Counterfeiting Vs Trademark Infringement

Counterfeiting and Trademark infringement is often confused with being one and the same. While both counterfeiting and Infringement of trademarks are related to each other they are not identical. It can be said that: “All counterfeiting of marks is trademark infringement however not all infringement of trademarks is counterfeiting.” Counterfeiting is a narrower concept under trademark infringement.

Both Infringement and counterfeiting are problems that can hamper the economy. They jeopardize the competitive position of companies in the global hemisphere. Companies that engage in counterfeiting and infringement of the Trademarks of others gain huge profits by negatively affecting the business of other companies who are honestly creating their goodwill and reputation. Counterfeit products also pose a threat to consumer health since they are made without proper supervision and don’t follow compliance. A good understanding of Counterfeiting and Infringement and their differences can help us in combat the spread of these goods.

What is Counterfeiting in the context of IPR

The Indian Trademark Act, 1999 doesn’t define counterfeit therefore we look towards the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement and legal dictionaries for counterfeiting definition.

The Trade-Related Aspects of Intellectual Property Rights (TRIPS) defines counterfeiting as:

“Counterfeit trademark goods” shall mean any goods, including packaging, bearing without authorization a trademark which is identical to the trademark validly registered in respect of such goods, or which cannot be distinguished in its essential aspects from such a trademark, and which thereby infringes the rights of the owner of the trademark in question under the law of the country of importation;

Webster’s New world law dictionary defines counterfeiting as:

To copy or imitate something without the right to do so and with the intent to deceive or defraud by representing the copy or imitation to be the original or to be genuine if no original ever existed.

The common elements that can be derived from these definitions are that Counterfeiting is the creation of an identical good in order to deceive or defraud the purchaser of the good.

What Is Infringement Under the Indian Trademark Act?

Section 29 of the Indian Trademark Act,1999 defines Infringement of the Trademark. According to this section, “A registered trademark is infringed by a person who, not being a registered proprietor or a person using by way of permitted use, uses in the course of trade, a mark which is identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered and, in such manner, as to render the use of the mark likely to be taken as being used as a trade mark.”

Violating the exclusive rights of the registered owner of trademarks without their permission is called Trademark Infringement. There are many ways of infringing an owner’s trademark which include, creating a mark similar or identical to the registered mark to create confusion in the minds of the general public of its association, or using the registered trademark’s name or part of it in the infringing mark in the same goods and service, etc. These methods of identifying trademark infringement are also listed in Section 29 of the Trademark Act,1999.

Difference Between Counterfeit Marks and Infringing Marks

A counterfeit mark is indistinguishable from the original or genuine mark. Infringing marks are considered confusingly similar to the genuine mark or original mark. This means that infringing marks might either be exactly identical to the genuine mark or it might be a mark that is being used in such a way that leads to confusion, deception or misunderstanding about the actual source of the Trademark. Counterfeiting also includes copying the packaging, instructions, stickers, etc of the original product. Counterfeit Products are very difficult to distinguish from the original products because even the essential features of the goods are copied to be exactly the same.

The remedies available for counterfeiting and trademark infringement also vary. Counterfeiting of a mark is punishable under the Indian Penal Code and is a cognizable offense. In the case of the Infringement of a Trademark, civil remedies in the form of injunction and damages can be sought by the registered owner.

The mere existence of counterfeit products is proof enough to bring legal action against the defendant. While in Infringement the plaintiff is required to prove that any other mark is deceptively similar to their mark to the extent that they can create confusion in the mind of the average person and that the defendant is not a registered owner of the mark and neither has permission from the registered owner to use the mark. Hence, the burden of proof is much more strict in cases of counterfeiting.

BY-

SHAKSHI SWARNKAR

2 YEAR LLB

ILS LAW COLLEGE, PUNE

FACTORS IMPACTING THE VALUATION OF IP ASSETS

Introduction

As people all across the globe become more aware of their intellectual rights and their ability to claim ownership of their creations, debates revolving around the valuation of such intellectual property are gaining traction. Intellectual property is a class of incorporeal property that is identified on the financial statements of corporations that own such intellectual properties.

It is important to distinguish between the “price” of an intellectual property asset and the “value” of an intellectual property asset. While price is the monetary value at which the asset trades in the market or the amount that a willing purchaser is ready to shell out. Value, on the other hand, represents the potential future economic benefits that the asset is likely to produce.

Valuation – though may seem deceptively lucid, the practical nuances and factors that are concomitant with executing valuations make it a complex exercise. Throw in the concept of intellectual property in the mix, it makes the process even more tedious. What makes the valuation of intellectual property assets complex is the fact that it involves a lot of inputs that are based on assumptions and projections. Furthermore, uncertainties around business projections, economic outlook, government policies, and technological disruptions dilute the accuracy of the value of intellectual assets.

FACTORS THAT INFLUENCE THE VALUATION OF IP ASSETS

As noted above, the valuation of an intellectual property asset of an enterprise is a gross product and amalgamation of a lot of factors, and thus, such factors should be kept in mind when intellectual property is valued.

Valuation Purpose: The purpose or the context for valuing or the benefits that will be accrued by an intellectual property asset indelibly impacts the valuation of the incorporeal property. Thus, factors such as access to technology or cost savings will impact the value.
Time: The considerable time reference when the intellectual property Is being valued is to be considered. An intellectual property affords an exclusive right to the owner or the licensee of the asset to exploit it for a limited time frame. For instance, a patent affords protection for a period of 20 years before it becomes available in the public domain. Valuation of the asset at different points in time will produce a different outcome. How the asset fit in its own product life cycle and the life cycle of the entity should also be considered.
Legal Status: The legal status of the asset owned by a firm will impact its valuation. Thus, whether an intellectual property asset owned by an enterprise is registered or unregistered will lead to different valuation results.
Individual or a Bundle Asset: Another factor that shall have an impact on the intellectual property owned by an enterprise is its status. Whether the asset is a stand-alone asset or part of a bundle of assets, inseparable from the bundle should also be paid attention to.
External variables: Factors such as the number of competitors in the market, barriers to entry into the market, legal policy framework, technological disruptions, and the degree of consumer preferences shall have an impact on the value of the incorporeal asset.
Geographical Protection and Jurisprudence: Whether the asset has been afforded protection limited to a particular jurisdiction or it enjoys protection in multiple nation-states will impact the value of the asset. For instance, a well-known mark that has its presence and is protected in multiple countries will be valued significantly higher than an asset that is only protected in a certain jurisdiction.
Miscellaneous Factors: Other factors such as tax implications, the industry in which the company operates, governmental supervision, investments, and the capital structure are some of the other attributes which can impact the value of the asset.

PURPOSES OF INTELLECTUAL PROPERTY VALUATION

Intellectual Property, an intangible or incorporeal asset is recognized as a legitimate asset on its financial statements by a company. Therefore, assets such as the company’s goodwill, its trademark, or any inventions which have received a patent registration must necessarily be valued. Secondly, if a company wishes to purchase or sell or license out an intellectual property, then a value must be ascribed to the asset in question. Furthermore, when two or more enterprises wish to merge or amalgamate, the intellectual assets of both entities need to be valued. What makes the valuation of Intellectual property more complex in this case is that valuation is to be considered in accordance with that of other tangible assets. Other areas for which IP assets are valued can be for the financing of a project or for securing a loan from a bank, ensuring the intellectual assets, efficaciously managing the overall asset portfolio, and ascertaining the tax implications for the company.

Intellectual Assets are valued from different perspectives based on the underlying cause for which they are being valued. For instance, International Accounting Standards now recognize and require intellectual assets to be valued at their cost in the initial stages. In the later or subsequent years, the asset is required to be valued at cost after any amortization and impairment charges. If an intellectual asset is acquired as part of an acquisition or a business combination, the asset’s cost is defined as its fair value at the acquisition date.

CONCLUSION

Intellectual Property and its valuation are, as evident from the Korero above, a complex exercise and warrants considering a plethora of factors. Thus, it is not uncommon to see that companies usually hire the services of a certified financial valuer. The company owning an intellectual asset may use different methods – depending on the stage in the life-cycle of the intellectual product, whether the asset is a stand-alone or a bundle of rights, and whether its acquiring value is to be gauged or the future economic benefits that can be expected from it are to be ascertained. In the former case, the company is more likely to use the cost approach, while in the latter case the company, to consider the future stream of cash flows, is likely to utilize the income method.

Intellectual assets bring with them a series of complexities and thus, a streamlined approach to ensure that such assets are valued efficaciously is required. In furtherance, the assumptions and projections must be incorporated in valuation models such that they consider all the factors and their impact on the value of intellectual assets.

BY-

RAGHAV GROVER

2ND YEAR LLB

ILS LAW COLLEGE

Social Media Influencers and Modern Advertisements in India

Social media influencers are the new age internet ‘celebrities’ who use social media platforms to rise to fame. These influencers create reels, blogs, videos, pictures, and more to gain followers and build connections with their audiences. Brands bank on the popularity of influencers to promote their products and services through influencer marketing.

Unlike, traditional advertisements, influencer marketing doesn’t appear at the first glance to be an advertisement. They might be mistaken by consumers as being the influencer’s personal recommendation instead of a commercial partnership. This also promotes false advertisement as influencers are seen endorsing products that they have never used and making false claims regarding them.

Regulation On Social Media Advertisements by

Influencers:

ASCI Guidelines

In India, the Advertising Standards Council of India (ASCI) is the self-regulatory body that sets guidelines for advertising across various mediums, including social media. The Guidelines for Influencer Advertising in Digital Media were released on June 14, 2021. These guidelines apply to all advertisers, including influencers, and aim to ensure that all advertising is truthful, honest, and not misleading.

Some of the key rules and guidelines for social media advertising by influencers in India are:

Disclosure of sponsored content: Influencers must clearly disclose any sponsored or paid content by using appropriate hashtags such as #ad, #sponsored, or #paidpartnership. The disclosure should be made upfront and prominently, and should not be buried within the post.
Truthful and honest advertising: Influencers must ensure that their advertising content is truthful and not misleading. They must not make false or exaggerated claims about a product or service or misrepresent its benefits or effectiveness.
Adherence to ASCI code: Influencers must adhere to the ASCI code for advertising, which includes guidelines on various aspects of advertising such as claims, comparisons, endorsements, and more.
Age-restricted products: Influencers must not promote age-restricted products such as alcohol or tobacco to minors.
Responsibility for content: Influencers are responsible for the content they post, and must ensure that it complies with all applicable laws and regulations, as well as community guidelines of the social media platform.

In addition to these guidelines, influencers must also comply with any specific guidelines or rules set by the social media platform they are using. For example, Instagram requires influencers to clearly disclose any sponsored content using its branded content tools. It is important for influencers to be aware of these rules and guidelines and ensure that their social media advertising practices are compliant with them. Failure to do so can result in legal action, fines, and damage to their reputation.

Consumer Protection Act, 2019

The Consumer Protection Act, of 2019 addresses the evolving market scenario in the country. It provides consumers with enhanced protection and transparency in influencer marketing. The Act mandates that influencers disclose any material connections or commercial relations that they have with brands that they are promoting. This includes any payments, gifts, or other incentives they have received in exchange for promotion.

The act also prohibits misleading advertisements, which means that influencers must ensure that the claims that they make about the products or services they are promoting are truthful and not exaggerated. If an influencer makes false or misleading claims, they can be held liable for any harm caused to consumers.

Misleading Advertisements are defined in Section 2 (28) of the Act as an advertisement which

falsely describes such product or service; or
- gives a false guarantee to, or is likely to mislead the consumers as to the nature, substance, quantity or quality of such product or service; or
- conveys an express or implied representation which, if made by the manufacturer or seller or service provider thereof, would constitute an unfair trade practice; or
- deliberately conceals important information;

The act also provides consumers with the right to file complaints against any misleading or fraudulent advertisements. In case of any violation, the influencers can face penalties such as fines and even imprisonment. The punishment for the misleading advertisement includes imprisonment up to a period of 2 years with a fine that may extend up to ten lakh rupees. This Punishment is stated in section 89 of the Act. Section 21 of the act gives Central Authority the power to remove any false advertisement.

What the Judiciary Says:

Marico Limited v Abhijit Bhansali [1]

The Bombay High Court, in its decision, had also identified “social media influencers” as a nascent category of individuals who have acquired a considerable follower base on social media and a certain degree of credibility in their space. The decision also noted the need to impose certain responsibilities on such influencers keeping in mind the power they wield over their audience and the trust placed in them by the public.

Aditya Kumar Jha v. UOI [2]the High Court of Allahabad held that the role of the ASCI is to ensure that advertisements are truthful and honest. Further, the test to determine if an advertisement is truthful and honest is the impact it has on a consumer and whether it is likely to mislead them.

Conclusion

According to some reports, half of the Indian population uses social media and this number is expected to keep growing. With the advent of digital media, influencer advertisement has become the new norm of advertisement. The Indian legislators have also taken notice of this and have accordingly come up with guidelines and statutes to stop misleading or false advertisements by influencers. The ASCI guidelines are being strictly applied to influencer and their posts with mechanisms for detecting violations set up in place.

BY-

SHAKSHI SWARNKAR

2ND YEAR LLB

ILS LAW COLLEGE, PUNE

[1] 2020 SCC OnLine Bom 265

[2] 2017 SCC OnLine All 3922