In an unprecedented move, the Enforcement Directorate has slapped money laundering charges on two Indian firms for violation of the Trade Marks Act.
In April 2013, the Steel Authority of India (SAIL) lodged a complaint with the Chhattisgarh Police against two Raipur-based companies (Ms Alankar Alloys Pvt Ltd and Ms Pankaj Ispat Ltd) for manufacturing TMT steel bars for using the SAIL trademark without authorisation. Our readers may be aware that under the Indian Trade Marks Act it is an offence to falsely use a trade mark and sell such goods. A probe was initiated by Enforcement Directorate (ED) when it was discovered that the firms sold their wares at inflated rates and allegedly laundered huge sums of money. The ED swiftly identified the “proceeds of crime” under the Prevention of Money Laundering Act (PMLA) and seized the firms’ assets worth Rs 7 crores. The ED is the primary agency responsible for the enforcement of FEMA and PMLA.
Trade- Intellectual Property linkages are mechanisms to address problems of enforcement of IPRs, chiefly to impose sanctions on non-compliance. In this case the violators of Trade Marks Act have been booked under the PMLA. Until recently IP linkages usually involved custom authorities and drug regulation authorities.
The punishment for offences under the PMLA is rigorous imprisonment for a term from three years to seven years and a fine which may extend to five lakh rupees. Under the PMLA, certain offences relating to trademarks fall in the list of ‘scheduled offences’- the occurrence of which is a pre-requisite for initiating investigation into the offence of money laundering. The instant matter shall now proceed to be heard before the Adjudicatory Authority constituted under the PMLA, which will decide on validity of the attachment of the property. Recently, the ED has amped up on crackdowns in wake of shocking scams surfacing every odd month. The said anti laundering act was enacted in 2002, thus is fairly recent. Consider these statistics: Until 2012, there were only 131 cases where attachment of properties was upheld and the total number of persons arrested were 22! The action by the ED in this case comes across as zealous protection of trade commodities, which has now been extended to goods with definite IP value attached to them. In view of the far-reaching powers the ED has been vested with, I hope the investigations shall be properly conducted and charges will not be slapped indiscriminately.