Falsifying and falsely applying trademarks

There has to exist a protectable trademark which can be falsifying or falsely applied as a trademark. The provision applies both to registered as well as unregistered trademarks.

Falsifying a Trademark

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No person without the assent of the proprietor of a registered or unregistered trademark prevalent in India may do any of the following:

  • make or create that trademark or a deceptively similar mark, or in other words a mark which so nearly resembles the genuine work as is likely to deceive or cause confusion; and;
  • carry out alterations. additions or otherwise efface a genuine trademark.

Anyone indulging in activities referred to in the above mentioned two points is considered to falsifying  a trademark .

Important aspects of Falsifying a Trademark

An important point is that falsifying a trademark in the nature of :

  • making the trademark of the proprietor; or
  • making a deceptively similar mark; or
  • altering , adding or otherwise effacing the proprietor’s trademark, should be done in respect of those goods for which the mark is being used or registered. For instance, other conditions of falsifying process  being fulfilled, if ‘A’ alters the trademark ‘Colgate’ for his textile goods, the case might not be covered by the offence of falsification at all. The expression used in the provision is ‘the trademark‘, which indicates that the goods of the both the offender and the complainant must be same or at least similar.

Falsely applying a trademark

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The following two instances fir the offence of falsifying or falsely applying a trademark:

If, without the assent of the proprietor, the trademark , is applied to the goods or services or any package containing goods, the person doing so shall be guilty of falsely applying the trademark.

Similarly, if goods, other than the genuine goods of the proprietor of the trademark are packed, filed or wrapped in any package bearing an identical or deceptively similar mark without the assent of the proprietor of the trademark, it is deemed to be falsifying applying the trademark. To illustrate , if ‘A’, applies the trademark ‘Colgate’ to his own locally made toothpaste , it would amount to falsely applying the trademark. Likewise , if ‘A’ puts his locally made toothpaste in the carton bearing the  trademark ‘Colgate’, he would commit the same offence. The expression ‘false trademark‘ is used in the Act for both the above situations.

Falsification in foreign countries

As the 1999 Act is not extra -territorial in nature, it may be possible to prosecute the foreign consignor who has falsifying the trademark abroad, however the goods will be liable to confiscation under section 140(1) of TMA, 1999. Any proprietor or licenses of the registered trademark may give notice to the Collector of customs, if the import of any of the specified goods would constitute infringement under section 29(6)(c) . The import of grey or parallel goods can also be restrained under section 140(1) read with section 29 (6)(c) . Moreover, if there is any abettor of any offence under this Act in India, he can be punished.

False trademarks in exports

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If goods with false trademark (having rights in India) are should to be exported from India, the export seller can be published under section 103 as the offence of falsifying is committed in India. Thus , the exporter of counterfeit goods from India is punishable whereas exporter to India can go Scot-free, but might be punishable depending upto  the law of the country from where the export originated.

If a person in India falsifying a trademark of foreign origin ,section 103 is not attracted as section 102(section  77 of the 1958 Act) subsumes only the trademarks in Indian Jurisdiction. In such cases, the foreign owner of a trademark protected elsewhere can avail of the remedy at the entry point in the country of the import. If an  Indian exporter falsifies another Indian trademark, the owner of the concerned trademark may not come to know when  goods leave India, and the law of the importing country may be protecting the trademarks registered in that country. Thus, trademark registration or use in as many countries in which the owner has his export mark, for protection of the mark in the country of import, is necessary . In the agreement on TRIPS or the Paris Convention, there is no provision mandating provision for protection to trademark registered or used in on country , in any other country, in any other country without use or trademark registration, except if the mark is well known.

Possible Defenses

It has been pointed out that Chapter 12 of the TMA , 1999 contains Criminal Law pertaining to trademarks .The prosecution tries to fix criminal liability on the accused and the accused may take the following defenses  to avoid liability:

  • To begin with, he may say that the suit is barred by the Law of limitation under section 1998 of TMA , 1999. Section 118 provides that no prosecution for an offence under the TMA , 1999 would commence after expiration of the three years  following the commission of the offence charged, or two years after the discovery thereof by the prosecutor , which ever happens first.
  • An important defense would be to allege invalidity of trademark registration. This defense would be the course be available only while dealing with registered trademarks. Where the accused is charged with the offence of applying falsifying trademarks to goods or services, as mentioned under section 103, and the concerned trademark is a registered one, and he raises the plea of invalidity of trademark registration, the criminal proceedings against him may be stayed, subject to the fulfillment of certain prescribed conditions.

Stay proceedings when invalidity  of Registration is Pleaded

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However, in all these cases for the stay of proceedings, the following conditions must be satisfied:

  • The court should be satisfied that such defense is tenable. If so, it shall not proceed with the charge but shall adjourn the proceeding for three months from the date on which the plea of the accused is recorded to enable the accused to file an application before the Appellate Board, for the rectification of the Register on the ground that the trademark registration is invalid.
  • If the accused proves to the court that he has made such rectification application within the time so limited or within such further time as the court may for sufficient court allow, further proceedings in the prosecution shall stand stayed till the disposal of such application for rectification.
  • If the proceedings challenging validity of the trademark registration of the concerned trademark have already been initiated by the accused, before a criminal suit is filed against the accused, the court would say the suit till the question of validity of trademark registration is settled. Thereafter, the criminal suit would be disposed off in conformity with the result of the application for rectification in so far as the complainant relies upon the trademark registration.
  • The procedure for stay of proceedings would remain the same as in section 124 even where the accused is charged with an offence under section 104 and 105 of TMA, 1999 and he pleads invalidity of Trademark registration.
Successful Defense

It may be noted that since Chapter 12 dealing with criminal offences relating to trademarks treats both registered and unregistered trademarks on the same footing, it would not be a defense on part of the accused to say that the registered mark had been abandoned or discontinued by the proprietor and thus, he cannot be held liable for committing an offence in relation to it. It is the act of the deceit and the wrongful application of the concerned mark that is punishable under the chapter as an offence.

  • say that the prosecution has failed to establish the proprietorship of the concerned mark;
  • claim to have acted as a servant of a master in good faith and in obedience of the letter.

Such actions would not constitute an offence in section 102,103,104 and 105 of the Act .Section 110 (section 84 of 1958 Act)may also be taken note of, which enacts exception for actions or omissions permitted under the TMA, 1999 and any other laws.

Section 110 of 1999 Act reads as under :

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The provisions of sections 102,103,104 and 105 shall, in relation to a registered trademark or proprietor of such mark, be subject to the rights created or recognized by this Act and no act or omission shall be deemed to be an offence under the aforesaid sections if,-

  • The alleged offence relates to a registered trademark and the act or omission is permitted under this Act; and
  • the alleged offence related to a  registered or an unregistered trademark and the act or the omission is permitted under any other law for the time being  in force.

Anything lawfully done under any other law provides immunity for the provisions in section 102,103,104, section 105 have been discussed. Section 113 enjoins the court to adjourn the proceedings for three months for filling a rectification application, however, only if the defense appears to be tenable.

Forfeiture of goods:

If under section 103 of TMA, 1999, the accused is convicted or if the accused has been able to prove that he had intention to defraud, then whether  the accused in convicted or acquitted under section 103,104 or  105, in both the cases of acquittal or conviction, the court under section 111(1) is empowered to direct the forfeiture to the government all the goods or things. The goods or things referred to are those in respect of which the offence was prosecuted.

Selling under false trademark

While section 103 penalizes those who have applied falsifying trademarks and trade descriptions, section 104 provides penalty for selling those goods or providing those services  to which a falsifying trademark/description has been applied. Under section 104 any person who  sells or exposes for sale, or has in his possession for sale any goods.

  • to which a falsifying trademark/description has been applied; or
  • in regard to which the indication of country in which they were produced etc., is absent, would be punished as under section 103.

Section 104 different form Section 103:

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Under section 104, it is necessary that the goods or services to which the false trademark or description has been applied are sold,  or exposed for sale or are at least in possession for sale. Under section 103, on the other hand, the offence is complete as soon as any false trademark or description is applied to the concerned goods or services. It is not necessary for an offence under section 104 to show that the accused has himself applied the false trademark/description to the concerned goods or services; It would be sufficient if the accused sells, exposes for sale or possesses for the sale the incriminating article or service.

Rationale behind section 104

The rationale behind this provision is to prevent the retailers from forming a cartel sort of an arrangement with the wholesale dealers, manufacturers or other service providers. Thus, if a retailer/accused falls into the legal net, he is mandate to disclose all information about source of his retail trade, enabling law to trace the  source of spurious goods/ services

No offence in certain cases:

Section  104 is in relation to a registered trademark or proprietor of such mark, subject to the rights created or recognized by the TMA, 1999 and no act or omission would be deemed to be an offence under the aforesaid section , if it is permitted under the TMA, 1999 or under any other law for the time being in force.

Exceptions

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The section itself provides certain grounds on which the accused can escape punishment. They are as follows:

  • The accused can escape liability if he is able to prove the satisfaction of the court that he took all reasonable precautions against committing an offence and that at the time of committing the alleged offence, he has no reason to suspect the genuineness of the trademark /description or that any offence had been committed in respect of goods and services . The question whether the accused took all reasonable precautions or not depends on the facts and circumstances of each case and cannot be standardized.
  • Similarly, the accused can escape liability by showing that as and when the prosecutor demanded, he provided all the information that was in his power with respect to the person from whom he had obtained the spurious goods or services. Likewise, the falsifying or accused is able to show that he acted ‘innocently’, he would not be penalized. The expression ‘innocently’, does not indicate something done in ignorance of the statute but something done in ignorance of the statute but something done inadvertently and under some mistake of fact.

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