IP infringement and civil raids

Proprietors of popular brands are aware of the large scale of infringement that takes place in the Indian market. Contrary to what many might believe, counterfeiting is often carried out in an organised manner and the poor retailers we often see on the road are at the very bottom of the counterfeiting chain. For those at the top of this chain, it is a lucrative business as there is no requirement of quality control, no warranties, no marketing and it is highly doubtful if these entities pay tax. Brand owners generally try and avoid targeting the lowest in the chain of infringement as targeting these poor retailers doesn’t structurally affect the chain of the infringing business. 

Often, brand owners discover someone at the head of the infringement chain who is flooding the market with counterfeits bearing their brand. At this stage, the brand owners turn to a lawyer for advice. Most lawyers would advise the brand owner to conduct an investigation to determine the extent of the infringement and the exact location where the product is warehoused or is being manufactured. In consultation with the brand owner, an investigator is engaged to conduct a ‘trap purchase’. Although legal, a trap purchase needs to be conducted in line with the requirements laid down in the case of Banyan Tree v. A. Murali Krishna Reddy, 2010 (42) PTC 361 (Del) (DB). If the trap purchase confirms infringement, the next step is to obtain orders to conduct a raid. It is critical that the address mentioned in the Court’s Order is correct. This will ensure that there is no ambiguity about the location of infringement. Further, the raid must be carried out with every precaution (some such precautions have been mentioned in this article) to ensure the safety of all the members of the raiding party.  

Steps involved in conducting a raid

To ensure that a raid is carried out successfully, one can divide the entire process into three different parts:

1. Investigation: determining the correct location

It is critical that before filing of the suit, a brand owner conduct an investigation to determine where the raid is to be conducted. This is the address that will be included by the Court in its injunction order.

2. Lawsuit: obtaining the correct order

A lawsuit is filed to seek the appointment of a Local Commissioner by the Court who will visit the location mentioned in the order. The Local Commissioner has no right to visit any other premises even if counterfeit products can be seen through the gates of the premises.

3. Raid

There must be a recce in advance to understand the location the raid is to be conducted in and its nature, safety, etc. After which the raid is conducted to seize and record the infringing products.

Investigation

The investigator has two briefs. The first is to ensure that he determines the correct location and places of business of the infringer. A raid should be conducted at a place where a majority of the counterfeit products are stored or manufactured for it to be successful. Second is to create jurisdiction. Often, the key infringer might be located in a smaller town out of the territorial jurisdiction of the Court. The investigator needs to ensure that the products are delivered within the territorial jurisdiction of the Court to enable the lawsuit to be filed. Jurisdiction is often a tricky business under trademark law and has been regulated by various landmark judgments with the latest being Indian Performing Rights Society Ltd. v. Sanjay Dalia & Anr., 2015(63) PTC 1(SC).

Lawsuit

Once the investigation is completed, a lawsuit is filed elaborating the trademark rights of the Plaintiff (brand owner), and explaining how and in what manner the same is infringed by the Defendant (infringer). It is imperative that the lawyer impresses upon the Court the need for an ex parte ad interim injunction i.e. an injunction granted without notice to the opposite party. This is critical because once notice is granted to the Defendant, he may dispose of all the infringing products and there may be no evidence left to confirm the infringement and its quantum as the suit progresses.

Along with the Plaint and the application for ex parte injunction, the Plaintiff must also file an application for the appointment of a Local Commissioner who will visit the location of Defendant (as provided in the suit). If there may be multiple locations, the Plaintiff is free to mention all such locations in the application for injunction and the Plaint, and pray for multiple Local Commissioners to be appointed, if required.

Raid

1. Prior to the raid

The final planning begins once an order granting an ex parte injunction is passed and a Local Commissioner is appointed. One needs to get in touch with the Local Commissioner to determine the availability of the Local Commissioner. Civil raids can take the entire day and often stretch late into the evening and the appointed Commissioners may not be available on some days. 

It is important to remember that the raid must be conducted within a timeline that allows the Plaintiff to serve the Defendant in consonance with the provisions of Order 39 Rule 3 of the Civil Procedure Code, which states that the Court shall direct notice of the injunction application to be given to the Defendant. In matters that are ex parte, the court may grant an injunction and provide the Plaintiff with additional time to send the notice of the injunction application to the Defendant. The timeline for such compliance may stretch anywhere between 3 to 15 days.

It is important to plan the travel to and from the location of the raid in advance and with sufficient buffers built into the travel plan to deal with any unforeseen delays. Thereafter, a recce must be conducted a day or two in advance of the raid to make sure that there are infringing products at the location to be raided – it would be a waste of time and resources if the Defendant was fortunate enough to have run out of infringing stock on the day of the raid. The recce team, in consultation with the advocates, must determine whether police protection is required at the location or not.

On the day of the raid, if police protection is required, one must reach the police station early in the morning; civil raids figure low on the police’s list of priorities and may cause a lengthy delay in execution of the raid. While the Local Commissioner is at the police station, the Plaintiff must ensure that there is someone watching the raid location. It is not unknown for there to be local links between small local businesses and the local police who may tip off the Defendant about the raiding party. Eventually, when the police agrees to accompany the Local Commissioner, the action can begin. 

2. Raid

The Local Commissioner must calmly approach the Defendant, show them the order and speak to the most senior person he can find from the Defendant’s side to explain the importance of the order. If the location is a narrow market prone to overcrowding, the Local Commissioner should request the accompanying police personnel to disperse the crowds as they can spiral out of control.

The raid must be quick and efficient. The Local Commissioner, with assistance from the Plaintiff’s advocates, must quickly determine the infringing goods, find them and create an inventory of all the products. Such an inventory can be very useful at the time of determining damages if the matter goes to trial. Care must be taken to ensure that the raid is completed as early as possible.

As the raid winds down, the Local Commissioner should ideally begin to write his on spot proceedings report and have the Plaintiff’s and Defendant’s representatives sign on each page. A Superdari must also be created and signed by the Defendant’s representative who will agree to take custody of the goods. An attendance sheet with the names and signatures of those present can also be taken but it is not always required. And finally, an inventory sheet must be prepared where the Local Commissioner makes a note of all the goods that have been seized and sealed.

3. Post-raid

Once the raid is over and the goods are sealed under the signature of the Local Commissioner, the raiding party can leave. The Local Commissioner must carry all the original documents back with him as they are required to be submitted to the Court along with the final report.

The Local Commissioner can file the report over the days following the raid and this final report must contain his experiences in detail. Facts such as the Plaintiff’s representatives who accompanied him, the police personnel deputed to accompany him, the Defendant’s employees and representatives that he came across and the time at which the raid started and concluded should be recorded in the report. All of this must be mentioned in the report in consonance with the fact that the Commissioner is the ‘eyes and ears’ of the Judge.

Importance of a raid

An injunction order, along with a raid at the Defendant-infringer’s premises is one of the best ways to ensure that the brand is protected and infringer faces some monetary impact for his illegal actions. Raids are optic in nature and the sight of lawyers and policemen entering the location of an infringer can serve as a deterrent to people who may be thinking of moving towards the lucrative business of counterfeiting. Additionally, the infringing material seized cannot be sold by the Defendant for the remainder of the case, and Courts will often decree that the infringing goods be handed over to the Plaintiff-brand owner for destruction at the conclusion of the suit.

Aside from the legality, many moral considerations come into play in a civil raid. For example, brands avoid going after poor street sellers whose livelihood depends on it regardless of legal validity. Ignoring these moral considerations not only generate bad press for the brand but also affect how the immediate surroundings will react to the raiding party and hence, putting their safety at risk.

Raids are an important tool for brand owners to enforce their trademarks and it is imperative that they are conducted in a planned manner and executed well. Small mistakes and long delays can cost brand owners dearly and may cause bodily harm to those causing the raids. 

DISCLAIMER: The information provided in this article is for educational purpose only. The same cannot be construed as legal advice.