Dec 2021

India

Introduction

Rapid growth in the global economy has placed a premium on innovation and Intellectual Property rights. There is no denying that Intellectual Property rights have served as a catalyst spurring innovation and accelerating growth. India has transitioned from a process-patent oriented system to a product-patent system using The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) as an opportunity to amend its laws and the TRIPS-compulsions as an opportunity to make giant strides in this well-known but unexplained terrain.

After Pharma, a crucial sphere of IP rights in India is the fashion industry. Although IPR attempts to tackle the emerging issues of fashion law, it will nonetheless always remain an unfinished chapter in view of the ever-expanding horizons of law.

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

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1.1. Trademarks and non-traditional trademarks

The Trademarks Act, 1999 protects words names, symbols, devices, logos, etc. It also protects non-traditional marks such as shapes, smells, or sounds. All marks are protected as long as they meet the basic criteria for registration, for example, that it:

  • has distinctiveness (capable of distinguishing the goods and services of one undertaking from others);
  • it is not already registered; or
  • it is not a descriptive, generic or a laudatory word, geographical name, or a common name.

A caveat for the registration of such a mark is that it has acquired a secondary meaning (consumers identify a trade mark with a certain product) or it has the status of a well-known mark.

Trademark registration is prima facie evidence of its validity and ownership and deters other entities from using the same or deceptively similar mark.  However, the proprietor of an unregistered trademark may only sue for passing off and the onus of providing use of the mark is on the Plaintiff.

The process of registration of a mark includes:

  • filing of mark (online or through physical mode);
  • examination thereof by the Trademark Registry;
  • submission of appropriate reply;
  • acceptance thereof;
  • advertisement inviting opposition; and, finally
  • granting of the registration certificate.

A mark once granted/registered is valid for 10 years and may be renewed from time to time. Additionally, a mark must be used within 5 years of its registration, failing which, potentially, a third party may apply for its rectification or cancellation for non-use.

Non-conventional marks are not strictly the usual letters, numerals, logos or symbols but may contain non-conventional elements which have, overtime become an indicator of source of origin, (i.e. distinctiveness). Some examples are illustrated below.

Color. While there is no statutory bar on registration of single-color marks, the criteria for registration is very high. One has to show that the color is associated with that business/service and recognized by customers as the source of origin. Cadbury, for example has successfully been registered as a color mark (for the purple Pantone color used). Other instances include Victronicx (# 1394234 – brown color label), and Telecom (# 1462271 – magenta color label).

The Delhi High Court in the case of Christian Louboutin Sas v MrPawan Kumar &Ors has recognized the red sole of shoes as having acquired distinctiveness and therefore, a good color mark. Additionally, a combination of colors is also registrable as a trademark.  In practice, it is possible to obtain registration for a color mark provided the element of distinctiveness is proven.

Sound mark. The Trademark Act does not define a ‘sound mark’ but the concept has judicial backing. A sound represented graphically by a series of musical notes (with or without words) could receive protection in law. The graphical representation should include the musical score divided into measures showing different musical notes, shapes, flats and naturals. The Yahoo! yodel is a typical example of a sound mark, and so is ICICI Bank’s jingle “DhinChik Shin”.

Touch/texture mark. These marks protect patterns and features. An example is the velvet touch of Khvanchkara wine bottles. Marloro’s textured pattern III is also registered.

Shape mark. Shapes are included in the definition of a trademark under the Trademark Act, 1999, however, these marks are protected only if consumers can associate the shape with the particular product. Examples include, the Zippo lighter (#714368) or the shape of the Coca Cola bottle (#2327469).

Being a common law country, marks that are not registered in India but have been in use are also recognized and afforded protection (in enforcement actions). For instance, a prior user of a mark would be protected even though the mark is not registered, by virtue of a Passing-Off remedy.

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1.2. Design as an alternative or addition to TM registration

Designs in India are protected under the Designs Act, 2000. A design is a feature of shape, configuration, ornamentation, or composition of lines as applied to an article. A design excludes subject matter protected by trademark. Therefore, luxury goods such as bags, shoes, clothes, and carpets may be protected under the Designs Act.

The registration process is fairly simple and quick resulting in registration within 6 months. A design once registered is valid for 10 years and can be renewed for 5 years thereafter.

Any slavish copy or an obvious or fraudulent imitation of a design can be restrained by way of an injunction. Damages and/or accounts of profit may be also claimed, in addition to search and seizure of infringing goods.

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1.3. Copyright as an alternative or addition to TM registration

Copyright in India is governed by the Copyright Act, 1956. Copyright protection extends to original artistic works, literary works, sculptures, paintings, musical works, sound recordings, cinematographic works, public performances, and dramatic works. ‘Original’ means that the work has originated from the author and is not copied from a third party. Copyright protection in a work commences as soon as the work is created, therefore registration is not mandatory, however, it is advisable. The period of protection varies depending on the type of work. As an example, for an artistic work, the period is for the life of the author plus 60 years. Logos are successfully protected as copyright subject matter. Patterns on textiles or dresses by themselves would also form the subject of a copyright registration prior to application on the goods; once applied on the goods (textile), design is the appropriate mode of protection.

RohitBal became the first fashion designer in India to get his complete collection copyrighted. Anju Modi and Anita Dongre, two well-known fashion designers, quickly followed suit and copyrighted their whole collection.

Violation of copyright can be controlled through civil and criminal remedies available in law. In civil remedies, which are very effective, a suit for copyright infringement is filed. At the ex-parte stage (without presence of the defendant) an injunction, search and seizure order may be granted in appropriate cases.

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1.4. Any other pertinent IP rights?

N/A

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1.5. Summary of additional IPRs

IPR in India

Duration

Time and modalities for grant

Pros and cons in the fashion sector

Patents

20 years, non-renewable.

Application filed at the Indian Patent Office.

The registration is granted for 3-4 years from the date of application.

Pros: protection for 20 years.

Cons: fashion keeps changing with time, hence it may not be worth getting a 20-year long patent.

Trade secrets

There is no limitation on time.

A trade secret is automatically granted protection if the information is not readily accessible, it has commercial value, and all measures have been taken to protect it.

Pros: unlimited protection and no registration is required

Cons:

  • Disclosure of trade secret would lead to misappropriation, and not infringement.
  • Since it is undisclosed and unregistered, the use of the same secret by a competitor without fraud or theft would lead to misappropriation due to a lack of defense/recourse.
  • No specific law exists governing trade secrets.

Domain names

Registered for 1-10 years.

A domain name can be registered with the gov. in domain registration service India

Pros: enables accessibility to a wider customer base and market.

Cons:

  • Registration is granted based on availability. It may not get registered if a registered trademark with the same name exists.
  • Cybersquatting.
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2 . Beyond intellectual property: what contractual arrangements are useful in manufacturing, distribution and advertising fashion products?

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2.1. Manufacturing fashion products

License agreements and Non-Disclosure Agreements (NDAs). The luxury and fashion industry is entirely built and driven by the ‘dream factory’ or ‘wow’ factor of a product: creating timeless iconic pieces that are exclusive to a customer. Most luxury brands prefer exclusive distribution of their products through ‘flagship stores’, educating customers about brand value and establishing brand loyalty. The brand owner may license his/her designs, trademark and the brand name for marketing and distribution either by way of an exclusive agreement, sole agreement, or a non-exclusive agreement without actually transferring the ownership. Brand owners who often engage third-party manufacturers may risk their intellectual property if it is not protected by a Non-Disclosure Agreement (NDA).

A Non-Disclosure Agreement signed between the parties would restrict the signing party from disclosing any information received from the owner. An NDA is particularly important in the fashion industry to prevent disclosure of proprietary information. Hence, it is essential to clearly define the parameters of confidential information to avoid ambiguity. Courts in India do take cognizance of such non-disclosure agreements and would come down heavily on those committing a breach. In appropriate cases, the courts may order to search a computer system, create mirror images, and seizure of infringing goods.

Subcontract agreements / in-house manufacturing. A subcontractual agreement is subordinate to the parent contract. It is a useful tool when brands look at outsourcing the manufacture of parts of the main product. IP rights may also be subcontracted. One of the emerging threats in this respect is the unauthorized subcontracting to third parties’ by the licensee. Often licensees sub-contract third parties to manufacture or supply products or parts thereof without the knowledge of the licensor/owner. This is particularly threatening for, not only the quality and standard of the product, but also the possibility of infringement of IP rights in the instance where the designs fall into the hands of the competitors or third parties. It is therefore essential for the brand owner to clearly define the liability in case of breach of contract or infringement.

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2.2. Distributing fashion products

Effective distribution of fashion products is essential to access consumers and to maintain integrity of the supply chain. These arrangements or a lack of control of the distribution chain may lead to increase in counterfeiting. For instance, if luxury products are distributed only through specifically contracted parties, courts would readily infer infringement and come to the rescue of a brand owner.

Agency agreement. This comes into existence when a brand wants to establish a ‘chain of flagship stores’. It is a contract under which the luxury brand may have its own store and then enter into arrangements/agreements between the brand owner and the distributor/license/subcontractee. Such contracts are governed by Section 222 of the Contract Act, 1872. The brand is responsible for the quality, safety and performance of the product, whereas market penetration is the key for the agent. Such arrangements can also be easily enforced in a court of law.

Selective distribution online in high-end fashion and trademark protection. A trademark owner through the selective distribution system usually selects exclusive online platforms to control the production and distribution method to preserve the authenticity, prestige, and standard of the brand value. By this method, the trademark owner licenses the distribution rights to certain recognized platforms to undertake sales on behalf of the owner or producer. Recently in the advent of e-commerce, brands handpick online portals to sell their products to target selective consumer markets. However, the doctrine of trademark exhaustion restricts the trademark owner’s control over distribution channels. This is because the owner ceases to have rights after the completion of the first sale (see www.mondaq.com/india/trademark/714080/selective-distribution-system-and-trademark-exhaustion).

Section 30 of the Trademark Act, 1999 recognizes the exhaustion doctrine in India, for further sale of goods into the market which has been lawfully acquired by the trademark owner. In the case of Kapil Wadhwa v. Samsung Electronics (2013 (53) PTC 112 (Del.)) the court recognized the existence of the doctrine within the territory of India only, i.e local exhaustion. For instance, several luxury brands such as Raytran have used civil courts and criminal courts to check counterfeiters online.

Co-branding and co-marketing. While both the concepts may be interlinked the difference lies in the execution. Co-marketing is when brands that deal in the same market align their marketing tactics with the aim of promoting each other's products. This facilitates the brands to penetrate into each other's customer base and expand their sales. Conversely, co-branding allows brands to combine their individual qualities into a singular product to highlight their individual qualities and introduce themselves in each other's market (see www.impactplus.com/co-marketing-vs-co-branding-whats-the-difference). Therefore it is a method of licensing trademarks to form a new brand product to increase sales and market recognition. An example is the effective use of Airtel (service provider) by iPhone in India. iPhone derived great advantage from the platform of Airtel.

Co-branding as a strategy has advantages, though one must carefully choose the partner brand to avoid dilution of mark and customer confusion. It is therefore imperative to craft the trademark licensing clauses with due caution to avoid unnecessary consequences.

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2.3. Advertising fashion products

Employing fashion models. One of the most well-known advertising techniques in fashion has been by using fashion models. Brands have excessively used this tactic to gain positive brand association. However, it is imperative to clearly define the structure of the activities through contractual agreement. Most common contractual agreements between brands and models are either exclusive contracts or one-time-only contracts (see www.lawcorner.in/modeling-contracts-and-its-clauses/).

Another important aspect is the model release forms which are imperative for defining limits for the use of the photographs taken during the shoot. It is a contractual obligation between the models and the photographer to establish how and where the images are to be used or published to protect them from liability in the event of a dispute (see www.rps.org/media/4kvcamlr/rps-model-release-form-pdf.pdf).

Social media, influencers and brand ambassadors/celebrities. Social media and advertising through influencers is a relatively new concept for advertisers and hence the roles and responsibilities must be clearly outlined in an Influencer Agreement. An Influencer Agreement can therefore be either short-term or long-term/ongoing depending on the termination of the contract.

It is also important to hire such influencers whose brand value is aligned with the brand being promoted, to effectively attract customers. Hence, an Influencer Agreement should specify the type of content that is being promoted including the types of photographs, videos, or audios, in addition to the channels through which the content would be published, such as Instagram, Facebook, or YouTube. It is also essential to establish the ownership of the content including the rights of the influencer with respect to the usage of the work. Another clause that is specific to an influencer agreement is the use of particular hashtags in relation to the name and theme of the campaign to track the reach of each post (see https://blog.ipleaders.in/terms-included-influencer-agreement). Moreover, advertisers can use e-commerce pop-up stores on various social media platforms or as websites as a temporary outlet with special discounts to reach and attract more customers within the market (see www.neilpatel.com/blog/ecommerce-popup-shops).

Advertising standards, relevant authorities and advertising practice. The Advertising Standards Council of India, (ASCI) was established in the year 1985, and introduced under section 25 of the Companies Act, 1956. It is a self-regulatory body to monitor and regulate advertising activities in India, to maintain social responsibility, and competitive conditions (see https://blog.ipleaders.in/advertisement-standards-council-india-asci/). In accordance with the standards established by the council any advertisement which is unethical, dishonest, offensive or vulgar must be avoided/banned. Any misleading or anti-competitive ads such as comparative advertisements (disparaging) are specifically banned by the Advertising Standards Council of India to protect the sanctity of competition within the market (see www.legaldesire.com/advertising-laws-in-india/).

Furthermore, the ASCI introduced guidelines for influencer advertisements on social media to regulate content that is posted online. Through these guidelines the ASCI aims to distinguish between content and promotions thereby making the consumers aware of whether particular content is a paid promotion/advertisement or a genuine review of the product (Guidelines for Influencer advertising on digital media, 2021).

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

Online marketing has escalated to become one of the most effective choices for advertisers to promote their brands. However, there are no statutes that solely regulate digital advertising or sale of products in India. However, the trademark and copyright regime in India recognizes online transactions, without any substantial changes in the basic principles. For instance, the following situations may invite penal action:

  • creation of a Twitter handle using names of well-known brands;
  • making derogatory comments about a brand on a Facebook page or any social media platform;
  • promotion of counterfeit goods on social media or e-commerce platforms;
  • use of a celebrity image for sale of goods leading to personality rights infringement; or
  • unauthorized use of Copyrighted images.

Nonetheless, the Advertising Standard Code of India enshrines guidelines to regulate and monitor the content of advertisements which must be abided by advertisers (see www.lexology.com/library/detail.aspx?g=3ed4bf3b-0eec-4c6b-8e93-6018f918e58c).

The following are the statutes that complement the aforementioned Code:

  • Consumer Protection Act, 2019. Section 2(28) of the Act defines ‘Misleading Advertisements’. Section 10 of the Act established a Central Consumer Protection Authority for the violation of consumer rights due to any false or misleading advertisements.
  • The Indian Penal Code and Criminality of Advertisement. This provides that no advertisement must be indecent.
  • The Indecent Representation of Women (Prohibition) Act, 1986. This prohibits the indecent representation of women in any form.
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3.1. Consumer protection regulations

The  Government of India introduced the Consumer Protection (e-commerce) Rules, 2020 which aim to combine the Consumer Protection Act, 2019, the Indian Exchange Control Laws, and the Information Technology Act, 2000 to control the hazards in e-commerce and technology-driven marketing (see https://www.icsi.edu/media/webmodules/Consumer_Protection_E-Commerce_Rules_2020.pdf).

Rule 5 enshrines the liabilities of the marketplace e-commerce entities. The rules require the sellers to ensure that the descriptions and images of the product are accurate with a maintained standard of quality, purpose, and nature. The details regarding the use of the product must be clear and easily accessible.

Rule 6 prohibits any seller from participating in unfair trade practices. The products must not be falsely represented to the consumers pertaining to quality or features. It also directs the sellers to honestly advertise and promote the characteristics, access, and usage of the product.

These rules are under consideration and may be amended in 2021.

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3.2. Physical store and online store layout

Under the Trademarks Act, 1999, a physical store layout is protected under non-traditional trademarks as a trade dress, because consumers have begun to associate the store layout with the brand. Although the Trademarks Act, 1999 does not specifically provide for the protection of a store layout, it nonetheless fulfills the conditions, namely: graphical representation and function as a source identifier (see www.mondaq.com/india/trademark/1055562/trademark-protection-for-store-layouts-in-india).The Taj Mahal Restaurant and the Bombay Stock Exchange building in Mumbai are both registered in India (see www.spicyip.com/2017/06/taj-mahal-palace-hotel-first-building-to-receive-trademark-in-india.html).

A website layout can be protected as a copyright by way of registration. While the domain name of the website can be protected as a trademark, the entire layout of the store is registered as copyright.

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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 was introduced to deal with unfair trade practices in India and replaced the Monopolies and Restrictive Trade Practices Act, 1962. Unfair competition is an act or practice, which, in the course of industrial practice, is contrary to honest practices. Therefore, any form of unfair trade practice would lead to unfair competition. In accordance with the Competition Act, 2002 unfair trade practices include anti-competitive agreements, abuse of dominant position, and combinations (mergers & acquisitions) (see www.mondaq.com/india/antitrust-eu-competition-/33971/indian-competition-act-an-overview). In Maruti Suzuki India Ltd. versus Rajiv Kumar (2009)((7) CP SC 1047: JT 2009 (9) SC 406) the court held that the definition of unfair trade practices is inclusive in nature. In another case, Colgate Palmolive (India) Ltd vs Hindustan Lever Ltd,(1998) (1 Comp LJ 171 MRTPC) the court held that unfair trade practices also include falsely representing goods and products to be of a particular quality, or giving false or misleading facts about the product.

Trade secrets, on the other hand, are not enforced by way of a particular statute in India, nonetheless, it can be enforced through the principles of equity and common law practice of breach of confidence, as held in the case of John Richard Brady & Ors V. Chemical Process Equipment Ld (AIR 1987 Delhi 372). Furthermore, since India is a signatory to the TRIPS agreement, it allows members to formulate frameworks to prevent unauthorized disclosure of confidential information not known or readily accessible, and has commercial value (A. 39(2) TRIPS Agreement).

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

The Indian fashion industry is trying to be sustainable given the fast-depleting natural resources. Consumers and brands have also been increasingly aware of sustainability in fashion. Brands such as FabIndia, The Jodi Life, KhadiCult, The Body Shop, or Anokhi in India have been focusing on serving the environment through sustainable fashion. More than two-thirds of the buyers, the majority consisting of the GenZ and Millennium generation, are willing to spend more on eco-fashion clothes. While the Government of India banned the use of plastic bags in the country, the fashion industry soon adopted ways to comply with the changing times (see www.moneycontrol.com/news/india/eco-friendly-fashion-indias-sustainable-apparel-market-is-finding-more-takers-4344381.html).

ISO certification. ISO standards are internationally adopted for quality, safety, and trust assurance. ISO 9001 certification for the textile industry is important for quality management, whereas an ISO 14001 Certification describes a company’s efforts towards the environment, and therefore works towards sustainable fashion (see www.e-startupindia.com/learn/iso-certification-for-textile-industry).

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

The Intellectual Property Rights (Imported Goods) Enforcement Rules 2007 along with the Customs Act 1962, allows IP owners to record their intellectual property with the Customs Authority Board of India to monitor their products. This acts as a preventive measure to detect and confiscate counterfeiting goods. An application must be filed for the recordal of customs with the Customs Authority of India so that the products are seized at the customs port. The application is available electronically, which must be completed along with the necessary documents at the Indian Customs IPR Recordation Portal, in return for a Unique Temporary Registration Number (UTRN). This UTRN, along with the documents, must be then submitted to the IPR cell of Customs Department, after which within 30 days a Unique Permanent Registration Number (UPRN) will be issued. Once an IP is registered, the Custom Office will have the right to confiscate any counterfeiting goods and will inform the IP owner immediately. Furthermore, a separate application must be filled for each intellectual property, and it can be renewed every 5 years (see www.mondaq.com/india/trademark/958304/custom-recordal-and-border-protection-measures-in-india).

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7 . Frequently Asked Questions

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EXPERT ANALYSIS

Chapters

Australia

Juliet Evans
Nicola Scheepers
Jennifer Wyndham-Wheeler

Brazil

Flavia M. Murad-Schaal
Isadora Schumacher Jeong

China

PENG Wei
WEI Xin

Finland

Hilma-Karoliina Markkanen

France

Floriane Codevelle
Karina Dimidjian-Lecomte

Germany

Ariane Hettenkofer
Gina Maria Ziaja

Greece

Maria G. Sinanidou
Alexandra Varla

Hong Kong

Hank Leung
Harry Wong

Ireland

Patricia McGovern

Israel

Moran Katz
Avi Ordo

Italy

Julia Holden
Nicolò Mosiello
Martina Olivieri
Giuseppe Verrecchia

Singapore

Penelope Ng
Lorraine Tay

Spain

David Fuentes Lahoz
José Miguel Lissén

Thailand

Piyawat Kayasit
Michelle Ray-Jones

United Kingdom

Gary Assim

United States

Megan K. Bannigan

Vietnam

Chi Lan Dang
Tu Ngoc Trinh
Diep Thi Bich Le
Hien Thi Thu Vu