Criminal Offences and Penalties under the Trademark Act for Trademark Violations

Think about the last time you bought a branded product – a bottle of shampoo, a pair of shoes, or even a packet of tea. Your trust in that product rests almost entirely on the brand name printed on it. Now imagine discovering that the mark was fake, the manufacturer had no right to use it, and you had been deceived. This is precisely the kind of harm that the criminal provisions of the Trade Marks Act, 1999 are designed to prevent and punish. Chapter XII of the Act, covering Sections 101 to 121, lays out a comprehensive criminal framework – defining offences, prescribing penalties, and establishing enforcement procedures – to protect trademarks from fraudulent misuse.

Why criminal law steps into trademark protection 🔗

Trademark protection in India operates on two tracks: civil and criminal. Civil remedies – injunctions, damages, account of profits – are reactive; they provide relief after the harm occurs. Criminal provisions, on the other hand, are preventive and punitive. They signal that certain trademark violations are not merely private disputes between businesses but offences against the public at large. When counterfeit goods flood the market under a reputed brand name, consumers are deceived, legitimate businesses suffer, and public trust in commerce erodes. The criminal framework under Chapter XII of the Trade Marks Act, 1999 addresses this by creating specific, punishable offences and empowering enforcement authorities to act swiftly.

Understanding what constitutes a criminal trademark offence 🔗

Before penalties can be applied, the Act first defines what actions constitute a criminal wrong. This is done through Sections 101 and 102, which lay the definitional groundwork for the offences that follow.

Section 101: meaning of applying trade marks and trade descriptions 🔗

Section 101 clarifies what it means to “apply” a trademark or trade description to goods or services. Applying a mark includes affixing it to goods, packaging, invoices, labels, or using it in advertisements. This broad definition ensures that no one can escape liability simply by arguing that the mark was not stamped directly on the product itself.

Section 102: falsifying and falsely applying trade marks 🔗

Section 102 is the definitional core of the criminal offence structure. It identifies two distinct wrongs. First, falsifying a trademark – which means either making a mark that is identical or deceptively similar to the proprietor’s mark without consent, or altering a genuine mark by addition, effacement, or any other modification. Second, falsely applying a trademark – which means affixing such a false or deceptively similar mark to goods, services, or packaging without the owner’s authorisation.

An important procedural feature is embedded in Section 102(4): in any prosecution under this section, the burden of proving that the proprietor consented to the use of the mark lies on the accused, not the prosecution. This reversal of the usual burden of proof reflects the legislature’s intent to make it easier for trademark owners to pursue criminal action against infringers.

The core criminal offences and their penalties 🔗

Section 103: penalty for applying false trade marks and trade descriptions 🔗

Section 103 is the primary penal provision targeting those who actively create or apply counterfeit marks. The offences covered under this section include making, possessing, or using instruments intended to falsify a trademark; applying a false trade description to goods or services; misrepresenting the country of origin or manufacturer details; and tampering with or removing any compulsory indication of origin under Section 139 of the Act.

The punishment for a first-time conviction under Section 103 is imprisonment for a term not less than six months, which may extend to three years, along with a fine of not less than ₹50,000, which may extend to ₹2,00,000. Courts do retain the discretion to impose a lesser sentence if adequate and special reasons are recorded in the judgment – for instance, where the offence was minor or the accused was a first-time, inadvertent violator. A key defence available under this section is the absence of intent to deceive; an accused who demonstrates that they acted in good faith without knowledge that the mark was false may avoid conviction.

Section 104: penalty for selling goods with false trade marks 🔗

While Section 103 targets those who create or apply false marks, Section 104 targets those further down the supply chain – the sellers, hirers, and distributors who deal in goods or services to which false trademarks or trade descriptions have already been applied. This includes possessing such goods for sale, exhibiting them, or otherwise circulating them in trade.

The penalties mirror those under Section 103: imprisonment between six months and three years, and fines between ₹50,000 and ₹2,00,000. However, an accused can avoid punishment under Section 104 by proving that they had no reason to suspect the mark was false, that they acted without intent to defraud, and that they were willing to assist in identifying the persons who supplied the goods. This defence recognises that distributors and retailers may sometimes be innocent middlemen.

Section 105: enhanced penalty on second or subsequent conviction 🔗

The Act treats repeat offenders with significantly greater severity. Under Section 105, anyone who has previously been convicted under Section 103 or 104 and is found guilty again faces enhanced punishment of imprisonment for not less than one year, extendable to three years, and a fine between ₹1,00,000 and ₹2,00,000. The minimum thresholds are higher, and the court’s discretion to reduce the sentence, though not eliminated, is more constrained. It is worth noting that convictions under the earlier Trade and Merchandise Marks Act, 1958 are not counted for the purposes of Section 105 – only convictions under the 1999 Act are relevant.

Other specific offences under Chapter XII 🔗

Section 106: removing piece goods contrary to section 81 🔗

Section 106 addresses the removal of piece goods, hosiery, and other textile items that are required under Section 81 to bear trade marks indicating the length of the piece. Removing or causing removal of such mandatory marks is a punishable offence, reflecting the Act’s concern with ensuring accurate product information across specific categories of goods.

Section 107: falsely representing a trade mark as registered 🔗

Section 107 targets a different kind of deception – not counterfeiting a rival’s brand, but misrepresenting one’s own trademark as registered when it is not. Using the ® symbol, or making any verbal or written claim implying registration, when the mark is not in fact registered, constitutes this offence. The penalty under Section 107, as amended by the Jan Vishwas (Amendment of Provisions) Act, 2023, is now a civil monetary penalty – a fine equivalent to half a per cent of total turnover or ₹5,00,000, whichever is less – replacing the earlier criminal punishment of imprisonment. The amendment reflects a policy shift towards decriminalising procedural or technical violations while retaining criminal teeth for substantive fraud.

Sections 108 (falsely describing a business as connected with the Trade Marks Office) and 109 (falsification of entries in the Trade Marks Register) have been omitted by the Jan Vishwas Act, 2023, as they had become largely obsolete in day-to-day trademark practice. Their removal streamlines the penal framework without significantly weakening protection for registered marks.

Forfeiture, exemptions, and corporate liability 🔗

Section 111: forfeiture of goods 🔗

A court convicting a person under Sections 103, 104, or 105 – or even acquitting them on the basis of good faith – may direct the forfeiture of all goods and instruments connected with the offence to the Government. This ensures that even where the accused escapes imprisonment, the tools and fruits of the criminal enterprise do not remain in circulation.

Section 112: exemption for innocent employees 🔗

Section 112 provides protection to employees acting in the ordinary course of their employment. A person who applied a trademark or trade description to goods purely as an employee, without awareness of the falsity and without personally benefiting from the fraud, is exempted from criminal liability. This provision ensures that criminal prosecution is directed at those with actual culpability rather than unknowing workers on the shop floor.

Section 114: offences by companies 🔗

Under Section 114, when a company commits a trademark offence, both the company itself and every person in charge of and responsible for the conduct of the company’s business at the time of the offence can be prosecuted. The term “company” is broadly defined to include firms and other associations of persons. This provision prevents businesses from hiding behind corporate structures to escape criminal accountability for trademark fraud.

Enforcement mechanism: cognizance, search, and seizure 🔗

The procedural architecture for enforcing criminal trademark law is set out primarily in Section 115. Offences under Sections 103, 104, and 105 are classified as cognizable, meaning the police can register an FIR and investigate without first obtaining a court order. A police officer of the rank of Deputy Superintendent of Police or above may, upon receiving credible information, conduct a search and seize goods, machinery, dies, plates, and other instruments involved in the offence – all without a warrant. However, before executing such a search and seizure, the officer is required to obtain the opinion of the Registrar of Trade Marks on the facts of the case and is bound to act in accordance with that opinion.

In contrast, offences under Section 107 (and earlier under Sections 108 and 109) are non-cognizable – a Magistrate could take cognizance only on a written complaint by the Registrar. No court below the level of a Metropolitan Magistrate or a Judicial Magistrate of the First Class is competent to try any offence under the Act.

An aggrieved trademark owner can initiate criminal proceedings by approaching the local police station to file an FIR for cognizable offences, or by filing a complaint directly before the Magistrate under Section 190 of the Code of Criminal Procedure, 1973 – a route particularly useful when the police are reluctant to register the FIR on the mistaken assumption that the matter is purely civil.

The interplay between criminal and civil remedies 🔗

A trademark owner is not compelled to choose between civil and criminal action. Both routes can be pursued simultaneously. Civil proceedings before a District Court can seek injunctions, damages, or an account of profits under Sections 134 and 135 of the Act. Criminal proceedings, at the same time, can result in imprisonment, fines, and forfeiture of infringing goods. The two remedies are complementary – civil proceedings protect the owner’s economic interests, while criminal prosecution deters future violations and punishes conduct that harms the marketplace as a whole. The availability of criminal remedies also gives trademark owners significant leverage in settlement negotiations, since the prospect of prosecution tends to prompt quicker resolution than civil litigation alone.

A quick reference: key penalties at a glance 🔗

To consolidate the penalty structure, the following overview captures the major provisions. Under Section 103 (applying false marks): imprisonment of 6 months to 3 years and a fine of ₹50,000 to ₹2,00,000. Under Section 104 (selling goods with false marks): the same range of imprisonment and fine, with a good-faith defence available. Under Section 105 (repeat offence): enhanced imprisonment of 1 to 3 years and a fine of ₹1,00,000 to ₹2,00,000. Under Section 107 (false representation of registration): a civil monetary penalty of 0.5% of turnover or ₹5,00,000, whichever is less, following the Jan Vishwas amendment. Forfeiture of goods applies across Sections 103, 104, and 105, even in cases of acquittal on good-faith grounds.

What do you think? Given that the Jan Vishwas Act, 2023 has converted the offence under Section 107 from a criminal to a civil penalty, does this dilute the deterrent effect of the trademark law, or does it strike the right balance between ease of doing business and IP protection? And considering that sellers and distributors can escape liability under Section 104 by proving good faith, do you think this defence creates a loophole that organised counterfeiters might exploit through layers of middlemen?

References

1. https://www.indiacode.nic.in/bitstream/123456789/15427/1/the_trade_marks_act,_1999.pdf
2. https://indiankanoon.org/doc/1725877/
3. https://blog.ipleaders.in/section-103-of-trade-marks-act-1999/
4. https://www.jainandpartners.com/blog/details/article-on-trademark-infringement/27
5. https://www.compliancecalendar.in/learn/penalty-for-falsely-representing-a-trademark-as-registered
6. https://medium.com/@EashanGhosh/the-jan-vishwas-amendments-to-the-trade-marks-act-three-talking-points-37271af94f35
7. https://numenlaw.com/criminal-prosecution-for-infringement-of-trademark-and-copyright.php
8. https://depenning.com/blog/trademark-enforcement-strategies/