Decriminalisation of offences under the Indian trademarks and patents acts

The Indian government has instigated numerous initiatives to create a conducive business environment in the country and attract foreign direct investment. Various intellectual property (IP) statutes that may make company directors responsible for non-compliance have been amended to decriminalise offences. On August 1 2024, the Jan Vishwas (Amendment of Provisions) Act, 2023 (JVA) was enacted with the objective of decriminalising offences “for ease of living and doing business”. The JVA has revised penalties provided under 42 statutes, including several IP statutes.

This article covers the significant changes introduced by the JVA in the Trade Marks Act, 1999, and the Patents Act, 1970.

If any person makes a false representation claiming that a trademark is registered or its part is separately registered as a trademark as envisaged under Section 107, the offence will now be punishable with a sum equal to half a per cent of the total sales or turnover, or INR 500,000, whichever is less. The provision of imprisonment for up to three years or a fine, or both, provided in Section 107(2) has been omitted.

Section 108 mentions that if any person uses words that falsely imply a connection between their business and the Trade Marks Office, the offence is punishable with imprisonment for up to two years or a fine, or both. This provision has now been omitted.

Under Section 109, imprisonment for up to two years or a fine, or both, for falsification of entries in the Trade Marks Registry was provided for. The provision has now been omitted.

Sections 112A and 112B have been inserted. The registrar may authorise an officer to be an adjudicating officer (AO) for holding an inquiry and impose a penalty as per the Trade Marks Act, 1999 after hearing the parties. Any person aggrieved by the order passed by the AO can appeal to the appellate authority within 60 days or later, subject to establishing sufficient cause for the delay in filing the appeal. The appeal is required to be disposed of within 60 days. In the event of non-compliance with the order within 90 days of the order passed by the AO or an appellate authority, the person shall, in addition to the penalty, be punishable with a fine of INR 100,000 or imprisonment for up to a year, or both.

The government rolled out the Trade Marks (Holding Inquiry and Appeals) Rules, 2024 on August 16 2024. These rules provide a mechanism to file a complaint electronically to the AO regarding any violation under Section 107 (penalty for falsely representing a trademark as registered) and outline the procedure for conducting an inquiry by an AO, an appeal, and a resolution of disputes.

Section 140(2) provides that if prohibited goods are imported into India (as specified in Section 11 of the Customs Act, 1962) and are liable to be confiscated under that act, the commissioner of customs (upon a request made to them for protection of a trademark) can ask the importer to produce documents relating to the importation of goods, and furnish details of the person by whom the goods were consigned to India and details of the person to whom the goods were sent in India. If these details are not provided by the importer within 14 days, the importer will be liable for a penalty of up to INR 1,000.

If any person refuses or fails to submit any information to the central government under Section 100(5) or to the controller supporting the statement of the working of a patent (Form 27) under Section 146, the offence shall be punishable with a fine of up to INR 100,000, and INR 1,000 per day in the event of continuing non-compliance.

The imprisonment provision for knowingly providing false information, under Section 122(2), has now been deleted. Instead, if a person knowingly provides false information, they will be liable for a fine equal to half a per cent of the total sale or turnover of the business or of the gross receipts in the profession, or INR 50 million, whichever is less.

Tenfold increase in the fine for making a false representation

If any person makes a false representation that an article sold by them is patented in India or the subject matter of a pending patent application in India, they shall be punished with a fine under Section 120 (increased from up to INR 100,000 to up to INR 1 million). In the case of a continuing claim, a further penalty of INR 1,000 per day shall be imposed.

Wrongful use of the words “patent office”

Under Section 121, wrongful use of the words “patent office” by any person to convey that their place of business is connected with the Indian Patent Office was punishable with six months’ imprisonment or a fine, or both. This provision has now been deleted.

Sections 124A and 124B have been inserted. The controller may authorise an officer to be an AO for holding an inquiry and impose a penalty as per the Patents Act, 1970 after hearing the parties. Any person aggrieved by the order passed by the AO can file an appeal before the appellate authority. The timelines for filing an appeal, the adjudication of an appeal, and the imposition of a penalty in the event of non-compliance with the order passed by the AO or an appellate authority are on similar lines to those introduced in the Trade Marks Act, 1999 (discussed under “Increase in the scope of powers of the registrar” above).

The primary aims of the JVA are to create a more conducive business environment, foster economic growth, encourage entrepreneurship, and attract investment. This approach aligns with the government's broader vision of making India a global business hub by minimising bureaucratic hurdles and enhancing transparency. However, the deletion of certain provisions seems to be permitting some activities that otherwise would be criminal offences. It is also true that there are no reported convictions or criminal prosecutions under the old regime. Therefore, it appears to be a step in the right direction to frame laws in a manner that seems practical and business friendly.

Also, eliminating the need for court intervention in minor offences should help to reduce the burden on the justice system. This will hopefully help in reducing case pendency and facilitates a more efficient justice dispensation.

On the other hand, there is a fear that decriminalising the working statement requirement under the Patents Act, 1970 might negatively impact innovation. Without the obligation to submit a working statement with a small fine to be paid in the event of failure to submit the statement, patent holders may not be incentivised to commercialise their inventions, potentially leading to a decrease in the practical application of patented technologies.