Intellectual Property Rights in the Era of Counterfeit Goods

Everybody loves a good bargain. There is an unexplainable satisfaction that one derives from the purchase of high quality branded goods at a modest price. It is this aspect of consumer behavior that the counterfeit product industry relies upon.
All over the world markets are flooded with counterfeits of branded products. Such products can be found in almost every industry starting from fashion, cosmetics, and footwear to electronics, life-saving devices, and automobiles. The problem of counterfeit goods has plagued the markets to such an extent that counterfeits are now available for food items, beverages, and even medicine.
In India, local markets in cities like Delhi, Kolkata, and Mumbai among others are overflowing with counterfeit products. From counterfeit products of luxury beauty brands like Huda Beauty and Kylie Cosmetics to counterfeits of bridal lehengas designed by famous designers like Sabyasachi, Anamika Khanna, and Manish Malhotra, the Indian markets have counterfeits of all types of products. If one walks through the streets of Kolkata, he can find products of brands like Louis Vuitton, Gucci, and Chanel being sold at next to negligible prices.
Counterfeits provide a cheap alternative to the original products. Usually, the counterfeit products are sold at 1/4th of the price of the original. This makes them attractive to consumers.
Usually, in case of products like clothing, footwear and other fashion accessories consumers knowingly purchase the counterfeit product. This may be because of the low prices of the product, the low utility value of the product or simply because of his desire to own a branded product.
However, when it comes to food, beverages, cosmetics, live-saving electronic devices such as miniature circuit breakers (MCBs), wires, etc consumers are often duped into purchasing a counterfeit product.
The counterfeit industry is on the rise. This has serious and catastrophic impacts on an economy. India is an emerging producer of counterfeit goods.
Legitimate businesses engage in a significant amount of Research and Development to bring a new product into the market. The protect their intellectual property so that they can reap the benefit of their efforts. The growth of counterfeits means that legitimate businesses are now competing with organizations that steal their intellectual property and do not pay taxes. Legitimate businesses incur huge losses due to the presence of counterfeits in the market.
Countries, where the markets are ripe with counterfeit products, are less attractive for investors in sectors like technology, pharmaceuticals, and manufacturing. Counterfeits demotivate investors thereby limiting the GDP growth of the country.
Counterfeit goods pose a significant threat to the health and safety of consumers. Counterfeit goods are not subject to regulatory controls like the original products. Consumers are exposed to serious health hazards while using counterfeit goods. There has been an alarming number of motor vehicle accidents which can to attributed to counterfeit products used in the vehicles. A large number of people have died due to the consumption of fake medicines.
For the businesses which hold the rights to the products and the authorized vendors of the product, counterfeit products greatly diminish the revenues generated by them and aggravate losses. In addition to this, trademark infringements have adverse effects on the brand value of the businesses. The image of a brand is one of the most invaluable assets a company has. A legitimate producer uses unique trademarks that distinguish his business from the rest. With these trademarks, the consumers have expectations as to the superior quality of the products. Counterfeiting significantly decreases the value of the original products by misusing the trademark. The consumers hold the legitimate manufacturer responsible defects in the counterfeit product. The consumers’ trust in the brand is broken and the reputation of the business is ruined.

Weak enforcement of Intellectual Property laws makes India a hub for the production of counterfeit goods. These goods are not only sold in the domestic market but are also exported by the manufacturers. In India, there is no legislation which imposes strict punishment and imprisonment for counterfeiting and piracy. Even though the Trademark Act, 1999 contains provisions for search and seizure in case of using false trademarks or selling of goods under false trademarks, the provision mandates that the prior opinion of the Registrar of Trademarks has to be taken. This is a time-consuming process and provides the counterfeiters with ample opportunity to evade the law. Filing a complaint before the Magistrate under the Criminal Procedure Code, 1973 for search and seizure is also a cumbersome processor does not guarantee speedy action. Usually, brands seek recourse under section 64 of the Copyright Act, 1957 for search and seizure.
In recent decisions like Amarnath Vyas v. State of Andhra Pradesh and State Government of NCT of Delhi v. Naresh Kumar Garg, different High Courts have concluded that offenses under the Copyright Act, 1957 are bailable. Hence, it has become easier to secure bail without approaching a court. Without the fear of detention acting as a deterrent, trading in counterfeit goods has become rampant.
Counterfeit goods pose a threat which goes beyond the mere violation of copyright or trademark. Presence of counterfeit goods harms the society at large. Hence, there is a need to enhance the punishments for infringements of intellectual property so as to limit counterfeit of goods. The existing provisions of Trademark Act and Copyright Act are not sufficient deterrents to the band of organized counterfeit racketeers. The punishment for contravention ought to be cognizable and non-bailable as enshrined in the Indian Penal Code.