A crackdown on copyright infringement and counterfeiting product
Changing dynamics in the retail industry and proliferation of store formats has seen an unusual fallout – a surge in the instances of copyright infringement and counterfeiting of products. This gives rise to the problem of identifying authentic products from counterfeit ones, which results in curbing their sales.
Counterfeiting has infiltrated most industries including apparel, make-up and electronic goods. Globally, Asia is one of the countries where counterfeiting is on a rise and is posing a great threat to reputable brands around the world. According to reports, in India alone, counterfeiting has increased by 10000 per cent over the past three decades. These numbers are not only alarming but also pose a grave threat to the brands.
Anil Dutt, Partner of Lakshmikumaran & Sridharan (L&S), an Indian law firm, said, “One of the major reasons that can be attributed to the mushrooming of copyright infringement and counterfeiting in India is that a large section of public cannot afford genuine products. The only recourse available to them is a low-cost purchase. China is the major contributor of counterfeit products all over the world.”
Citing an example on how rampant the sale of counterfeit products is, Dutt said that there was a recent crackdown by Starbucks across shops at Sadar Bazaar, a large wholesale market in New Delhi, where the beverage company seized counterfeit products using its trademarks and artwork without authorization.
Apart from the apparent financial loss, retail brands also face copyright infringement and counterfeiting leads to dilution of brand value and also loss of customer loyalty. Another example is Kitply, a plywood sheet that was counterfeited due to which the company suffered loss of its market hold and trust amongst its customers. Due to rampant counterfeiting, the company was forced to develop a feature that scans the brand’s logo on the product to ascertain whether it is genuine or fake. Carpenters across India were made aware about this feature so that they could buy authentic products, which helped the company regain its market share within six months.
Commenting on what distinguishes willful copyright infringements and doing it inadvertently, Dutt said, “It is important to understand whether the copyrighted work has been copied/reproduced in its entirety or whether there are minor differences even though material that makes the retail brands owners believe that the mistake could be an honest concurrent one. With counterfeiting, there is usually a willful intention to direct the sales from genuine retail brands to counterfeit products and therefore, the mistake in such cases is not an inadvertent one on part of the infringer.”
Brand owners should ensure that their products reach the markets through organized channels with proper checks and balances at all levels. This way, if any products are found at a specific location that do not fall within their permitted market area, it will be easy to crackdown on counterfeit products and seek help of the legal provisions available to recover damages for their losses. To combat counterfeiting, the company should track and trace and follow proper procedures that ensure action against counterfeiting under the Customs Act and Information Technology Act.
In a bid to safeguard themselves, brand owners should always seek statutory protection of their Intellectual Property Rights and adopt a no-nonsense policy on crackdown of markets selling such counterfeit products so as to deter infringers from selling such products again. It is better to be safe than to be sorry, especially in business.