By: SANJEEV SHARMA AND SABIN JUNG PANDE
Intellectual Property Right (IPR) plays a vital role for economies to thrive in today’s competitive world. Countries have been adopting rigorous legal and technical measures to secure the intellectual properties (IPs) which they consider very important to attract investments and also to secure their national interests. For businesses, IPR has become a valuable intangible asset which is necessary for their growth and sustainability. Protecting such assets creates an environment where they can invest to expand their businesses and engage in fostering innovations which in turn generate employment, besides adding revenue to the government coffers.
Current IPR Scenario in Nepal
The history of IPR regime in Nepal can be traced back to the period of Rana Prime Minister Juddha Sumsher some 80 years ago. He enacted the Nepal Patent, Design and Trade Mark Act, 1993 BS in order to address IP related issues which had begun to surface gradually with the growing industrial and commercial activities. Eight decades after the implementation of the country’s first IP law, it is an irony that the IPR ecosystem in Nepal is still in a nascent stage. “Four factors that drive the engine of IP smoothly are creation, promotion, protection and use of IP. But Nepal’s IP ecosystem is moving at a snail’s pace due to inadequacies in the remaining three driving factors of IP. On the other hand, the quality of IPR protection and its service delivery is extremely poor,” observes IPR expert Madhu Soodan Paudyal. Paudyal who is the General Secretary of the Intellectual Property Protection Society of Nepal (IPPSON), an independent organisation formed in 2012, says that there is no dearth of creative activities here coming out from academic and research organisations as well as technical professionals who produce literary, artistic, musical and scientific creations.
At present, IP activities in Nepal are limited only to the areas of trademark, design, patent and copyright. It is because the existing legal frameworks only cover these four aspects of IP. Presently, two separate laws, namely Patent, Design and Trade Mark Act, 2022 BS and Copyright Act, 2059 BS exist. “There are some 4,000 maintained and valid trademarks but the annual application rate of patent and design ranges from zero to four which is quite disappointing,” says Paudyal. According to him, registration is not mandatory for copyright and so it does not indicate the total progress. “Copyright activities in musical and cinematographic works appear satisfactory but the creators of literary and academic works are not aware about copyright although creative activities are taking place,” he opines.
There are little or no activities seen in other forms of IP including geographical indication, trade secrets, integrated circuit design and new plant varieties due to the absence of legal frameworks to govern these IP aspects. “Many factors like traditional knowledge and indigenous technology, cultural expressions, digital data, bio-diversity and genetic resources and utility models, etc are part of our national interest,” shares Paudyal.
Besides the far too inadequate legal framework, the absence of a specialised IP office, service institutions and training centres also present difficulties in mitigating the 21st century challenges in properly managing IPR issues and fostering a favourable environment for the creators and innovators.
Insecure trade and service marks
At present, infringement of trademarks and designs is rampant in Nepal. Violation of trademarks happens generally in the form of unauthorized registration and the copying of trademarks of internationally recognised brands, also called well-known marks, by individuals and organisations. According to Janak Bhandari, founder of Global Law Associates PLC, a leading IP law firm, infringements mainly happen to take advantage of the market value of international trademarks. “Those who carry out such acts only have to make a little or no effort at all, in terms of accessing the market which has already been established by the reputed trademarks,” he says. Financial benefit is another factor Bhandari points out in trademark violation. “Many people who have registered trademarks of foreign companies bargain for the ownership of the brands in Nepal and demand large amounts of money to return the ownership,” he mentions.
Loopholes in the existing law are the main reasons behind the occurrences of infringements of trade and service marks. According to the Patent, Design and Trade Mark Act, 2022 BS, the rights and ownership of foreign brands are only established after the trademarks are registered in Nepal. “Exploiting this loophole, some Nepalis register and hold the trademarks of international companies,” says Bhandari, adding, “This has caused ambiguity in terms of registration and ownership of trademarks.”
The confusion over the status of well-known marks is also due to the fact that there is no mention of any parameter so as to determine the international trade and service marks in the existing law. Countries have been using the six parameters of WIPO to determine well-known marks. The parameters are (i) determining the first user or adopter of the well-known mark, (ii) the duration, extent and geographical area in terms of any use of the mark, (iii) registration and recognition along with its promotion and advertising (iv) the duration and geographical area of any registrations (v) the record of successful enforcement of rights in the mark and (vi) brand value. “As a member of WIPO, Nepal first needs to adopt the parameters in its IPR law,” mentions Bhandari.
According to WIPO, “Well-known marks are usually protected, irrespective of whether they are registered or not, in respect of goods and services which are identical with, or similar to, those for which they have gained their reputation.”
Currently, a number of trademark disputes are pending at the Department of Industry (DoI) and courts. According to Shanker Aryal, director general of DoI, the government body under the Ministry of Industry (MoI) to oversee the registration of industrial and intellectual property, there are currently 445 pending cases of trademark disputes. “When I assumed the post around nine months ago, there were 649 cases pending at the DOI. Of them, we resolved 119 by the end of FY2073/74. In the current fiscal year, an additional 80 cases were registered while we resolved 165 more,” he says. Expressing surprise, Aryal says that there were cases pending for more than six years at the department. “There are interest groups eying leveraging benefits from certain trademarks and in the process hampering the original businesses,” he adds. The cases go to Patan High Court if DoI isn’t able to settle the disputes. In 2074 BS, a total of 23 cases of intellectual property disputes were filed at the court, out of which 19 are related to trademark and four in copyright disputes. The court has settled four cases till date. Though the exact number is not known, it is believed that dozens of such cases are currently pending at the Supreme Court. Trademark disputes of Rajanighandha, Kansai Nerolac and Havells are among the large number of high profile cases. Some of the cases have already received verdicts while many others are pending at the courts for over a considerable period of time.
Trademarks of Nepali brands, too, haven't been spared when it comes to theft and copying activities. A couple of years ago, the popular footwear brand Goldstar found itself in a legal fight over infringement of its trademark and the violators were sentenced with tough punishments for their involvement in illegal activities. A few weeks ago, another shoes brand Magic Footwear published notices in newspapers warning some manufacturers to immediately stop copying its trademark and designs of products or to face legal actions. Such notices have become a commonplace in the Nepali media in recent years. It has become a usual practice that whenever a product, be it Nepali or foreign, becomes an instant market hit, copies of the product pop up one after another. Nepali alcoholic brands in particular have been facing the problem of their brand names and packaging designs being copied.
Part of this particular problem in IPR is also due to the low trademark and brand consciousness among Nepali consumers. “This is why items that look identical to established brands are so widespread in the local market,” says advocate Bhandari. Generally, foreign FMCG, clothing and footwear brands are the victims of counterfeiting. In August 2016, police raided stores and offices of some Kathmandu-based importers and found that they had been importing and distributing various counterfeit products of the Indian FMCG major Hindustan Unilever Limited. Experts point out different ways to control such activities. “There is a need to make it mandatory to mention the brand name (trademark) and the real price of commodity in the customs clearance bill to easily identify foreign grey products,” suggests Paudyal.
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