Misuse of khadi mark by Fabindia adversely affects interests of artisans; KVIC has strong case against erring firms

Recently, the Khadi and Village Industries Commission (KVIC), filed a case against Fabindia in the Bombay High Court claiming Rs 525 crore in damages for the unauthorised use of the ‘khadi’ mark. Khadi refers to a kind of fabric that is ‘hand-woven’ in India. The khadi mark is registered as a trademark in India by KVIC, a statutory body responsible for promoting khadi and other village industries in India.

Geographical indication (GI) registration has also been sought over ‘khadi’ (Application No 492). The unauthorised use of the khadi mark adversely affects the interests of the community which is granted the mark (in this case, the community of khadi weavers), as the benefits (fair compensation) from the use of the mark do not reach that community.

This is not the first instance of misuse of the khadi mark by a commercial entity. For instance, in Germany, a foreign company, Khadi Naturprodukte, was granted a trademark over khadi, thereby allowing the use of khadi by the German company without paying any compensation to the community of khadi weavers in India. The ongoing legal battle over khadi involving Fabindia also led to a recent meeting by the Indian government that plans to promote khadi as an Indian brand abroad to prevent further misappropriation of the khadi mark.

 Misuse of khadi mark by Fabindia adversely affects interests of artisans; KVIC has strong case against erring firms

Representational image. AFP.

The use of the khadi mark (without the authorisation of the KVIC) by commercial entities amounts to an infringement of KVIC’s trademark and a loss of licensing fee payable to KVIC for the use of the khadi mark.

Protection granted by trademarks

The purpose of a trademark is to act as a ‘source-indicator’ or an indication of the origin of goods. For instance, the brand name ‘Nike’ and the famous Nike ‘swoosh’ sign are trademarks of the company ‘Nike’ and any sports equipment manufactured by Nike is instantly recognised by customers as a Nike product.

If another individual/entity uses Nike’s trademarks on their goods, this would be an infringement of Nike’s trademark and would mislead the consumers about the source of the good, as consumers might be deceived into thinking that the goods are manufactured by Nike. This form of trademark infringement is also referred to as ‘passing off’ where the competitors of a trademark owner might try to pass off their goods as originating from the trademark owner.

Passing off risks maligning the image of the trademark owner where inferior goods are passed off as those manufactured by the trademark owner. One of the reasons KVIC has sent legal notices to companies including Fabindia to desist from using the khadi mark including words such as ‘handwoven’, ‘woven in handlooms’ and ‘handspun’ to describe the khadi products is that these companies are selling spurious goods, which puts the livelihood of rural artisans at risk.

Trademark row involving khadi

KVIC’s dispute with Fabindia goes back to 2015 when it first asked Fabindia to stop making unauthorised use of the khadi mark. Despite giving assurances to KVIC that it would not use the khadi mark, Fabindia continued using the khadi mark without taking a licence from KVIC (the trademark owner of khadi). KVIC sent a legal notice to Fabindia in February 2017 and finally filed a case in the Bombay HC to resolve the matter. Under the Khadi Mark Regulations, 2013 (issued by the Ministry of Micro, Small and Medium Enterprises), only those entities/individuals which sell genuine khadi can use the khadi mark tag/label.

In February 2016, KVIC had sent a legal notice to Aditya Birla Group’s Madura Fashion for the unauthorised use of the khadi mark to promote the company’s apparels; Madura Fashion agreed to stop producing its merchandise under the brand name khadi.

Under section 29 of the Trade Marks Act, 1999 the unauthorised use of a registered trademark amounts to infringement of the registered trademark. As khadi is registered as a trademark by KVIC, a court in the instant case would most likely rule in favour of KVIC.

Use of the khadi mark worldwide

Instances of the misuse of the khadi mark have also occurred outside India. In 2014, it was reported that the Indian government was seeking cancellation of the khadi trademark granted to the German company, Khadi Naturprodukte, in Europe. Khadi Naturprodukte’s mark is registered for use on non-fabric products such as soaps and cosmetic based products, utensils etc. In this case, it was possible for Khadi Naturprodukte to obtain a trademark over ‘khadi’ in Europe despite the mark being already registered in India, because trademarks (like other intellectual property rights) are territorial.

This means that a trademark protection is granted to an individual/company only in the jurisdiction in which the mark is registered. It is therefore conceivable that a particular mark such as khadi is registered by different entities in different countries. It is unclear what the current status of the trademark granted to Khadi Naturprodukte is- ostensibly, the German company continues to sell products under the brand name ‘khadi’. This can be problematic for the Indian government, which is strengthening its efforts to promote the khadi brand abroad and government agencies could be held liable for trademark infringement for using the khadi mark while selling products abroad, if the khadi mark has already been registered by an individual/company in that jurisdiction.

Stronger protection for khadi

The Indian government can secure better protection for khadi by making a serious effort to challenge the registration of khadi as a trademark where the mark has been registered by any commercial entity outside India. The Indian government can oppose the trademark registration over khadi by foreign companies on the ground that khadi as an Indian fabric is  well known internationally (even if it is not registered by KVIC in other jurisdictions)- this is because khadi has long been associated with the Swadeshi movement in India as it was handspun in India during the national freedom movement to boycott foreign goods.

Marks which have a global reputation are not registrable under trademark law on the ground that the mark is already associated with a particular individual/company and therefore, KVIC can still claim the remedy of passing-off with respect to khadi in other jurisdictions (even though KVIC does not enjoy trademark rights in that jurisdiction). Once the registration of the khadi mark by foreign companies is successfully challenged by KVIC, KVIC should seek to register khadi in various jurisdictions by filing an international application under the Madrid System.

While KVIC has a strong case to prevent the misuse of the khadi mark by companies in India (on the ground that KVIC owns the khadi trademark in India), the Indian government’s bid to promote khadi abroad will be successful only if KVIC actively seeks cancellation of any wrongful registration of the khadi mark abroad along with registering the khadi mark internationally. This will ensure that KVIC does not itself fall afoul of intellectual property laws in other jurisdictions.

Also, by successfully registering the khadi mark abroad, the Indian government can ensure that khadi craftsmen in India receive a fair share of royalties from the use of the khadi mark by foreign companies. This can help alleviate concerns of threat to the livelihood of the community of khadi craftsmen and reputational concerns surrounding the use of the khadi mark by those selling spurious goods.

(The author is an LLM candidate at the University of Cambridge)

Updated Date: Jul 05, 2018 21:10:56 IST