While India is a fast growing market for high-end luxury brands, it is also a paradise for creators and consumers of infringing goods. In a study conducted in 2014 by the Associated Chambers of Commerce of India and KPMG, the U.S. audit, tax and advisory services firm, the growing prevalence of counterfeit and grey market goods in the Indian market are serious impediments to the growth of the industry.
According to the study, “Most of these products belong to segments such as apparel, perfumes and accessories, which are usually lower ticket items and can easily be placed in grey market channels.”
Note: Gray market goods – also known as parallel imports – are typically defined as genuine branded goods obtained from one market (i.e., a country or economic area) that are subsequently imported into another market and sold there without the consent of the owner of the trademark.
In order to get a handle on this increasingly problematic element of the market, awareness and collaboration between brand owners and local authorities is essential. The courts in India are, therefore, the first port of call for the proprietors of luxury brands and owners of trademarks, in the search for protection against infringement.
Courts in India are rapidly gaining expertise, and confidence, in dealing with cases of trademark infringement in relation to luxury brands. In considering the well-known status of some luxury marks, and considering the potential for loss to the proprietors of those marks, the courts in India are beginning to develop a robust intellectual property jurisprudence, slowly dispelling a long-held image of India as a welcome home for counterfeit goods.
Hermès v. Da Milano
In one notable trademark and trade dress case, French luxury brand Hermès took Indian leather goods company, Da Milano, to court to stop the sale of handbags that resemble Hermès’s famed Birkin Bag. One argument put forth by the defendant was that due to the difference in prices between the two companies bags – the Birkin Bag costs upwards of Rs 6 lacs ($9,000), whereas the defendant’s bags cost approximately Rs 10,000 ($146.79) – there was a very low likelihood that consumers would be confused (the core issue in a trademark/trade dress infringement suit). The defendant further argued that the shape of its bag and the shape of the Birkin bag were identical, further dispelling any chance of confusion.
In that case, Hermès was granted a preliminary injunction in 2013 from the Delhi High Court, thereby preventing Da Milano from continuing the sell the bags at issue and further infringement Hermès’s intellectual property rights.
Three years later, in the interest of ending the litigation, the parties managed to settle the case out of court. While the defendants were allowed to sell their handbag, they were prohibited from showing “ornamental or decorative part of the plaintiff’s handbag viz a horizontal belt and flap having three protruding lobes,” which is a legally-protected element of the Hermès Birkin bag.
Christian Louboutin v. Nakul Bajaj & Ors
Christian Louboutin also received protection from the Delhi High Court in connection with its own trademark. In that case, Paris-based Louboutin filed suit upon learning that the defendants were selling shoes online, claiming that they authentic Louboutin shoes, and using the mark CHRISTIAN LOUBOUTIN prominently on their websites.
Louboutin contended that the goods – even if technically authentic – would be deemed to be counterfeit since they were being sold without the company’s authorization and quality control. Moreover, Louboutin asserted that the normal grey market rule (which states that once a trademark owner releases its goods into commerce, it cannot prevent the subsequent re-sale of those goods by others) would not apply to products sold on the internet since the potentiality of harm was much higher there, rendering it impossible for the proprietor of the mark to exert any sort of quality control.
Louboutin, relying on Copad SA v Christian Dior Couture SA (ECJ), also contended that luxury goods “have an aura of luxury and prestige surrounding them differentiating them from other goods”, and therefore, “even very small changes in storage, packaging, labeling, after sale services, ware-housing, etc., can affect the quality of the goods and consumer's belief in them.”
The court sided with Louboutin, holding that the brand would suffer a grave loss if an injunction was not granted.
Cartier International Ag & Others vs Gaurav Bhatia & Ors
Still yet, the case of Cartier International Ag & Others vs Gaurav Bhatia & Ors centered on the defendant’s sale of counterfeit Cartier goods online at a massive “discount.” The marks at issue included CARTIER, PANERAI, VACHERON CONSTANTIN, and JAEGER LECOULTRE. Considering the evidence on hand, including screenshots from websites, and complaints made by several customers to authorities, the Delhi High Court granted Cartier a permanent injunction, monetary damages, and ordered that the defendant produce for Cartier all of the details of any transactions it entered into with consumers in connection with Cartier’s trademarks.
The Fight Against Fakes
Courts are able to understand, more than ever, the need to protect well-known trademarks and luxury marks, and do so with alacrity. In the same vein, the need for proprietors of luxury marks to be vigilant to counterfeits, as well as to the unauthorized trade of their goods cannot be overstated. Indeed, the proprietors of well-known marks must be well served on the need to actively defend their intellectual property rights, particularly in order to maintain their competitive advantage in crowded sectors.
This need is amplified considerably in the case of luxury brands. The premium attached to the brand comes from the prestige associated with it, and therefore, any tarnishment or dilution of the marks and the overall brand as a result of the unauthorized sale of authentic and/or counterfeit goods stands to have a real, and considerable, effect on the value of the brand, ultimately hurting profits and diminishing the value of the brand.
Therefore, the proprietors of such luxury brands and widely recognized marks must continue to be vigilant and prompt in defending their brands in Indian markets. It appears that the Indian courts are up to the challenge.
Isha Mital is an associate at Chadha & Chadha Intellectual Property Law Firm in New Delhi, India. She served as a Judicial Clerk in the Chambers of Hon'ble Ms Justice Indermeet Kaur.