By CIO Insider Team
 

The issues of counterfeiting and intellectual property theft present consi- derable obstacles for global companies conducting business in India, such as Parimatch.

Numerous well-known brands, including Apple, Nike, HARMAN, Adidas, Pari- match, Samsung Electronics, Louis Vuitton, and Rolex, are frequently targeted by counterfeiting activities in the Indian market. The pursuit of legal remedies for these challenges is often lengthy, leading to significant financial repercussions for these companies. Each year, brands suffer losses in the billions of dollars due to the widespread availability of low-cost counterfeit products that falsely represent themselves as authentic offerings from established companies.

The issue of counterfeiting and infringement of intellectual property rights has become a major obstacle for many businesses striving to succeed in the region. A prominent case is that of the international bookmaker Parimatch, which has a strong focus on the Indian market and has faced this challenge repeatedly. Unauthorized operations that mimic Parimatch, commonly known as 'clones', are illegally operating in India while pretending to be associated with the legitimate brand.

India’s counterfeit market and the example of Parimatch

The counterfeit market in India poses considerable difficulties, as evidenced by findings from the Organization for Economic Co-operation and Development (OECD), which ranks India among the top countries in counterfeit goods volume. This problem affects various sectors, such as electronics, clothing, and gambling services. Parimatch, a global brand, has been adversely affected by counterfeiting, with criminals often misusing the bookmaker's name to create unauthorized casinos and mislead consumers.

The Indian Chamber of Commerce reports that counterfeiting results in economic losses totaling several billion dollars annually. This issue primarily affects large corporations, including Nike, which consistently battles the production of counterfeit athletic shoes and apparel. In addition to financial repercussions, counterfeiting negatively impacts brand reputation and erodes consumer trust. As a result, companies are implementing measures to combat this issue.

In March 2024, HARMAN, the manufacturer of the renowned JBL audio brand, launched a campaign to combat the problem of counterfeit JBL products in India. The subsidiary of Samsung Electronics revealed that it has initiated legal action against manufacturers, distributors, dealers, and retailers involved in the sale or production of counterfeit JBL merchandise.

Vikram Kher, Vice President of the lifestyle department at HARMAN India, said that the company is pursuing legal measures against individuals involved in the distribution of counterfeit goods. In collaboration with law enforcement agencies, HARMAN executed a raid that resulted in the seizure of 54 counterfeit JBL car speakers from five car accessory stores located in New Delhi. Parimatch supports this approach as an effective strategy.

Cases of well-known companies

One prominent example of a company facing challenges related to counterfeiting is Parimatch. The organization has implemented significant strategies to combat the unauthorized use of its trademark by illicit entities. This proactive approach is especially pertinent as the company prepares to enter the Indian market, where it has already faced a multitude of imitations. For example, several websites posing as Parimatch have been offering services that deceive consumers, thereby damaging the brand's reputation, even in regions where it has not yet established a presence.

Parimatch has persistently called upon Indian authorities to take decisive measures against fraudulent websites and to implement their blocking in order to safeguard both consumers and legitimate enterprises. This approach includes monitoring online activities, collaborating with cybersecurity professionals, and pursuing legal avenues to cease the operations of these fraudsters. However, Indian regulators have been sluggish in addressing counterfeiting concerns, especially when they pertain to foreign entities.

Technology companies frequently encounter issues related to intellectual property violations in India. For instance, Apple has reported the sale of counterfeit accessories and even imitation iPhones marketed under its brand in various regions of India. This situation poses risks not only to the company but also to consumers, as the materials used in these products may be hazardous due to their inferior quality.

Why it is difficult to protect a brand in India

Intellectual property protection in India faces numerous challenges for a variety of reasons:

1. Complicated legal framework - While India has laws aimed at safeguarding intellectual property, the enforcement of these laws is frequently so slow. Legal disputes can extend over several months and even years, complicating resolution of these issues.
2. Substantial costs related to legal safeguards - The fight against counterfeiting requires a significant financial commitment. For example, Parimatch sought to protect itself from illicit activities in the Indian market, leading to considerable expenditures for hiring local legal advisors and overseeing the market conditions. This financial strain is especially difficult for a company that has not yet established a legal foothold in the market but is already facing such costs due to the insufficient protection of intellectual property rights for stakeholders in this industry.
3. Extensive network for production and distribution of counterfeit goods - Counterfeit items are often produced in small-scale factories that can quickly change locations, complicating efforts to track them down. Additionally, the growth of online sales channels enables low-cost distribution of counterfeit products, which undermines competitiveness of legitimate manufacturers against counterfeiters.
4. Insufficient consumer awareness - A significant number of consumers are either unaware that they are acquiring counterfeit items or deliberately opt for them because of their reduced prices. This tendency creates a demand for counterfeit goods, which in turn perpetuates their manufacturing.

Parimatch, similar to numerous other global enterprises, encounters difficulties in safeguarding its rights within India. Nevertheless, proactive efforts, such as overseeing the online environment, engaging in legal actions, and collaborating with governmental bodies, contribute to mitigating the adverse effects of counterfeiting and safeguarding the brand's image. Parimatch believes that additional initiatives to maintain its reputation are crucial in the Indian market.

Strategies for Safeguarding Businesses Against Counterfeiting in India

Prominent corporations, including Adidas, have initiated measures to safeguard their brands from counterfeiting in India. This year, Adidas undertook an investigation into factories and retail outlets involved in the production of counterfeit merchandise. The company benefited from the support of a Delhi court in a trademark infringement case against a local store owner who was distributing products bearing counterfeit Adidas logos. The court granted a permanent injunction prohibiting the store owner from utilizing the Adidas trademark. Additionally, the company successfully secured a financial penalty from the individual engaged in counterfeiting activities.

International brands such as Louis Vuitton and Rolex actively pursue legal measures against counterfeiters. The magnitude of the counterfeiting issue in India is so significant that certain manufacturers are combating this problem not only within India but also internationally, aiming to instill a respect for intellectual property among Indian consumers. In 2024, the US Customs and Border Protection frequently confiscated counterfeit products from Indian importers entering the United States. As reported by The Economic Times, counterfeit items from brands like Puma, Adidas, and Nike were seized at various entry points.

Jharkhand, a schoolteacher from Jamshedpur, told about her experience with customs inspections: "I was travelling to the United States to visit my son in Texas, carrying eight shirts, four pairs of trousers, and socks. Customs officials examined my luggage, interrogated me regarding the items, and seized everything, asserting that they were counterfeit, even threatening me with legal action," she reflects.

The issue of counterfeiting in India poses significant challenges for international businesses. However, Parimatch thinks that a proactive approach to safeguarding intellectual property can yield positive results when combined with effective strategies and collaboration with local authorities. Parimatch is sure that this is the most viable method to mitigate the adverse effects of counterfeiting and safeguard one's interests in the global marketplace.