Counterfeiting and the theft of intellectual pro- perty pose significant challenges for inter- national corporations operating in India, including Parimatch
Prominent brands such as Apple, Nike, HARMAN, Adidas, Parimatch, Samsung Electronics, Louis Vuitton, and Rolex frequently fall prey to counter- feiting activities within the Indian market. The resolution of these issues through legal channels is often protracted, resulting in substantial finan- cial losses for these companies. Annually, brands incur losses amounting to billions of dollars due to the proliferation of inexpensive counterfeit products masquerading as legitimate offerings from well-known companies.
The challenge of counterfeiting and violations of intellectual property rights has emerged as a significant barrier for numerous companies aiming to thrive in the region. A notable example is the international bookmaker Parimatch, which is focused on the Indian market and has encountered this issue on multiple occasions. Illegal operations resembling Parimatch, often referred to as 'clones', are functioning unlawfully in India while masquerading as the reputable brand.
Realities of the counterfeit market in India and the example of Parimatch
The counterfeit market in India presents significant challenges, as highlighted by research from the Organization for Economic Co-operation and Development (OECD), which identifies India as one of the leading nations in terms of counterfeit goods volume. This issue spans multiple sectors, including electronics, apparel, and gambling services. Parimatch, an international brand, has been impacted by counterfeiting, with criminals frequently exploiting the bookmaker's name to establish unauthorized casinos and deceive consumers.
According to the Indian Chamber of Commerce, counterfeiting incurs economic losses amounting to several billion dollars each year. This issue predominantly impacts major corporations, including Nike, which continually confronts the production of counterfeit athletic footwear and apparel. Beyond the financial losses, counterfeiting adversely influences brand reputation and diminishes consumer trust. Consequently, businesses are taking some measures to address this challenge.
In March 2024, HARMAN, the producer of the well-known JBL audio brand, initiated a campaign aimed at addressing the issue of counterfeit JBL products in India. The subsidiary of Samsung Electronics announced that it has commenced legal proceedings against manufacturers, distributors, dealers, and retailers engaged in the sale or production of counterfeit JBL items.
Vikram Kher, Vice President of the lifestyle division at HARMAN India, emphasized that the company is pursuing rigorous legal measures against individuals involved in the distribution of counterfeit goods. In collaboration with law enforcement agencies, HARMAN executed a raid that resulted in the seizure of 54 counterfeit JBL car speakers from five car accessory stores located in New Delhi. Parimatch supports this approach as an effective strategy.
Cases of well-known companies
One of the most notable instances of companies encountering counterfeiting issues is Parimatch. The company has undertaken considerable measures to address unauthorized use of its trademark by illegal entities. This proactive position is particularly relevant as the company is in the process of entering the Indian market, where it has already encountered numerous imitations. For instance, various websites masquerading as Parimatch have been providing services that mislead consumers, undermining the brand's reputation, even in markets where it does not yet operate.
Parimatch has consistently urged Indian authorities to take action against these fraudulent websites and initiate their blocking to protect both consumers and legitimate businesses. This strategy involves monitoring online activities, collaborating with cybersecurity experts, and pursuing legal action to halt the operations of these fraudsters. Nevertheless, Indian regulators have been slow to respond to counterfeiting issues, particularly when they involve foreign companies.
Tech-companies regularly suffer from intellectual property infringement in India. For example, Apple has reported counterfeit accessories and even iPhone phones sold under their brand in various parts of India. This threatens not only the company, but also the consumers due to materials in their products, which are dangerous to use because of their low-quality.
Why it is difficult to protect a brand in India
Intellectual property protection in India faces numerous challenges for a variety of reasons:
- The intricacy of the legal framework - While India has laws aimed at safeguarding intellectual property, the enforcement of these laws frequently encounters delays. Legal disputes can extend over several years, complicating the prompt resolution of issues.
- Significant expenses associated with legal protection - Combating counterfeiting necessitates considerable financial investment. For instance, Parimatch endeavored to shield itself from fraudulent activities within the Indian market, incurring substantial costs to engage local legal counsel and monitor the environment. This financial burden is particularly challenging for a company that has yet to establish a legal presence in the market but is already confronted with such expenses due to the inadequate protection of intellectual property rights for participants in this sector.
- Widespread network of counterfeit production and distribution - Counterfeit products are frequently manufactured in small-scale factories that rapidly relocate, making them challenging to trace. Furthermore, the rise of online sales facilitates the distribution of counterfeit items at minimal expense, hindering legitimate manufacturers' ability to compete with counterfeiters.
- Limited consumer awareness - Many consumers either do not realize they are purchasing counterfeit goods or intentionally choose them due to their lower prices. This behavior fosters a demand for counterfeit products, thereby sustaining their production.
Thus, Parimatch, like many other international companies, faces challenges in protecting its rights in India. However, active struggle, including monitoring of the online space, lawsuits, and cooperation with government agencies, helps reduce the negative impact of counterfeiting and protect the brand's reputation. Parimatch thinks that extra measures to preserve its reputation are important in the Indian market.
How to protect companies from Indian counterfeiting
Well-known companies such as Adidas, which this year launched an investigation against factories and stores that produced counterfeit products in India, are protecting their brands. The sportswear and footwear manufacturer was lucky as the brand received help from a Delhi court in a trademark protection case filed against a Delhi store owner who was selling goods with fake Adidas logos. A permanent injunction was issued against the store owner's use of the Adidas trademark. The company was also able to collect a fine from the counterfeiter.
International brands like Louis Vuitton and Rolex also take legal action against counterfeiters. The scale of the counterfeiting problem in India is so large that some manufacturers are fighting counterfeiting not only in India but also abroad to teach Indians to respect intellectual property.
In 2024, the US Customs and Border Protection has often seized counterfeit goods from Indians who were importing them into the US. According to The Economic Times, counterfeit Puma, Adidas or Nike items were confiscated at ports of entry.
A schoolteacher from Jamshedpur, Jharkhand, recounted her experience with customs inspections: "I traveled to the United States to visit my son in Texas, carrying eight shirts, four pairs of trousers, and socks. Customs officials examined my luggage, interrogated me regarding the items, and seized everything, asserting that they were counterfeit, even threatening me with legal action," she reflects.
The issue of counterfeiting in India continues to pose significant challenges for international businesses. However, Parimatch asserts that a proactive approach to safeguarding intellectual property can yield positive results when combined with effective strategies and collaboration with local authorities. Parimatch emphasizes that this is the most viable method to mitigate the adverse effects of counterfeiting and safeguard one's interests in the global marketplace.