Counterfeit (Fake) Products, Real Damage: How a Trademark Infringement Case Became a Full Brand Protection Strategy for a ₹100 Crore Company.
What Was the Case
Our client is a 100 cr. Valuation company, has been in business of packaged food products like spices, snacks, and ready-to-eat products for more than 30 years. The company had registered its trademark under the Trade Marks Act, 1999, covering the brand name, logo, colour and design used on the product packing.
The company's regional sales team started getting complaints from customers that the taste and quality of the product had “changed.” But the company had not changed anything. When the team randomly visited different shops they found that shops were selling counterfeited (fake) packets. The brand name, logo, colour, and shape of the counterfeit (fake) packets were all in the same style as the original one.
After research we came to know that the product was manufactured by a small unregistered factory. This is a clear case of trademark infringement under Section 29 of the Trade Marks Act, 1999. According to the section, if someone uses a mark on the same type of goods that is identical or looks almost the same, enough to confuse people, as a registered trademark, it called infringement. The case also involved passing off under Section 27(2) of the same Act. Passing off means one company is trying to sell its goods by making people believe they are buying from the original manufacturer company.
As per the company records these counterfeited products were being sold in more than 4,000 shops in three different states. Roughly this unregistered manufacturer was earning several crore rupees every year from this fake business. The products that were manufactured by the counterfeiters were of poor quality and therefore many customers were dissatisfied. This dissatisfaction was directed to the original brand name, and not at the counterfeiters who were responsible for poor products.
What Made This Case Difficult
- The infringement was not coming from one particular factory, as there were some other unregistered factories producing counterfeit products in various cities and even in other states
- The fake manufacturer used a name that was only slightly different from the original brand name, so they could later argue in court that it was not an exact copy
- The counterfeited goods were sold mostly in small local shops, making it difficult to track the source of counterfeit products were being supplied and distributed
- If the counterfeit sellers found out about the ongoing investigation, they could simply shift their stock, make little changes to packaging and even change their business names
- The case involved more than one state, which raised the question of which court has the jurisdiction to hear the case
- The Client was not interested in highlighting this matter into the newspapers as negative publicity about “fake products in the market” would spoil their reputation even if they themselves were not doing any wrong
How SPJ Advocates Handled It
Month 1 — Quiet Investigation
- We hired trained investigators to visit the local shops and buy sample packets of the counterfeit (fake) product, without disclosing that they were connected to the original legitimate company
- We collected and compared the fake products packets side by side with the original ones to demonstrate the similarities in their names, logos, colors, and designs
- We traced the the source of the counterfeit products by going backwards along the supply chain from the shops to identify which local units were producing the fake products
- Conducted this entire investigation in secret manner, so the counterfeit sellers would not get any early warning and destroy evidence
Months 2–4 — Filing the Case and ex-parte ad-interim injunction
- We filed a civil suit for permanent injunction, damages, and accounts of profits under Section 135 of Trade Marks Act, 1999, in the Delhi High Court.
- In addition to the civil suit, we also filed a urgent application for interim injunction under Order 39, Rule 1 and 2 of the Code of Civil Procedure, 1908, for stop the counterfeit sellers immediately without waiting for the full trial.
- The court found that prima facie the case was strong and genuine, which led to granting an ex-parte ad-interim injunction. It means the court issued this order on a speedy basis even without giving a chance of hearing to the other party, since a single delay could cause much more damage to the client
- The court order restrained (legally stopped) the identified units from manufacturing, selling, or distributing the counterfeit goods anywhere in India
Months 5–8 — Raids to Seize counterfeit Stock
- We applied in the court for appointment of Local Commissioners under Order 26, Rule 9 of the Code of Civil Procedure. The Local Commissioner is an officer appointed by the court who may go to a particular location and collect evidence on site, with police support if required
- Conducted raids simultaneously at multiple places across different states on the same day to ensure that no fraudulent unit got a chance to give prior information to any other unit
- During these raids, the Local Commissioners seized counterfeit packets, printing plates, packaging material, and Accounts book, all of which became strong evidence for the case
- We filed a criminal complaint under Sections 103 and 104 of the Trade Marks Act, 1999 for selling goods with a counterfeit trademark.
Months 9–15 — Settlements & Litigation Trial
- A number of small manufacturer, once they realized the strength of evidence, agreed to sign agreements to permanently stop making or selling the counterfeit goods and to compensate our client for the agreed amount.
- Some manufacturers who refused to sign on the agreement, the case went to litigation where the seized evidence, the packet samples, and the report of the investigator were presented to the court.
- The court compared the packets side by side and came to the conclusion that a common consumer, in a small shop with many products on display, could be easily misled between the original and the counterfeit packet.
Months 16–18 — Court Orders and Long-Term Protection
- The court passed a final judgment confirming a permanent injunction against all identified infringing manufacturing units, along with an order to pay damages to the client
- We advised the client regarding the trademark protection further, including registration of a few variations of its brand name, so copycats have fewer easy options in future
The Result
The case was fully resolved in 18 months. The court granted a permanent injunction against all the identified counterfeit manufacturers, along with an order to pay damages to the client. Several manufacturing units signed the agreement and stopped their fake business completely. The criminal complaint led to real consequences for the most serious offenders, sending a clear signal to other potential copycats in the market.
Is your Trademark/brand being copied in the market? Fast legal action can stop counterfeit sellers before more damage is done. Call SPJ Advocates at +91-8920245815 to handle your brand trademark protection.
