Examining The Menace Of Counterfeit Products In The Apparel Sector

Share

Share

 

Counterfeiting is a major challenge to copyright law throughout the world, to which India is no exception. The rapid growth in fake copies of garments does not only effect businesses at large but also the economy, it deceives the consumers and distresses the intellectual property right holders.

This article aims at understanding the significant impact of counterfeiting in the clothing industry while considering various possible stakeholders, analyzing its effects from the perspective of copyright law.

What Is Counterfeiting & How Does It Work ?

Sec 2 (4) of The Bhartiya Nyaya Sanhita, 2023 defines counterfeit as making one thing resemble another with the intent to deceive or knowing it is likely to deceive, regardless of whether the imitation is exact. If the resemblance is such that it could deceive someone, it is presumed that the person causing the resemblance intended to deceive or knew it was likely to deceive, unless proven otherwise. The Trade Mark Act, Section 102 talks about counterfeiting in terms of falsification and false application of a trade mark .

The act of creating or marketing a product that appears to be a duplicate of a trademark with the intention of tricking a customer into believing they are purchasing the original brand goods is known as counterfeiting, as per the Black’s Law Dictionary.

A counterfeit, according to the Cambridge Dictionary, is something that is intended to appear like the original product for deceitful or unlawful reasons.

The unapproved duplication or copy of items, frequently with trademarks or designs that closely resemble real things, is referred to as counterfeiting. Within the apparel industry, counterfeit goods imitate the styles and emblems of well-known brands and cover anything from clothing to accessories. Usually offered at reduced costs, these fake products take advantage of the goodwill and reputation of well-known companies.

The demand for less expensive alternatives, customer ignorance, and occasionally lax enforcement of intellectual property rights all contribute to the sizeable market for counterfeit apparel in India. Because counterfeit goods frequently fall short of quality requirements, this illegal activity not only has an impact on the economy but also puts consumers’ health and safety at risk.

Legal Framework: Copyright Protection For The Apparel Industry

Copyright protections are crucial in the fashion industry’s legal battle against counterfeiting. Under the Indian Copyright Act, 1957, original artistic works—including designs used on clothing—are protected by copyright. This includes the unique prints, patterns, and artistic elements that make an item of apparel stand out.

For these designs to qualify for copyright protection, they must be sufficiently unique, that is, the result of the author’s own independent creative activity. It can’t just be a regular component arrangement. A design that is copyrighted cannot be used or copied by anyone else without the owner’s consent.

How Are Copyright Infringement & Counterfeiting Similar?

All counterfeiting is essentially a kind of intellectual property infringement. This is due to the reason that counterfeiting, by definition, entails the illicit production and branding of products that are protected by patents, trademarks, and copyrights without the consent of the brand, or the intellectual property right holder. The converse isn’t usually true, though. Counterfeiting does not refer to all intellectual property violations.

Implications Of The Menace On Various Stakeholders

1. Consumer Safety & Health

Purchasing counterfeit apparel exposes consumers to various concerns, including poor quality, potential health risks from inferior fabrics, and the absence of warranties or product support. The presence of fake goods undermines consumer confidence, as they can deceive customers into believing they are buying authentic products. Despite being aware of the counterfeiting, some consumers may still opt for these items due to their lower cost, enabling them to acquire a status symbol without paying a premium price. For example, someone unable to afford a luxury watch might choose to purchase a counterfeit version to maintain the appearance of owning the genuine article without the associated expense.

2. Impact On Goodwill Of Original Brand/Company

Counterfeiting diminishes consumer trust in brands whose names are misrepresented through counterfeit products. This erosion of trust can lead to reputational damage for the original brand or company, resulting in the loss of consumer base, market share, and sales. Ultimately, this can translate into substantial financial losses for the affected brand or company.

3. Loss Of Sales/Revenue To The Copyright Holder

Counterfeiting disproportionately impacts legitimate businesses, resulting in reduced revenue, damaged reputations, and increased compliance costs. Counterfeit goods undermine market prices for genuine products, unfairly competing and reducing the market share of authentic goods. The ability of businesses to protect their investments in brand development and innovation hinges on robust legal protections afforded by copyright and trademark laws.

4. Innovation & Creativity

Legitimate apparel brands invest significant resources in design and quality products. When these efforts are copied and inferior versions flood the market at substantially lower prices, it distorts the market for genuine clothing brands and discourages innovation and creativity. This imitation undermines the incentives for brands to invest in new designs and technologies.

5. Impact On Economy

Counterfeiting in the apparel industry has significant and diverse economic consequences. Counterfeiters gain market share and revenue at the expense of legitimate businesses that incur costs for design, research, and ethical manufacturing. This reduces tax revenues for governments, undermines fair competition, and hinders economic growth by diverting profits away from legitimate manufacturers. Additionally, counterfeiting contributes to job losses within the legitimate fashion industry and affects related sectors such as supply networks, logistics, and supporting industries.

Copyright Infringement Remedies

Civil: Injunction and damages are the two civil remedies available to copyright holders under Section 55(1) of the copyright laws.

Injunction: A judicial ruling that prevents an infringing party from carrying out further acts that breach the rights of the copyright owners. It may also mandate that the infringement party repair any damage done and return the situation to how it was before. When it comes to shielding the rights of the copyright owner from future damage, injunctions are quite successful.

Damages: Money given to the owner of the copyright as compensation for losses incurred as a result of the infringement. The goal is to put the owner of the copyright back in the same situation as if the infringement had never happened. Losses, harm to one’s goodwill, a decline in sales, lost earnings are some factors impacting the number of damages along with other pertinent factors like the infringer’s purpose and associated litigation expense. In order to ensure fair reimbursement for the illegal use of the creative works of the copyright owner, damages are compensatory rather than punitive.

Criminal: According to Section 63 of the Copyright Act, it is a crime to violate someone else’s intellectual property. The owner of the copyright may file criminal charges against the offender. The penal remedy is a supplement to the civil compensation, not its replacement. Therefore, the owner of a copyright may file both criminal as well as civil cases at the same time.

Conclusion

A thorough and coordinated response is required in light of the substantial legal, economic, and societal issues posed by counterfeiting in the Indian apparel sector. The impact of counterfeiting must be reduced by strengthening intellectual property laws, improving enforcement strategies, encouraging international cooperation, and increasing consumer awareness. India can maintain the integrity of its garment sector on a national and international level, protect legitimate enterprises, and ensure consumer safety by defending intellectual property rights and promoting a fair and competitive marketplace.

In conclusion, tackling the intricacies of counterfeiting necessitates a coordinated strategy that strikes a balance between proactive measures, legal strictness, and consumer trust in order to protect innovation, economic development, and India’s thriving apparel industry.

Authors: Bhumika Sharma & Ananya Mehta

Lawyers.

Interns and Paralegals.

Disclaimer.

As per the rules of the Bar Council of India, we are not permitted to solicit work or advertise. By agreeing to access this website, the user acknowledges the following:

This website is meant only for providing information and does not purport to be exhaustive and updated in relation to the information contained herein. Naik Naik & Company will not be liable for any consequence of any action taken by the user relying on material / information provided on this website. Users are advised to seek independent legal counsel before proceeding to act on any information provided herein.