--By Sanjeev Sharma
The Nepal government is notorious for policy and procedural dillydallying when it comes to providing services to businesses. This has led to some serious problems for industries and businesses to continue their operations in the country. Among the many problems being faced by them, infringement of trademarks of reputed foreign companies and multinational brands has become a major issue in the recent years.
According to the Department of Industry (DoI), the government body under the Ministry of Industry which handles the registration of industrial and intellectual property, there have been 546 registered complaints of trademark violations as of June 15, 2016 with many cases currently in the court. The department informs that it has so far settled about 90 disputes.
Nevertheless, sources say that the number of such disputes can be as high as 1,200 with some cases continuing to go undecided for over 15 years. Some of the trademark disputes include cases of Dhara Oil, Panparag, Rajanighandha, Pepsico, Havells and Kansai Nerolac, many of which are currently at court. Looking at the disputes, trademark infringement of reputed Indian brands seems to be at the top. According to experts, this has increased since 2003 after Nepal became a member of the World Trade Organisation (WTO).
Experts point out the absence of proper laws and policies for the increasing trend of trademark in-fringement cases. As the existing Patent, Design and Trade Mark Act, 2022 lacks clarity on registration and security of trademarks, among other things, the theft and duplication of trademarks of globally recognised brands is on the rise, they say. “The lack of clarity in the existing law has caused problems regarding the registration and ownership of trademarks,” says Janak Bhandari, Advocate at Global Law Associate, a law firm looking into the cases of trademark infringement.
As per the Act, the rights and ownership are only established after the trademarks are registered in Nepal. “Using this provision, local companies here are registering and holding the trademarks of MNCs,” he says. According to Bhandari, the trend has increased over the last decade. He said that there are many instances of registering copied trademarks of MNCs. “When the genuine owners of the trademarks come to Nepal, they find that the marks are already registered here by someone else,” he mentions.
Reasons for It
The malpractice regarding the registration of trademarks happens for various reasons. “Market value of trademarks is the main reason. A well established brand earns goodwill and reputation among the customers internationally,” opines Bhandari. “The trend is increasing as the involved people are benefitting financially. Many people who have registered trademarks of foreign companies bargain the ownership of the brands in Nepal.”
Similarly, it is easy for the involved people to effortlessly access the market which has already been established by others. According to Bhandari, consumers usually do not purchase goods by studying the details of the brands. They can be satisfied by purchasing items that look similar to established brands. “Many products of international brands are available in the domestic market without the registration of trademarks,” he says. The carelessness of the genuine owners is also another cause for the rise in infringement cases as they do not register their trademarks in Nepal in time. The negligence of DoI is also causing the infringement of trademarks to happen. “The officials register the internationally recognised trademarks without properly investigating the ownership,” mentions Bhandari.
The weak legal provision in the country is providing a fertile ground for the malpractice regarding the registration of trademarks. As per the Patent, Design and Trade Mark Act, 2022 copying and the use of already registered trademarks is illegal. Nevertheless, the law is not strong when it comes to punishment. As per the existing legal provisions, DoI can levy a fine of up to Rs 100,000 and seize related items from the people involved in trademark violations. “However, there are not many instances in the past where people were strongly punished for such deeds,” Bhandari says, adding, “One of the well known cases is the trademark infringement of Goldstar brand shoes when the people involved were slapped with tough punishments a couple of years ago.”
Inability to Reform Existing Law
Had Nepal been able to formulate policies in accordance with the Paris Convention for the Protection of Industrial Property, then the trademark disputes would not have arisen in this magnitude. Nepal became a signatory of the landmark global deal in 2001 which incorporates substantive provisions to ensure the protection of trademarks. However, 15 years after signing such an international treaty, the government has not been able to amend or reformulate the existing Act in line with the convention.
One of the highlights of the treaty is to provide protection to well-known trade and services marks. The article 6bis of the treaty ensures protection to globally famed trademarks without having to register in the signatory countries. However, due to the lack of appropriate legal provisions, well-known trademarks are becoming victims at present. “It clearly shows that our government and lawmakers either do not know the importance of these international treaties or are totally ignoring the significance of the conventions signed by the country,” argues Sushil Kumar Pant, Senior Advocate at the law firm Jurist and Company. The former Attorney General also points to the dishonesty prevailing in the bureaucratic and political levels to continue corrupt practices hindering the formulation of policies to implement such essential international conventions.
The deadline for implementing the convention has been extended thrice for Nepal. The country, after missing the first deadline in 2006, was provided the period of 2007-2015 to update and reformulate its existing law which has now been extended to 2021.
Impact on FDI
Experts fear that the rising trend of trademark infringement cases will affect the flow of foreign investment to Nepal. The cases of the Japanese paint brand Kansai Nerolac and other international and MNC brands, for example, indicate that foreign companies may stay away from the Nepali market despite the business opportunities they have in our country. “The Paris treaty has incorporated some important provisions such as the 100 percent exclusive rights to the well-known services and trademarks. Nonetheless, we have not been able to provide protection to the brands,” says KP Pandey, Director at Federation of Nepalese Chambers of Commerce and Industry (FNCCI). He mentions effective right, effective implementation and effective remedy as three essential aspects of the convention. “Without ensuring these aspects, no industrial and intellectual property can foster,” he opines. He stresses on the need of formulating parameter to identify the well-known marks.
Implementing the Paris Convention
Incorporating the provisions of the convention in the existing law is not only necessary to stop the infringement of trademarks, but is also important to fulfill the international obligations of Nepal.
Legal experts are seeking the court’s intervention in order to ease the hurdles to implement the treaty. “The treaty also needs the court’s interpretation so that its status can be established in the country while also paving the way for the government and parliament to amend or reform the existing law,” says Bhandari. “The courts should decide if the provisions of the Paris Convention have the same validity as Nepali law or if the existing Act needs to be reformed on the basis of the treaty.”
On legal grounds, implementing the convention would not be a hard act as an existing law recognises international treaties signed by the country. According to section 9 of the Nepal Treaty Act, 2047, treaties signed by Nepal shall be enforceable as any Nepali law.
Unified IP Policy in the Offing and DoI Initiatives
After years of long delay and uncertainty, the government is finally working on introducing a unified intellectual property (IP) policy which aims to provide IP services including registration of trademarks, patent, design and copyright from a single office. Currently, DoI is providing the first three services from its different units while the Office of the Company Registrar is handling the latter. Concerned government officials have said that the proposed Intellectual Property Policy 2016 will include provisions of the Paris Convention and Agreement on Trade Related Aspects of Intellectual Property Right (TRIPS) of which Nepal became a member in 2004. However, to what extent the provisions of the Paris treaty and TRPIS will be incorporated in the new IP policy is still not clear.
Similarly, DoI, after dealing with the increasing number of infringement of trademark cases of foreign companies over the years, has been using the IPAS software to avoid duplication of well-known trademarks. According to the department, it denies the registration of any proposed trademark that is 50 percent similar to any trademark which is registered or in the process of registration.
"Inability to reform Patent, Design and Trademark Act is the main factor behind trademark infringements"