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Christopher Finnigan

April 4th, 2019

Nepal: Combating the counterfeit goods market

0 comments | 2 shares

Estimated reading time: 5 minutes

Christopher Finnigan

April 4th, 2019

Nepal: Combating the counterfeit goods market

0 comments | 2 shares

Estimated reading time: 5 minutes

Counterfeit goods and businesses bearing a similar name to leading international brands is common in Nepal. As the Nepalese Government attempts to update its copyright legislative framework, Harsh Mahaseth explains why domestic brands have been able to mask as leading, global brands and how this will be soon brought to an end.

Nepalese businesses have been exploiting the good faith and name of well-known giant brands such as KFC, Adidas, Nike for decades. It’s common in Nepal to see a restaurant named ‘KKFC’, resembling the American fast-food chain KFC or a Nepalese brand named ‘CenterFillz’, closely resembles Centre Fresh. Counterfeit Adidas and Nike clothing can be easily found. The prevalence of such counterfeit items is largely due to the absence of effective legislation protecting intellectual property. The current legislative framework has allowed the use of identical logos and the use of the goodwill (or inaction) of international brands. Such practice has discouraged foreign investment into Nepal.

The Patent, Design and Trademark Act enacted in 1965 had the intention of protecting intellectual property and trademarks but failed to address the emerging challenges faced by domestic and international brands. The loopholes present in the Act are the main reasons behind the occurrences of infringements of trademarks. As per the Act, the rights and ownership of a brand are only established after the trademark is registered in Nepal. This will soon change with the introduction of the Industrial Property Bill by the Nepalese Government. The Government has finalised the draft of the Bill and will soon be forwarding it to the Parliament. Once signed into law, this will replace the old Act. The Bill aims to address the various intellectual property thefts of both foreign and domestic investors who have built huge brands.

The Bill aligns itself with the Paris Convention for Protection of Industrial Property 1883 and the Agreement on Trade-Related Aspects of Intellectual Property Rights of the World Trade Organisation. Furthermore, it excludes geographical locations from being registered as a trademark. This will prevent patenting items such as Bhaktapur’sJuju dhau, yogurt, the Nepali khukuri, and the Dhaka topi.

There have been past cases where well-known trademarks were unable to register in Nepal due to a domestic company registering the trademark in their name. Kansai Nerolac Paints could not launch their paints in Nepal (they even lost the case in Court) and were forced to sell its products under the name as KNP. Recently Thumbs Up also faced a similar problem and had to reach a negotiated settlement. The Bill therefore aims to safeguard the well-known brands even if they are not registered in Nepal. It states that similar sounding trademarks cannot be registered under names which may give a false impression or association with some individual or company. The Bill has earmarked a fine payment of up to Nepali one million Rupees as a fine for the violation of a trademark. The Bill also demands that custom officials seize knockoffs which are both exported and imported in Nepal.

The trademark protection period will begin from the day trademark registration applications are filed, against the current statute, which begins protection period from registration date. This Bill will replace the Patent, Design and Trademark Act(1965). The Bill will also register the patent for a period of 20 years. However, the government can use those innovations and creations for the purpose of national, health and food security without seeking the permission of the patent owner.

Drafting an umbrella Intellectual Property Rights Law to cover all aspects of intellectual property is urgently required. The Nepalese Constitution, which was formed only a few years ago, necessitates the formulation of an integrated Intellectual Property Rights law. Article 25 of the Constitution enshrines intellectual property among the fundamental rights of the citizens of Nepal.

Intellectual Property has become a pertinent issue for Nepal. The concerned body regarding registration and protection of trademarks and intellectual property is not well equipped. At present, the Intellectual Property Section at the Department of Industry is very small. There is a requirement for trained and well-equipped man power to deal with the several issues of intellectual property and trademarks which would also require the knowledge of national and international laws and the technical aspects of trademarks, design, patents and copyright.

The Nepalese consumers have been deprived and deceived of quality goods or services due to the knockoffs sold in markets with the logo and goodwill of other international brands. Protecting the Intellectual Property will mean encouraging persons to come up with innovative ideas in businesses or services. Hopefully these provisions will foster entrepreneurship and innovation and provide a sense of security to domestic as well as foreign investors.

This article gives the views of the author, and not the position of South Asia @ LSE blog, nor of the London School of Economics. Please read our comments policy before posting. Photo credit: kalhh, Pixabay

Harsh Mahaseth is currently pursuing a degree in law from the National Academy of Legal Studies and Research (NALSAR), India.

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Christopher Finnigan

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