Intellectual property: these legal steps you can take if your IP rights are violated in India

What to do if your intellectual property is infringed in India? According to our lawyer Van Lavanya, as a European company, you have three options: send a Cease & Desist letter, initiate civil or criminal proceedings. She explains when which remedy applies and what to expect at each step.

Cease & Desist letter

When there is counterfeiting (the unauthorized imitation of a branded product) and/or piracy (the unauthorized copying of a product protected by intellectual property rights), the first option available to the aggrieved party is to send a Cease & Desist letter requesting that the infringing acts cease(cease) and remain ceased(desist).

The purpose of this letter is to resolve the dispute quickly and without litigation. Moreover, this means is very cost-effective to enforce IP laws before taking legal action. It is recommended that this letter be sent by an attorney to show that the company is considering legal action.

Should the cease and desist letter not work, the aggrieved party can always decide to go to court. Indian IP law has both civil and criminal approaches for this purpose:

Civil action for IP infringement

The civil action is designed to stop the distribution, manufacture or sale of the infringing product. A choice can be made to bring a claim for damages or to gain insight into the infringing party's accounts.

If insight into the accounts is chosen, the infringing party must hand over the profits they made from the illegal activities to the injured party. In a claim for damages, the court sets an amount to be paid by the infringing party.

During ongoing civil proceedings, the court may even issue injunctions designed to prevent imminent infringement of IP rights. The court can impose an ad interim injunction on the opposing party. This is prohibiting any action with the aggrieved party's product until the dispute is resolved. However, the injured party must be able to show that if the temporary injunction is not granted, it will result in irreparable losses.

The Mareva injunction also protects the interests of the aggrieved party during litigation and is granted to stop the opposing party from selling its products or services until the trial ends.

Further, under a Anton Pillar Order, a company may go to the opposing party's location with a court-appointed commissioner to search and seize relevant documents and counterfeit goods. This may be decided to prevent the removal or destruction of evidence before trial.

If the infringing party is unknown (for example, if it is an e-commerce company), action can still be taken on the basis of a John Doe order. This gives prosecutors the freedom, with the help of a court-appointed commissioner, to raid locations where infringement activity may be occurring.

Learn how to protect your intellectual property already when setting up your entity in India

Criminal proceedings for IP infringement

In India, IP rights are private rights enforceable through civil proceedings. Yet the Trademark Act, the Copyright Act and the Geographical Indications Act, also have criminal remedies. Penalties can range from 6 months to 3 years in prison and a fine of 50,000 to 200,000 rupees (550 euros to 2250 euros).

Under these laws, suspects are subject to prosecution and police can conduct raids and seize property without a court order.

Because criminal investigations take a long time to complete, there is a large backlog of cases in these courts. To get around these years of proceedings, the courts have created an option of plea bargaining. In this case, the offending party accepts its guilt in exchange for remission of jail time and compensation for damages suffered by the injured party.

Always seek legal advice first

It is important to always seek legal advice first about suspecting that someone is infringing on your intellectual property rights. Making threatening demands without proof is illegal.

An intellectual property legal expert can help you determine whether the infringement of your property rights is actionable and where to report it. If you choose to file a civil lawsuit as well, a local IP lawyer can help you file and build a strong case.

Business acquisition in India: why due diligence is an essential step

Acquiring a company in India is not without risks, noted Johan de Boer, managing director of KROV. The Dutch manufacturer of train, office and store fittings decided to abandon the acquisition of a manufacturing partner in the Indian city of Bangalore after extensive due diligence.

Have thorough research done before you engage with an Indian partner

"It's not down to the products the Indian company makes," De Boer reflects. "The quality is fine. We offer their products in Europe and they themselves sell directly to customers in America." After the owner indicated a desire to sell the company, De Boer visited the factory in August for an initial thorough inspection. Then began the due diligence process, conducted by an Indian accountant and a local lawyer. In December, they delivered their report with the advice: don't do it.

Both financially and legally, the producer was found not to have its affairs in order. Those figures did not match the reporting. That was surmountable, according to De Boer, but the findings of the lawyer were less innocent. The company turned out to be incorrectly registered, irregularities regarding personnel contracts came to light, and the administration and payment of social security contributions were not in order. "That not only carries hefty fines, as an owner you can even end up in jail for that," he said.

Work with local advisors

For De Boer, this experience reaffirms the importance of recruiting good local consultants in India. "If we had conducted this process independently, we might not have been able to bring this to the surface. Then you are suddenly liable for a company in which things are not properly arranged. Afterwards, you can't fix that. The consequences, financial or worse, are then yours." To put it mildly, the current owner was not happy that De Boer renounced the deal. "He still tried to tone down the irregularities, but I didn't hire advisors for nothing. It would be stupid to go against their advice."

Still, De Boer remains interested in the Indian producer. "I know that this factory in India delivers quality and the relatively low production costs are of course attractive. That is why we have now discussed an alternative route. If the Indian owner liquidates the company, we would then like to take over the factory premises, machinery and some of the employees. That would remove the legal risks for us. The current owner is keen on this. We have agreed to discuss this further in the coming year."

Producing in India has interesting advantages

De Boer has another reason for wanting to manufacture in India. "KROV has a good reputation worldwide as a supplier of train equipment, such as tables, chairs and backrests. India has the ambition to build a nationwide network of high-speed trains and we are already in talks about this through main manufacturer Kawasaki. Our position is stronger when we have a production facility in India, because the Indian government would like to create as many jobs in India as possible. So an Indian plant would also be interesting with a view to sales there."

Do you want to enter the Indian market, but are unsure what is the best first step for your business? Or are you looking for a local party to conduct market research or due diligence for you?

Intellectual property in India: this is how to protect your IP

India has been a member of WIPO (World Intellectual Property Organization) for nearly 50 years, which means that most intellectual property laws in India meet international standards and Indian courts can provide injunctive relief relatively quickly in the event of infringement. But what options do you yourself have to protect your patents, trademarks, copyrights and designs when setting up your entity in India? Our lawyer Van Lavanya lists them for you.

Intellectual property (IP) registration in India

Intellectual property rights in India are enshrined in several laws, including Trademarks Act 1999, Copyright Act 1957, The Patents Act 1970, The Designs Act, The Geographical Indications Act 1999 and The Customs Act, 1962. These laws provide a system of remedies for the enforcement of IP rights.

Most IP types, such as patents, trademarks or designs, can be registered online at the Office of the controller general of patents, designs and trademarks. The registration process and required documents vary depending on the type of IP you are registering, but in all cases you should prepare the following documentation:

• Application Form: The Indian IP office uses specific forms for each type of IP (patent - Form 1, trademark - Form TM-1 etc.).

• Applicant Information: Your company's name, address and contact information.

• Proof of ownership: Documents that demonstrate your ownership of the IP. For example, these can be documents that describe the invention in case you register a patent.

• Power of Attorney (if applicable): If you are using an IP attorney to file the registration (such as an Indian IP lawyer), you should add a power of attorney so that this person can represent you.

• Specification/Description: A detailed description of the IP, depending on the type. For patents, this is the complete specification describing the invention.

• Fees: The Indian IP office charges fees for registration applications. These fees vary depending on the type of IP you are registering. Trademark registration costs on average between 4,000 and 10,000 rupees (45 to 115 euros). Patent registration is more expensive, costing on average between 15,000 and 50,000 rupees (170 to 560 euros).

It is advisable to hire an Indian IP lawyer who is familiar with the documentation required for foreign companies for your registration as well, you would be sure not to incur unnecessary costs or delays.

Non-disclosure agreement (NDA).

Commercial business strategies such as trade secrets, know-how, production methods or any kind of information that is kept confidential to maintain an advantage over competitors are covered by trade secrets.

India has no statutory or legal basis guaranteeing the protection of trade secrets. Therefore, if you are going to work with a partner in India, you should take steps to protect this IP yourself. You do this by making arrangements with you partner(s) and recording them in a non-disclosure agreement (NDA).

Therefore, any confidential information that cannot be registered as a patent, trademark, copyright or design with the Indian IP office must be protected in an NDA. Confidential information can be exchanged in an NDA, such as information in the context of negotiations to purchase another company or a patent.

If one expects to share confidential information in order to do business or collaborate, an NDA ensures that this information is not disclosed to outsiders. At a minimum, an NDA should include the following information:

1. Parties involved
Clearly identify both parties involved in the agreement: the IP owner (sharing confidential information) and the receiving party (receiving confidential information). Include full legal names, addresses and contact information.

2. Definition of Confidential Information
Define what constitutes "confidential information" in the NDA. Use clear and concise language that covers the type of information you want to protect. Consider including examples, but avoid an overly comprehensive list. Address whether information independently developed by the receiving party is also considered confidential.

3. Confidentiality Obligations
Outline the obligations of the receiving party regarding maintaining the confidentiality of the disclosed information. State restrictions on the use, disclosure and sharing of the confidential information. Exceptions for permitted use may be stated, such as for the purpose of intended cooperation or disclosure required by law.

4. Duration and termination
Determine the duration for which the confidentiality obligations apply. This may be a fixed period or until the information becomes public. Specify the conditions under which the NDA can be terminated by either party.

5. Consequences if NDA is violated
Outline the possible consequences if the receiving party violates the NDA. These may include injunctive relief (court order to prevent disclosure) or damages.

6. Dispute Resolution
Establish a mechanism for resolving disputes arising from the NDA. This may be negotiation, mediation or arbitration.

7. Applicable Law and Jurisdiction
Specify the legal jurisdiction applicable to the interpretation and enforcement of the NDA.

Again, it is highly recommended that you engage an Indian IP lawyer who is familiar with local IP regulations and experienced in drafting NDAs for collaborations between Indian and European partners. This way, you will avoid missing important elements.

Agreements around the creation of new IP

An NDA can also include agreements on the use of a Background IP. This is the intellectual property that a company already has before partnering with a party in India. In a collaboration, the company will develop new intellectual property (IP) together. It is therefore important to clearly define agreements around the use of the new IP.

This is important in India because much of the technology coming to India from Europe needs to be modified or localized, either to reduce cost or to make it workable for the Indian context. In the absence of clear agreements on the new IP, this IP will be free from infringement by others. It becomes very difficult at a later stage to protect that IP or to dispute that the IP was developed based on the background technology.

Provisional Patent Application (PPA).

For trade secrets that a European company wants to share with an Indian partner, a PPA registration can also be used: a Provisional Patent Application. This is a legal tool that does not exist in Europe, but is widely used in countries such as India, the U.S. and South Africa as an additional means of protection.

A PPA means that an owner of confidential information (both patents and unregistered trade secrets) can register that information in confidence and under secrecy with the Indian IP office. They provide a certificate stating that the owner submitted his information by a certain date. This information, unlike formal patent applications, will never be made public.

The PPA certificate can be added as an attachment to an NDA to prove at all times that the information shared at the start of the collaboration originated from the European party and is confirmed as such by the Indian IP office.

This sends an extra strong signal to the Indian party to respect confidentiality. It also makes legal action easier because it can be shown that everything possible was done to protect the information. A PPA can be used for any kind of confidential information.

After the expiration of the PPA registration (12 months), the European and Indian partner should prepare a declaration that the information will continue to be protected by the two partners in the future. This is an additional demonstrable commitment by the Indian party that ensures protection and can be used in a worst case scenario in formal action.

Due diligence

Before a company engages with an Indian business partner, it is important to conduct (or have conducted) a comprehensive background screening of this Indian party. Due diligence helps make the right decision and mitigate the risks associated with the business transaction. Much of the due diligence can be done online.

Important sources of information are the Ministry of Corporate Affairs (MCA), which regulates business affairs in India. All companies in India must file their financials and shareholder information with the MCA.

Furthermore, information can be obtained from the Credit Information Bureau India Limited (CIBIL) website. On this, the credit history of an individual, company, or partnership can be accessed. Any disputes/cases pending against them are listed here and also whether they have ever been declared a willful defaulter in the past.

Finally, the professional federation of the sector in which the company operates can also be an interesting source of information.