‘Open Markets’ & Counterfeiting in India

‘Open markets’ are ubiquitous in India. The term ‘open market’ refers to non-motor & brick establishments that have mushroomed in and around public spaces across the country. They have emerged as an additional market space surrounding motor & brick shops in well-established markets in India. The following pictures of an ‘open market’ located in Nehru Place (a well known financial district and computer market in the heart of New Delhi) provide the general characteristics of an ‘open market’:

The most common articles of trade in these ‘open markets’ consist of clothing, shoes, bags and electronics. Most of the goods, if not all of them are usually counterfeit in these ‘open markets’. Counterfeits of international brands like Nike, Reebok, Adidas, and other international brands are a common eye sore to brand owners.

Unfortunately, the brand owners have been unable to prevent the omnipresent counterfeiting in these ‘open markets’ even though India has a well-developed and evolved trademark law, which came in affect on Sep 15, 2003. This law is extensively used by the brand owners to prevent counterfeiting in India. And, the Indian judiciary has further strengthened the new trademark law by regularly issuing Anton Pillar and John Doe orders in an ex parte interlocutory injunction to prevent counterfeiting. But, it is very rare for a brand owner to pursue an anti-counterfeiting action in these ‘open markets’.

Absence of anti-counterfeiting action in ‘open markets’:

There are numerous reasons why brand owners have not taken stern anti-counterfeiting measures against ‘open markets’ in India. The most important reason is that these ‘open markets’ are at the bottom of the food chain. So far brand owners have focused on manufacturing units rather than the last transaction in the chain of counterfeiting. However, merely focusing on the manufacturing units have not produced desired effect of choking supply to these ‘open markets’ because small-scale operators rather than large manufacturing units manufacture most of the counterfeits in India. Therefore, even after a successful anti-counterfeiting action in form of a civil or criminal raid, it’s easier for the counterfeiter to relocate and continue the production of counterfeit product from a different location.

Additionally, there are enormous logistical difficulties in conducting anti-counterfeiting in these ‘open markets’. Usually, these ‘open markets’ are a tightly knit community. If there is even a whiff of a possible anti-counterfeiting raid in the market, the vendors move the counterfeit goods in no time. The other problem is the fact that the vendors in these ‘open markets’ trade in different kinds of the counterfeit products. So even if one brand owner pursued an anti-counterfeiting action in one of these ‘open markets’ replete with all kinds of counterfeit products, the actual rate of return of one particular brand is too low. This deters a single brand owner to pursue an expensive anti-counterfeiting action. And, since these ‘open markets’ are spread all over the country it is a colossal task for a brand owner to pursue an anti-counterfeiting action in all the markets simultaneously.

So it seems that in the present state of affairs unless brand owners follow a different strategy, the trade in counterfeiting will continue unabated in these ‘open markets’ in India.