequent to the registration by the IP holder can deny the custom clearance certificate for such infringed goods. Additionally, it can also revalue the infringed goods and impose the correct value of custom duty if such goods were imported to be sold below the authorised market price in India. Thus creating a deterrence for the parallel importer and the purpose of selling it at lower market price is taken away and the profit incentive as well, which will cater to monitoring the issues of parallel imports and the grey-market goods.

Conclusion

In India, knowledge and compliance are poor with respect to securing IP. However, for invention and growth, securing patents, trademarks and copyrights is crucial. Even with rapid developments on the technological, science and economic fronts, we are still lagging behind countries like China and USA.

However, along with registering IP, it is equally important to correctly safeguard it. In many cases, civil remedies only serve to reward compensatory damages and which are not too harsh on the infringer. Apart from the punitive penalty, a strong reason to initiate criminal cognizable proceedings in infringement cases is to create an exemplary deterrence effect. This in turn helps create a safe balance and a good cycle for healthy IP to be in the market.

---

[1] 563 U.S. 754 (2010)

[2] IPRs alignment source 

[3] Violent Crime Control and Law Enforcement Act of 1994

[4] Press Release, U.S. Dep’t of Justice, Internet Seller of Pirated Software Sentenced to 18 Months in Prison for Criminal Copyright Infringement (May 28, 2010)

[5] Press Release, U.S. Attorney’s Office Dist. of Conn., East Hartford Man Who Pirated Movies and Television Shows and Sold Them on eBay Is Sentenced to Prison (Sept.