Breaking the Trademark Counterfeit Racket: Bridging India's Enforcement Gap Through Structural Reform

Introduction : The Delhi High Court, in a case of ECG Easy Connect Logistics Pvt Ltd vs Commissioner of Customs Airport (2024), lowered the penalties on a courier agent for his involvement in bringing in counterfeit iPhones worth millions of rupees under the ‘doctrine of proportionality', and forfeiture was reduced by 50%, with the license forfeiture period changed from a permanent ban to two years. The Court considered the courier a ‘peripheral actor’, even while holding him guilty. This case, along with other practical scenarios, such as the recent 2026 Delhi Police crackdown that seized fake OPPO and Realme products alongside manufacturing machines and packaging materials, highlights the glaring enforcement gap in India's anti-counterfeiting regime. The systemic failure results in significant revenue loss every year in pharmaceuticals, textiles, FMCG, and consumer goods, which is a significant threat in terms of public health, economic and consumer safety. Despite statutory provisions that counterfeiting is a first-degree cognizable offence under the Trademarks Act 1999 (Section 115), efforts to enforce measures are limited to the arrest of low-level vendors, and criminal businesses prosper. The blog explores the shortcomings of India's enforcement system altogether and suggests actionable steps to fill the vacuum and safeguard brands and safety.

Beyond Brand Dilution : Economic and Public Health Harms

Trademark Infringement diminishes the brand value of genuine products placed in the market. This is achieved through the widespread manufacture and sale of counterfeit products, which dupe customers while attacking the goodwill of the original brand, causing serious economic repercussions for branded companies. The Delhi High Court acknowledged in a case that product counterfeiting is a significant problem with far-reaching consequences that not only diminish brand value but also deceive consumers. A few studies revealed that counterfeit medicines pose a serious concern, especially to public health. Similarly, counterfeit electronic devices manufactured using substandard materials are not designed to perform safely, and may overheat, causing electric shock. However, courts have recognised that the effects of counterfeiting extend beyond its immediate consequences, as it constitutes a broader macro-economic offence with wider and long-term implications for the nation.

The counterfeit market occupies a bigger place in India’s illicit trade, duping customers and in some cases, sponsoring terrorism and allied activities that remain unexposed at higher levels. There is, thus, an apparent link between transnational organized crime and illicit trade. These crimes impede economic development, as the cost of counterfeiting on the Indian economy is ₹1 lakh crore annually, by which legitimate industries suffer huge losses in sales and billions of rupees in loss of tax revenue that is estimated to be diverted from public welfare. If this continues, legitimate companies will incur huge losses, forcing them to cut production and prices. Customs and border regulations must be stringent, as many counterfeit products are effectively imported through various countries' networks. 

Judicial Recognition vs. Functional Failure : The Enforcement Gap

In contemporary India, legislations like the Trademarks Act, the Patent Act, the Copyright Act, and the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act (SAFEMA) are essentially sufficient to deal with infringements and counterfeiting. Such laws operate as special statutes and prevail in case of any conflicts with the regular laws because they have been harmonised with the Indian obligations under the TRIPS Agreement. There are various forms of legal remedies already provided, including fees and damages, commissioners and receivers, attachment and injunctions. However, the primary concern is how well these laws are implemented and enforced. In counterfeiting cases, proceedings may become ineffectual due to delays in the appointment of local commissioners or the granting of interim relief. 

Enforcement raids are generally led by the petitioner (advocates), with non-strict involvement of the police force. The costs are also borne by the petitioner regarding storage until proceedings are completed. Although cities like Mumbai, Chennai and Ahmedabad have stringent court mechanisms to handle these cases, combating such cases requires strict enforcement that goes far beyond mere execution orders. In the Puma v. Mahesh case, the court ruled that counterfeiting is a serious crime that should be dealt with “without any prejudice”, and offenders have no recourse to equitable compensation. It is regarded as the most serious type of passing off and first-degree trademark infringement, and such units must be dealt with diligently and efficiently. 

An important consideration is that trademark infringement at such a level of nefarious economic activity should be treated as a high-level crime, which could have a deterrent effect and save large portions of genuine products. The Indian judiciary has recognised that counterfeiting is a grave offence, and even the powerful financial legislation, PMLA, includes trademark infringement as a predicate offence. This implies that the power to treat such offences, seize duped goods, freeze assets and bank accounts already exists. But in practice, records fail to be maintained. The result is that, even though local commissioners are appointed by the court, the target remains largely limited to low-level vendors or factories in specific geographical areas. 

Sometimes, it is observed that the success of such an Anton Piller order (where the search is executed without warning to prevent destruction of evidence) gets diluted due to a lack of proper provision for storing seized counterfeit products, and the actual proceeds of crime are not traced. There are even instances where defendants frequently break seals, sell inventory, claiming it has been destroyed by rats, which in turn levies a heavy cost burden on plaintiffs. Consequently, the existing enforcement mechanisms address only the limited physical, visible criminal activities, while failing to address the underlying criminal enterprise. Thus, we need to shift the approach away from a seizure-driven to an intelligence-driven model that closes the gap between our legislative authorities and their functional reality.

Structural Reform Reform Pathways : The Way Forward for India 

At present, India does not need new laws specifically on trademark law but rather a rigorous overhaul of law-making and its implementation. To this end, it is recommended that:

Firstly, raids should also track the proceeds of crime so that state machinery can seize inventory, under SAFEMA and PMLA, effectively targeting broader rackets. This can be achieved through proceedings under Section 45 of PMLA, wherein two strictures must be satisfied for bail to be granted. If getting bail is very difficult at early stages, it effectively paralyses the syndicate leaders, reducing counterfeiting from a low-risk business gamble into a high-liability criminal operation. To ensure better and targeted implementation, anti-counterfeiting agencies can be established across states with effective state machinery, targeting the root sources of these manufacturing. Through this, the burden currently borne by plaintiffs could also be redistributed.

Secondly, the Customs Department needs to refurbish the defence barrier against transnational networks exploiting asymmetrical financial threats at the national level. The networks intermingle with the cross-border smuggling centres, compromising lawful tax revenues of the Indian government, and directly funding organised crime syndicates. Improving intelligence-based border surveillance and strengthening border measures make it more difficult for banned and fake materials to enter the wholesale markets.

Thirdly, technology is irreplaceable in fighting counterfeit trading. While technology is used in trademark infringement, especially through digital systems or printers to create sophisticated fakes, the same technology should also be deployed to detect, track, and break down these networks. AI-driven surveillance tools can access digital marketplaces, recognise suspicious listings and differentiate authentic merchandise from counterfeit merchandise. Blockchain technology can enable product traceability, and AI-powered invoice validation can prevent fraudulent claims. In this regard, the effective utilisation of modern technologies and expanding technological potential can create a more resilient system, ensuring the preservation of trade integrity. 

In conclusion, tracking technologies like artificial intelligence, multi-sectoral collaboration, and deterrent fines can help mitigate the economic and social effects of the counterfeit trade in India. Consequently, there is a need for legal enforcement measures to deal with counterfeiting, which include brand protection and effective legal action.

Conclusion

India’s fight against trademark counterfeiting requires a decisive shift from isolated seizures and prosecutions of low-level offenders towards dismantling the financial, logistical, and manufacturing networks that sustain the counterfeit trade. Although the existing legal framework provides remedies under the Trade Marks Act, 1999, customs legislation, and other applicable laws, its effectiveness depends on coordinated investigations, timely judicial intervention, reliable evidence management, and consistent enforcement. Particular attention must be given to identifying the persons who finance and organise these operations, tracing illicit proceeds wherever legally justified, and ensuring that penalties are proportionate to each offender’s role and the gravity of the offence.

Technology can strengthen this approach. Artificial intelligence can assist in identifying suspicious online listings and recurring patterns in counterfeit distribution, while blockchain-based traceability systems can improve supply-chain transparency when supported by reliable data and appropriate verification mechanisms. These tools, however, must complement rather than replace police investigations, customs enforcement, judicial oversight, and cooperation between brand owners and public authorities. Financial investigations and asset attachment or confiscation must likewise follow the statutory requirements of the applicable laws.

Ultimately, effective anti-counterfeiting enforcement is not measured merely by the number of raids conducted or goods seized, but by whether criminal networks are disrupted, consumers are protected, legitimate businesses retain confidence in the market, and offenders are held accountable. By combining intelligence-led enforcement, financial investigation, technological innovation, and institutional coordination, India can move towards a more sustainable and effective system of trademark protection - one that safeguards public health, strengthens economic security, and preserves the integrity of legitimate trade.

Author: Jahnavi Mehrotra in case of any queries please contact/write back to us via email to content@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney

Endnotes

1. The Trade Marks Act, 1999, Sections 103–105 and 115, Government of India. These provisions address penalties for applying false trademarks, selling goods bearing false trademarks, enhanced penalties for subsequent convictions, and police search-and-seizure powers.

2. Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007, Government of India, Ministry of Finance. These Rules establish procedures for customs intervention against imported goods suspected of infringing intellectual property rights, including the suspension of clearance.

3. Prevention of Money-Laundering Act, 2002, particularly Sections 2(1)(u), 3 and 5, read with the applicable Schedule. This legislation provides the framework for addressing proceeds of crime, money laundering, and provisional attachment where statutory requirements are met. Trademark infringement alone should not be described as automatically constituting a scheduled offence under the PMLA; the applicability of the Act depends on the underlying scheduled offence and the statutory conditions.

4. ECG Easy Connect Logistics Pvt. Ltd. v. Commissioner of Customs (Airport & General), New Delhi, Customs, Excise and Service Tax Appellate Tribunal, Final Order No. 55447/2024, decided 22 March 2024. This decision concerns customs action against a courier operator in connection with imported goods and is relevant to discussions about intermediary responsibility and proportionality in enforcement.

5. OECD and European Union Intellectual Property Office (EUIPO), Mapping Global Trade in Fakes 2025: Global Trends and Enforcement Challenges (2025). The report examines the scale of international counterfeit trade, enforcement challenges, cross-border networks, and the importance of coordinated responses.

6. European Commission and European Union Intellectual Property Office, EU Enforcement of IPRs - Results at the EU Border and in the EU Internal Market 2025 (published October 2026). The report provides recent evidence on counterfeit-product detentions, including the role of customs, police cooperation, e-commerce consignments, and counterfeit packaging. It offers a comparative reference for strengthening coordinated enforcement in India.