IP & Corporate Law Updates
- Border protection measures in Bangladesh
- Country of Origin to be specified on E-commerce websites for Product Listings
- Draft EIA Notification 2020- Deadline to file objections extended to August 11, 2020
- Copycat COVID products- New face of Counterfeit
- DETTOL v. DEVTOL- Delhi HC imposes fine for infringing the mark DETTOL
- Ban on RO Water Purifiers- NGT directs Ministry to Issue Notification
- Trans-border Reputation of Foreign Trademark- India
- Online Gaming a profitable venture
Bangladesh introduces Border Protection Measures
Trade and international movement of goods not only form the backbone of any economy, but forms an integral part of the broader socio-political landscape. Intellectual Propriety Rights holders are under constant threat of counterfeit products in the market, which is increasing exponentially with growing technology and increase in cross-border commerce between countries. Interestingly, such counterfeit goods may not always be manufactured and circulated for trade and commerce in the domestic market but may also enter illegally through the customs frontiers of a country. Therefore, it is crucial for IP Rights holders to keep a close watch and take appropriate and timely action against imports that can potentially be infringing on the rights of such IP Rights holders.
The Customs IPR (Export-Import) Rule, 2019
Recently, to honour Bangladesh’s international commitments under the TRIPS (Trade Related Aspects of Intellectual Property Rights) Agreement, and to counter the ever present and ever-growing issue of import-export of counterfeits and fake goods strengthened its Border Protection Measures and the Government People’s Republic of Bangladesh embraced this growing bandwagon of countries actively battling against the issue of cross-border counterfeits by enacting a special set of laws/rules to counter this problem. In this regard, the National Board of Revenue (NBR) of Bangladesh recently issued the Intellectual Property Rights Enforcement (import and export) Rules-2019 in November 2019.
The new Border Protection measures allow for Intellectual Property Rights Holders to object to the import-export of suspected infringing products by filing a prescribed form with the Commissioner of Customs. Under the rules, “Intellectual Property” includes:
- Trademark defined under the Trade Marks Act, 2009
- Copyright defined under the Copyright Act, 2000
- Patent defined under the Patent and Designs Act, 1911
- Geographical Indication defined under the Geographical Indication Act, 2013
As regards the above IP, a Right Holder is deemed as any person who owns any of the above Intellectual Property or his licensee or any authorised representative. Any Rights Holder may take action under the rules with respect to any “infringing” product that has been manufactured, reproduced, published or used upon infringing the intellectual property law/s prevailing in Bangladesh or in any other jurisdiction and without the license/authorization obtained from the right holder or its authorized person/entity.
Key Provisions under Customs IPR (Export-Import) Rule, 2019
Upon any information about any suspected case of counterfeiting or infringement via import-export, a right holder may file a notice in the prescribed form to the relevant Commissioner of Customs, inter alia requesting them to withhold the said consignment. The form must contain certain mandatory information, including but not limited to the correct name and contact details of the Rights Holder or its representative, documents such as certificates evidencing registration of intellectual property (such as trade mark registration certificates) as well as documents evidencing their validity (such as renewal certificates or certified copies of the IP register in question), details about the grounds on which the consignment may be stopped, description of the original goods of the client in question, details of the relevant port/customs house, etc. Further, the application has to be accompanied with payment of the requisite fee (BDT 5,000) as well as the corresponding receipt.
The said documents have to be submitted with the application and in case of non-submission at the time of filing, the Commissioner of Customs may call upon the Applicant / Rights-Holder to furnish the necessary documents within 15 days.
Post-filing the application, the Commissioner of Customs has to inform the Applicant/ Rights-Holder about their decision (registration or refusal) within a time of 30 days. Post registration, a bond will also have to be submitted, the terms of which may be intimated by the Commissioner of Customs.
VALIDITYThe registration shall be valid for a period of one (1) year.
SCOPE OF PROTECTION
Upon registration, the Commissioner of Customs shall inform other posts/customs houses about the said registration.
CONFISCATION OF SUSPECTED CONSIGNMENT BY CUSTOMS
Any designated officer may either at his own discretion or upon an application by a Rights-Holder, withhold clearance of product (either import or export), which is suspected to be infringing.
Upon such action, the Customs Office shall contact the Rights-Holder and grant them a period of 10 days to submit relevant documents to prove that they have the requisite IP rights with respect to the consignment. However for perishable goods, a period of only 3 days may be granted.
If the Rights-Holder is able to satisfy the requirements regarding IP, the Commissioner of Customs may then hold the said consignment/products under Section 17 of Customs Act and resolve the matter as per Rule 9 of the new rules. If the said requirements are not met, then the Commissioner of Customs may release the consignment/products within 24 hours.
FAILURE TO SUBMIT DOCUMENTS
In case of failure to respond within the stipulated time on part of the Rights-Holder, the Customs Office may thereafter take a decision as per the relevant provisions of law.
INSPECTION OF GOODS
Post receipt of approval from the Customs Office/ers, the Rights-Holder or its authorised representatives may then examine the impugned consignment/products or obtain a sample of the same for the purpose. The Rights-Holder shall be obliged to keep the information confidential.
In such cases, the Importer or Exporter shall also be granted opportunity to seek information regarding the consignment. Upon application from the importer-exporter, the Customs Office/ers may provide the information as furnished by the Rights-Holder. However, information pertaining to “trade secrets” may not be shared.
DISPOSAL OF INFRINGING GOODS
The Commissioner of Customs may order the destruction of the impugned products by following the due process, and may also hold the importer-exporter liable to bear the expenses for such destructions.Furthermore, the Customs Office may not send back the infringing products to its source.
The introductions of these Border protection measures by Bangladesh is a significant step forward towards combating infringement/counterfeiting in the region, by stopping them at the very borders. This will also empower domestic as well as foreign Rights-Holders to better police their IP rights in the jurisdiction. As the rules have very recently come into place, Rights-Holders worldwide will be observing how the actual enactment of the same unfolds over the next few months.Related Posts CUSTOM RECORDAL AND BORDER PROTECTION MEASURES IN INDIA
COUNTRY OF ORIGIN TO BE SPECIFIED ON E-COMMERCE WEBSITES FOR PRODUCT LISTINGS
Demands for specifying the Country of Origin (“COO”) of products sold online has gained ground in view of Prime Minister’s vision of “Atmanirbhar Bharat” and “Make in India”. The Domestic traders’ associations have been at the forefront of these demands.
The Ministry for Commerce and Industry has mandated that the Government e-Marketplace (“GeM”), which experienced INR 55,048 crores worth of transactions till date to adopt the said approach in the interest of creating an ‘Aatmanirbhar Bharat’. The sources report that the Ministry has stated in its statement that “Sellers who have already uploaded their products before introduction of this new feature on the GeM, are being reminded regularly to update the country of origin. It’s with a warning that their products will be removed from the GeM if they fail to update.”
Furthermore, the Department for Promotion of Industry and Internal Trade (“DPIIT”) had asked various e-commerce giants, for a meeting which was scheduled for July 08, 2020, to discuss the ‘concerns relating to displaying origin of the products’ on online retail platforms. This follows the GeM platform’s policy that makes it mandatory for its listed sellers to specify the country of origin while registering new products on its portal. The said meeting was likely to discuss and set the time frame for implementation of the rule, and to ensure that existing listings on e-commerce platforms are compliant with the new rule.
Government asks e-commerce websites to display Country of Origin on Product Listings
Recent reports suggest that the Government has asked e-commerce websites to display Country of Origin of new products listed by sellers on their websites by August 01, 2020, and for legacy items by October 01, 2020. The e-commerce companies sought more time to implement the changes, which are part of the government’s plan to curb imports. The e-commerce platforms said the measures should be introduced in a phased manner with the involvement of manufacturers and sellers in the process. Certain points relating to the feasibility of the move and lack of clarity in the Legal Metrology (Packaged Commodity) Rules, were also raised.
Further, as reported, one of the issues relied upon during the said meeting was in the context of non-packaged goods. At present there is no requirement to display country of origin on non-packaged goods. The DPIIT would be discussing the introduction of relevant legal provisions with the Ministry of Consumer Affairs on listing such information.
What is a Country of Origin and its relevance?
A Country of Origin (“COO”), is representative of the country or countries of manufacture, production, design, or brand origin where an article or a product comes from. For various multinational brands, a COO may include multiple countries describing the value-creation process.
There are divergent rules of origin under various national and international laws. Country of Origin labeling (“COOL”) is also known and considered as a place-based branding, the made-in image or the “nationality bias”, in certain cases. For instance, certain regions may adopt unique local terms such as ‘terroir’ used to describe wine appellations based on the region where grapes were grown and the wine was manufactured.
The Law in India relating to disclosure/specification of Country of Origin
The Indian laws and regulations enumerate the statutory provisions pertaining to declaration of ‘country of origin’ or ‘country of manufacture’ on imported products. However, no law in India discusses the aspect of display/ disclosure of “country of origin” on the seller’s website.
The issue relating to display of “country of origin” on e-commerce websites has gained momentum recently in the wake Prime Minister’s vision of “Atmanirbhar Bharat” and subsequent efforts of the Indian Government to weed out availability and dependence on imported products and goods in India.
Delhi HC issues notice in Plea seeking disclosure of “country of origin” on E-commerce websiteIn a recent development, the Hon’ble Delhi High Court on July 01, 2020 has issued notice to the Centre in a case, wherein the Petitioner sought directions to the Centre to display the name of manufacturing country on E-commerce websites.
Law in India relating to disclosure of “Country of Origin” on Imported Products
In India, as per the Customs Tariff Rules, for products not wholly obtained or produced in India shall be considered as originating in the exporting beneficiary country if: the total value of the non-originating materials used in the manufacture of the export product does not exceed seventy per cent of the FOB value or ex-works value of the product so produced or obtained (that is, the local value added content in the exporting beneficiary country is at least thirty per cent); and the final process of manufacture is to be performed within the territory of the exporting beneficiary country.
The Legal Meteorology (Packaged Commodities) Rules, 2011 also require a declaration of ‘country of origin’ or ‘country of manufacture’ or ‘country of assembly’ on the imported products. This is aimed at curbing false and misleading claims by the brands to deceive the customers, as also to give complete information of the product to a potential buyer.
Furthermore, the requirement of indicating origin of goods imported/exported can also be traced under
Section 71, the Geographical Indications of Goods (Registration and Protection) Act, 1999Under both the aforementioned statutes, the Central Government may, by notification in the Official Gazette, require that goods of any class specified in the notification which are made or produced beyond the limits of India and imported into India, or, which are made or produced within the limits of India, shall, from such date as may be appointed by the notification not being less than three months from its issue, have applied to them an indication of the country or place in which they were made or produced, or of the name and address of the manufacturer or the person for whom the goods were manufactured.
The objectives of compulsory marking the origin of a product are many. If the provisions are construed from the context of the respective legislations, one of the main objectives is the prevention of falsification of marks. This will also help in preventing passing locally manufactured goods off as imported goods. The other objective is to check for parallel importing of the goods to the domestic market. The said rule also plays a progressive role in/for a country or region.
Specifying the Country of Origin is an important factor when it comes to product evaluation processes as well as for product purchase decisions. Its importance also depends on the amount of information that the consumers have about the product and the product category.
Soon after GeM’s policy discussion with the e-commerce websites, an overwhelming and welcoming response was received by various e-commerce majors, stating their commitment to promote India-made products and the local manufacturing sector in the country. However, reluctance in terms of specifying Country of Origins for old listings on the websites could be seen, and a unanimous decision on this aspect is yet to be arrived at.
It was further reported that certain e-commerce websites mentioned that smaller sellers would be worse hit due to such increased compliance pressure, especially at a time when they are having trouble selling goods offline due to the present pandemic Another executive with an e-commerce platform said that 90% of the listings can become compliant with the new rule by the end of July, but smaller ones will find it difficult.
This article is intended to provide an overview of the relevant-applicable legal framework and a free resource for our clients and the wider business community. Should you need to discuss any issue in detail, the author strongly recommends to seek specific legal advice relevant to your business scenario. Please feel free to reach out to us at email@example.com.
 https://economictimes.indiatimes.com/news/economy/foreign-trade/display-country-of-origin-by-aug-1-govt-to-ecomm/articleshow/76864214.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst ibid  “Country-of-origin fit: When does a discrepancy between brand origin and country of manufacture reduce consumers’ product evaluations?”. Journal of Brand Management. 23 (4): 1–16. 2016. doi:10.1057/bm.2016.13.  https://www.indiatoday.in/india/story/delhi-high-court-pil-centre-country-of-origin-1695822-2020-07-01  https://www.cbic.gov.in/resources//htdocs-cbec/customs/cs-act/formatted-htmls/csnt29rules-2015.pdf;jsessiodetermination nid=0B5F658ED16259DF99BB4F13073DC7E0  supra 4
Related PostsE-Commerce websites now come under the purview of the Legal Metrology Act Curbing Online Counterfeiting in India: Need of the Hour India: Highlights of the ‘Make In India’ Week
Draft EIA Notification 2020- Deadline to file objections extended till August 11, 2020
By Vikrant Rana and Tulip De
The Ministry Of Environment, Forest And Climate Change (MoEFCC) had published the Environment Impact Assessment Notification, 2020 dated March 23, 2020 (hereinafter referred to as ‘EIA Notification, 2020’) on April 11, 2020 in exercise of the powers conferred by Section 3(1) and 3(2)(v) of the Environment (Protection) Act, 1986, in supersession of the Environment Impact Assessment Notification, 2006. Under rule 5(3) of the Environment (Protection) Rules, 1986, notice was given to the general public to send their comments, recommendations and objections to the said draft notification within sixty days i.e. latest by June 11, 2020. Vide further notification dated May 08, 2020, the last date was extended by further 60 days. However, there is a typographical error in the said Notification as the last date for filing objections was mentioned as June 30, 2020 whereas it ought to have been August 11, 2020.
Thus, a writ petition being W.P.(C) 3747/2020 titled as Vikrant Tongad Vs. Union of India (MoEFCC) was filed in the Delhi High Court, “to protect the rights of the persons of India to a clean environment and human health and their right to community participation guaranteed to them under Article 21 of the Constitution of India, as well as under the provisions of the EP Act, 1986 and the Regulations thereunder.”
The main reliefs prayed for in the said writ petition were:-
“a. Issue a Writ in the nature of Mandamus or any other appropriate writ, order or direction to the Respondent to extend the notice period to the public, in the draft EIA notification 2020 until 30 September, 2020 or till such further period till the Covid-19 lockdown/ restrictions subsist;
- Issue a Writ in the nature of Mandamus or any other appropriate writ, order, or direction to the Respondent to make translated copies of the draft notification available across the country in the official vernacular languages mentioned in the Eighth Schedule to the Constitution, and upload the same on all its websites including those of the Environment Ministries of all the States as well as those of the State Pollution Control Boards;
- Issue a Writ in the nature of Mandamus or any other appropriate writ, order or direction to the Respondent to conduct consultations with various stakeholders and concerned persons across the country through its State Pollution Control Boards, as a precondition to considering the draft notification;
- Pass any other directions or orders as deemed fit by this Hon’ble Court.”
Vide order dated June 30, 2020, Chief Justice Prateek Jalan, Delhi High Court, clarified that there is an error apparent in the notification dated May 08, 2020 as regards the deadline for public comments and objections, and clarified that the deadline is August 11, 2020.
As regard the language of the notification, it was contended that the draft EIA has been published only in English and Hindi, whereas it is proposed to have effect all over India and to several industries and comments have naturally been elicited from all over the country. The affidavit dated June 30, 2020 filed by the Respondent states in this connection that the notifications are published in the Gazette only in Hindi and English, but comments and responses can be made in multiple languages, and have in fact been made in other languages as well, which will also be considered. Having regard to the EIA Notification which prohibits (i) modernization, (ii) expansion and (iii) establishment of several industries as stated in the Notification and also looking to the far reaching consequences of the public consultation process for which the draft notification has been published, the Court held that it would be in aid of effective dissemination of the proposed notification if arrangements are made for its translation into other languages as well, at least those mentioned in the Eighth Schedule to the Constitution of India. The Court further suggested that such translation may be undertaken by the Government of India itself, or with the assistance of the respective State Governments, where applicable. Such translations should also be published through the website of the Ministry of Environment, Forest and Climate Change, Government of India as well as on websites of Environment Ministries of all the States as well as those of State Pollution Control Boards, within July 10, 2020, to further enable the public to respond to the draft EIA within the stipulated period.
What is Environment Impact Assessment?
Environment impact assessment is a process under the Environment (Protection) Act, 1986, which prevents industrial and infrastructural projects from being approved without proper oversight. This process ensures that every project should go through the EIA process for obtaining prior environmental clearance.
EIA covers projects such as mining of coal or other minerals, infrastructure development, thermal, nuclear and hydropower projects, real estate and other industrial projects. The projects are assessed based on their potential impact on the environment. Based on the assessments, they are granted or denied environmental clearance by a panel of experts.
Some of the salient features of the draft EIA Notification 2020 against which criticism has been voiced are as follows:-
A. Reduction of Public Response Time and Public Hearing
Normally under the Environment Impact Assessment (EIA) Notification, public consultation process takes place, where objections can be heard including from project affected people. The EAC can then make a final appraisal of the project and forward that to the regulatory authority, which is the MoEFCC. The new Draft EIA Notification reduces the time period of receiving public response from 30 to 20 days under the reason of streamlining the process. However, it may just leave the locals with even lesser time to raise objections as the draft notification also provides that the whole process of public hearing itself shall be reduced from 45 days to 40 days. For project-affected people, who are frequently forest dwellers or otherwise do not have access to information and technology, this will make it harder to put forth representations. As the Supreme Court has said in several judgements over the years, the time given to consultation should be adequate and, if it is not, then it is a violation of the principles of natural justice. This may also be against Principle 10 of the Rio Declaration which deals with promoting public consultation and awareness regarding industrial projects that may harm local environment, and India is party to the Rio Declaration.
B. Exemption of certain Projects from Public Consultation
The Draft EIA Notification exempts a long list of projects from public consultation. For example, linear projects such as roads and pipelines in border areas will not require any public hearing. The ‘border area’ is defined as “area falling within 100 kilometres aerial distance from the Line of Actual Control with bordering countries of India.” That would cover much of the Northeast, which is a repository of one of the country’s richest biodiversity.
C. The new EIA Notification also allows an Ex-Post-Facto Clearance Route
It allows projects that are in violation of the Environment Protection Act (EPA) to apply for clearance, thus in a way legalizing projects that have already been operating without approvals from the EIA. Where an EIA clearance was never sought or granted, and the construction of the project took place regardless, the project proponent can enter an assessment procedure and seek a waiver by paying some fines for the violation. Where such ex-post-facto clearances were being granted previously, the courts cracked down on them as being unsustainable and illegal. (Recent Supreme Court decision dated April 01, 2020 in Alembic Pharmaceuticals Ltd. v. Rohit Prajapati & Ors. speaks for itself). The legality of sidestepping the courts is questionable and will have to be tested.
This waiver clause raises questions on several existing projects that are running without EIA clearances. Some example are as follows:-
- The LG Polymer Plant in Vishakhapatnam, where the styrene gas leak happened on May 7. It was revealed that the plant had been running for over two decades without clearances.
- A similar incident was reported on May 27, where due to poor adherence of environment norms, the natural gas of Oil India Limited in eastern Assam’s Tinsukia district had a blowout and caught fire. This caused severe damage to the livelihoods in the region rich with biodiversity. The State Pollution Board, Assam, had reported that the oil plant had been operating for over 15 years without obtaining prior consent from the board.
D. Monitoring requirements have been slackened in the new EIA Notification
The draft EIA notification halves the frequency of reporting requirements from every six months to once a year in critical sectors such as mining. This allows for more leeway and a dilution of environmental details. During this period, certain irreversible environmental, social or health consequences of the project could go unnoticed because of the extended reporting time.
Further, the monitoring mechanism requires the compliance report to be filed by the project proponents themselves. This may create a lot of room for discrepancies.
E. The new EIA Notification extends the validity period for approvals in critical sectors such as mining and other heavy industries
Increased validity of the environment clearances for mining projects (50 years vs 30 years) and river valley projects (15 years vs 10 years), thus increasing the risk of irreversible environmental, social and health consequences on account of the project remaining unnoticed for long.
F. Risk to Protected Areas
The new EIA Notification allows several red and orange toxic industries to operate as close as 0-5 Km from a Protected Area, which may risk the protection of the diversity of the country’s forests and our source of water. According to critics and environmentalists, the radius chosen is arbitrary and too less, and suitable scientific methods should be adopted to determine the appropriate distance from a Protected Area.
G. Exemption of several large industries from public hearings (B2 category)
The EIA regime in India broadly divides the projects which require Environmental Clearance into Category A, Category B1 and Category B2 based on their presumed impact. Category A projects, which include capital-intensive projects such as thermal power projects and airports, have the highest impact and are to be assessed by the Central Government represented by the MoEFCC. Category B1 projects are assumed to have lesser impact and Category B2 projects the least impact. They are to be adjudged by the State Government represented by the State-level Environment Impact Assessment Authorities.
Further, industries that previously fell under the categories that required a full assessment have been downgraded. The construction industry will be one such beneficiary, where only the largest projects will be scrutinized fully. Effectively, many of these projects are meant for the public from whom this information will be hidden. Several red and orange industries have been moved from Category A (which needs expert appraisal) to Category B1 or B2 which have lesser EIA processes and B2 industries do not need public consultation or EAC reports. A non-exhaustive list includes:
- Chemical manufacturing and petroleum products
- modernization of irrigation
- buildings, construction and area development
- inland waterways
- expansion or widening of national highways
- all projects concerning national defence and security
- Projects involving ‘other strategic considerations’ as determined by the central government
- offshore projects located beyond 12 nautical miles (onshore or offshore oil and gas drilling etc.)
- largescale renewable energy projects like dams
This may be against international environmental law and agreements like the Stockholm Declaration 1972, the Rio Declaration 1992 and COP 25, to which India is party.
The basis for classification of these projects is very normative. It only depends on their size and capacity, and not just their impact on the environment and health of the population. The size of a project and the environmental risks it could cause may not always be positively correlated.
Earlier, the Defence and national security installations were under the exempted category. The new EIA proposes a vague new category of projects “involving other strategic considerations” which will also now be free from public consultation requirements. It is not clear what all will be included under this category, showing lack of transparency.
H. Notification of some areas as ‘Economically Sensitive Areas’
The new Notification proposes declaration of some areas as ‘Economically Sensitive Areas’ without a public hearing or comments from stakeholders, which is against democratic principles.
From 1992 to the present, there have been three Notifications; the last of these, the 2006 Notification has been amended more than 50 times and clarified more than 200 times through circulars since it came into force.
There are a large number of communities like Adivasis, peasants and coastal and fisher communities whose lives mainly depend on the state of the environment. Any drastic changes in EIA will have a direct impact on the living and working conditions of these people and the ecology.
Therefore, it becomes imperative that all stakeholders and members of the general public send their comments and objections to the EIA Notification, 2020 at the earliest.
Any person interested in making any objections or suggestions on the proposal contained in the draft notification may forward the same in writing for consideration of the Central Government within the period so specified to the Secretary, Ministry of Environment, Forest and Climate Change, Indira Paryavaran Bhawan, Jor Bagh Road, Aliganj, New Delhi 110 003, or send it to the e-mail address at firstname.lastname@example.org
COPYCAT COVID PRODUCTS – NEW FACE OF COUNTERFEIT
By Lucy Rana and Isha Tiwari
Ever rational consumer was caught off guard at the inception of this pandemic, as an impulse to create stock piles of groceries, medical supplies, drugs etc. reverberated throughout the country. Despite reassuring claims of the government and manufacturers picking up the production pace, deep seethed fear amongst the public was palpable and some viewed this as a lucrative opportunity to cash-in upon this distress. While India continues to fiercely battle the novel coronavirus, the looming threat of counterfeiting rises consequentially and the market faces an onslaught of counterfeit products, especially drugs and medical supplies, thereby causing distraught to the public and manufacturers alike.
Focus will be on plight of established brands during COVID-19 pandemic due to such counterfeiting, stressing majorly on the pharmaceutical sector and how their Intellectual Property (IP) rights are affected. Before delving further, it is crucial to understand the impact of counterfeiting during a pandemic.
Counterfeiting in layman’s terms is deceptively posing as established brands, in order to market illicit products to the public and has been projected to drain approximately USD 4.3 trillion from the global economy, alongwith piracy by 2022. Since the outbreak of the coronavirus, dependency on e-commerce has increased exponentially, thereby making a consumer more susceptible to online counterfeit attacks. Reportedly, Amazon had to remove more than 1 million fake products claiming to cure the virus. As per Forbes estimate, the market is flooded with counterfeit drugs worth USD 200 billion annually and with India being the 3rd largest producer, with an estimate industry value standing at USD 55 billion this year, it would be too optimistic to rule out the possibility of counterfeiting plaguing this industry.
Counterfeit Sanitizers during Pandemic
As demand and panic surged, so did the crime of counterfeiting. Counterfeiting, especially in pharmaceuticals, poses as double threat as there is an element of imminent threat to human life. Interpol conducted a global raid titled ‘Operation Pangea XIII’, wherein counterfeit hand sanitizers, face masks and antiviral drugs were seized, amounting to USD 14 million from 90 countries. Close to 2,500 web links, including websites, social media pages, online marketplaces and online advertisements for illicit pharmaceuticals were blacklisted.
Fearing its ripple effect in India, the Central Bureau of Investigation (CBI) issued warning across all States and Union Territories to maintain a strict vigil for counterfeit gangs posing as PPE and selling hand sanitizers containing methanol, a highly-toxic substance as its base as opposed to ethanol, isopropanol or a combination of these. Things took a turn for the worse, when the market saw an influx of ‘opportunists’ selling similar products under deceptively similar brand names. A few notable examples can be viewed herein:
|ORIGINAL PRODUCT||LOOKALIKE PRODUCT|
Additional statistics showing regarding counterfeit sanitizer industry amidst lockdown:
- Hyderabad – Seized 25,000 units of 100 ml hand-sanitizers and raw materials worth INR 40 lakh. Racketeers managed sale worth INR 1.4 crore.
- Bangalore – Seized fake hand-sanitizers worth INR 56 lakh during raids conducted in factories.
- Delhi – Seized 2,480 kg of raw materials, including masks, hand-sanitizers, PPE kits being smuggled to China.
- Mumbai – Seized fake sanitizers worth INR 2 lakh, manufactured by company with an expired license.
Read more – Proliferation of counterfeits during Covid-19
Intellectual Property (IP) and Counterfeiting
It is factual knowledge that robust IPR regime of a country stimulates economic development, as there is innovation growth, technology transfer and strong legal enforcement. For developing countries particularly, IP can provide tax incentives, attract FDIs, foster growth of small-medium enterprises (SMEs) and create employment opportunities. With circulation of counterfeits, not only is the economy crippled, there is infringement of intellectual property of well-known entities. In the case of pharmaceuticals, counterfeiters can reverse-engineer the laborious and capital-intensive research to produce a cheaper substitute and pass it off under the pretext of original product.
In India, ever since the Ministry of Consumer Affairs (MCA) declared hand-sanitizers and face masks as ‘essential commodities’ and introduced INR 20 lakh crore economic relief package catering specifically to local manufacturing, several budding companies and SMEs jumped on this lucrative business opportunity to secure a footing in the industry. The Indian Trade Mark Offices saw a surge in trademark filings for sanitizers just between the periods of March – May, 2020 (approx. 350 applications).
Read more – Trademark Filing for hand sanitizers amid COVID-19 pandemicThe aforementioned cited marks ‘DEVTOL’ (Application No. 4494428) and ‘PUREVELL’ (Application No. 4485090) were filed for registration in Class 05, in respect of sanitizers. It is pertinent to note that both these applications were dated May 01, 2020 and April 05, 2020 respectively, which may be a dubious strategy at play here to take undue advantage of the pandemic situation. In lieu of the same, the Hon’ble High Court of Delhi recently granted injunctive relief in favour of Dettol manufacturer, Reckitt Benckiser (India) Pvt. Ltd. hereinabove, as it was of the concurrent view that ‘DETTOL’, being a well-known mark, was subject to infringement from sale of products labelled as ‘DEVTOL’.
While an injunctive relief from production and sale of infringing articles is an active step towards curbing counterfeiting, emphasis is also needed on tackling the issue from the grassroots’ level. As per the study conducted by Organisation for Economic Co-operation and Development (OECD) titled “Governance Frameworks to Counter Illicit Trade”, two key aspects; enhancing the effectiveness of penalties and sanctions and rigorous screening of small shipments for illicit products, can counteract such illicit activities in the trade channels.
REMEDIES UNDER INDIAN LEGISLATIONS
The Indian IP regime covers the spectrum of counterfeiting under numerous legislative texts, such as:
- Section 29 read with Chapter XII of the Trade Marks Act, 1999 entitles a right holder to institute a suit for infringement and passing off against counterfeit goods being sold under the proprietor’s trademark.
- In addition, Section 11(2)(n) and (u) of the Customs Act, 1962, read with the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007, import and export of goods which infringe upon the intellectual property of a right holder is prohibited and such infringing goods are liable to seizure.
- In case of pharmaceutical drugs, if the process of manufacturing the drug or the product itself is identical then infringement relief as per the Patents Act, 1970 can be claimed.
- Sections 9B and 17B of the Drugs and Cosmetics Act, 1940 cover the aspect of spurious or imitation drugs, either imported or manufactured in India. As per the Act, marketing of spurious drugs is a cognizable and non-bailable offence and can be punishable by way of imprisonment and fine, in addition to seizure of such drugs.
- Sale/offer or expose for sale/issuance from dispensary of any drug or medical preparation as a different drug or medical preparation will be punishable by way of imprisonment or fine or both as per Section 276 of the Indian Penal Code, 1860.
Further, entities can undertake few measures on their own to ensure their brand is not a target of counterfeiting:
- Conduct internal checks to ensure there is no IP infringement of their products or counterfeits circulating in the market.
- Provide helpline numbers to wholesalers, retailers, traders and consumers for reporting of counterfeit articles in the market.
- Using product identification means such as marks, labels or symbols to ensure brand authenticity and segregation from counterfeits.
- Stringent inspections such as frequent investigations in the trade channels, to be conducted for determining the market of their counterfeit products, if any.
- Maintaining IP vigilance towards any application(s) filed which infringe upon the IP rights.
- Use advertisements and social media platforms to create brand awareness amongst public.
Brand imitation is not a new phenomenon and has been vexing established brands for years. Its influx by way of counterfeiting, is just another medium of infringing upon the rights of bona fide manufacturers and eating away their profits and now, it has vicariously jeopardised the safety and health of the nation in its wake. Especially, e-commerce platforms wherein the physical lag and lack of ‘seller’ information enables counterfeiters to guise themselves as the official supplier. On these lines Amazon had introduced its ‘Project Zero’ in 2019, which enabled genuine brands to identify such counterfeit products being sold on the platform
 Global impacts of counterfeiting and piracy to reach US$4.2 trillion by 2022; https://iccwbo.org/media-wall/news-speeches/global-impacts-counterfeiting-piracy-reach-us4-2-trillion-2022/
 Amazon Says It’s Removed More Than One Million Products Making Fake Coronavirus Claims; https://www.forbes.com/sites/tedknutson/2020/03/04/marketplace-contagion-amazon-has-already-removed-a-million-fake-products-related-to-coronavirus/#7e4c36ae418c; accessed on 23 Jun. 20
 Counterfeit Drugs: A Bitter Pill To Swallow; https://www.forbes.com/sites/sap/2019/10/03/counterfeit-drugs-a-bitter-pill-to-swallow/#4b828f707a68; accessed on 23 Jun. 20
 Global operation sees a rise in fake medical products related to COVID-19; https://www.interpol.int/en/News-and-Events/News/2020/Global-operation-sees-a-rise-in-fake-medical-products-related-to-COVID-19; accessed on June 23, 2020
 CBI alerts police in states about racketeers selling fake hand sanitiser using methanol; https://economictimes.indiatimes.com/news/politics-and-nation/cbi-alerts-police-in-states-about-racketeers-selling-fake-hand-sanitiser-using-methanol/articleshow/76387560.cms; accessed on June 16, 2020
 Fake hand sanitiser racket busted in Hyderabad after 1 lakh bottles sold for Rs 1.4 crore; https://www.indiatoday.in/india/story/fake-sanitiser-racket-busted-in-hyderabad-after-1-lakh-bottles-sold-for-rs-1-4-crore-1656765-2020-03-18; accessed on 23 Jun. 20
 Fake sanitizers worth Rs 56 lakh seized by EOW in Karnataka; https://www.business-standard.com/article/news-ani/fake-sanitizers-worth-rs-56-lakh-seized-by-eow-in-karnataka-120032001389_1.html; accessed on 23 Jun. 20
 Coronavirus scare: Rs 2 lakh fake sanitisers seized in Mumbai; https://timesofindia.indiatimes.com/city/mumbai/rs-2-lakh-fake-sanitizers-seized-in-mumbai/articleshow/74603022.cms; accessed on 23 Jun. 20
 As per the notification dated March 21, 2020: Hand sanitizer (INR 100 per 200 ml bottle); 3PLY masks (INR 10) and 2PLY masks (INR 8); https://consumeraffairs.nic.in/sites/default/files/file-uploads/essential-commodities-order/1197.pdf; accessed on 24 Jun. 20; Read More here: https://www.ssrana.in/articles/india-equitable-distribution-price-control-hand-sanitizers-face-masks/
 Reckitt Benckiser (India) PVT. LTD. Vs. Mohit Petrochemicals PVT. LTD. & Anr. CS(COMM)No.141/2020 & I.A.Nos.4034-37/2020
 Coronavirus (COVID-19) and the global trade
in fake pharmaceuticals; http://www.oecd.org/governance/illicit-trade/coronavirus-covid19-and-the-global-trade-in-fake-pharmaceuticals-brief.pdf; accessed on 24 June 2020
 Section 29 and Chapter XII Offences, Penalties And Procedure of the Trade Marks Act, 1999; http://www.ipindia.nic.in/writereaddata/Portal/IPOAct/1_43_1_trade-marks-act.pdf; accessed on 24 Jun. 20
 The Drugs and Cosmetics Act, 1940; http://legislative.gov.in/sites/default/files/A1940-23.pdf; accessed on 24 June 2020
 Sections 13, 27 and 36C of the Drugs and Cosmetics Act, 1940; Ibid
 Section 276 of the Indian Penal Code, 1860; https://www.indiacode.nic.in/bitstream/123456789/4219/1/THE-INDIAN-PENAL-CODE-1860.pdf; accessed on 01 July, 2020
 Amit Shukla vs UOI & Ors
DETTOL v. DEVTOL- Delhi HC imposes fine for infringing the mark DETTOL
By Priya Adlakha and Kiratraj Sadana
The High Court of Delhi vide its order dated May 28, 2020 imposed a cost of Rs. One Lakh on the Defendant, Mohit Petrochemicals Pvt. Ltd. and restrained them from using the mark ‘DEVTOL’.
The Plaintiff, Reckitt Benckiser (India) Pvt. Ltd., is manufacturer of the famous antiseptic liquid sold under the mark ‘DETTOL’.
The Plaintiff preferred a suit against the Mohit Petrochemicals Pvt. Ltd. for selling hand sanitisers under the mark and logo ‘DEVTOL’ and alleged that the impugned mark was deceptively similar to the Plaintiff’s registered mark and logo ‘DETTOL’.
In view of the similarity between the Plaintiff’s and Defendant’s mark and the nature of products being sold by both the parties, the Plaintiff sought the relief of injunction against the Defendants to restrain them from infringing the Plaintiff’s Trademark.
The Counsel for the Defendants appeared on advance notice and stated that the Defendants have agreed to stop manufacturing and selling their hand sanitizer under the infringing mark ‘DEVTOL’.
The Defendants further submitted that they have already filed a letter to the Trade Mark Authority on May 23, 2020 to withdraw their application for the infringing mark and have also written to their agents and dealers to withdraw the product bearing the infringing mark from the market.
In view of the submissions made by the Defendants, the Plaintiff prayed that the suit may be decreed in favour of the Plaintiff and against the Defendant. However, the counsel for the Plaintiff insisted that a cost may be imposed on the Defendant.
In view of the submissions made by both the parties, the Hon’ble Delhi High Court decreed the suit in favour of the Plaintiff, restraining the Defendants from using the impugned mark DEVTOL and ordered the Defendants to recall their existing stocks from the market.
The Court further directed the Defendants to deposit a sum of Rs. 1,00,000 (Rupees One Lakh) to the Juvenile Justice Foundation in the name of the Registrar General, High Court of Delhi, New Delhi as cost.
In this pandemic, when every person is extra careful about hygiene and there is a rampant spread of misinformation, a few opportunistic minds are trying to capitalise on this situation. In this case, the Defendant had the simple agenda on free riding on the goodwill of an already established brand.
The rise in demand of protective apparatus and cleaning products during this pandemic, has also triggered an influx of counterfeit masks, sanitisation products and PPE kits s in the market, which may not necessarily be manufactured according to the set safety standards. Read more about this here.
It is a set principle of Trademark law, that two products are compared from the eyes of a person with an average mind with an average power of recollection. In that case, if a person who is buying a sanitiser for the first time comes across the Defendant’s product, then he is bound to be confused and establish an association with the Plaintiff’s well-established and well trusted product.
Ban on RO Water Purifiers- NGT directs Ministry to Issue Notification
In a recent development, as reported by the Indian Daily, The Hindu, the National Green Tribunal (NGT) has directed the Ministry of Environment to issue a notification by December 31, 2020 to ban use of all RO (Reverse Osmosis) Purifiers, wherein the TDS i.e. Total Dissolved Solids in the water is less than 500mg per litre of water.
NGT’s order prohibiting use of RO
It would be relevant to mention here that the National Green Tribunal had earlier vide its order dated May 28, 2019, instructed the Ministry to issue notification prohibiting use of RO’s in areas where TDS in water was less than 500 milligram/ litre. Aggrieved by NGT’s impugned order, the Water Quality Association of India i.e. manufacturers of RO purifiers had also approached the Supreme Court, wherein the Apex Court directed the appellants to approach the Ministry and point out to the Ministry the material the appellants have in possession against the ban imposed by NGT prohibiting use of RO water purifiers in such areas. However, no appropriate action or notification has been issued by the Ministry in this regard till now.
Reportedly, the NGT in the case also expressed its disconcert on the delay being caused by the Ministry in issuing any appropriate notification in the matter.
The case has been next listed for hearing on January 23, 2021.
The NGT’s order prohibiting use of RO water purifiers has given a severe jolt to the manufacturers. RO water purifiers have become an indispensable household item for any general Indian household today. The public to avoid consumption of polluted water and associated health benefits has been hugely investing in RO water purifiers. However, the NGT through its expert committee report has highlighted that RO water purifier system demineralizes water in areas where TDS in water is less than 500 milligram/ litre, thereby making it unhealthy for human consumption.
TRANS-BORDER REPUTATION OF FOREIGN TRADEMARK- INDIA
By Priya Adlakha and Isha Tiwari
Keller Williams Realty, Inc. vs. Dingle Buildcons Pvt. Ltd. And Ors.- a case analysis
The Hon’ble Delhi High Court vide its order dated April 17, 2020, dismissed an application for the ad-interim injunction filed by real estate mogul, Keller Williams Realty, Inc. in the above suit. The Court headed by Hon’ble Mr. Justice Rajiv Sahai Endlaw reaffirmed the principle of trans-border reputation and goodwill subsisting in a trademark upon the asterisk condition that the same shall reach the Indian shores for a substantial claim of infringement and passing-off.
Keller Williams Realty, Inc. i.e. the Plaintiff is a Texan real estate franchisor founded in 1983 and one of the largest privately held global residential real estate brokers.
Plaintiff’s brand operated through wholly owned subsidiaries, agents, franchisees and its associates on worldwide basis under the trademarks ‘KELLER WILLIAMS’/‘KW’/ and thus, acquired immense reputation for itself.
The Plaintiff claims to be the registered proprietor of KW trademark in numerous countries, including in India since 2012 under classes 35 and 36.
The Plaintiff approached the Court seeking permanent injunction against the acts of infringement and passing off against the three Defendants namely Dingle Buildcons Pvt. Ltd., KW Homes Private Limited and its sister concern KW Security and Services Private Limited. It was alleged that the Defendants were running businesses under KW formative trademarks and the same being identically and/ or deceptively similar to the Plaintiff’s KW trademarks lead to deception and confusion amongst the general public.
Contentions of the Plaintiff
The counsel on behalf of the Plaintiff contended the following arguments:
- Being the registered proprietor of an inherently distinctive trademark KW, adopted as an abbreviation of its trade name ‘Keller Williams’, in several classes entitled protection to the Plaintiff under the provisions of the Trade Marks Act, 1999 (The Act).
- In India, the Plaintiff applied for registration of KW and KELLER WILLIAMS in Classes 35 & 36, on March 2, 2012 and the said registrations were granted;
- Prior registered domain names such as kw.com and www.kwworldwide.com, dating far back to 1995 and 2005 respectively, extensive use and advertising campaign across nations, which resulted in generation of reputation amongst the public, including Indian public staying abroad as well as in India.
- As against the Defendants, use of the KW formative trademarks such as , and KW BLUE PEARL amounted to infringement and passing-off as the same was identically and/or deceptively similar to its KW trademark, in respect of identical/similar services such as insurance, financial affairs, monetary affairs, real estate affairs, advertising, business management, business administration, office functions etc. and led to false association in the minds of public.
- Legal history with the Defendant, wherein several applications and registrations in classes 08, 35 and 36 were previously contested for the KW The counsel for the Plaintiff relied on the fact that all such applications had common user detail showing use since April, 2006, in support of which no evidence had been procured.
- Plaintiff relied on the judgment delivered by this Court in Mac Personal Care Pvt. Ltd. Vs. Laverana Gmbh and Co. Kg., wherein, it was held that trans-border reputation is sufficient to establish a claim of passing-off for an unregistered trademark without having any commercial use in the market.
- Defendants’ explanation for adoption of the impugned KW formative trademarks, has been inconsistent during the length of the proceedings.
Contentions of the Defendants
The counsel on behalf of the Defendants contended the following arguments:
- Bonafide adoption of KW formative trademarks on account of being adopted from the initials of Lt. Umadhar Kesar Wani, founder of KW Group. Further, KW formative trademarks are distinctive on account of being used with other words.
- Defendants are the registered proprietor of the KW formative trademarks in classes 14, 16, 17, 20, 21, 28, 35, 36, 37, 41 & 42. Defendant’s registration of the KW formative trademark in Class 35 dates back to August, 2011, as compared to Plaintiff’s registration of March, 2012 on proposed to be used basis. Defendants’ prior user claim dating back to April 1, 2006 for classes 36 and 37.
- In addition, the Defendants also own copyright registrations for their trademarks.
- Newspaper advertisements of the trademark KW SRISHTI dating back to 2010 and 2012, are indicative of prior use of the KW formative trademarks and therefore, protection of vested rights under Section 34.
- Plaintiff’s reply to the examination report issued in its trade mark application, wherein it took the stand of dissimilar nature of Plaintiff’s and the Defendants’ business, in order to overcome the objections raised by the Registrar, acts an estoppel to its submissions in the plaint.
- Plaintiff’s registration dated March 12, 2012 in India is on a ‘proposed to be used basis’ and it has also failed to establish continuous use, reputation and goodwill for a claim of passing off.
- Registrations acquired by Plaintiff were liable to be removed from the Register on account of non-use as per Section 47 as there has been no use till date nor the Plaintiff has expressed any intention to use the same in India post registration.
- Since Defendant is the also the registered proprietor of the mark KW in India, Plaintiff has failed to establish a suit for infringement as per Sections 29(1) and (2) and 30(2)(e).
Observations of the Court and Judgment
The Hon’ble Court made the following observations in his judgment:
- Plaintiff placed reliance upon Neon Laboratories Limited Vs. Medical Technologies Ltd., Milment Oftho Industries Vs. Allergan Inc. in its favour, wherein, the test of ‘first in the world market’ was emerged.
- Whereas, Defendants placed reliance upon Toyota Jidosha Kabushiki Kaisha Vs. Prius Auto Industries Limited, wherein as per the territorial doctrine of trademarks, prior claim of use of a trademark in one jurisdiction does not automatically grant exclusive rights of protection in another. The test of “first in market” is subject to the territorial limits of a trademark.
- The Hon’ble Court distinguished the above two judgements referred by the Plaintiff in its favour, stating that the said judgements were passed in the context of drugs and medicinal products, having International character.
- The Court placed reliance on the judgement of Hon’ble Supreme Court in Toyota vs. Prius (supra) and made an observation that ‘mere ownership or even registration of a mark does not lead to any presumption of the mark having a reputation and goodwill, even in the territories where the mark is being used; the plaintiff, while applying for registration of the mark, did not claim any use, in India, of the mark, by spill over of reputation and goodwill from another territory to India; the plaintiff has not made out any case of any use or spill over of goodwill and reputation, since registration’.
- By applying aforementioned principle for a successful claim of passing off, the Plaintiff must establish reputation and goodwill spread into Indian territories much before its use by the Plaintiff and before the Defendants’ use of their trademark. Since the Plaintiff had neglected to use its KW trademark since registration in 2012 and had also failed to establish with sufficient evidence that the KW trademark had acquired any reputation in India, registration alone was not sufficient to stop the Defendants from using their KW formative trademarks in India. Had the Plaintiff acquired any reputation before filing for registration, the application would have been filed with a use claim.
- No scope of any confusion between the trademarks in questions as they are dissimilar in nature and being used in respect of dissimilar services. Defendants’ KW formative trademarks appeared along with their corporate name or with BLUE PEARL, SRISHTI and DELHI-6 and the Plaintiff had also acquiesced to the same in their reply to the examination report. Furthermore, KW being English letters and common initials did not grant exclusive monopoly to any proprietor of a trademark.
- Plea of likelihood of confusion sustainable, only at the beginning of the proceedings and not when the matter is at the final stages of adjudication.
- Plaintiff guilty of delay and laches as they had been aware of Defendants’ use of the KW formative trademarks and had also defended their use against the Defendants’ in their reply to the examination report.
In view of the aforementioned observations, Hon’ble Justice Endlaw held that though the explanation of the Defendants of the reason for the use of alphabets ‘KW’ does not inspire confidence and is also contrary to the stand of the Defendants themselves, of KW standing for “Kesarwani World”, however the same alone would not entitle the Plaintiff to injunction without making out at least a prima facie case for infringement or passing off.
Therefore, there was no prima facie case of infringement or passing-off against the Defendants’ use of the KW formative trademarks and hence, dismissed Plaintiff’s application for ad-interim injunction.
Analysis and Take away
Chapter IV of the Trade Marks Act, 1999, enumerates both rights and limitations and their exercise upon a registered proprietor of a trademark. Registration cannot be construed as an impermeable right, especially against the rights of another registered proprietor of a resembling trademark. The underlined objective of the Act is to ensure protection against infringement and passing off by way of dishonest use of a trademark and not honest use by another. The aforementioned case highlights that registration is entangled with responsibility. Defence of registration may not always ensure protection in a suit, especially in passing off as the registered proprietor must show its grievance to the use by the Defendant, substantial account of its use along with the reputation and goodwill earned throughout its use.
Trademarks are limited by their geographical limits unless such a reputation transcends those limits and permeates the jurisdiction of another region. This has to be cemented with the intention to use that trademark in such region, which was evidently absent in the Plaintiff’s case. Filing an application on a ‘proposed to be used’ basis has been clearly construed to be ‘no use of the mark’ at least as on the date of application at the ad-interim injunction stage, and the Plaintiff is burdened to prove the same through detailed trial.
An application for trademark can have ripple effects throughout its term of protection. Even as basic as a reply to the examination report of the Registrar can determine your future defences in a suit for infringement and hence, applicants are recommended to seek guidance from a trademark attorney before filing an application.
 Keller Williams Realty, Inc. vs. Dingle Buildcons Pvt. Ltd. And Ors. CS(COMM) 74/2019
 2016 (65) PTC 357 (DB)
 (2016) 2 SCC 672
 (2004) 12 SCC 624
 (2018) 2 SCC 1
 Section 28(3) and Section 30(2)(e) of the Trade Marks Act, 1999; http://www.ipindia.nic.in/writereaddata/Portal/IPOAct/1_43_1_trade-marks-act.pdf; accessed on June 03, 2020
Online Gaming – a Profitable Venture in India
By Rupin Chopra and Reetika Wadhwa
With over 18.9 crore monthly active users and 5.1 crore daily active users, it would not be wrong in saying that online Ludo has become the King – the LUDOKING.
Why is Online Gaming a profitable business in today’s time? Find the answers in numbers
As the impact of the COVID-19 continues, online gaming industry is witnessing a profitable increase in the number of its users as those confined within their houses have sought respite in the virtual world for entertainment as well as monetary benefits. The wide availability of hand held devices, deep penetration of internet in the remotest nooks and corners of India coupled with factors of social distancing and lockdown have also contributed significantly to the rapid popularity of the online gaming in India and across the world. Gaming portals such as Paytm First Games and Gamerji have reported a 200% and 50% increase in their users of online gaming portals over March 2020. Over half a million daily active gamers spending 30- 45 minutes on gaming platforms. According to a KPMG report, India is already the largest emerging market when it comes to gaming app downloads.
Gaming industry is expected to witness a rise in revenue $1.1 billion by 2021. With the viral outbreak having increasing number of victims and more and more people have found increased number of users and the online gaming market in India is expected to rise.
Is the Profit story true for Gaming Startups as well?
India’s gaming industry has acquired investment of about USD 350 million from venture capital firms between 2014 and 2020, growing at rate of 22%, with over 400 gaming Startups in the nation, according to a report by Maple Capital Advisors titled ‘Gaming – India Story’. As per the said report, the Indian gaming industry currently valued at USD 930 million and is expected to grow at 41% annually thereby raising its expected valuation at USD 3,750 million by 2024.
Launched last year, Paytm First Games, the gaming arm of the fintech giant Paytm, has also witnessed a 200% increase in the user base in the last one month. Another startup joining the club here is Gameberry Labs, whose two games- Parchisi STAR and Ludo STAR together have seen an over 300% growth in daily engagement and installation. Adda52Rummy is also following the same path. It has seen a 200 percent increase in new users. Ashish, of Adda52Rummy, in an interview given to online portal, was quoted saying ‘Earlier, people used to play from 7 pm till 1 am. Now, we are observing that they are playing in the morning and afternoon hours as well. We have launched new tournaments for these hours’
Key pointers- for game developers
While online games are one of the most loved sources of entertainment it is essential to ensure that the customer loyalty as well as new acquisitions continue to ascertain revenue generation of gaming portals. Some of the key aspects which should be taken care of while developing the game have been listed as under:
- New concepts- the developers must focus on enhancing their creativity while choosing the scheme and themes of their game. Novel concepts should be adopted so that it creates greater customer base.
- Longer engagement – the developers should develop games with subjects engaging the users for a longer time. This may be done by opting for multi-level games, accrual of points/ rewards and multiple attempts.
- Virtual assets- the developers may take recourse to the development of games including graphics, designs, look and feel and animation which involve high degree of skills and detailing thereby attracting greater customer attention.
- In-App purchases- the developers may add animated equipment/ tools/ devices which may be purchased by the users for real money. With the optimum pricing, this can serve as a media to increase the profit share for the game developers.
- Multiplayer- the developers can engage many users at a time by permitting multiplayer game scheme. This will allow the users to advertise about the game by word of mouth this increase the number of users on the gaming portal.
- Personalization- the developers can provide a scope for the users to personalize their space on the portal. This can be a source of attracting users who can add their personal touch to the game within the allocated space.
- Skills- the developer must ensure that the games being developed and offered to the public comprise of substantial degree of skill. The winner should not be determined by luck or chance.
On one hand it is mandated under the law to have the winning outcome dependent on sufficient exercise of labour by the users while on the other hand skills of varied nature creates interest amongst the users to choose the developer’s games over all others available in the market.
What is the law related to Online Gaming in India?
By the virtue of the provisions of the Public Gambling Act, 1867, gambling activities where victory is dependent on the occurrence/ non-occurrence of an uncertain event are prohibited in India. The games which base success upon the existence of skill are known as games of skill. The law in India holds a game to be a game of skill, even with the element of chance if it depends upon3:
- Superior knowledge;
- Adroitness of the player;
- Element of Skill predominates over the element of chance
The Legal framework clearly recognizes that the games with below elements are not “gambling“:
- where success depends on substantial degree of skill; and
- despite there being an element of chance there is requirement of application of skill.
Also read Online Gaming Law in India
Can we get a License for Online Games in India?
Online skill games are not prohibited in most of the States in India, however the north-eastern State of Nagaland accords legal validity to the games of skill under the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016 and the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Rules, 2016 (hereinafter referred to as the “online game of skills law”).
The online game of skills law provides legal accreditation to the games where the users are required to expend their efforts and skills to emerge out victorious in a game session. Some of the games for which the said license is issued are Chess, Sudoku, Quiz, Rummy, Virtual racing, Virtual sports (Soccer/ Cricket/ Archery/ Snooker/ Bridge/ Pool), Fantasy games, etc.
With the gaming spree becoming the new favorite for all, the potential players may face challenge to stand out amidst their competitors. The developers need to think out of the box to have customers diverted towards them and thus enabling them to carryout successful business operations and at the same time ensure that there is adherence to the provisions of the applicable laws pertaining to online gaming in India.
 State of Bombay v. RMD Chamarbaugwala[ A.I.R., 1957 S.C. 699] – held by the Apex Court of India
 Assam Game and Betting Act, 1970
 Orissa Prevention of Gambling Act, 1955
 Telangana Gaming Act 1974