Brand Protection Agency Racket in India?
Over the decades while the counterfeiting has flourished in India, a lucrative, parallel industry has blossomed to fight it. Today, counterfeiting is a big business in India feeding numerous tributaries of allied crimes like drugs, prostitution and illegal arms trade and we are stuck with presumptions that catching few counterfeiters and sending them to jail will solve the problem. This crime syndicate is getting more and more organized. Clumsy and half hearted attempts and reforms led to signing of few international treaties and some laws were amended to accommodate these treaties. But the real crackdown is required on local corruption which is the real root of this evil and this remains to be eradicated. Unqualified, small Brand protection agencies with limited resources and powerful vested interests have little motivation to wipe out an illegal but highly profitable industry.
More than 20yrs of field investigation experience dealing with infringers, investigators, lawyers, law enforcement agencies and courts show many chinks in the system, beset by endemic and underreported fraud, made worse by corporate clients having poor command over how to successfully fight piracy in India.
They think that by hiring brand protection agencies charging top dollar they got the base covered. These top dollars are going down the drain worse! they end up in fact abetting the crime instead of eradicating it. We have created a big protection racket.
Investigator Mr.Havan Singh (fake Name) hunted counterfeiters of XYZ Company but he also doubled up as order booking agent for counterfeit XYZ products. He will simply kill the competition by putting them behind bars.
It is a classic form of double-cross in India’s murky anti-counterfeiting industry, which is plagued with fraud. Experience reveals that many brand protection agencies in collusion with the local police actually extort monthly payments from the local counterfeiters to permit them to sell their ware fearlessly. This is especially true but not limited to films and music piracy.
Brand protection fraud is a problem few are willing to discuss due to variety of reasons. In my extensive experience is dealing with the issue of counterfeit products in India there are multiple forms of frauds which are prevalent in various degrees in India;
- Corporate client’s sponsored brand protection agencies/investigators who were themselves manufacturing, selling or facilitating counterfeit versions of their clients' own goods.
- Presenting fabricated FIR and related documents, fabricating raids that never took place.
- Brand Protection agencies/Investigators placing orders to manufacture/assemble counterfeit goods at factories/point of sales so that they could raid and seize the same. Such counterfeit raids are then billed as regular raids.
- Brand Protection agencies are known to collude with Police and register fake FIR relating to commission of an IPR crime whereas actually the crime was different like chain snatching, gambling, keeping/selling stolen goods etc.Petty criminals, drug users and street urchins behind such petty crimes are often told to keep mum and accept piracy charges as they will invite lesser punishment and bail will be easy. They end up charging the corporate a handsome fee.
- Brand Protection agencies/Investigators have been caught even forging FIR’s to bill their corporate clients for brand protection raids which took place for some other client!!.
The story of XYZ ’s battle against counterfeits in India shows how one corporation was undermined by the very firm it hired to fight for it - and then let down again by the legal system.
Like XYZ, most brands privately hire brand protection agencies either directly or through a law firm, to weed out counterfeiters and to assist Legal enforcement authorities in conducting raids against them. Much of the work is then further subcontracted to poorly paid local brand protection agencies who rely on ill trained freelance operators on the ground. Many of such ground level investigators are often illiterate misfits. Such shady brand protection agencies/investigators have no rules or ethics to contain them. They thrive on deception, corruption and fraud.
Brand protection agencies are hired on rates applicable on type of raid. More seizures mean higher fees and extra rewards are there for number of raids - creating powerful incentives to cheat.
The role of the government itself, particularly police department on the local level, is very questionable. The same people who are tasked with fighting counterfeiters - not just investigators but also local officials - sometimes protect them. It is said that Police department often has a price list for conducting raids.
Political patronage is another serious impediment in doling out justice effectively in India. Once I was barred from raiding a company that stored and sold counterfeit, even though I had evidence and police team with me. Local police had a protection list of some sort.
Faulty and corrupt system provides a steady stream of successful raids all along the counterfeit supply chain, reporting actions against factories, packagers, warehouses, shops and exporters. Everybody makes money and the issue of fighting the counterfeit remains untouched in its enormity. It just keeps changing forms and addresses.
Legal side of the brand protection issue is equally heart rendering. Conviction rate is phenomenally low. Attitude of public prosecutor and judges is nothing short of pathetic to say the least.
Conviction Rate in IP Infringement Cases in India
As per NCRB Report 2013(Government of India), average number of IP infringement cases filed all over India by police between years 2004 to 2012 were a mere 6672 Per annum.Conviction rate is miserable. Variation on year to year basis between years 2004 to 2012 is just - 5%.Court figures show that an average case of IP infringement takes up to 5 yrs (average) before being settled. Even then the case which was filed in 2005 or 2006 should be settled by 2010 or 2011 but conviction rates in year 2010 are a mere 2.4% in Karnataka, 1.8% in Maharashtra, 11% in West Bengal. Only exception is Tamil Nadu with 60% conviction which is very bad but here it looks the best in the group of losers. All India average of convictions is mere 35% for all cognizable offenses and average for IP Infringement is even lower.
Above shown dismal conviction rate is so low. Why? My investigation shows that convictions are low because shoddy police investigations, defective charge sheet and missing/hostile witnesses.”These cases are mostly like orphans” in the words of a public prosecutor. We must ensure that this conviction rate must reach respectable levels if not 95%.
I have been working on infringement issues for close to 20 years. In above discussion I have explained different issues and frauds but all brand protection agencies are not fraud but yes, some fail to weed out fraud investigators in time. All above happens because corporate clients show total indifference to the fate of FIR’S after they get lodged. Solution to these problems is complex but corporate spending huge amounts on raids must spend little extra on follow up of the filed criminal cases. Registering of the case by police to final verdict/orders by the court.They must help the police is preparation of the charge sheet and subsequently they must follow-up the case with the public prosecutor and help him with the documents etc. Please do hire local lawyer to represent the case in front of the magistrate. Most of the time public prosecutors have little interest in ensuring justice as they are flooded with work. Piracy criminals become even bolder when they do not get convicted by trial courts. Once let off the hook they go about their business with a renewed vengeance.
Justice should not be sought only on the lines of retribution but also on the lines of restorative and distributive justice. This will give us more permanent solutions in IPR offences.
This step is just one of the many which must be taken.
Above article comes from me after working in the field of brand protection for over 2 decades in India. I’m a practicing lawyer in Delhi High Court and District courts. I’m a PhD research scholar in the field of brand protection. I’m also a consultant and corporate trainer on brand protection.