Buy Mountain Dew, you get Maintan Dew. Trademark infringement is on the riseNumber of trademark infringement cases has increased by more than 50 percent in three years, officials say.
The sun was shining fiercely on Monday afternoon, and Devi Chudal went down to the corner grocery store to buy a bottle of Mountain Dew to cool off. When she got home and was about to open the bottle, her daughter stopped her, shouting that she had the wrong brand.
“I checked the bottle, and it looked just like the Mountain Dew I used to buy before; even the lettering was designed exactly like it. But my daughter told me that the cold drink was actually named Maintan Dew, which was manufactured in Jhapa,” said Chudal.
"Even the price was the same," said the amazed 49-year-old resident from Mahalaxmisthan, Lalitpur.
College student Ruvi Shrestha had bought some chewing gum from the neighbourhood grocery, thinking it was her favourite brand Center Fruit.
“I was in a hurry and did not look at the packet properly because it was the same colour. But when I was about to open the packet, I saw that it was not Center Fruit; it was called Center Fillz," she said.
"I checked the packet properly, and there was no expiry date on it,” said Shrestha from New Baneshwar.
Like Chudal and Shrestha, many Nepali consumers are being duped into buying similar looking products.
And this is because of weak laws, say industry insiders.
Such deceptive and misleading practices not only result in customers being cheated in terms of quality and price, but the manufacturer of the original product also loses sales, according to them.
Experts say there has been a rise in counterfeit products in the market due to the weakness of law enforcement agencies in the country.
“We have come across many consumers who have shared their experience of being deceived when they were given a very similar looking bottle instead of the original Coke, Fanta or Sprite which they had asked for,” said Bottlers Nepal, a multinational company in Nepal that produces Coca-Cola, Coke Zero, Sprite, Fanta and Kinley.
The company said several companies were producing Coca-Cola look-alike products, and urged consumers to stay alert and check for the brand’s original logos (Coca-Cola, Sprite and Fanta) before buying and consuming them.
“Compared to three years ago, the number of trademark infringement cases has increased by more than 50 percent,” said Janak Bhandari, advocate at Global Law Associates. "Cases of trademark infringement are increasing in the country mainly for two reasons—weak laws and weak enforcement of the laws.”
“Firstly, the Patent, Design and Trade Mark Act 1965, the law related to trademark protection and enforcement, is years old and does not cover the current scenario. Secondly, the mechanism, rules and regulations that are in the law are not being implemented effectively,” said Bhandari, who looks after trademark, patent, industrial design and copyright cases. "Unscrupulous manufacturers are producing counterfeit goods, finding the weak areas in the laws."
A rise in the number of trademark infringement cases in Nepal has become a cause for concern for foreign investors.
Recently, Kiran Prakash Saakha, president of the Nepal-USA Chamber of Commerce and Industry, said that foreign direct investment from the US in Nepal has been declining because of the lack of a compensation law which is the number one priority for American investors.
“As duplicate products are easily available in the market, US investors fear putting money in the country.”
American financiers are very particular about intellectual property rights, but the government does not seem to be serious about it, industry insiders say.
"Being a party to different conferences and trade treaties, the country should have a mechanism to protect the trademark of multinational companies," said Bhandari, adding that there was no clarity which government agency is supposed to deal with it.
For now, the initial litigation is being looked after by the Department of Industry which has judicial authority.
There is confusion in the court as trademark and intellectual property issues are being handled by the department. "Due to all these issues, cases of trademark infringement have been increasing, especially in beverages and packaged food products,” Bhandari added.
By adding a single letter K to the abbreviation KFC for international restaurant chain Kentucky Fried Chicken, a Nepali firm called Krispy Krunchy Fried Chicken has created the misleadingly similar abbreviation KKFC, and has opened several outlets.
"KFC has been registered in Nepal and should have gotten protection, but it is neither being supported by the courts nor by the department," Bhandari said.
Consumer rights activists say selling such products is directly cheating consumers—both price-wise and quality-wise.
“Copied products point to the wrong intention of producers who want to pass off products that do not meet quality standards,” said Bishnu Prasad Timilsina, general secretary of the Forum for Consumers’ Rights, Nepal.
"This violates consumers' right to get quality products at a fair price. This increases unhealthy market competition as well, and impacts the functioning of a healthy market," he said.
“Counterfeit packaged food products also have effects on human health with the producer using dubious ingredients to give the taste of the original,” Timilsina said.
"Producers who are doing ethical business face losses while at the same time consumers are forced to buy counterfeit products. The producers who are involved in such businesses have links with the government authorities, due to which little action is taken," Timilsina said.
"Since the governing bodies are not inspecting the market properly, the lax attitude has led to a rise in the sales and distribution of counterfeit products in the market," he added.
Agreeing with Timilsina, Bhandari says it is obvious that the intention of producing counterfeit goods is not right.
Jiblal Bhusal, director general at the Department of Industry, admitted that the law had become obsolete.
"It does not include the different dimensions of the current situation. The punishment and action provisions in the law are limited as there is no clarity on what type of action needs to be taken in what type of case," he said.
“The laws are inadequate and there are only 10-12 officials to deal with this matter across the country. As a result, effective results have not been achieved,” Bhusal said. “We have been looking at the cases regarding trademark infringement that come to the department,” he added.
"A draft of the updated Patent, Design and Trademark Act has been submitted to the Cabinet through the Ministry of Industry, Commerce and Supply which will address all the issues regarding infringement," Bhusal said.
“Sometimes, due to the lack of basic documents on both sides, we have not been able to reach a decision. The department has been taking action against those involved in producing counterfeit products by conducting inspections, being strict regarding production, seizing the products and closing down production," Bhusal said.
“The presence of counterfeit brands raises questions about the strength of intellectual property and trademark protection laws of any nation. Loopholes in such laws often tend to create a lack of responsibility because of which strict actions are not imposed,” said a representative of Bottlers Nepal.
"When one manufacturer gets away with counterfeiting, it will drive more people to take advantage of this, resulting in the multiplication of counterfeit practices."
According to Bhandari, cases have been rising also due to delays in issuing decisions. The Department of Industry which looks after the cases is not a fully judicial body, and it cannot deal promptly with the court in terms of appeal.
Bhandari said that the increase in trademark infringement will definitely not give a positive message to foreign investors. “When the state fails to give protection to brands, investors will have doubts about the security of their investment in the country,” he said.
"Not all consumers are aware of the brands in circulation, and when a counterfeit product arrives with similar packaging as the original, the same brand name design, and even a similar product, they buy it. It is cheating consumers as they are fooled into buying a counterfeit product thinking it is the original,” Bhandari said.
He said that counterfeit products also need to be looked at from consumer rights and black marketing perspectives.
"A new bill was prepared regarding trademark, copyright and intellectual property rights around two years ago, and submitted to the Ministry of Industry, Commerce and Supplies," said Bhandari, who was one of the members of the drafting committee.
But with the change in government and the Covid-19 pandemic, the draft was delayed.
According to Bhandari, there is an urgent need for a law that includes all issues of trademark, copyright, patent and intellectual property rights. Arrangements for compensation payments, damages and increased fines also help to minimise trademark infringement, he said.
Currently, the maximum fine for trademark infringement is Rs100,000. Also, it takes two-three years to finalise the case, and a Rs100,000 fine is not sufficient. Despite cases being filed, counterfeit products are still available in the market, industry insiders said.
There should be a provision saying that when a trademark infringement case is filed, sales and distribution of such products should be stopped immediately.
Being a member of the World Trade Organisation, Nepal is automatically a member of two treaties concerning the protection of intellectual property—Agreement on Trade-Related Intellectual Property Rights and the Paris Convention.
The Paris Convention, adopted in 1883, applies to industrial property in the widest sense, including patents, trademarks, industrial designs, utility models, service marks, trade names, geographical indications and the repression of unfair competition. This international agreement was the first major step taken to help creators ensure that their intellectual works were protected in other countries.
"Trademark and intellectual property rights protection need to be provided equally to foreign investors as per the Paris Convention. It would be easy if the department works as per the agreement," Bhandari said.
There are two types of problems being observed in Nepal, one is infringement and the other counterfeit products. Infringement is making copies of branded goods within the country while counterfeit products are fake goods imported from other countries.
“Counterfeit goods mostly come from China," Bhandari said.
There is a provision in the Customs Act too that if someone files a case against counterfeit products, the imported shipments will be halted at customs.
"Anything that may be doubtful to consumers regarding any product should be reported to the respective companies for inquiry," said Bottlers Nepal.