Design Piracy Unveiled: Insights into Registered Design Theft

Introduction

Design piracy, particularly in the context of registered designs, poses significant challenges in today’s industrial landscape. A “design” encompasses the aesthetic aspects of any shapes, patterns, ornamentations, or compositions that can be applied to any two-dimensional or third-dimensional articles through industrial processes or techniques. According to the Indian Design Act of 2000, only those designs that are functional or used as artistic or property marks are not eligible for protection. Despite this legal framework, registered designs remain vulnerable to infringement. Owners of registered designs can pursue legal action against infringers; however, the ease of replicating designs and the difficulty in tracking widespread copying make enforcement problematic. This rampant unauthorized copying, known as design piracy, undermines the economic value of industries by diluting the uniqueness of original designs and reducing the market advantage of legitimate creators. As a result, combating design piracy remains a crucial yet complex issue for maintaining the integrity and profitability of creative industries.

Definition of Design Piracy

Design piracy refers to the act of unlawfully reproducing or imitating a registered design without the consent of the owner. Section 22(1) of the Design Act of 2000 addresses the issue of pirated designs and specifies the circumstances that would constitute such piracy.

1. Registered designs are used for fraudulent or obvious imitation of the design. In this context, the term ‘imitation’ does not refer to an exact duplication of designs. Rather, it pertains to determining if the infringing copy includes the key elements of the registered designs, which are the basis for claiming novelty. 
2. Registered designs are imported for sale without the consent of the proprietor.
3. A registered design has been published or exposed for sale with prior knowledge that it has obvious or fraudulent imitations

Legal Remedies Against Design Piracy

Any aggrieved person can institute a suit for infringement in a court, that is not below than court of district judge. Section 22(2) of the Act, provides the following remedies to the registered proprietor against the piracy of designs –

1. Injunction – It’s a court order that mandates an individual or corporation to either refrain from a particular activity or initiate a specified action. It can be of three types –
2. Temporary Restraining Orders (TROs): These are issued in emergencies to prevent immediate harm. They are usually short-term and can be granted without a full hearing.
3. Preliminary Injunctions: These are issued during ongoing legal proceedings to maintain the status quo until a final decision is made.
4. Permanent Injunctions: These are issued after a full trial and remain in effect indefinitely.
5. Damages – The aggrieved person can claim compensation for the loss suffered due to piracy. The infringer must pay up to INR 25,000 for each instance of piracy, recoverable as a contract debt. The total amount recoverable for any single design shall not exceed INR 50,000.
6. Account of profits – Instead of claiming damages An aggrieved person is also provided with the right to claim profits made by the infringer during the unauthorized use of design.

Design Piracy in the Digital Era

Design piracy in the digital era presents unique challenges due to the ease with which digital designs can be copied and distributed. Digitalization allows for the rapid replication of designs with minimal effort, making it difficult to detect and prove instances of piracy. For example, the fashion industry faces significant issues with fast fashion brands quickly replicating runway designs and selling them online before the original creators can commercialize their work. A notable case involved Zara, which was accused of copying designs from independent artists and selling them on its platform, making it hard for the original artists to take action due to the swift dissemination and vast reach of Zara’s online presence. Similarly, in the software industry, app designs and features are frequently duplicated. An infamous case is that of Instagram Stories, which closely mirrored Snapchat’s original concept. Snapchat struggled to legally contest this as Instagram’s vast user base and the minor modifications made detection and proof of design theft more complex.

Intersection between Design Piracy and Trademark Counterfeit

The intersection between design piracy and trademark counterfeiting lies in the unauthorized duplication and sale of products that infringe on the original creators’ aesthetic and brand identity. Design piracy involves copying the visual elements of a product, such as patterns, shapes, and ornamentation. At the same time, trademark counterfeiting entails the unauthorized use of a brand’s logo, name, or distinctive symbols. When these infringements occur together, counterfeit products replicate the original’s look and falsely bear the brand’s trademark, leading to significant consumer confusion. It can be further explained from the following figure.

In the above figure, the H&M brand utilizes a Prada design for its garments without using the Prada logo or trademark, committing the act of design piracy, as it entails replicating the visual aspects of a product while avoiding the usage of any legally protected marks. There is another brand that manufactures sunglasses and incorporates the brand name ‘channel’ in its product but doesn’t replicate the exact style of Chanel sunglasses. This is considered trademark counterfeiting, as it involves the unlawful use of a brand’s trademark. The intersection of the two circles signifies instances where both the design and the trademark have been replicated. Hence if any product imitates the handbag design and incorporates the ‘LV’ mark in the imitated goods is an infringement of Louis Vuitton’s handbag design and trademark.

In the case of M/S Sabyasachi Couture v. Anil Kumar Batra & Ors CS(COMM) 1543/2016, the defendant Anil Kumar who is the founder of the famous South Delhi store, ‘FRONTIER RAAS’, had replicas of the garments of the designer Sabyasachi at the said store and was also using the name ‘Sabyasachi’ in their couture line. The court observed this to be a well-found instance of infringement where the defendant was ordered not to possess any copies of the plaintiff’s subject designs and also not to misuse their trademark ‘Sabyasachi’ in any manner.

This twofold violation diminishes the economic value of the original designs and dilutes the brand’s market position in the following manners –

1. Loss of Revenue: Both design piracy and trademark counterfeiting result in significant revenue loss for legitimate businesses. Consumers may purchase cheaper counterfeit goods instead of authentic products, which results in a diversion of revenue from the original creators and a decrease in their market share.

• Brand Dilution: It occurs when counterfeit products fail to meet the high standards of quality and craftsmanship associated with authentic commodities. When customers come across low-quality replicas, it damages the reputation of the authentic brand, resulting in a decline in customer trust and loyalty, as well as a weakening of the brand’s overall value.

• Market Confusion: The presence of counterfeit products creates confusion in the market, making it difficult for consumers to distinguish between genuine and fake items. This confusion can lead to decreased sales of authentic products as consumers become wary of potential counterfeits and would not want to invest the same amount of money for replicated products.

• Reduced Innovation Incentive: The extensive piracy and counterfeiting of designs and trademarks might diminish the motivation for corporations to spend in the creation of fresh products and advancements. Insufficient protection of intellectual property may discourage enterprises from investing in the development of innovative designs.

• Supply Chain Issues: This concern arises when counterfeit items invade genuine supply channels, resulting in logistical challenges and complicating the management of product distribution. This might result in differences in stock levels, complications with warranty claims, and higher expenses related to product recalls and customer service.

Strategies to Prevent Design Piracy

1. Businesses can implement design management software that enables them to track the whole design process, from inception to market launch, facilitating the monitoring and protection of intellectual property. This software can alert businesses to any unauthorized use or replication of their designs.
2. Blockchain Technology can be utilized by businesses or individuals to create an immutable digital ledger that records the details of each design, including its creation date, creator’s identity, and ownership. This ledger is decentralized and tamper-proof, providing a reliable way to verify the authenticity of a design.
3. Businesses can embed digital watermarks into design files which would make it difficult for pirates to reproduce designs without being detected. Watermarks can be visible or invisible and can contain information about the design’s origin and ownership.
4. In their products businesses can incorporate QR codes and Near Field Communication (NFC) tags enabling customers and merchants to scan and confirm the product’s legitimacy. These codes have the capability to establish a connection with either the blockchain ledger or a secure database in order to verify the authenticity and ownership of the design.
5. Businesses can incorporate machine learning algorithms that can predict potential piracy hotspots and trends, allowing businesses to proactively target and mitigate risks before they escalate.
6.  An AI-powered detection system can be deployed by businesses that can scan the internet, marketplaces, and social media for instances of design piracy. These systems use image recognition and pattern matching to identify unauthorized copies of registered designs.
7. Businesses should allocate resources toward educating their clients regarding the significance of acquiring genuine items and the detrimental effects of counterfeit merchandise. This may be achieved through marketing efforts, informative websites, and outreach on social media platforms. Consumers who are knowledgeable about a particular product are less inclined to purchase illegally copied designs and can assist in detecting counterfeit goods.

*Written by Nikita Verma, Legal Intern @Intepat