Mar 2024

India

Law Over Borders Comparative Guide:

Fashion Law

Introduction

The Fashion Industry has been undergoing a global transformation, with advancement in technology, conscious consumerism and the underlying need to address environmental concerns. India is gaining international recognition, with the domestic industry experiencing dynamism like never before. As one of the fastest growing industries in the world, India’s fashion industry is expected to reach USD 115-125 billion by 2025 with a compound annual growth rate of 11-12%. Known for its rich tapestry, intricate work, heritage, fabrics, prints and embroidery, work of Indian brands, artisans and designers has been recognised worldwide. As heritage continues to take centre stage in the luxury and fashion industries, the non-negotiable aspects of ethical fashion are forcing the industry, and the collaboration and supply chain within it, to become both transparent and resilient. Technological advances, and the need to satisfy changing consumer choices, present opportunities and challenges that brands must strategically navigate. 

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1 . What are the main intellectual property rights available to protect fashion products?

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1.1. Summary of IPRs

IPRDurationTime and modalities for grantPros and cons in the fashion sector
Trademarks10 years from the date of filing; indefinitely renewable for further 10-year periods.8 months – 1 year.

Pros: 

  • Grants exclusive right of use in the industry and is a long-term asset since it can be protected indefinitely.
  • Helps build brand value and recognition, fostering trust and quality assurance thereby boosting client engagement.

Cons:

  • Unless a trademark is well-known, rights may not be enforced against use of a similar mark for unrelated products/services.
  • In case of changes in brand name/stylisation, new versions ought to be protected separately.
Design10 years from filing/priority date, extendable once for a term of 5 years.4 – 6 months.

Pros:

  • Securing registration increases the product value and its market presence where the owner is the exclusive owner thereof, and can stop others from using a similar design in an industry with ‘inspired by’ creations. 
  • Relatively lower cost of protection and faster procedure. 

Cons: 

  • Registration is mandatory for enforcement under the Designs Act, 2000 and no common law remedy is available for unauthorised use of designs under the Act.
  • Registration under the Designs Act only protects the specific design, therefore each design must be filed for protection separately in each class. 
  • The shorter life of products in the fashion industry (with different seasons creating different designs) makes this form of protection infeasible and costly unless a collection is classic and intended to be used over a longer period of time.
Trade secretsProtectable once created and remain protected for as long as they are kept secret.No specific law protecting trade secrets in India. These can be protected through appropriate contracts (e.g. NDAs). 

Pros:

  • Immediate protection up until disclosure. 
  • Cost effective.
  • Wide range of protection including data analytics interpretation, target marketing strategies, production techniques and effective supply-chain methods.

Cons: 

  • Can be lost through disclosure: accidental disclosure, employee misconduct, or reverse engineering.
  • No public record, therefore it can be difficult to prove that a trade secret exists or that it has been misappropriated. 
Domain names1 – 10 years.From at the time of filing to 24 – 48 hours. 

Pros:

  • Online presence across borders.
  • Increased credibility for businesses.
  • Accessibility to e-commerce. 

Cons: 

  • Cybersquatting.
  • Unavailability of domain.
Patents20 years from the filing date (national patent).2 – 3 years by normal route or 1 year by expedited route.

Pros:

  • Monopoly for 20 years.
  • Innovation may boost a brand’s value (e.g. new fabrics made from banana and soya or even ‘leather’ from mango pulp in India).  

Con: Scope of innovation may be limited due to similar production techniques being used in the fashion industry. 

CopyrightDepends on the type of protection.2 – 3 months.

Pros:

  • Registration is not mandatory.
  • Work protected as soon as it is created.
  • The Copyright Act, 1957 provides that if something is protectable as a design, but is not registered as such, it is protected under the Copyright Act for up to 50 reproductions.

Con: Does not protect ideas or concepts and protection is limited to expression thereof. 

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1.2. Trademarks and non-traditional trademarks

The Trade Marks Act, 1999 defines a trademark as a mark capable of graphical representation and bearing the ability to distinguish the goods/services of one person from another. Definition of a mark includes a device, brand, heading, label, ticket, name, signature, word, letter, numeral, shape of goods, packaging, combination of colours, or any combination thereof). Thus, a trademark in India may include just about anything so long as it is capable of graphical representation and bears the ability to distinguish goods/services of traders/service providers. Accordingly, non-traditional trademarks such as three-dimensional marks, motion marks, pattern, position marks, sound marks, store-layouts and so on may be registered. The current Draft Manual of Trademark Practice and Procedure, published by the office of the Controller General of Patents, Designs and Trademarks, does not consider olfactory marks (smells) to be registrable since they cannot be graphically represented.

The criteria for registration are distinctiveness (inherent or acquired through prior use) and availability in relation to earlier similar marks. Assessment of distinctiveness of non-traditional trademarks is stricter, often requiring exhaustive corroborative evidence. Several non-traditional marks in the fashion industry stand registered in India. Courts have also recognised non-traditional marks and granted relief. Examples include Christian Louboutin’s red sole (Christian Louboutin SAS v. Pawan Kumar (CS(COMM) 714/2016)), the ‘Arcuate Stitching Design’, a pattern used by Levi (Levi Strauss & Co. v. Imperial Online Services Pvt. Ltd. (CS(COMM) 657/2021)) and Hermes’s single letter “H” (Hermes International & ANR. v. Crimzon Fashion Accessories Private Limited (CS(COMM) 919/2022 & I.A. 22377/2022)). 

It must be noted that India is a Common law country and rights in a mark accrue by virtue of its use. Although registration is not mandatory, it is prima facie evidence of ownership. Remedies available to a registered proprietor include initiating a suit for infringement in addition to an action for passing off, which can be initiated by the owner of an unregistered mark on the basis of goodwill and reputation vesting in the mark, confusion likely to be caused on account of the objectionable use and damage/loss resulting therefrom.

The Legal Metrology (Packaged Commodities) Rules, 2011 mandate packaged goods to carry labelling which includes the name and address of the manufacturer/importer or packer, the generic name of the commodity, its quantity, the country of origin, care details, the maximum retail price (MRP) and so on. In force since 1 January 2023, the Legal Metrology (Packaged Commodities) (Third Amendment) Rules, 2022 introduced mandatory labelling requirements for loose or unpackaged garments/hosiery which includes MRP in Indian currency, sizes, consumer care’s email address and phone number, together with the name and address of the manufacturer/marketer/brand owner or importer, as well as the country of origin. 

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1.3. Design as an alternative or addition to TM registration

Design protection is highly relevant in the fashion industry in India. As a visually driven industry — where aesthetics are key in consumer purchase decisions — design registration offers optimised protection by allowing exclusive use of one’s unique design or style, helping prevent its dilution in an ‘inspired by’ industry and in turn building a strong brand image and increased brand value. The Designs Act, 2000 protects design as a feature of shape, configuration, ornamentation or composition of lines as applied to an article. 

There may be an overlap between trademarks and designs in so far as shapes are concerned. Non-functional shapes have been recognised as protectable trademark matter in which case, if registered as a trademark, protection as a design may not be available. To qualify for trademark protection, strong evidence is required to establish the distinctiveness quotient of a shape through acquired distinctiveness, which can be established through use. On the other hand, registration of a shape under design law only requires novelty and it is much quicker to obtain protection. 

Once registered, a design is protected for a period of 10 years, which can be extended once by five years. Owners of design registration enjoy exclusive rights on the design and can pursue action against infringement obtaining relief under the Designs Act, 2000.

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1.4. Copyright as an alternative or addition to TM registration

Subject matter for copyright protection includes original literary, dramatic, musical and artistic works and cinematograph films and sound recordings. In the fashion industry, several designers in India have obtained copyright registration for their artistic works. Copyright registration is not mandatory in India; however, it is beneficial as registration is prima facie proof of ownership. Copyright exists as soon as a work is created, and, so long as it is original, it is protected. Tenure for registration depends on the type of work, which includes the life of the author and a period of certain years after. In case of artistic work, copyright exists for up to 60 years after the author’s life.

Provisions under the Copyright Act, 1957 provide that designs which are capable of being registered under the Designs Act, 2000, but are not registered, are protected for up to 50 reproductions under the Copyright Act. Thus, in the absence of a design registration, copyright in the design ceases as soon as any article to which the design has been applied is reproduced more than 50 times by any process. Depending on the business interest of a designer/brand owner, protection through copyright can be used as an alternate in case of launch of limited inventory. 

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1.5. Any other pertinent IP rights

A geographical indication (GI) is an indication identifying goods as originating or manufactured in the territory of a country, or a region or locality in that territory, which possess quality or reputation due to that origin. GIs in India are protected under the Geographical Indications of Goods (Registration and Protection) Act, 1999. To qualify for registration, a product must have a specific geographical origin and possess qualities or a reputation that are due to that origin. The product must also be processed in the geographical area. An application is filed with the Controller General of Patents, Designs and Trade Marks which includes the name of the geographical area where the product is produced or processed, and the qualities or reputation that are due to the product’s geographical origin. Several GIs for textiles stand registered in India, including the famous Pochampalli Ikat from Telangana, Chanderi sarees from Madhya Pradesh, the Mysore traditional paintings from Karnataka to the intricate Banaras Zardozi. Protection as a GI is suitable for collectives and artisans to protect indigenous work.

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2 . Beyond intellectual property: what contractual arrangements are useful in manufacturing, distributing and advertising fashion products?

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2.1. Manufacturing fashion products

License agreements 

Intellectual property as an intangible asset can be monetised akin to immovable property. Fashion houses often leverage their intellectual property through commercial arrangements, such as licensing whereby rights in their intellectual property are leased to another on predetermined terms, to expand their company presence and market footprint. Licensing is common practice in India, across industries including fashion, and there are various examples where fashion brands have licensed their intellectual property (e.g. Superdry selling South Asian Licenses to Indian conglomerate Reliance Brands Ltd.). Many Indian designers are also collaborating with international fashion houses to combine Indian heritage and international modernisation. It is through such commercial arrangements that the IP owner is able to commercialise their intangible assets and the local licensee gains a position of trust with the Indian consumer because of the strong international repute associated with such brands. 

Key provisions in a licensing agreement include:

  • the nature of the license (exclusive/ non-exclusive); 
  • the territory wherein the licensee can operate; and 
  • commercial use, including royalty payments (usually based on a percentage of sales) and lump sum one-time fee for know-how and technical assistance. 

The basic criteria behind licensing include supervision and quality control, which need to be provided for in an agreement. In addition, the following clauses need attention while drafting license agreements:

  • ownership of intellectual property; 
  • indemnification; 
  • right to further sublicense; and 
  • dispute resolution. 

Non-disclosure agreements (NDAs)

Provisions relating to confidentiality and non-disclosure are another extremely important part of license arrangements, especially in the fashion industry. License arrangements require sharing of intellectual property rights, together with know-how, and other proprietary confidential information with the licensee. It is vital that strong confidentiality and non-disclosure obligations be cast upon the licensee. Under Indian law, confidentiality obligations are enforceable in perpetuity and remedies include injunction and damages. 

Subcontract agreements with suppliers/in-house manufacturing

Subcontract agreements in the fashion industry outline the relationship and responsibilities between the main contractor and the subcontractor, whether it’s a supplier or a manufacturer. Sub-contracting results in a cost-effective arrangement where the brand owner/licensee can outsource production to a sub-contractor thereby utilising the sub-contractor’s manufacturing facilities. This agreement delineates key terms such as scope of work, quality standards, pricing, production timelines, and intellectual property rights. By establishing clear expectations and legal protections, it helps ensure the seamless production of fashion products while safeguarding the interests of all parties involved. In an industry known for its creativity and fast-paced nature, a well-crafted subcontract agreement is an essential tool for successful collaboration and product delivery. Apart from clear clauses defining liability and indemnification, aspects of non-compete, non-solicitation must be factored. Details specifying the quality standards to be adhered to by the subcontractor must be well-defined.

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2.2. Distributing fashion products

Appointing distributors is another commonly used commercial arrangement within the fashion industry to tap into newer markets. Here, again, a fashion house can choose the rights that may be offered to a distributor, including appointment of an exclusive or a non-exclusive distributor, together with choice of territory. A well-structured distribution system ensures an extensive and secure supply chain, making quality products available to consumers. Aspects requiring well-defined clauses in distribution agreements include:

  • responsibilities of the manufacturer;
  • obligations of the distributor;
  • sales of articles; 
  • advertisement and promotion; and 
  • ownership of intellectual property. 

Agency agreement 

Through agency agreements, a brand owner can penetrate the market by appointing agents who are responsible for marketing and promotion of the brand together with sales of the brand owner’s products. This arrangement is usually not preferred by fashion houses since the agent carries on business activities on behalf of the brand owner and the brand owner can be held accountable for the agent’s conduct. Indian contract law provides for agency indemnity by establishing the right of indemnification for lawful acts performed by an agent on behalf of the brand owner. Therefore, distribution arrangements where the brand owner and the distributor collaborate on a principal-to-principal basis, is usually the preferred mode of collaboration. 

Selective distribution online in high-end fashion and trademark protection

The fashion and luxury industries often rely on a “selective distribution system” as a strategy to control distribution of their products and maintain the prestige of their brands. This system authorises specific channels or platforms to sell their products, typically aimed at preserving the exclusivity and luxury image of their products. Through the selective distribution system, brands opt for specific platforms to maintain exclusivity and brand image. In this approach, distribution rights are only given to established distributors/platforms meeting certain criteria, mostly qualitative. 

Selective distribution is a vertical agreement (i.e. between parties at different levels in a supply chain), which falls under the umbrella of the Indian Competition Act, 2002 and therefore it is valid so long as appreciable adverse effect on competition is not caused. Factors that need to be considered while assessing if an arrangement has an appreciable adverse effect on competition include: 

  • creation of barriers to new entrants in the market; 
  • driving existing competitors out of the market; 
  • foreclosure of competition; 
  • benefits or harm to consumers; 
  • improvements in production or distribution of goods or provision of services; and 
  • promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services.

Having said that, complete control on distribution by brand owners is negated with provisions of the Trade Marks Act, 1999 recognising the doctrine of trademark exhaustion. Pursuant to the provisions of the Act, upon lawful acquisition of a product by a consumer, subsequent sales thereof cannot be considered as infringement. Thus, a brand owners’ rights are exhausted after the initial sale of its products. 

Co-branding and co-marketing 

Both co-branding and co-marketing aim at blending synergies to tap into existing market hold and presence of two or more market players. 

Co-marketing is a business strategy to promote sales of products by leveraging another player’s brand image in a certain territory. 

Co-branding, on the other hand, leverages the goodwill/reputation of a brand in an existing market thereby enhancing sales and the brand value of one’s own brand. This assists in greater market reach and combined quality assurance. 

It is imperative that this arrangement clearly delineates rights and obligations of the parties involved in the collaboration. Key clauses include: 

  • ownership of intellectual property rights; 
  • revenue sharing; 
  • territory of operation; 
  • quality control measures; and 
  • rights and obligations including distribution, marketing and consumer relations. 

Such collaborative arrangements must define termination rights to provide for any reputational damage. Since parties have collaborated and created a single/joint brand through two distinct business houses, any negative publicity owing to one of the parties can have severe repercussions on the other. Hence, provisions to safeguard a party in such eventuality are vital to these arrangements. 

Franchising and alternative sales model agreements 

A franchise agreement is a commonly adopted business model, particularly in fashion, to authorise a franchisee to open a franchise site while granting the ability to use franchise-specific resources, such as branding, business methods and supplier sources. The genesis of a franchising agreement is the commonality of the look and feel of a store, thereby assuring consistent customer engagement and satisfaction globally. Franchising agreements should include key clauses around maintaining consistency in look and feel, jurisdiction of operation, franchise fees and royalty payments, as well as common clauses such as term, dispute resolution, ownership of intellectual property, confidentiality and termination. 

Alternative sales models may include the following:

  • Corners or ‘Shop in Shop’ within a larger multi-brand store dedicated to a particular brand which may be leased by that brand on pre-decided terms. The corner store owner typically pays the brand a percentage of sales for the products they sell. 
  • Consignment stores are retail shops that sell products on behalf of individuals or businesses (consignors) who retain ownership until the item is sold. Consignors provide their products to the store for sale. The store earns a commission on each sale. Unsold items may be returned to the consigner. 
  • Pop-up stores are temporary retail spaces that allow businesses to showcase products or services for a short period, often in high-traffic areas or during special events or seasons. Pop-up stores are versatile and can be set up in various locations. They create a sense of urgency and novelty, attracting customers. Contracts may specify the duration, rent, and terms. 
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2.3. Advertising fashion products

Advertisement is crucial to define a brand’s success story. While the role of models in the fashion industry has been well known, engaging with celebrities, and now influencers and digital avatars, are other advertisement avenues, some of which are increasingly being utilised by the fashion industry. Engaging a celebrity/brand ambassador/influencer allows consumers to better relate to a brand leveraging on the fan following of these renowned personalities. Such engagements — whether continuous, tenure based or one-time — require strategically crafted contractual clauses that can benefit both the brand and the celebrity/influencer/ambassador involved. Key clauses for advertisement agreements include, amongst others: 

  • aspects covering exclusivity of the celebrity/influencer involved; 
  • tenure of engagement; 
  • commercial terms; 
  • indemnification provisions; and 
  • termination and related outcome. 

Employing fashion models 

A modelling contract is an essential part of the fashion industry, binding models to clients or agencies with specific terms and conditions. Broadly, common modelling modelling contracts can be: 

  • exclusive contract; 
  • non-exclusive contract; and
  • one-time-only contract.

 Common clauses in modelling contracts are:

  • A personal information transfer agreement which addresses the lawful use of a model’s personal data by modelling agencies, ensuring data security and defining how information is shared.
  • Limitation of liability specifies the damages or compensation one party must provide to the other, ensuring that parties are not held responsible for more than agreed upon.
  • An indemnification clause, which transfers risk from one party to another, specifying which party is responsible for costs arising from breaches or misconduct.
  • A disclaimer clause outlining rights and obligations in a contract, often including warnings or expectations to prevent harm or injury.
  • The term defines the duration for which the contract is in effect, obligating both parties to adhere to its terms until expiration.
  • An earnings clause determines the commission taken by the modelling agency from the model’s earnings, typically around 20%.

Model release forms

A model release is a contract that permits a company to publish the subject of a photograph/copyrighted work for commercial purposes. This is a written agreement that allows authorised users to publish an image. The person depicted in the image must agree with the brand’s exclusive rights to modify, publish, and redistribute their images for promotional content. Key clauses include:

  • identification and definition of parties; 
  • media type and usage; 
  • nature of rights (exclusive or non-exclusive); 
  • release of image to third parties; 
  • usage restrictions; and 
  • liability and assignment. 

Social media, influencers and brand ambassadors/celebrities 

With influencer advertisement on the rise, various new challenges have emerged seeking transparency in promotion to allow consumers to make informed choices. Obligations have been cast on celebrities/influencers for endorsements under the Guidelines for the Prevention of Misleading Advertisements and Endorsements for misleading advertisements, 2022, supplemented with the guide ‘Endorsements Know-hows!’ released in 2023 by the Department of Consumer Affairs in India for celebrities, influencers and virtual influencers on social media platforms. 

Essential contract clauses include: clear description of the promotional content, guidelines, and designated platforms for promotion, as well as deliverables and responsibilities of both parties. Ownership of content including all intellectual properties must be clearly identified together with the extent of permissible use of the influencer/celebrity or brand ambassador’s personality rights. Payment terms, duration, rights approvals and dispute resolution, terms of engagement, and tenure of engagement must also be clearly specified.

Advertising standards, relevant authorities and advertising practice 

Established in 1985 under provisions of the Companies Act, 1956, the Advertisement Standards Council of India (ASCI) is a voluntary self-regulatory body which ensures that all advertising in India adheres to principles of legality, decency, honesty and truthfulness. It operates under a Code for Self-Regulation in Advertising and consists of principal members from the advertising, media and related industries. ASCI’s key objectives include: monitoring advertising standards, preventing misleading advertising, promoting decency and safeguarding against the promotion of harmful products. 

ASCI recently issued “Guidelines for Advertisements Making Environmental/Green Claims”, effective from February 15, 2024, listing a set of requirements, including mandating that absolute claims such as ‘environment friendly’, ‘eco-friendly’, ‘sustainable’, ‘planet friendly’ etc., be substantiated by robust data or well-recognised accreditations. 

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3 . What regulations govern online marketing and how are the rules enforced?

With the rise in e-commerce, several brands in India advertise or market their products online. As per a report by the Business Insider, India is the fastest-growing internet advertising market in the world. A number of laws and regulations in India govern marketing and advertisement for online marketing. 

The Consumer Protection Act, 2019 includes provisions related to e-commerce and digital marketing which prohibit unfair trade practices, misleading advertisements and false claims. The Consumer Protection (e-commerce) Rules, 2020 were issued under the Consumer Protection Act, 2019 and specifically apply to e-commerce platforms. They require e-commerce platforms to provide accurate information about products, sellers, prices and return policies. Platforms must also take measures to prevent the sale of counterfeit and fake products. The enforcement of online marketing regulations in India is carried out by the Central Consumer Protection Authority (CCPA) and the Department of Consumer Affairs. 

The Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022 were published to further protect consumers from misleading/false advertisements. 

The Telecom Regulatory Authority of India (TRAI) maintains the National-Do-Not-Call (NDNC) Registry, where individuals can register their preference not to receive unsolicited commercial communications. Businesses are prohibited from sending marketing messages to numbers registered on the NDNC list. 

The ASCI monitors and regulates advertising content, including online advertisements. It ensures that online advertisements are truthful, honest and adhere to ethical standards, thereby ensuring that advertisements are not misleading to consumers. ASCI also provides a mechanism to file complaints against misleading online advertisements. 

The new legislation on privacy in India, the Digital Personal Data Protection Act, 2023 aims to safeguard individual’s digital privacy and personal data. It outlines provisions for secure and lawful processing of personal data including the requirement of obtaining free and specific consent in addition to requirements of data localisation and data subject rights. Brands/companies need to comply with the provisions of the Act, particularly the requirement to obtain consent while processing personal data of individuals for the purpose of marketing, promotion and advertisement. Hence, unsolicited marketing and advertising will be regulated and marketing companies will need to comply with the specific consent requirement of the data privacy legislation. 

The proposed Digital India Act, 2023 represents a comprehensive effort to regulate various aspects of the digital landscape in India, covering areas such as open internet access, data protection, cybersecurity and e-commerce. The Digital India Act aims to tackle issues relating to consumer protection including online marketing, advertisement, electronic contracts and content moderation on social media platforms. 

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3.1. Consumer protection regulations

Consumer protection rights in India are regulated by the Consumer Protection Act (2019) and the rules made thereunder, including:

  • Consumer Protection (e-Commerce) Rules (2020);
  • Consumer Protection (Mediation) Regulations (2020);
  • Consumer Protection (General) Rules (2020); and 
  • Consumer Protection (Consumer Disputes Redressal Commissions) Amendment Rules (2022).

Provisions under the Consumer Protection Act, 2019 allow a consumer to file a complaint and obtain relief against unfair trade practices by a company/brand. Unfair trade practices are clearly defined in the Act and include false and misleading representations by brands. Complaints may also be filed to obtain relief against defective products, a deficiency in services or when charged over a fixed or displayed price. A complaint may also be made when goods, which may be hazardous or unsafe, are being sold. Rights given to consumers under the Act include, amongst others, protection against the marketing of hazardous products/services and the right to be informed of the quality, quantity, purity, standard and price of goods (see www.indiacode.nic.in/bitstream/123456789/15256/1/a2019-35.pdf).

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3.2. Physical store and online store layout

Based on a broad definition of trademarks under the Trade Marks Act, 1999, store layouts qualify for trademark protection in India if they are capable of graphical representation and rendering a source identifier function. However, the burden of establishing distinctiveness (inherent or acquired) is higher than for typical trademarks. Several store layouts stand registered in India. As for online stores, rights may be enforced under the Copyright Act, 1957 which can protect digital creations as well as multimedia elements. 

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4 . What are the most relevant unfair competition rules for fashion businesses and how do the courts interpret and enforce these rules?

The Competition Act, 2002 (including a recent amendment — The Competition Amendment Act, 2023) aims to promote and sustain fair competition in the Indian marketplace. The law regulates agreements/arrangements which can be said to be an abuse of dominant position and are likely to have an appreciable adverse effect on competition in India. Thus, an enterprise which ‘enjoys a dominant position’ in a relevant market is prohibited from abusing its position of dominance. A list of factors are provided which may be considered to determine the position of dominance. These include market share, size and resources of an enterprise, size and importance of competitors, market structure and size of market. It also provides an exhaustive list of practices which, when carried out by a dominant enterprise or group, would constitute an abuse of dominance and is likely to be prohibited. For all industries, including the fashion industry in India, these would include:

  • Imposing unfair or discriminatory conditions (directly or indirectly) on sale or purchase of goods/services, including predatory pricing.
  • Limiting or restricting:
    • production of goods or provision of services or market; or
    • technical or scientific development relating to goods or services to the prejudice of consumers.
  • Indulging in practices or practices resulting in denial of market access.
  • Making the conclusion of contracts subject to acceptance by other parties of supplementary obligations, which, by their nature according to commercial usage, have no connection with the subject of such contracts. 
  • Using one’s dominant position in one relevant market to enter into or protect another market.

Further, the law seeks to regulate two kinds of agreements:

  • Anti-competitive agreements between or amongst competitors (known as horizontal agreements), for example cartel arrangements, price fixing agreements, agreements limiting or controlling production and/or supply, market-sharing agreements and bid rigging arrangements. 
  • Anti-competitive agreements between enterprises or persons at different stages or levels of the production chain (known as vertical agreements).

The law casts a presumption that horizontal agreements may cause an appreciable adverse effect on competition in India and parties to such agreements may be called upon to provide evidence that the agreement does not result in an appreciable adverse effect on competition. Such presumption however, does not apply to vertical agreements. 

Indian courts analyse whether an entity which holds a dominant position in the market is conducting activities which can have an appreciable adverse effect on competition in the relevant market and if the same is ascertained, an order to stop such activity together with compensation can be passed. Moreover, courts discourage anti-competitive agreements which have a negative impact on competition in India. 

Trade secrets 

India does not yet have specific legislation to protect trade secrets — currently they can be protected either under contract law or through the equitable doctrine of breach of confidentiality. Signatory to the TRIPs Agreement, India recognises the importance for protection of trade secrets through common law principles of equity and natural justice.

Essentials of a trade secret are that:

  • it should have a commercial value; and
  • it is known by a limited group of people.

Reasonable steps should be taken by the owner to keep the information secret.

Indian courts uphold trade secret protection on the basis of principles of equity and common law action of breach of confidence amounting to breach of contractual obligations through non-disclosure agreements. The remedies available to the owner of trade secrets are to obtain an injunction or request the return of confidential and proprietary information and compensation for loss suffered due to unauthorised disclosure. 

Specifically, in the fashion industry trade secrets may include but are not limited to: confidential customer, supplier and buyer information, customer preferences, marketing and pricing strategies, distribution mechanisms, or software tools/other copyrightable fashion designs.

That said, the Law Commission in India has recently proposed new law to protect trade secrets in India, including provisions protecting whistle-blowers. A report on ‘Trade Secrets and Economic Espionage’ has been submitted to the Government and a draft ‘The Protection of Trade Secrets Bill, 2024’ has also been submitted. Thus, a new law on trade secrets may be on the anvil in India.

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5 . Is there any regulation specifically addressing sustainability or ESG (Environmental, Social and Governance) in the fashion industry?

India does not currently have specific legislation addressing sustainability or ESG in general or in the fashion industry. However, there are laws that may be relevant, such as:

  • The Factories Act, 1948, which regulates the working conditions of factory workers and includes provisions for health and safety, welfare, and working hours.
  • The Water (Prevention and Control of Pollution) Act, 1974, which regulates discharge of pollutants into water bodies with the aim of preventing water pollution.
  • The Air (Prevention and Control of Pollution) Act, 1981, which regulates discharge of pollutants into the air with the aim of preventing air pollution.
  • The Environment Protection Act, 1986, which regulates discharge of pollutants in the environment with the aim of preventing environmental pollution.
  • The Companies Act, 2013 and the Companies Corporate Social Responsibilities Policy Rules, 2014 make accountable certain businesses for sustainability reporting standards. It requires that certain companies allocate at least 2% of its average net profits toward CSR activities. 
  • SEBI (Securities and Exchange Board of India) mandates submission of the Business Responsibility Sustainability Report (BRSR) effective April 2022 for the top 1000 listed companies (by market capitalisation), requiring sustainability targets and performance to be disclosed, such as use of resources, waste management, and carbon-emissions.
  • The Government of India formed the National Guidelines for Responsible Business Conduct (NGRBC) in 2019 (revising the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business introduced in 2011). NGRBC recommends certain principles for businesses which include conduct and governance with integrity in a manner which is ethical, transparent and accountable, providing goods and services in a sustainable and safe manner, respecting and making efforts to protect and restore the environment amongst others.
  • The National Green Tribunal Act, 2010 addresses environmental disputes in India and enforces environmental laws to provide relief. 

The need to address environmental issues, including climate change, has brought to the forefront perils of over-consumption and carbon-footprints of industrialisation. To appease conscious consumers, companies and brands are increasingly engaging in greenwashing, a marketing gimmick where companies overstate their environmental initiatives. While India does not have specific laws/regulations, existing laws sanction greenwashing in India. ASCI lays down guidelines for advertisements broadcasted to Indian consumers and discourages corporates from indulging in misleading advertisements. The Consumer Protection Act, 2019 includes provisions related to consumer rights and protection against unfair trade practices, misleading advertisements, and false claims. Consumers can file complaints against companies engaging in deceptive advertising practices. Additionally, ASCI is working with the Department of Consumer Affairs to form a task force to tackle greenwashing in various sectors, including fashion. The intention is to study global regulations and guidelines on sustainability and green claims to adopt an inclusive framework in India.

Labelling is an essential part of branding which helps consumers make informed choices. Products with clear, accurate, transparent and verifiable information about its environmental attributes, can discourage companies from making false or exaggerated claims. Certification marks are used to indicate that products or services meet specific standards, including environmental and sustainability criteria. When certification marks are based on rigorous and independently verified standards, they provide a clear signal to consumers about a product’s authenticity, reducing the risk of greenwashing. An example would be ISO and Global Organic Textile Standard (GOTS). Collective marks are used by members of an association to distinguish their goods or services, typically based on shared characteristics or standards. An example being ‘Tamil Nadu Handloom Silk’ or ‘Tamil Nadu Handloom Cotton’. Both Certification and Collective trademarks may be filed in India on the prescribed form supported with the required documents before the Office of the Controller General of Patents, Designs and Trademarks.

The Bureau of Indian Standards (BIS) is the authorised national standardised body which issues ISO certificates in India. ISO certificates are not mandatory; however, they work as an effective tool to relay a brand or product’s quality and authenticity. There are a number of ISO certifications available in India, see www.isoindia.org/services.php. The fashion industry can benefit from the following ISO certifications: ISO 9001-2015 (Quality Management System), ISO 14001:2015 (Environmental Management Certification), ISO 45001:2018 (Occupational Health and Safety Management System), and ISO 26000 (Social Responsibility).The BIS has also developed a standard for eco-labelling of products and services called IS/ISO 14024:1999.

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6 . Customs monitoring: do any special import and export rules apply to fashion products?

As the sixth largest exporter of clothes and textiles in the world, India’s textile industry constitutes 15% of its total export. Traditionally a major exporter, early 2023 showed a notable upsurge in imports of textiles compared to previous years. The Foreign Trade (Development and Regulation Act), 1992 regulates imports and exports in the country and the Directorate General of Foreign Trade (DGFT) controls imports and exports. The Foreign Trade Policy is a set of guidelines and instructions established by the DGFT in matters related to the import and export of goods in India. It also lists the amount of applicable import and export duties. As a pre-requisite, all importers or exporters require an ‘Importer Exporter Code (IEC)’ from the DGFT. Through the DGFT website www.dgft.gov.in/CP/, the entire import and export policy for HS Codes may be accessed for various items including items of leather, silk, cotton, wool, other vegetable textile fibre, knitted or crocheted fabrics, articles of apparel or clothing accessories, etc. A list of prohibited items for import has also been published by the DGFT — www.content.dgft.gov.in/Website/Prohibited.pdf — which includes ‘Articles of apparel and clothing accessories of wild animals covered under the Wild Life Protection Act, 1972. Under the Customs Act, 1962, imports of prohibited items may attract a penalty of up to five times of the value of goods. 

A key challenge in the fashion industry is combatting counterfeiting and infringement and India has taken measures to address the same. Through the issue of notification No. 49/2007-Customs dated 8 May 2007, India prohibited import of goods infringing intellectual property rights of the rights holders under The Copyright Act, 1957, the Trade Marks Act, 1999, the Patents Act, 1970, the Designs Act, 2000 and the Geographical Indications of Goods (Registration and Protection) Act, 1999. This notification was later superseded by notification No. 51/2010-Customs (NT), dated 30 June 2010. Thus, by virtue of the same, infringing goods are therefore liable for confiscation. 

An essential measure adopted to combat infringement is the Customs Recordal system, implemented by the Customs Department of India, to stall cross-border movement of counterfeiting or infringing goods. The intellectual property owners in India can register their products with the Customs Authority of India, who then monitor the imports and can notify the rights holders if infringing goods are confiscated. The Customs Act, 1962, along with the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007, makes possible confiscation, seizure and detention of infringing/counterfeit goods at the border itself.

The procedure for recordal of intellectual property with the Customs Authority includes an online application to be filed at the Indian Customs IPR recordation Portal, which generates a Unique Temporary Registration Number (UTRN) on file. Documents uploaded in support of the application, together with the UTRN are thereafter sent to the IPR Cell of Customs Department. Upon approval of the application, the Temporary Registration Number is converted to a Unique Permanent Registration Number (UPRN) confirming recordation with the Authority. The application stands valid for five years and can be renewed by re-filing upon expiration. 

While this addresses issues at the border, challenges related to counterfeit/infringing goods produced in India for both domestic and global markets and parallel imports remain areas of concern.

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7 . Frequently Asked Questions (FAQs)

What are the different forms of intellectual property protection available to fashion brands in India, and why is it important to register one’s intellectual property.

While this has been detailed in the paragraphs above, fashion products may be protected as trademarks, designs, copyright, geographical protection as well as patents. Depending on the nature of work seeking protection, it is vital that a brand delineates a suitable strategy amplifying its business goals and obtaining maximised protection. Registration of Intellectual Property Rights boosts a brand’s valuation, assisting better monetisation and recognition. Registration is prima facie evidence of ownership and the remedy of filing an infringement action is available to a registered proprietor over and above the remedy of passing off.

Why is intellectual property important? What are the benefits?

Intellectual property being an intangible asset forms part of the balance sheet. It can be monetised by various means including licensing and assignment. It also adds to the goodwill and valuation of an organisation. Brands can enter different collaborative arrangements to boost their revenue through licensing arrangements, partnerships or collaborative deals, know-how/technology license agreements and/or assignments allowing boost of a company’s revenue stream.

Are parallel imports permissible in India?

Since parallel imports are not counterfeit products but original products being sold, there is no law in India which considers parallel imports to be illegal. However, there are other practical and commercial avenues which can be utilised to curb this practice, including such products not having warranties provided by the fashion houses as the sale is not emanating from an authorised dealer. 

EXPERT ANALYSIS

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Australia

Derek Baigent
Ellen Baker
Jennifer Wyndham-Wheeler
Shannon Fati

Belgium

Christine De Keersmaeker
Katrijn Huon

Brazil

Flavia M. Murad-Schaal
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Spain

David Fuentes Lahoz
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Taiwan

Cathy Wang
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Chanya Veawab
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United Kingdom

Gary Assim

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Megan Bannigan

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Chi Lan Dang
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