The ‘Stale’mate in IP Enforcement?

The recent ruling of the Punjab and Haryana High Court in Arun Kumar v. State of Punjab and Anr.[1] provides a pivotal insight into the procedural and substantive complexities of intellectual property (IP) enforcement in India. This judgment exposes shortcomings in current enforcement mechanisms and highlights the urgent need for reforms to ensure effective protection against counterfeiting thereby, expanding the conversation around efficient and lawful IP enforcement.

The case stemmed from an incident in 2017, where the Petitioner, was accused of manufacturing and selling counterfeit garments under the PUMA brand. Acting on a complaint vide a First Information Report (FIR) was registered at the Police Station near Ludhiana. A police inspector conducted an investigation at the petitioner’s factory and took charge of alleged counterfeit goods. Based on the investigation, the petitioner faced a charge under Section 63 of the Copyright Act, 1957 which deals with the criminal offense of copyright infringement. Subsequently, during trial, the prosecution requested the Ld. Trial Court to frame additional charges against the petitioner under Section 103 of the Trade Marks Act, which deals with the penalty for applying false trademarks and Section 104 which deals with selling goods under false trademarks. In response to the charges framed against the petitioner, the petitioner filed a petition before the High Court under Section 482 of the Criminal Procedure Code and contended that the act of selling garments did not attract the offence under copyrights and there were procedural defects in the manner in which the investigation was conducted under the Trade Marks Act. The petitioner requested the Court to “quash” the proceedings. After hearing the parties, the Court quashed both the charges framed against the petitioner. The Ld. Judge reasoned that his decision was based on the following grounds.

• The manufacture and sale of garments by the petitioner did not constitute a work and therefore did not attract copyrights.
• In respect of trademarks, while conducting the investigation there were procedural violations and proper procedure laid down under Section 115(4) of the Trade Marks Act was not followed.

The Court emphasized that Section 13 of the Copyright Act, 1957 enumerates categories of works eligible for copyright protection, such as literary, artistic, and musical works. Following the case of Deepak v. State of Haryana and Ors. (2023)[2], where it was observed that, the act of manufacturing pipes with a counterfeit mark affixed on them were not works in which copyright subsisted, the Court held that industrial goods such as clothes or similar manufactured items were therefore, not works eligible for copyright protection. Hence, no offence was made out. Consequently, the Court held that the offences pertaining to alleged counterfeiting of PUMA-branded garments could not be sustained in copyright law.

With regards to the ground under trademarks, Section 115(4) of the Trade Marks Act outlines strict procedural requirements for investigating false trademarks:

• Investigations must be conducted by police officers not below the rank of a Deputy Superintendent of Police (DSP); and
• The investigating officer must obtain the Trade Mark Registrar’s opinion before initiating search and seizure operations.

In this case, the investigation was conducted by a police official below the rank of a DSP and further the investigating official did not obtain the required opinion before initiating the operation. These lapses rendered the prosecution under the Trade Marks Act ultra vires and led the Court to quash the charges.

This decision and the facts surrounding the same prompted me to analyse this judgement critically and its implications on efficient IP enforcement. Firstly, this case poignantly brings out the fact that there cannot be any copyright subsisting in industrially manufactured goods as they cannot be considered “works”. This distinction between copyright violation and trademark infringement has been blurred in India because of the procedure laid down in the Indian Copyright Act for registering artistic works which can be used as trademarks as copyrights. The formal copyright registration process requires an applicant to obtain a no-objection certificate from the Indian Trade Marks Registry. However, the registration of copyright is for the artistic work per se and not in relation to the goods or services, to which they are applied.

The legal framework in the USA ensures that trademarks and copyright registrations serve distinct functions. While creative works such as literary, musical, and artistic expressions qualify for copyright protection, their use as trademarks does not extend copyright protection to the trademark itself. The Courts in USA have reiterated that functional items like logos and symbols primarily serving as trademarks do not qualify for copyright protection unless they demonstrate independent creative merit in cases such as Durham Industries, Inc. v. Tomy Corp.[3] & American Dental Association v. Delta Dental Plans Association (1997)[4]. Unlike the USA, this position is currently nebulous in India.

Secondly, when Section 115(4) was enacted, understanding of intellectual property laws amongst the enforcement authorities in India was nascent. Procedural safeguards were necessary to prevent the misuse by officials to ensure that only the rightful owners initiated actions. However, today the landscape has evolved and there is a pressing need for speed and decisiveness in enforcement actions. The procedural requirements under Section 115(4), though well-intentioned, in practice, often impede swift action against counterfeiters.

Counterfeit goods are “hot” goods that need to be seized promptly since they are transient by nature, quickly disposed of or hidden. Delayed action often results in the dissipation of evidence defeating the purpose of any anti-counterfeiting action.

Thirdly, the foremost requirement of an anti-counterfeiting action is speed. In India, a complaint for an offence is usually lodged in a police station headed by a Station House Officer (SHO), who is responsible for an individual police station and not a DSP. Upon registering a complaint through an FIR, the SHO may direct a Sub-Inspector to conduct an investigation along with a representative of the complainant to inspect and search the premises of the accused, identify counterfeit goods and seize them. The Sub-inspector takes charge of all the infringing goods. However, under the provisions of Section 115(4) of the Trade Mark Act, 1999 which does not take this reality into account, SHOs and Sub-inspectors are not authorized to act. Under Section 115(4), upon registering a complaint, the SHO will have to transfer the same to the DSP in charge of the Police Station. In urgent cases involving counterfeit goods this is counterproductive.

The involvement of multiple entities increases the chances of leaks, as “interested” parties may tip off counterfeiters to relocate or destroy incriminating evidence.

In the case of Sanyo Electric Company V. State[5], the Delhi High Court provided an alternative path to enforce an anti-counterfeit action. Brand owners can file a complaint under Section 200 of the CrPC before a Judicial Magistrate. If the Magistrate finds that there are sufficient grounds for proceeding with an anti-counterfeit action, he/she may direct an investigation under section 202 or under section 156(3) to arrest the counterfeiter by a police officer or issue a search warrant under Section 93 of the CrPC.  In this case, the Delhi High Court held that in the case of counterfeiting of trademarks “a search warrant issued by the Court under Section 93 of the Code can be executed without the requirement stipulated in the proviso to Section 115(4) of the TM Act.” The Code of Criminal Procedure (CrPC) has been replaced by the Bharatiya Nagarik Suraksha Sanhita (BNSS). While the objective of both the legislations is same, the provisions which are pari materia to Section 200, Section 202, Section 156 (3) & Section 93 are Section 223, Section 225, Section 175 (3) and Section 96 respectively.

In cases like Arun Kumar v. State of Punjab and Anr., where counterfeit goods are transient and require immediate intervention, this approach could offer a pragmatic solution.

With counterfeiting becoming an increasingly sophisticated and globalized challenge, a more agile enforcement framework is imperative that balances speed, efficiency, and provides immediate action. This is the need of the hour to strengthen India’s fight against counterfeiting. 

[1] Arun Kumar v. State of Punjab and Anr.: 2024: PHHC:155158.

[2] Deepak v. State of Haryana and Ors.: 2023: PHHC:047571

[3] Durham Industries, Inc. v. Tomy Corp.: 630 F.2d 905, 909 & n.6 (2d Cir. 1980)

[4] American Dental Association v. Delta Dental Plans Association: 126 F.3d 977 (7th Cir. 1997)

[5] Sanyo Electric Company V. State: 2010: DHC :4253