Concepts of Trademark and its

Infringement in context of Nepal

First term paper submitted for the partial fulfillment of LL.M. First Year,
Intellectual Property Law

Word Count: 3560

Symbol No.
P.U. Registration No.:
Chakrabarti Habi Education Academy
College of Law
Bijulibazar, Kathmandu,
Purbanchal University

17 January 2019

Submitted to:
Purbanchal University
Faculty of Law
 TABLE OF CONTENT

1. Introduction ............................................................................................................ 2

1.1 Background .............................................................................................. 2

1.2 Objective of the study .............................................................................. 2

1.3 Significance of the study ......................................................................... 3

1.4 Scope and limitations ............................................................................... 3

1.5 Rationale .................................................................................................. 3

1.6 Organisation of the study ......................................................................... 4

2. Conceptual Review ................................................................................................... 5

2.1 Intellectual property (IP) .......................................................................... 5

2.2 Concept of Trademarks ............................................................................ 7

2.2.1 What is trademark? .................................................................................. 7

2.2.2 Functions of trademark ............................................................................ 8

2.3 Other marks ............................................................................................. 9

3. Infringement ............................................................................................................. 13

3.1 Infringement of Trademark.................................................................... 13

3.2 Fundamental Elements of Infringement of Trademark.......................... 13

3.3 Trademark Infringement related to Conventions ................................... 15

3.4 Patent, Design and Trademark Act,1965 (2022 B.S.) ........................... 15

3.5 Remedies against infringement.............................................................. 16

4. Cases related with the Trademark Infringement ...................................................... 18

5.1 Analysis, Summary and conclusion ....................................................................... 20

Reference

Page | 1
CHAPTER ONE
1. INTRODUCTION

1.1 BACKGROUND

With the advancement of the world and globalization, the world have become a small
village now. One can get the things produced in another country and one can sell the
things in another country governing by the rules and treaties between the countries and
international conventions.

The intellectual property laws have played vital role to enhance globalization and
economic development of not only a country but the whole of the world. Intellectual
property laws are the laws which protects the rights of the creators of the intellectual
property and the rights of the users of such intellectual property. It governs various laws
related with patent, designs, trademarks, copyrights, geographical indications, trade
secrets, integrated circuits, etc.

Amongst the subject matter of the intellectual property, Trademark occupies a major
part because it is related with the production of goods, delivery of services and their
trade worldwide. Therefore, study of trademark is very important to anyone concerned
with the intellectual property law.

1.2 OBJECTIVE OF THE STUDY

The major objective of this term paper is to understand and analyze the conceptual
understanding of trademarks and also to examine the legal provision related with the
infringement of the trademark in Nepal. Beside this major objective, this study tries to
satisfy the following objectives:

 To understand the relationship between trademark and other intellectual

property.
 To examine the conceptual understanding on trademark.
 To examine the legal provisions on infringement of trademark in Nepal.

Page | 2
1.3 SIGNIFICANCE OF THE STUDY

Importance of trademark is equally important with the importance of the intellectual

property. Trademark occupies a major portion of the intellectual property. It is not only
related with the production of goods and delivery of services it is also related with their
trade worldwide. Therefore, study of trademark is very significant.

Study of the trademark laws provides the understanding of the practical and theoretical
aspects of the trademark and thereby it ensures that the right of the owner will be
protected and any infringement of the trademark will be punished according to law and
the customers/ consumers be provided the options to take correct decisions as per their
wish or choice. It provides better understanding on the subject matter to any researchers
such as legislatures, judges, legal professionals, legal scholars, legal writers, etc.
Therefore the study of the trademark law is very significant to any person interested in
the intellectual property law.

1.4 RATIONALE

Rationale of this study (term paper) is to understand various concepts, aspects, types,
etc of the trademark there by making the researcher and the reader of this report
understand the subject and consequence of the infringement of trademark. After having
the understanding of it, one would be able to prepare a clear synopsis on infringement
of any trademark.

1.5 SCOPE AND LIMITATIONS

Scope of this study is limited only to the study of conceptual understanding of

trademark and its infringement only. It does not cover the broader aspect of trademark
laws and conventions but only studies the subject matter in the context of the conceptual
understanding and Nepali Law.

This term paper is a doctrinal type of study and the data and information are collected
largely from the library and books. A descriptive approach is followed in this study.

Page | 3
1.6 ORGANIZATION OF THE STUDY

This term paper is divided into five parts as chapters and each chapter describes about
the particular aspects of the trademark in the context of the legal field.

The first chapter contains about the introductory part of the term paper which includes
introduction, objectives of the study, significance, scope and limitations, rationale of
the term paper. The second chapter deals about the theoretical aspects and literature
review on the subject matter starting from the conceptual review of intellectual property
then trademarks. The third chapter shade lights on the infringement of the subject
matter. The fourth chapter shows some example of the legal cases on the infringement
of trademark. The fifth chapter provides the analysis, summary and conclusion on the
said subject matter.

Page | 4
CHAPTER TWO
2. CONCEPTUAL REVIEW

2.1.1 BASIC CONCEPTS OF INTELLECTUAL PROPERTY (IP)

Intellectual property (IP) refers to creations of the mind: inventions; literary and artistic
works; and symbols, names and images used in commerce. 1

Intellectual property, very broadly, means the legal rights which result from intellectual
activity in the industrial, scientific, literary and artistic fields. 2

The manufacturer of the industrial goods have two types of rights of ownership over
the goods manufactured by him. Physical ownership over the goods is the first right and
the Intellectual property or the industrial property is the second right which separates
the manufactured goods by means of trade mark or design.3

Property can be broadly divided into two categories; Corporeal and Incorporeal

Corporeal Property can be divided into Movable and Immovable

Incorporeal Property can also be divided into a) Jura in re-aliena and b) Jura in
repropria (Right of ownership over the incorporeal property- Intellectual Property)

Intellectual property can be further divided into industrial property and artistic and
literary works as shown below in the figure.

1
What is Intellectual Property?, World Intellectual Property Organization (WIPO), Geneva, Switzerland,
WIPO Publication No. 450 (E), at 2.
2
WIPO Intellectual Property Handbook, World Intellectual Property Organization (WIPO), Geneva,
Switzerland, WIPO Publication No. 489 (E), 2004, at 3.
3
Mount Everest Brewery Pvt. Ltd. & United Brewery Nepal Pvt. Ltd. v. Department of Industries, NKP
2067, Decision Number 8356, para 5'.

Page | 5
 Property

Corporeal Incorporeal

Jura in re-aliena Jura in re-propria

Movable Immovable (Leases, (Intellectual
Securities,etc.) Property)

Literary and Artistic

Industrial IP Works

Patent,
Design,Trade marks, Copyright
etc.

Figure 1 Relationship of Intellectual Property & Property

Thus, intellectual property is intangible rights over the inventions or the creations by
human intellect such as copyright, patent, trademark, designs, trade secrets, etc.

Intellectual property law have two major purpose; one is to protect the moral and
economic right of the creators over the creation and also to protect rights of public to
access over those creations. Second purpose is to promote, as a deliberate act of
Government policy, creativity and the dissemination and application of its results and
to encourage fair trading which would contribute to economic and social development.

Page | 6
2.1.2 KINDS OF INTELLECTUAL PROPERTY

We can see new kinds of IP rights emerging in the recent world with the advancement
of globalization and technological advancement. Therefore, the kinds of the IP is still
can be said as growing. However, these are the basic types of IP;

1. Patent

2. Industrial Design

3. Trade Mark

4. Copyright

5. Trade Secret

6. Geographical Indications

7. Traditional Knowledge

8. Integrated Circuits

9. Plant Varieties

2.2 CONCEPT OF TRADEMARKS

2.2.1 WHAT IS TRADEMARK?

Trademarks were found to be used in the ancient Greek period also as scratches, stamps,
etc. It is a distinctive marks in form of marks, words, sign, or combination of all or any
two on the products or service to distinguish from other similar products or services.

Trademark is a distinctive mark, motto, device, or emblem, which a manufacturer

stamps, prints, or otherwise affixes to the goods he produces, so that they may be
identified in the market, and their origin be vouched for.4

4
Henry Campbell, Black's Law Dictionary (New York (?), West Publishing Company, 1990)'

Page | 7
A trademark is a sign capable of distinguishing the goods or services of one enterprise
from those of other enterprises. 5

"Trademark" means a mark capable of being represented graphically and which is

capable of distinguishing the goods or services of one person from those of others and
may include shape of goods, their packaging and combination of colours or any
combination thereof.6

"Trade mark" means the word, symbol, or picture or a combination thereof to be used
by any firm, company or individual in its products or services to distinguish them with
the product or services of others.7

Patent, Design and Trademark Act of Nepal does not cover colour as a trademark
however Indian act accepts colour also as a trademark. Nepalese act's definition of
trademark is little narrower.

2.2.2 FUNCTIONS OF TRADEMARK

The major function of the trademark is to distinguish the product or service from other
similar product or service.

'Under modern business conditions a trade mark performs four functions: (1) Identifies
the products and its origin, (2) It guarantees its unchanged quality, (3) It advertises the
product, and (4) it creates and image for the product.'8

World Intellectual Property Organization (WIPO) have mentioned three functions of

Trademark;

1. To Customers: It enables the customers to distinguish and identify the products.

5
https://www.wipo.int/trademarks/en/ (visited on 5 Jan 2019)'.
6
Trademark Act, 1999, section 2(1)(zb), India.
7
Patent, Design and Trademark Act, 1965 (2022 BS), section 2(c), Nepal.
8
P. Narayanan, Intellectual Property Law, Eastern Law House, Kolkata, Third Edition (Revised), 2017,
at 147

Page | 8
 2. To Producers: It enables manufacturers to distinguish and identify their products
from those of their competitors or similar manufacturers.
3. To Regulatory Authorities: It provides the ability to the government authorities
or regulatory authorities to distinguish and identify the product.

The function of Trademark can be briefly noted as below:

1. It protects the product by preventing others from selling a product under the
same name.
2. It protects consumers from confusion and deception while choosing the product.
3. It protects the owner of the trademark from unfair competition.
4. It helps to increase the sales and business.
5. It ensure the quality of goods to the customers and other stakeholders.

2.3 OTHER MARKS

Trademark is sometimes seems similar with other marks but it is distinct in nature than
others however the governing law for these marks could be same.

Some of the other marks are;

1. Service marks

2. Trade Marks

3. Collective Marks

4. Well known Marks

5. Certification Marks

6. Smell/Sound as trademark

7. Trade Names

Page | 9
2.3.1 SERVICE MARK

Service Mark is similar as trade mark but it represents service of a service provider or
person.

'A service mark is one which distinguishes the service rendered by one person from
those of others. Service means service of any description which includes services in
connection with business of any industrial or commercial matters such as banking,
communication, education, financing, insurance, ' …', and so on.'9

Examples of service mark:

2.3.2. TRADE MARKS

Please refer section 2.2.1 of this term

paper.

Examples:

2.3.3 COLLECTIVE MARKS

'Collective marks are usually defined as signs which distinguish the geographical
origin, material, mode of manufacture or other common characteristics of goods or
services of different enterprises using the collective mark. The owner may be either an

9
Ibid, at 152

Page | 10
association of which those enterprises are members or any other entity, including a
public institution or cooperative.'10

Examples: Mark of Nepal Bar Association,

2.3.4 WELL KNOWN MARK

'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.'11

Example: Logo of Google,

2.3.5 CERTIFICATION MARK

'Certification marks are usually given for compliance with defined standards, but are
not confined to any membership. They may be used by anyone who can certify that the
products involved meet certain established standards.'12

Example: Mark of ISO, Woolmark, etc.

2.3.6 SMELL/SOUND AS A TRADE MARK.

Sound of roaring lion is a trade mark of MGM Cinema.

Some countries have started protecting smell as trademarks too.

10
https://www.wipo.int/sme/en/ip_business/collective_marks/collective_marks.htm, (visited on 2 Jan
2019)
11
https://www.wipo.int/sme/en/ip_business/marks/well_known_marks.htm, (Visited on 2 Jan 2019)
12
https://www.wipo.int/sme/en/ip_business/collective_marks/certification_marks.htm, (Visited on 2 Jan
2019).

Page | 11
2.3.7 TRADE NAMES

'Trade Names are generally names, terms or designations which serve to identify and
distinguish and enterprise and its business activities from those of other enterprises.'13

2.3.8 DOMAIN NAMES

'An enterprise, by registering its domain name, acquires a unique identity on the Internet
which serves in the world of electronic commerce the same or almost the same purpose
that is served by a trade mark or name or service mark in the world of trade and
commerce.'14

13
Dr. Bal Bahadur Mukhia, Intellectual Property Law (Lalitpur, Mission Legal Service Pvt. Ltd., 2015)
43'.
14
Dr. J.P. Mishra, An Introduction to Intellectual Property Rights, 3rd Edition (Allahabad, Central Law
Publications, 2012) 303'.

Page | 12
CHAPTER THREE
3. INFRINGEMENT

3.1 INFRINGEMENT OF TRADEMARK

Unauthorized use of a trademark registered under the law or an imitation of such

trademark applied on goods and services of the same class, or sale, storing for the
purpose of sale, or exhibiting for sale of goods and services bearing a counterfeited
mark, or using a mark duly registered under the law by another person to serve the
purpose of unauthorized promotion of goods or services of the same class are
infringement of trademark.

The Patent, Design and Trademark Act, 1965 (2022 B.S.) defines infringement by
following section: 'No one shall copy or use or cause to use in the name of the others
without transforming the ownership or written permission pursuant to Section 21d, the
trademark registered in the name of any person pursuant to this Act.'15
'If anyone uses any registered trademark for the commercial purpose without
permission of the owner or person with the ownership, it will be deemed as
infringement.'16

3.2 FUNDAMENTAL ELEMENTS OF INFRINGEMENT OF

TRADEMARK

There are four essential elements to constitute infringement.

(i) Using a sign: - The first elements requires examination of what constitutes use of a
sign, which sign includes affixing the sign to goods or their packaging, or offering or

15
Patent, Design and Trademark Act, 1965 (2022 B.S.), section 16(2).
16
Shreedhar Sapkota and Lal Bahadur Kunwar, Concepts of Intellectual Property Law in Context of
Nepal, (Kathmandu, National Judicial Academy, 2011) 52'.

Page | 13
exposing goods for sale, putting them on their market, or stocking them for sale under
the sign, as well as offering or supplying services under the sign.17
(ii) In the course of trade: - The second elements require that the defendant make use
of sign in the course of trade. It means if the uses of such mark by defendant will not
hamper on economic benefit of plaintiff, it doesn’t constitute infringement. So for the
purpose of infringement, defendant must have to use such mark in the course of trade
for economic benefit. 18
(iii) Use in relation to goods or services: The third essential element requires use in
relation to goods or services.
(iv) Use in conflict with registered mark: - The last and fourth essential element requires
use in conflict with registered mark. The second party should use the registered
trademark without consent of the first party, and which creates the conflict. That is
known as an infringement of the trademark. There are three levels of comparison to
determine whether conflict or not with registered mark, which are applied to the relative
grounds of refusal.19

 Identical or similar or deceptively similar marks/dissimilar goods or services

 Identical marks/ similar goods or services and similar marks/ identical or similar
goods or services
 Identical marks/ identical goods or services

17
Trademark Directory, Department of Industries, Vol. I, P-3 P - 38
18
Ibid.
19
Ibid. at 369

Page | 14
3.3 TRADEMARK INFRINGEMENT RELATED TO
CONVENTIONS

Besides Nepali Law, Nepal has accredited following Conventions related with
Trademark: 20

 Paris Convention for the Protection of Industrial Property (June 22, 2001)
 Convention Establishing the World Intellectual Property Organization
(February 4, 1997)
 Agreement establishing the World Trade Organization (WTO) (April 23, 2004)
 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS
Agreement) (1994) (April 23, 2004)

3.4 PATENT, DESIGN AND TRADEMARK ACT,1965 (2022 B.S.)

There is slightly confusion in proviso clause of section 18(1) of such Act, it states that
in case it is felt that such trademark may hurt the reputation of any individual or
institution or adversely affect the public conduct or morality or undermine the national
interest or the goodwill of the trademark of any other person, or in case such trademark
found to have already been registered in the name of another person, It shall not be
registered.

Regarding the infringement of trademark section 16(2), 18(1) provision clause, 18(B),
19, and 25 are mostly related provisions in existing Act.

No one shall copy the registered trademark. Section 16(2) 'No one shall copy or
use or cause to use in the name of the others without transforming the ownership or
written permission pursuant to Section 21d, the trademark registered in the name of any
person pursuant to this Act.'21

20
https://wipolex.wipo.int/en/legislation/results?countryOrgs=NP&subjectMatters=4, (Visited on 4 Jan
2019)
21
Patent, Design and Trademark Act, 1965 (2022 B.S.), Section 16(2).

Page | 15
 No one can use as a registered trademark without registration in department.
Section 18(B) read as 'Prohibition to Use Trade-marks: No trade-mark may be used as
a registered trade-mark without registering it at the Department.'22

REMEDIES AGAINST INFRINGEMENT

3.4.1. Fine and Confiscation of Goods

If anyone has violates the above matters, they are liable for punish for illegal use of
trademark with not exceeding one hundred thousand rupees as fine & all the articles
connected such offences shall be seized on the order of the department. Section 19 of
the act read as 'punishment for illegal use of trademarks: In case anyone who, violates
Sub-Section (2) of Section 16, or brings into use a trademark which has been cancelled
under Sub-section (3) of Section 18, or violates Section 18B, may be punished with a
fine not exceeding is One Hundred Thousand Rupees and articles and goods connected
with such offense confiscated on the orders of the Department as per the gravity of
offense.'23

3.4.2. COMPENSATION

Section 25 of the act read as 'In case a person whose patent, design or trademark has
been registered under this Act, suffers any losses as a result of violation of the
provisions of this Act by any others person in respect to the patent, design or trade-
mark, the Department may order to pay amount actually by the title holder from such
offender in the form of compensation.'24

22
Ibid. section 18(B).
23
Ibid. section 19.
24
Ibid. section 25.

Page | 16
3.4.3. PROHIBITION

Prohibition may be issued by the court in favor of the owner of the trademark in cases
of infringement as remedy against the infringement.

3.4.4. INTERIM ORDER

The court may issue the interim order to stop usage of trademark if in prima faciely it
is seen that the right of the trademark owner is breached.

Page | 17
CHAPTER FOUR
4. CASES RELATED WITH THE TRADEMARK
INFRINGEMENT

1. AMERICAN HOME PRODUCTS CROP. V. LUPIN LABORATORIES

LTD. 25

In this case, the court examined the issue of deceptive similarity for pharmaceutical
preparation of different nature i.e., therapeutic and analgesic. The plaintiff is the
registered owner of the mark ROLAC for pharmaceutical preparation of the therapeutic
value from 1992. In 1993 the defendant started using the mark TOROLAC. In a suit for
infringement on the ground of deceptive similarity that addition of ‘TO’ to the mark of
the plaintiff will not enable a patient of imperfect recollection to distinguish the marks.
The court held the mark deceptively similar.

2. IN THE CASE OF KIRAN SHOES MANUFACTURES V.

DEPARTMENT OF INDUSTRY ET AL, 26,

The Supreme Court, on this case, related with the trademark of Goldstar Shoes, ruled
that in order to determine the similarity of trademarks in infringement action, it is
necessary to watch on the issue whether there is any symmetry between the products
and the trademarks affixed to them as well as whether there is a likelihood of confusion
among the general public as a result of the use of a registered trademark. An act of
copying or using registered trademarks without the written permission of owners is
prohibited in section 16 (2) of the Act. The Department of Industries (DOI) is
empowered to impose a fine in the amount up to 100,000 Rupees to infringers of
registered trademarks and also to order to confiscate all products and materials related

25
1996 IPRL 61 (Bom)
26
Kiran Shoes Manufacturer v. Department of Industries and others, NKP 2062 B.S., Decision No. 7536.

Page | 18
to such illegal act. Nepal Police under the instruction of the DOI conduct search seize
and raid actions. In infringement actions, trademark owners are not required to prove
harm or loss. Trademark owners are also entitled to compensation from the infringers
as to the amount of actual loss in the event trademark owners are able to prove loss or
harm suffered as the result of infringement. No provision of punitive damage is made
in the Act.

In the context of Nepal, section 19 of the Patent, design and trademark Act, 2022
constitute the punishment for illegal use of trademark: In case anyone who, violates
Sub-Section (2) of Section 16, or brings into use a trademark which has been cancelled
under Sub-section (3) of Section 18, or violates Section 18B, may be punished with a
fine not exceeding is one hundred thousand rupees and articles and goods connected
with such offense confiscated on the orders of the Department.

Page | 19
CHAPTER FIVE
5.1 ANALYSIS, SUMMARY AND CONCLUSION

Trademark is a distinctive marks in form of marks, words, sign, or combination of all

or any two on the products or service to distinguish from other similar products or
services.

The major function of the trademark is to distinguish the product or service from other
similar product or service. Under modern business conditions a trade mark performs
four functions: (1) identifies the products and its origin, (2) It guarantees its unchanged
quality, (3) It advertises the product, and (4) it creates and image for the product.

The objective of the Trademark law is to deal with the precise nature of the rights which
a person can acquire in respect of trademarks, the mode of acquisition of such rights,
the method of transfer of those rights to others, the precise nature of the infringement
of such rights etc. The Act on Trademark in Nepal has to some extent provided the fair
provision in regard to the Trademark protection. However the country lacks a separate
legislation on it. Similarly the fine for the infringement of the trademark is very nominal
and with no provision of punitive or special damages, lack of commitment from
government agencies and slow court process, protection of trademark rights in Nepal
has become a major concern. The DOI has been playing significant role in protection
and promotion of trademark laws in Nepal, however efforts of the Department seems
to de minimum due to lack of proper legislation and qualified manpower. The role of
the Judiciary in interpreting the Trademark role and protecting its essence is also
remarkable. However, the combined effort on the part of the judiciary and government
is necessary to guarantee the Trademark Law in Nepal.

Whenever the trademark, whether it is registered or unregistered, is infringed by other

person in the course of trade, the first user can obtain the remedy on the base of statutory
law.

Page | 20
REFERENCES

STATUTES

 Patent, Design and Trademark Act, 1965 (2022 B.S.)

 Trademark Act, 1999, India.

BOOKS

 Dr. Mishra, J.P., An Introduction to Intellectual Property Rights, 3rd Edition,

(Central Law Publications, 2012).
 Dr. Mukiha, Bal Bahadur, Intellectual Property Law (Lalitpur, Mission Legal
Service Pvt. Ltd., 2015).

 Narayanan, P., Intellectual Property Law, 3rd Edition (revised), (Kolkata,

Eastern Law House, 2017)

 Sapkota, Shreedhar and Lal Bahadur Kunwar, Concepts of Intellectual Property

Law in Context of Nepal, (Kathmandu, National Judicial Academy, 2011).

 What is Intellectual Property?, (Geneva, World Intellectual Property

Organization (WIPO), WIPO Publication No. 450 (E)).

 Wipo Intellectual Property Handbook, 2nd Edition, (Geneva, World Intellectual

Property Organization (WIPO), WIPO Publication No. 489 (E), 2004,
Reprinted 2008).

DICTIONARY

 Campbell, Henry, Black's Law Dictionary (New York (?), West Publishing
Company, 1990)

DIRECTORY

 Trademark Directory, Department of Industries, Vol. I

CASES

Page | 21
  Nepal Kanoon Patrika 2067, volume 4, page no. 895, decision no. 8356.

 Nepal Kanoon Patrika 2062, volume 5, page no. 969, decision no. 7536

 American Home Products Corp. v. Lupin Laboratories Ltd, (1996), IPRL 61

(Bom)

ONLINE

 https://www.wipo.int/sme/en/ip_business/collective_marks/collective_marks.h
tm, (visited on 2 Jan 2019)

 https://www.wipo.int/sme/en/ip_business/marks/well_known_marks.htm,
(Visited on 2 Jan 2019)

 https://www.wipo.int/sme/en/ip_business/collective_marks/certification_mark
s.htm, (Visited on 2 Jan 2019).

 https://wipolex.wipo.int/en/legislation/results?countryOrgs=NP&subjectMatte
rs=4, (Visited on 4 Jan 2019)

 https://www.wipo.int/trademarks/en/ (visited on 5 Jan 2019).

Page | 22