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Strengthening Consumer Protection against Abuse of Intellectual Property Rights
"Consumer is the sole end and purpose of all production; and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer."
                                                                            - Adam Smith

Every human being who consumes anything for survival is a consumer; every individual is a consumer, regardless of occupation, age, gender, community or religious affiliation. Consumer rights and welfare are now an integral part of the life of an individual and we all have made use of them at some or the other point in our daily routine. Consumers have traditionally called for government intervention, when the marketers fail to produce a socially desirable outcome. Governance is that broad field of economics, which concern the design of regulatory system through which exchange is smoothly conducted.

The economic theory of regulation, most often examines how collective action by individuals, through the auspices of government, affects the incentives of participants in markets. The role of government in regulating the marketing activities must be to contribute to the development of an efficient system, for creation of products or services; communication and delivery to the consumers. It should establish an efficient structure for governance of marketing activities, which involves the standardization and refinement of marketing tools and techniques for consumer benefits [1].

The Consumer Protection Act, 1986 is an important social legislation to protect the consumers from exploitation from the business and trading community with bad intentions. Under this act the government has made provision for the establishment of consumer councils and other authorities for the settlement of consumers' disputes and for the matters connected therewith to secure speedy and in- expensive redressal of their grievances. With the enactment of this law, consumers now feel that they are in a position to deal with the business community and corporations against their exploitation. The broad salient features of Consumer Protection Act are:
  • The Act is exclusively passed for the interest of the consumers
  • It seeks to promote the rights of the consumers
  • It covers private, public and co-operative sector
  • The provisions of Act are compensatory in nature
In short, it protects the consumers from influences of the seller's (marketer/manufacturer) coercive power by way of unfair trade practices to restrict competition. The Consumer Protection Act, 1986 prohibits marketers form adopting the following unfair trade practice {Section 36A and Section 2(1) mn}:
  • False representation of the quality, composition, style or model of goods and services
  • Falsely alleging affiliation and misleading statements about the usefulness of goods and Services.
  • Warranties or guarantees given without adequate tests, or expressed in misleading terms, giving false or misleading facts disparaging the goods, services or trade of others.
  • Announcing bargain prices for goods, which are either put on sale or are offered in quantities which are not reasonable with respect to the nature of the trade, offering gifts, prizes or other items with the intention of not providing them as offered.
  • Sale of substandard and hazardous goods under defined conditions.
Enactment of the Consumer Protection Act, 1986 marked one of the most important milestones in the consumer movement in the country. It is one of the benevolent social legislation intended to protect the large body of consumers from exploitation. The Act has come as a panacea for consumers all over the country and has assumed the shape of practically the most important legislation in the country during the last few years. It has become the vehicle for enabling people to secure speedy and in-expensive redressal of their grievances. With the enactment of this law, consumers now feel that they are in a position to declare sellers beware whereas previously the consumers were at the receiving end and generally told buyers beware.

Consumer means any person who -

(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment, and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approv­al of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or

(ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly prom­ised, or under any system of deferred payment, and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred pay­ment, when such services are availed of with the approval of the first mentioned person [2]. 

The provisions of this Act cover 'Products' as well as 'Services'. The products are those which are manufactured or produced and sold to consumers through wholesalers and retailers. The services are of the nature of transport, telephones, electricity, constructions, banking, insurance, medical treatment, etc. The services by and large include those provided by professionals such as Doctors, Engineers, Architects, Lawyers, etc. The objects of the Act are:
  • Protection of Interests of Consumers
  • Protection of Rights of Consumers
  • Establishment of Consumer Protection Councils
  • Establishment of Consumer Dispute Redressal Agencies [3]
Trademark and Consumers:
The Trade and Merchandise Mark Act [4] had been enacted with a view to protect trade interests to prevent the deception of the consumers by the misuse or abuse of the trademark.

The Trade Marks Act, 1999 is the governing law for Trade Marks in India. It has been enacted to provide for registration and better protection of trade marks for goods and services and for the prevention of the use of fraudulent marks. According to the Trade Marks Act, the 'trade mark' means a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include shape of goods, their packaging and combination of colors [5].

The Controller-General of Patents, Designs and Trade Marks, under the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, is the 'Registrar of Trade Marks'. It directs and supervises the functioning of the Trade Marks Registry (TMR), which in turn administers the Trade Marks Act, 1999 and the Rules thereunder.

Trademarks are distinctive signs used to differentiate between identical or similar goods and services offered by different producers or services providers. It may be a distinctive word, phrase, logo, Internet domain name, graphic symbol, slogan or other device that is used to identify the source of a product and to distinguish a manufacturer's product from others. Here, the term 'distinctive' means unique enough to help consumers recognize a particular product in the market place.

A service mark is same as a trademark, which promote services and events, not only products. For example, when a business uses its name to market its goods or services in advertising copy or on signs, the name qualifies as a service mark.

Consumers often make their purchasing choices on the basis of recognizable trademarks/ service marks. So, the main thrust of trade mark Act is to ensure that trademarks don't overlap in a manner that causes users/ consumers to become confused about the source of a product. As per the Act, the trade mark shall not be registered if it is of nature so as to deceive public, cause confusion, has identity with or similar to an earlier trade mark, or comprises or contains scandalous or obscene matter, etc.

A trademark essentially serves as a link between the consumer and the manufacturer. It enables the consumer to get closer with the manufacturer. Consumers, today, demand safety and a continuous assurance of quality.

In a way, trademark is a specified set of promises from the manufacturer to the consumer. So, a consumer can claim damages if his reasonable expectations are not fulfilled. Further, since the use of trade mark enables the manufacturer to distinguish his product from that of the others, the consumer becomes fully aware of the advantages of using that particular product.

The registration of a trade mark confers upon the owner the exclusive right to use that mark [6]. Thus, it is his responsibility to educate the consumers on the unique features of his product as against products of other manufacturers. The main reason being that there is high level of consumer awareness of the goods and its manufacturer. Now, lots of alternatives are available for almost every product. So, the manufacturer or the owner of trade mark has to come up to the expectations of the consumers to make his Trade Mark acceptable to them [7].

Patents Protection:
Patents means an official document giving the holder of the patent the sole right to make, use or sell an invention and preventing others from imitating it [8]. From the manufacturer's prospective patents create a market barrier to other competitors and they can also charge royalties on the license of patents to third parties. Though patents give effective protection to invented new technology; it is an expense. It allows the owner to commercially exploit the consumers.

The patent system has protected inventors by giving them an opportunity to profit from their labours, and it has benefited society by systematically recording new inventions and releasing them to the Public after the inventors' limited rights have expired. India made its patent laws compatible with the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement under WTO by 2005 and has incorporated all changes in the Patent Act, 1970 through various amendments. These changes caused paradigm shift in the thinking of the intellectual property managers and inventors.

Design Protection:
As per Design Act 2000, design refers to the features of shape, configuration, pattern or Ornamentation, which can be judged by the eye in finished products. Design registration is used to protect the visual appearance of manufactured products. A registered design gives you a legally enforceable right to use your product's design to gain marketing edge. It also prevents others from using the design without your agreement. The design registration in India is intended to:
  • Protect only for the appearance of the article and not how it works.
  • Protect features of shape, configuration, pattern or ornamentation.
  • Protect designs, which have an industrial or commercial use.
  • Exclude the designs, which are essentially 'Artistic Works' which are covered by copyright legislation and are not eligible for design registration.
  • Protect the features which appeals to and is judged by the eye. The features are applied by Industrial process [9].
Copyrights Protection:
The Copyright Act, 1957 in Section 14, describes copyright as the exclusive right subject to the provisions of this Act. It authorizes the copyright owner for the reproduction or copying in respect of a work or any substantial part thereof, namely:

Copyright vests in original work involving skill, labour and judgment in respect of literary (such as books, publication including computer software); dramatic and musical works, artistic Works; Engineering drawings; Sound recording; Musical work; Cinematography film, etc. Computer programs are entitled to protection under the present laws. Computer software comprises program manuals, punched cards, magnetic tapes, disks, and papers etc. which are needed for the operation of computers. Manuals, papers and computer printouts can be classified as literary but the concept of algorithms, normally used in programming are not covered under copyright protection. Software containing certain special information in a particular notation, mainly punched cards is considered as a literary work. The magnetic tapes and disks, on which electronic impulses are recorded, are considered as literary work. As per Section 51 of the Copyright in a work shall be deemed to be infringed:
  • When any person without a license granted by the owner of the copyright of the Registrar of Copyrights under this act or in contravention of the conditions of a license so granted or of any condition imposed by a competent authority under this Act -
  • Does anything, the exclusive right to do which is by this Act conferred upon the owner of the copyright, or
  • Permits for profit, any place to be used for the communication of the work to the public where such communication constitutes an infringement of the copyright in the work, unless he was not aware and had no reasonable ground for believing that such communication to the public would be an infringement of copyright; or
  • When any person makes for sale or hire, or sells or lets for hire, or by way of trade displays or offers for sale or hire, or
  • Distributes either for the purpose of trade or to such an extent as to affect prejudicially the owner of the copyright, or
  • By way of trade-exhibits in public, or
  • Imports into India.
In India, the unauthorized hire and sale of copies of video films, cassette recordings for public Performance and books is regarded as a violation of Copyrights Laws. Against such violations, civil suits provide remedy for claiming compensation for loss of profits. If copies of the work done outside India, are produced in India it would infringe the copyright of the owner, and its import will be banned. Mere import of such material would result in the infringement of the copyright law in India. The Intellectual property is one of the corner stones of modern economic policy at the national level. It is increasingly becoming an important tool for sustainable development in the knowledge-based society of this millennium.

Therefore, understanding and appreciating the economic foundations of the IP systems is a prerequisite for comprehending its increasing importance and role in national strategies for enhancing competitiveness and accelerating socioeconomic development. As the IPR legislation gives protection to the marketers or owners of the IPRs, it may lead to the monopolistic situation and exploitation of the consumers. However, through the enactment of the following laws the consumer's interest is protected.

Geographical Indications and Consumers:
A Geographical Indication (GI) is a sign used on goods that have a specific geographical origin and possess qualities, reputation or characteristics that are essentially attributable to that origin. The Geographical Indication of Goods (Registration and Protection) Act, 1999 is the main Act which has been enacted to provide for the registration and better protection of geographical indications (GIs) relating to goods.

According to the Act, the term 'geographical indication' (in relation to goods) means "an indication which identifies such goods as agricultural goods, natural goods or manufactured goods as originating, or manufactured in the territory of a country, or a region or locality in that territory, where a given quality, reputation or other characteristic of such goods is essentially attributable to its geographical origin and in case where such goods are manufactured goods, one of the activities of either the production or of processing or preparation of the goods concerned takes place in such territory, region or locality, as the case may be".

The Controller-General of Patents, Designs and Trade Marks, under the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, is the 'Registrar of Geographical Indications'. It directs and supervises the functioning of the Geographical Indications Registry (GIR), which in turn administers the Geographical Indication of Goods (Registration and Protection) Act, 1999 and the Rules thereunder.

GIs are source identifiers as they help the consumers to identify the place of origin of the goods as well as act as the indicator to the quality, reputation and other distinctive characteristics of goods that are essentially due to that place of origin.

Any duplication and false use of GIs by unauthorized parties is detrimental for both the consumers as well as legitimate producers. Because of this, former are likely to be deceived as they get a worthless imitation of product, which they buy by considering as genuine product with specific qualities and characteristics. While, the producers suffer losses and damages as their valuable business is taken away from them and their established reputation for the products is damaged.

The benefits of registration of geographical indications are:- (i) provides legal protection to Geographical Indications in India, which in turn gives boost to the exports; (ii) prevents unauthorized use of a Registered Geographical Indication by others; (iii) promotes economic prosperity of producers of goods produced in a geographical territory; (iv) promotes consumers' welfare by providing goods of reputation and quality; etc.

However, there are some of the GIs which are not registrable under the Act, about which consumers must be fully aware. These are:-
  • When GI has become a generic name, that is, names of those goods which have lost their original meaning and are used as common names;
  • If use of GI is likely to deceive public, cause confusions, or is contrary to any law in force;
  • GIs which comprises scandalous or obscene matter or hurt any section of the society, etc.
If a geographical term is used as the designation of a kind of product, rather than an indication of the place of origin of that product, this term does no longer function as a GI. It has been recognized that consumers need to be made aware of this fact as well [10].

Protection against Unfair Competition:

Promoting Competition (CA)
Ordinarily an unfair trade practice means a trade practice [11] which is detrimental to the interests of consumer whether the interests are economic or in respect of health, safety or other matters which can be regarded as unfair to the consumer. The Competition Act, 2002 endeavor's to shift the focus from restricting monopolies to promoting fair competition, so that the Indian market is equipped to compete with market word-wide. The object of Competition Act is to promote fair competition in the market, to protect consumers, firms from each other's and the interest of the society. The highlights of the CA are as follows:
  • The anti-competitive practices such as price-fixing, output restrictions, bid rigging and market restriction are prohibited.
  • Regulates the mergers and acquisitions above threshold limits.
  • CA emphasizes in competition advocacy.
The overall direction of this Competition Act is to protect the interest of the consumers, freedom of trade and promote healthy competition.

Protection against unfair competition has been recognized as one of the main objectives of intellectual property system. It does not grant exclusive rights to the owners with respect to the subject concerned, like in the case of patents, trademarks, etc. In fact, it prohibits any act of competition that is contrary to honest practices in industrial or commercial matters, referred to as "unfair competition".

The acts of unfair competition not only adversely affect the competitors, which tend to lose their customers and market share; but also affect consumers as they are likely to be misinformed and mislead and tend to suffer economic and personal prejudice.

The following acts of unfair competition are closely related to IP and are directly relevant to consumer protection:-
  • all acts of such a nature as to create confusion by any means whatever with the establishment, the goods, or the industrial or commercial activities, of a competitor
  • false allegations in the course of trade of such a nature as to discredit the establishment, the goods, or the industrial or commercial activities, of a competitor
  • indications or allegations the use of which in trade is liable to mislead the public as to the nature, manufacturing process, characteristics, suitability for their purpose or quantity, of the goods.
Whatever form unfair competition may take, it is in the interest of the honest and legitimate entrepreneur, the consumer and the public at large that they should be prevented from it as early and as effectively as possible. Free and fair competition between enterprises is considered to be the best means of satisfying supply and demand in the economy as well as of serving the interests of consumers and economy as a whole.

This stimulates innovation and productivity and leads to the optimum allocation of resources in the economy; reduces costs and improves quality; as well as accelerates economic growth and development. Hence, In India, the Government has formulated a Competition Policy which protects the interests of consumers and producers by promoting and sustaining a fair competition.

Further, fair play in the market place cannot be ensured only by the protection of industrial property rights. A wide range of unfair acts, such as misleading advertising, violation of trade secrets, etc., are usually not dealt with by specific laws on intellectual property. Thus, it is necessary to enforce Unfair Competition law to supplement the intellectual property laws and to grant fair protection to consumers [12].

Issues and Problems:
Globalization has made the world smaller by integrating the global markets. This has exposed the consumers to the wide range of products and services available in the market. It has, on one hand; given them a greater choice of products and brands with lower costs. While, on the other hand, it has made consumers more and more quality consciousness and aware of their rights. As a result, they are able to voice their concerns about various problems and issues faced by them.

Some of the commonly raised problems are:
  • Adulteration of food substances by traders through addition of substances which are injurious to health or removal of substances which are nutritious or by lowering their quality standards
  • Misleading advertisements of goods and services in television, newspapers and magazines to influence the consumers demand for the same
  • Variations in the contents filled in the package of goods
  • Improper delivery of after sales services
  • Supply of defective goods
  • Hidden price component
  • Use of deceptive or incorrect rates on products
  • Use of false or non-standard weights and measures in supply of goods
  • Production of low quality goods in bulk quantities
  • Illegal fixation of Maximum Retail Price (MRP)
  • Selling above the MRP
  • Unauthorized sale of essential products like medicines, etc. beyond their expiry date to ignorant consumers
  • Poor customer services
  • Non-compliance with the terms and conditions of sales and services
  • Supply of false or incomplete information regarding the product
  • Non-fulfillment of guarantee or warrantee etc.
All such issues and problems must be handled more efficiently both at the Centre and the State level, with a view to protect the interests of the consumers and promote their welfare [13].

Suggestions and Conclusion:
In today's changing market scenario, there is an increasing necessity of empowering the consumers through education and motivation regarding their rights and responsibilities. He/she should be equipped to be fully vigilant so as to be able to protect himself/herself from any wrongful act on the part of the seller/trader. Several steps have been taken by the Government, both at the Central and State level towards generating awareness among the consumers. Given all such initiatives, it is the responsibility of the consumer as well to keep in mind the following Suggestions:
  • Purchase products only after their complete scrutiny and not at the cost of attractive advertisements.
  • Keep check on the weighing and measuring instruments used by traders.
  • Avoid buying fruits and vegetables from unhygienic place.
  • Check print of MRP on the packet.
  • Check the quantity as per the figure printed on the packet.
  • Check the expiry date of the product, particularly that of eatables and medicines.
  • Always collect bill at the time of purchase.
Moreover, the packaging and appearance of the product should not be the guiding factor for consumer purchases. Along with cost consideration, consumer must be cautious of the quality of the product. Most importantly, it is the prime responsibility of a consumer to bring to the notice of the concerned authorities, any violation in their rights [14].

The Intellectual property is one of the corner stones of modern economic policy at the national level. It is increasingly becoming an important tool for sustainable development in the knowledge-based society of this millennium. Therefore, understanding and appreciating the economic foundations of the IP systems is a prerequisite for comprehending its increasing importance and role in national strategies for enhancing competitiveness and accelerating socioeconomic development. IPRs cannot be misused to escape provisions of the competition law by using unreasonable conditions. And this would be the second instrument that will keep a check on the prices of patented drugs here; the first being a price negotiation as a pre-condition for giving marketing approval to any patented drug in India.

[1] V.V. Sople and Jyoti Gattani, New IPR (Intellectual Property Rights) Legislation and Regulations for Marketing Activity, International Marketing Conference on Marketing & Society, 8-10 April, 2007, IIMK 720.
[2] Section 2 (d) of Consumer Protection Act, 1986.
[4] This Act has consolidated The Trade Marks Act, 1940 and Indian Merchandise Marks Act, 1889 and provided law relating to registration and better protection of trademarks in the country.
[5] Section 2 (zb) of Trade Mark Act, 1999.
[6] Section 28 (2) of Trade Mark Act, 1999.
[8] Vino V. Sople, Managing Intellectual Property: the strategic imperative, Prentice Hall of India Pvt. Ltd., New Delhi, 2006, p.74.
[9] Vino V. Sople, Managing Intellectual Property: the strategic imperative, Prentice Hall of India Pvt. Ltd., New Delhi, 2006, p.152.
[11] Section 2(1) (r) of Consumer Protection Act, 1987.

Published by
Mr. Sandip Bhosale
LL.M Student at Rajiv Gandhi National University of Law, Patiala

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