Rajeev Narayan

First awakenings can be rude and testy, for they instill in many a feeling of outrage and indignation. Do you want examples? Well, it happened to Indian cricket in this year’s T20 World Cup, when India lost miserably to Pakistan in their very first outing; the result was verbal and physical mayhem across the nation, especially on social media. In June last year, it happened to India’s farmers, when they were suddenly straddled by ‘three black farm laws. It resulted in a year-long standoff at Delhi’s borders and culminated with the repeal of the same laws. And in July 2019, it happened to e-commerce in India, when the Delhi High Court struck down the right of e-commerce platforms from selling products without being authorized to do so. Ironically, a landmark ruling of this nature did little to raise even a modicum of awareness about the intricacies of Intellectual Property (IP) and patent infringements in India.

To understand the gravity of this situation, let’s revisit the Delhi HC ruling, which was the first big legal awakening for e-commerce in India. The High Court returned an interim injunction in favor of a group of seven claims – instituted by Amway, Oriflame, and Modicare – restraining e-commerce platforms Amazon, Flipkart, Snapdeal, and others from permitting sellers supplying products on those platforms unauthorized by the claimants. The ruling came after heavy gunfire from both sides, which saw a heated debate on whether e-commerce platforms can be treated as pure intermediaries.

Analysis of the Ruling 

If we dissect the court’s ruling, this is what we get. One, that such sales by e-commerce platforms violated the 2016 Direct Selling Guidelines; two, this was also an infringement of trademark rights; three, e-commerce platforms were directed to comply with due diligence requirements to sustain access to safe harbor protections under the IT Act; & four, e-commerce platforms’ actions were indulging in ‘tortuous interference with the claimants’ contractual relationships with direct sellers.

Before we move further, look at the claimants – Amway, Oriflame, and Modicare – all giants in their field of business. If players of this size and stature can be outfoxed by India’s IP, patent, and business state of affairs, what of smaller players and start-ups? Let me give you both legal jargon and then state the same in everyman’s common English. The legalese for this is that “products sold by various sellers are original articles manufactured by the claimant(s), products have been secured from the open market by unauthorized means or via leakages in their supply chains; these are then impaired or tampered with ahead of re-sale to consumers via various e-commerce platforms”. The common English translation of this is that “someone’s products are being sold by other parties without their consent, leading to massive financial and branding losses”. Let’s not even talk about the loss of face when rejected or defective products are sold under their brand.

 

Here then, let me repeat myself; if the rights of such big-name companies can be vitiated so publicly and maliciously, what is the outlook for smaller companies and start-ups? It is very feeble and flaccid indeed. This, then, is the moral of the story – India needs a down-on-the-ground and sterling awakening on the Intellectual Property (IP), patents, and trademarks fronts if entrepreneurship and new, small businesses are to survive. Because they are suffering, and quite badly so…

Do you want another example? Okay. Nidheesh Kumar of Odisha created a new creed of soap, one which had no chemicals and no bleach. It was not only soothing to the user’s skin but also beneficial for him/her as it supplied essential nutrients and natural oils that supplemented the growth of new skin cells and defied aging. Nidheesh went to the market and became an overnight hit in the state, and then sales started booming across the country, largely driven by reviews on social media. Nidheesh’s revenues and profitability soared for months, till they suddenly nosedived. Why? Because Nidheesh had not filed for patents and IP rights to his created soap product. And suddenly, one of India’s largest consumer goods companies offered the very same product at half the price, and started the sales pitch with a multi-faceted all-India brand campaign on TV, in newspapers, and through direct marketing. Within months, Nidheesh, the real and original creator of the product, was wiped out.

There is an intrinsic moral to this story. Smaller businesses and start-ups need to be aware of their rights and privileges, especially from the trade and product protection perspective. Sadly, this is an aspect that is barely discussed or understood in India, and this leads to a tremendous loss of IP and creativity, with smaller businesses losing out to deep-pocketed bigger companies. An idea is replicated or copied, and the creator is simply rubbed and snuffed out. Some of the newer start-ups feel that the mere filing of patents is enough. It is not – it has to be followed up with stringent measures to ensure that infringement does not happen. DO not wait for a third party to start marketing a duplicate product before enforcing your patent rights; you can be pre-emptive and stop any infringer from entering the market in the first place. The beauty of the patent regime is that merely having a patent can act as a severe deterrent because even the possibility of litigation is enough to put off most competitors. Further, patenting your product in other countries can pave the way for entry into international markets, giving your product a headstart.

To sum up the IP battle, it is the smaller players who are the biggest target of larger entities, who more than often steal an idea or a product and pass it off as their own; fighting them off is an uphill task. And those that have not protected themselves locally can’t even dream of going global, thus losing out on a massive opportunity that could have been availed if they were protected. Look at China – that country is doing exceptionally well for all kinds of businesses large and small, despite huge global anti-perception and aversion. Why? Simply because their patent and manufacturing regime is so sturdy that few can match them, leave aside the pricing formula.

 

The good news is that the Government of India has taken notice of this turn of things and intervened – the time taken for grant of patents has reduced dramatically and things are moving fast. And with the global market turning into a smaller global village with e-commerce taking wings, an increasing number of patent violations are being filed against Indians overseas, especially in the United States. It is time for Indian entrepreneurs to better understand the changing dynamics. We need to protect ourselves, protect our products, and protect our future.

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(The author is a communications consultant and clinical analyst. Views expressed in the article are personal.)