|
| Copyright infringements, fakes dog FMCG sector |
| Viveat Susan Pinto / Mumbai Jan 14, 2011, 01:19 IST |
|
When US-based Kraft Foods dragged biscuit major Britannia to court last week, alleging trademark and copyright infringement of its Oreo brand of cookies, many in the fast moving consumer goods (FMCG) industry weren’t surprised. These issues have dogged the industry for long.
 “While trademark and copyright infringement is a legal issue, counterfeit and spurious products or fakes is a criminal one,” says Adi Godrej, chairman, Godrej Consumer Products Ltd.
According to retail consultancy Technopak, close to seven per cent of the Rs 115,000-crore FMCG industry is made of fakes. That is, Rs 8,050 crore. At a 17 per cent tax rate, the loss to the exchequer is Rs 1,300 crore, says the consultancy. “That is a huge chunk of money,” says Pratichee Kapoor, associate director, Technopak.
P D Narang, group director, Dabur India, says the loss to the national exchequer is more, at Rs 15,000 crore per annum. “It is a very serious issue, which is as much a danger to the national exchequer as it is to the consumer,” he says.
What are companies doing to tackle this issue? Most resort to periodic police raids to rein in makers of spurious products. Some approach the issue in a systematic manner. Emami, for instance, has a separate cell headed by an ex-police officer of the level of assistant commissioner, whose job is to investigate leads provided by the in-house sales force on places where counterfeit products of its popular brands are made. Once these units are identified, the team, along with the local authorities, raids these factories. “On an average, we do at least two to three raids per month,” says Aditya Agarwal, director, Emami Ltd.
Narang says his company maps out locations where illegal copies or look-alikes of its products are made. “We go after them backed with sufficient evidence that counterfeit products are indeed being made there,” says Narang. In the past 18 months, for instance, Dabur has conducted raids in Delhi, Kolkata and Agra, among other places.
“Tracking makers of counterfeit products is easier in larger towns. It is tougher in small towns,” says Vineet Agrawal, president, Wipro Consumer Care & Lighting. “The reason being weak enforcement,” he says.
“Though the law is stringent, its enforcement is weak,” says the legal head of an FMCG company. “There are discretionary powers given to the enforcement authorities, which means perpetrators are generally not penalised too heavily for the crime they commit. This encourages them to get back into circulation once released on bail or after having served a sentence of six months to a year. Most of them get smarter by then, learning how to evade the authorities by masking their operations effectively.”
For those who opt to wage a legal battle over copyright and trademark infringement or passing off, it can be tougher still. “That is because it is difficult to prove passing off in court,” says Godrej, whose company successfully prosecuted one such maker Himachal Pradesh-based Gandhi Soaps and Detergents, whose soap, Gandhi No 1, resembled GCPL’s Godrej No 1. The Bombay High Court in August last year restrained Gandhi Soaps from manufacturing and selling the soap as Gandhi No 1.
“It was a hard-fought battle,” says a GCPL insider. Now Kraft and Britannia find themselves in the same soup.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
