Trademark Infringement and Consumer Protection: How the CPA, 2019 Strengthens IP Enforcement

Introduction

The interaction between intellectual property law and the law of consumer protection yields an interesting convergence of legal norms and societal goals. In India, both the Trademark Act, 1999 and the Consumer Protection Act, 2019 have different yet intersecting goals—one protects commercial goodwill and brand name, while the other protects consumers from deceptive trade practices and dishonest behaviour. Both of them, combined, create a legal system that not only encourages level competition but also ensures that consumers’ interests are always at the front. With increasingly competitive markets and e-commerce on the rise, knowledge of the intricate interrelationship between these two acts becomes more and more important.

Trademarks represent the identity of goods or services and allow consumers to link certain characteristics or reputations to certain brands. The Trademark Act, 1999 provides statutory protection for marks, logos, symbols, names, and identifiers that distinguish the goods and services of one entity from another. It grants trademark owners exclusive rights in publishing their marks, and holding registrants accountable for marks that infringe on their marks. Contrastingly, The Consumer Protection Act, 2019 is consumer-centric legislation that is aimed at curbing unfair practices by the companies in their dealings with consumers, promotions that mislead an average consumer, and defective products and services. While the Trademark Act views the proprietor’s rights as priority, the Consumer Protection Act exists from a public interest aspect to limit consumer indiscretions.

This overlap becomes most clear when the issue involves passing off, counterfeit goods or misleading advertisements. For instance, if a business is selling counterfeit “Nike” shoes that use a confusingly similar logo, they are not just infringing on Nike’s trademark rights under the Trademark Act but are committing an unfair trade practice under the Consumer Protection Act. The consumer who buys the counterfeit shoes (who was misled into buying something thinking it is authentic Nike shoes) has suffered economic and emotional harm.

In Cadbury India Ltd. v. Neeraj Food Products, the Delhi High Court prohibited the defendant from using the mark “children’s “JAMES BOND” with a similar style of packaging that is strikingly similar to “CADBURY GEMS,” and found it to be both passing off and consumer deception. Although Cadbury was enforcing its proprietary rights under the Trademark Act, there were also implications for consumers. A parent who purchased “James Bond” thinking they were purchasing “Gems” could be misled, especially if the quality of the product ends up being sub-par. Although consumers are not parties to such proceedings, their interests should be foremost in the mind of the court in its approach to interpretation through the marketplace.

Where to draw the line

Trademarks are the hallmark of goods or services, enabling consumers to connote some qualities or reputations with a brand. The Trademark Act, 1999 provides statutory protection to marks, logos, symbols, names, and other identifiers by which the goods and services of one entity differ from others. It provides exclusive rights to the owners of trademarks and remedies in case of infringement. The Consumer Protection Act, 2019, is, however, consumer-facing legislation to preclude unfair trade practices, deceptive advertisements, and faulty goods or services. While the Trademark Act concerns proprietor’s rights more, the Consumer Protection Act represents a public-interest policy to preclude unfair exploitation of consumers.

Misleading advertising is yet another area of overlap, which is examined under Section 2(1)(r) of the Consumer Protection Act, 2019, that overlaps with trademark infringement where brands are using either registered trademarks or deceptively similar trademarks, while falsely exaggerating quality. For example – if a toothpaste brand claims to be “approved by the Indian Dental Association” in an advertisement, along with a logo deceptively similar to a legitimate dental association’s mark, this is not an example of trademark dilution or violation but is misleading for consumers; therefore, violating consumer rights under Section 2(1)(r). If paired with such endorsements alleged in an advertisement, this would create a misleading sense of credibility and could pose a question regarding the consumer’s health.

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Also, the Consumer Protection (E-Commerce) Rules 2020, registered under the Consumer Protection Act, provide additional obligations for online sellers and platforms, such as disclosure of the seller’s identity and the authenticity of the product. The new rules will overlap with the aspects of potential trademark concerns, particularly in respect to requirements regarding misrepresentation or use of registered marks. Therefore, the usage of consumer protection legislation is being used to enforce standards to expand trademark purposes.

Cases involving celebrity endorsements and misleading brands also demonstrate this interface. For instance, if a celebrity endorses a weight-loss product under a registered brand name, has no reliable scientific support, and that brand name is sufficiently similar to a well-known brand name for a weight-loss pharmaceutical, we have two issues: trademark infringement, and misleading representation and infringement of consumer rights. Liability for those who endorse is included in even the Consumer Protection Act, 2019, in Section 21, which highlights the point of intersection where IP and consumer laws create liability for different parties having engaged in unfair practice.

Another case that deals with a practical situation, is Bisleri International Pvt Ltd v Parle Agro Pvt Ltd, that dealt with the use of the trademark “Maaza.” Bisleri sold its rights to the “Maaza” brand name to Coca-Cola but then decided to launch a mango drink which deceptively branded itself similar to Coca-Cola. Although the main legal issue here is trademark, it raises the immediate and practical question of consumer confusion. A consumer goes to a store to purchase Coca-Cola’s Maaza product, purchases the new mango drink, and thinks it is a different product to be sold under the same brand. In this situation, trademark law protects the brand equity and consumer law will protect the individual from deceit and injury.

The Trademark Act takes a similar thing into account and also permits the Registrar of Trademarks to reject the registration of any mark that is likely to mislead or confuse consumers (section 11). This aligns with protecting consumers. For example, if a business attempted to register “McDowall’s” for liquor products that are confused with “McDowell’s No.1”, the Registrar could reject the registry taking into account consumer confusion. This could just as easily be subjective. It would be just as much as protecting the brand identity of a business as it was to protect consumer confusion.

Conversely, there are circumstances where the elements of consumer protection are useful for exposing bad faith case for trademark usage. For example, a company registers a mark not to create a mark for a brand but to keep competitors from using similar names or sapping off some of the goodwill with the consumer base created by the “mark.” In this instance, it would be possible to displace the mark by showing that the trademark serves no public good and that the intention was solely for market cornering. Here, consumer law has an important role in preserving the competitive market and fairness to consumers, serving as the added ethics for trademark enforcement.

Indian courts have thought about the public interest principle as well as trademarks in their decisions. In ITC Limited v. Punchgini, Inc., the court noted that one of the key considerations in assessing passing off is consumer’s confusion and deception; it is worth emphasizing that the consideration of consumer perception merges the focus of the Trademark Act and the Consumer Protection Act’s focus on the right to be informed and the right to be protected against unfair practice.

In addition, at this time, the Consumer Protection Act, 2019 recognized and established product liability. This is important because not only the brand owners who take time to defend their trademarks, but they must ensure their products perform, and are marketed, there and brand standards. For example, if a cosmetics brand has a registered trademark, and marketed skin cream under, skin that is hypoallergenic, but really causes allergic reactions; the consumers can place claims in product liability, which will convert trademark law from a shield to a sword, under consumer protection law, as accountability is required well beyond the entity of identity of brand.

The Food Safety and Standards Authority of India (FSSAI) has also played a role in addressing deceptive branding practices. When food brands use labels like “natural,” “organic,” or “ayurvedic” alongside registered trademarks, they imply a quality standard. If these claims are misleading, both FSSAI and the Consumer Protection Act can be invoked. A 2020 case involved Patanjali products being called out for misleading advertisements suggesting COVID-19 cures, raising questions about brand responsibility and consumer trust. While the brand had a strong trademark, its claims violated consumer laws.

The quasi-judicial forum established under the Consumer Protection Act, notably the District Commissions, State Commissions, and the NCDRC have also created a forum for consumers to remedy trademark abuses as well. Having these quasi-judicial bodies provide an opportunity for individuals to fight the big companies, without the cost of going through the litigation process under trademark law. It is not unusual for a consumer to complain that they feel misled for being sold a misleadingly packaged product even if the action is also considered trademark infringement.

From a policy perspective, the alignment of trademark law with consumer protection ensures that links between brands (i.e., marks) and their consumers remain accountable. Brands will have more motivation than ever before not only to protect their marks but also to warrant that their quality and claims about the marks meet consumers’ expectations. The dual liability of the Acts provides additional deterrent value to ensure a higher standard of business principles.

Nonetheless, there is still work to be done. Trademark law is historically based on property rights and tends to take a brand owner’s position, while consumer law tends to focus on the rights of end users, albeit the brand owner may or may not be the end user. This evolve to be different modes of enforcement. For instance, a brand may bring a successful trademark infringement action against a vendor selling counterfeit products, but consumers who have obtained defective counterfeits may have their own difficulty obtaining refunds by having to file their own consumer complaint. If further integration occurs by the Trademark Registry, Consumer Affairs Ministry and Competition Commission of India (CCI) could work together to bridge those gaps and achieve a more complete type of justice.

In conclusion, the Trademark Act, 1999 and the Consumer Protection Act, 2019 play two roles in India’s commercial legal landscape - each supporting the other in an established mutually-beneficial manner. Trademarks help to exercise brand integrity and a fair marketplace, while consumer protection provisions help guarantee brands do not abuse brand integrity to exploit and/or deceive consumers. Real life examples show that both acts can work together to promote a credible marketplace when interpreted in a consistent manner. The continued co-relationship of these two laws will guarantee a marketplace of innovation and fairness as businesses evolve to accommodate new technologies and consumer behaviour’s shift.

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

References

1.      The Consumer Protection Act, 2019 (Act No. 35 of 2019).

2.     The Trade Marks Act, 1999 (Act No. 47 of 1999).

3.     Cadbury India Ltd. v. Neeraj Food Products, 2007 SCC OnLine Del 622.

4.     Bisleri International Pvt. Ltd. v. Parle Agro Pvt. Ltd., 2009 SCC OnLine Del 4074.

5.     ITC Ltd. v. Punchgini, Inc., (2009) 1 SCC 735.

6.     Consumer Protection (E-Commerce) Rules, 2020, Sec. 3(i).

7.     Times of India, ICMR, Ayush Ask Patanjali to Stop Promotion of COVID Cure Coronil, Asks Them to Verify Their Claim, June 23, 2020, https://timesofindia.indiatimes.com/life-style/health-fitness/health-news/icmr-ayush-ask-patanjali-to-stop-promotion-of-covid-cure-coronil-asks-them-to-verify-their-claim/articleshow/76533063.cms.