Penalty for Selling Goods or Providing Services of false trademark

This Article prescribes penalty for selling goods or providing services to which false trademark or false trade description is applied. The penalty proposed is the same as sought to be provided for an offence in clause 103. In this clause, the court is also empowered to award a lower sentence of penalty for adequate and special reason to be mentioned in the judgment.

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penalty

The section prescribed penalty for selling or providing services to which a false trademark or false trade description is applied. Applying false trademark, false trade description etc. is an offence punishable under section 103, under section 104, a person who-

  • Sells or exposes for sale, or
  • Has in the possession for sale,
  • any goods or things to which a false trademark or false trade description is applied, or
  • to which an indication of the country or place in which they were made or produced etc. required to be applied under section 139, are without the required indication is punishable with imprisonment and with fine. The punishment prescribed is the same as laid down in section 103.

Thus, the person who has committed any of the offences mentioned in section 104 is punishable with imprisonment for a team which shall not be less than six months. But which may extend to three years and with fine which shall not be less than fifty thousand rupees but which extends to two lakhs rupees.

The Court may, however, impose a sentence of imprisonment for a term of less than six months or a fine of less than fifty thousand rupees, for adequate and special reasons to be mentioned in the judgment.

Distinction between sections 103 and 104

Section 104 prescribes penalty for selling or providing services to which false trademark or false trade description is applied or which, being required under section 139, are without indication of the country or place of origin. The offence section 103 is complete as soon as the trademark is falsified or falsely applied to goods or services. However, under section 104, it is necessary that the goods or services, to which any false trademark or false trade description is applied, should be sold or exposed for sale or must be in possession for sale. The person may thus be convicted under section 103 and 104 when an offence has been committed under section 103 and that the goods which he sells or exposes for sale or has in the possession for sale, or for any purpose of trade or manufacture, bear a false trademark or false trade description. Similarly provision or hiring services with false trademark or false trade description is an offence under section 104. For an offence under section 104, it is not necessary to show that the accused himself had applied a false trademark or false trade description. It is sufficient to show that the accused sells or has in his possession for sale the incriminating article. The object of the section is to prevent a retail merchant from selling the spurious goods with the connivance of the wholesale traders or the manufacturer of goods. As the accused in order to escape punishment, is required to give all information with respect to the persons from whom he obtained the spurious goods,

It becomes possible to trace the main offender who may be the manufacturer or wholesale dealer or importer of the goods.

Proof by prosecution of genuineness of the trademark

To establish an offence under the section the persecution has to prove the existence of the genuine trademark associated with the goods or services of another person and that the goods or services of another person and that the goods or services complained of had some trademark or trade description and that such trademarks or importer of the goods.

Possession of incriminating goods etc. for sale

In Yusuf Mahomad Abarudh versus Bansidhur siraogi, though no goods complained of had been sold, it was held that an offence had been committed under former section 486 of IPC. A person who merely stocks the goods of the manufacturer who has used a false trademark cannot be held to have committed an offence or to have abetted the commission of it. In Narumal Khemchand versus Bombay Co. Ltd., it was held that the design or pattern covered the whole body of the goods and formed part thereof and was not a mark apart and different from the goods and that it was not a trademark within the meaning of section 478 IPC and was also not a trade description.

Having taken all reasonable precautions

Under section 104(a) the question whether the accused has taken all reasonable precautions is one of fact and will depend upon the circumstances of each case. In this connection in Shantilal uttamram Mehta verses Dhanji Kanji shah, the judge remarked “the words having taken all reasonable precautions must be read in conjunction with the concluding words of that clause, namely, ‘had no reason to suspect the genuineness of the mark’. That means that the precautions, which the accused is expected to take, have relation to the examination of the mark and hi coming to the conclusion that after having taken all reasonable precautions, he had no reason to suspect that the mark was a false or a counterfeit mark”.

It is no excuse for the defendant to say that he had no reason to suspect the genuineness of the trade description unless he shows that he has taken all reasonable precautions. Here there was a failure to take all reasonable precautions. Here there was a failure to take all reasonable precautions, and therefore the defense, based upon the absence of reason to suspect the genuineness of the trade description, was impracticable. Section 104(a) is concerned “to prove a defense where the person charged has a reasonable belief in the lawfulness of what he did. Those who act honestly and reasonably are not be visited within criminal sanctions. It makes no sense to confine this defense to cases where the defendant is aware of the existence of the registered trademark and exclude altogether those cases where the defendant is not”. Section 104(a) provides a defense where the defendant believes on reasonable grounds his use of the sign does not equally furnish a defense in the stronger case where the reason why the defendant believes his use of the sign does not infringe a registered trademark is that he reasonably believes he has taken all reasonable precautions against committing an offence and penalty.” Section 104(a) is to be interpreted as including the latter case as well as the former.

Quashing of criminal proceedings, when civil case is pending

The Trademarks Act provides for civil and criminal proceedings in respect of infringement and passing off cases. Questions arise whether where there is a civil case is pending before a court or courts maintaining criminal proceedings are permissible. It has been held that mere pendency of civil cases is not a ground for quashing criminal proceedings, where the Supreme Court has emphasized that inherent jurisdiction should be used sparingly and cautiously that too only when the court comes to the conclusion that there would be manifest injustice or abuse of the process of the court by continuing the criminal proceedings. In Haldiram bhujiaeala Ltd. Versus Haldiram Foods international, it was held that “contentions on merits by the accused at this initial stage cannot be gone into” and the prayer of the petitioners for quashing criminal proceedings was rejected. Where matter is amicably settled between parties and the complainant does not want to pursue the criminal complainant, criminal proceedings may be quashed.

Defenses

The onus is on the prosecution to establish an offence under section. However, the accused has following defenses to escape liability and for this purpose, he has to prove-

  • That he took all reasonable precautions against committing an offences and at the time of commission of the alleged offence, he had no reason to suspect the genuineness of the trademark or trade description; or that any offence had been committed in respect of the goods or services, or
  • That on demand by the prosecutor, he gave all the information in his power with respect to the person from whom he obtained such goods or things or services; or
  • That otherwise he had acted innocently.

The accused may also claim the benefit of the provisions of section 110, to escape liability. The accused may also plead that the trade description is not a false trade description but a genuine use according to established trade usage.

Acted innocently

In Stone versus Burn, it was held: “Mere ignorance of the provisions of the statue does not amount to innocence for this purpose of penalty. The words “acted innocently” point to some apprehension of fact. And here the appellant did not labor under any mistake of fact, for he did what he did with full knowledge, and claiming that he had a right to do it. Such innocence can only exist where the infraction was committed by inadvertence or mistake of fact. Here the appellant knew all the facts – his only mistake was as to the effect of the statute.” The order relevant cases are: mercer versus pyramid sand and Gravel co., and Slatvher Geoge mence smith Ltd., etc.

In the context of the former section 486 IPC, in Pranjivandas Sunderji versus State of Bombay, the judge observed “it is true that the statute uses the word ,innocently but as has been pointed out again in Allard versus selfridge and co., innocently in this section does not mean ‘without any intention to defraud’. Innocently means ‘without any intention to do the act which was forbidden by the statute’. The above cases were followed in Shantilal Uttamram Mahta versus Fhanji Kanji shah, where Naik said: “ In clause (c) the word “otherwise” has been used and ordinarily the use of the word “otherwise” indicates that there is a division by dichotomy between the clauses which precede and the clause in question. That means that clause(c) will apply only when first two clauses do not come into operation “.

Improper Search Warrants

“The power of issuing a search warrant is not intended to be used for the purpose of giving complainants an opportunity of fishing for evidence in case of penalty. The warrant is intended for use in respect of definite documents believed to exist which must be clearly specified in the warrant, and before issuing it the Magistrate must have before him some information or evidence that the documents are necessary or desirable for the purposes of the inquiry before him. To issue a search warrant for the search of a man’s house and for the production of all papers and books in it for the purpose of an inquiry as to whether he had used or sold articles with a counterfeit trademark, is a gross prevention of the law.”

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