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Million-rupee fine for trademark violation

In Nepal, a restaurant that resembles American fast food chain, KFC, has been branded KKFC; chewing gums that look like Center Fruit and Center Fresh — products of Italy-based company in India — are sold as Center Fillz; and shoes with fake Adidas and Nike logos are found everywhere.

It is illegal to use identical logos and fonts of renowned brands, such as KFC, Center Fresh, Adidas and Nike, to produce knockoffs. But Nepal has not been able to control this practice because of an obsolete law.

This will change soon as the government has finalised the draft of the Industrial Property Bill to control theft of intellectual property and address concerns of foreign and domestic investors who have spent big sums to build their brands. The bill, which will be tabled in the next session of Parliament, will replace the Patent, Design and Trademark Act, enacted 53 years ago. Once this bill is signed into law, those producing knockoffs of renowned domestic and international brands will face legal action.

The bill states that well-known trademarks will be protected even if they are not registered in Nepal. This will give protection to well-known brands such as KFC, Coke, Adidas and Nike even if they don’t register their trademarks in Nepal.

A few years ago, Kansai Nerolac Paints, the Indian subsidiary of Kansai Paints of Japan, could not launch its products in Nepal, as the trademark ‘Nerolac’ was registered here by a domestic company. The company went to court but lost the case and was forced to sell its products as KNP. Recently, Thums Up, an Indian carbonated drink faced similar problem and is vying for a negotiated settlement.

The draft bill states that domestic and international trademarks that sound or look similar, and trademarks that give false impression of association with some individual or company cannot be registered.

Those who violate these provisions will be fined up to Rs 1 million. They will also have to bear losses suffered by those whose trademarks were illegally used, states the draft bill. The bill also gives authority to customs officials to confiscate knockoffs that are being imported to or exported from Nepal.

The trademark protection period, according to the draft bill, will start from the date applications are filed to register the trademark. Currently, such protection starts from the date of registration. Applications can be filed electronically. The bill recommends ‘first come first serve’ principle in trademark application. Once registered, the trademark should be brought into use within three years, from the existing one year. If owners fail to use the trademark within three years of registration, they can be given two more years to make use of it.

The draft bill is compatible with the 1883 Paris Convention for Protection of Industrial Property, and the Agreement on Trade-Related Aspects of Intellectual Property Rights of the World Trade Organisation. It takes into account new areas, such as geographical indication, utility model, trade secret and integrated circuit layout design.

The bill stipulates that geographical indications cannot be registered as trademark. “This provision will prevent others from patenting Bhaktapur’s Jujudhau (yogurt), Nepali khukuri (curved knife) and Dhaka topi (Nepali cap),” corporate lawyer Anju Upreti Dhakal told THT. “Only local people can register such products.”

The bill also paves the way for innovators and creators to register their patent for a period of 20 years, meaning these innovations and creations cannot be made, used or sold without permission of owners for two decades. If anybody infringes upon patent rights of others, the erring party will have to pay compensation equivalent to three times the amount of losses suffered by the affected party, states the bill. 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, adds the bill.

“We hope these provisions will foster entrepreneurship and innovation, and provide a sense of security to domestic as well as foreign investors,” corporate lawyer Gaurish Krishna Kharel said.


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