Combating counterfeiting in the nutraceutical industry

The article focuses on counterfeit nutraceuticals being sold in India on a large scale risking consumers’ health and detrimental to the economy in general and the burgeoning health industry.

The various options and remedies available to businesses faced with counterfeits are set out below.

• Ex-parte injunction and seizure of counterfeits: It is recommended that regular market surveys are conducted to trace the origin and stock of counterfeit goods. Once identified, the trademark owner can file a trademark infringement suit to obtain an ex-parte interim injunction restraining counterfeiters from further manufacture and sale of counterfeits. The trademark owners can request for a court-appointed commissioner to seize counterfeits and identify their source. John-doe orders can also be obtained in cases where identifying the counterfeiter is difficult, or where several parties are involved with a common link.
• Trademark registration: Nutraceutical companies are advised to have their trademarks registered for better enforcement of their rights. While the trademarks law recognizes common law rights in unregistered trademarks, registered trademarks are easier to enforce as they have the benefit of a legal presumption of ownership. The Trademarks Act, 1999 also provides criminal remedies against counterfeiting. In such cases, the police seek the opinion of the Trademarks Registrar before initiating a criminal raid. However, for having police to act against a counterfeiter, registration of a mark is practically necessary.
• Copyright registrations: The labels/logos/trade dress of a product can also be protected as artistic works under the Copyright Act. Section 64(1) of the Act allows police authorities to seize goods bearing the infringing logos/labels/trade dress, etc. without a warrant for further proceedings before the Magistrate. A copyright registration of such artistic works is a proof of ownership and facilitates smoother enforcement.
• Customs recordal: Trademark registrations help diminish the import of counterfeit goods. To prevent the import of counterfeits in India, the IP owners can record their registered trademark with the Customs Authority of India under the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 and the Customs Act, 1962 for inspection and seizure of counterfeits at the border itself.
• Complaint under FSS Act: Complaints against adulterated, substandard products, labelling defects in products can be registered with Food Safety and Standards Authority of India (FSSAI) under the Food Safety and Standards Act (FSS Act). Food Safety Officers have the power to search and seize impugned goods, which is then intimated to the Designated officer for further proceedings.
• Counterfeiting on e-marketplaces: The e-marketplaces are infested with counterfeits as these platforms are not physically inspected and can maintain anonymity. Upon discovery of counterfeits, the trademark owners are advised to immediately send a take-down notice to such platforms. The e-marketplaces are deemed ‘intermediaries’ under the Information Technology Act, 2000 which obligates them to exercise due diligence while discharging their duties. Consumer Protection (E-Commerce) Rules, 2020 further sets out the duties/liabilities of e-marketplaces which include establishing an efficient grievance-redressal mechanism, obtaining undertakings from sellers on product authenticity, displaying seller contact details, customer reviews/ratings on their platforms, etc. Some e-marketplaces, such as Amazon, have issued anti-counterfeiting mechanisms allowing IP holders to report and remove counterfeit listings on the platform.
• Fraudulent websites: There has been an increase in fraudulent websites having similar domain names and look-and-feel of the websites of legitimate nutraceutical brands/companies and selling counterfeits. A domain-name complaint is effective in having transferred such fraudulent domains to the complainant, which can be filed under the Uniform Domain Name Dispute Resolution Policy for generic top-level domains such as .com, .org, and local regulations for national country-code top-level domains such as .in domains (for India, governed under .IN Dispute Resolution Policy). These complaints are resolved through arbitration and are preferred by complainants to avoid litigation.

To prevent counterfeits, brand owners can release caution notices on their websites and leading newspapers or news websites educating the public about their brand and the authentic platforms selling their products. A financial budget set aside for trademark protection and enforcement including regular market surveys, investigations, and legal consultations from an early stage mitigates such impediments in the future. Investment in effective IP protection and enforcement is pertinent not only to companies’ growth but also as a social responsibility towards the public and their safety especially in the healthcare sector.

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