The huge price difference between OEM spares and counterfeits draws customers to the latter. “Vehicle manufacturers to some extent contribute to the growing counterfeit menace,” says Amarjit Singh, secretary, Indian chapter of International Association for the Protection of Intellectual Property (AIPPI) and vice chairman – Global Anti-Counterfeiting Group. Apprehensive of losing lucrative revenue, they restrict vendors from selling in the retail market through contractual agreements. “Mostly the price of the counterfeit product is almost equal to the price that vendors supply parts to vehicle makers.” If the price was kept marginally higher the end-customers would settle for genuine parts, he opined.

Allowing component makers to sell products (made as per vehicle manufacturers’ technology) in the retail market for an additional royalty payment will ensure the interests of both parties are contractually protected while keeping counterfeiters at bay. This will also help end-customers get genuine parts, averred Amarjit Singh, who is also the secretary general of Anti-Counterfeiting Group of India (ACGI), which is part of the Global Anti-Counterfeiting Network (GACN). ACGI is in to proposing law reforms, sharing best practices in different countries, training of customs, police and public prosecutors, interacting with law makers on legislative skills and different kinds of laws. GACN observes 8 June as world anti-counterfeiting day.

Brand custodians are partly responsible for counterfeits, by not taking proper action when required, opined Col Ramani. Countering this argument, Kumar Kandaswamy, country manufacturing industry leader, Deloitte India, says OEMs invest substantial time and money to develop a part or a system so it is not feasible for them to sell it to someone who has not been a part of the investment. “Companies are far more aware that if holding on to the IP ceases to be of competitive advantage, they do let go of the IP. It is a problem for legitimate manufacturers as there is a loss of revenue. There are plenty of uninformed customers who buy products from grey market ultimately affecting the brand image of the OEMs,” he said.

RamaniCol K G Ramani, founder director, C3i

Why Counterfeits?
Lack of strict laws and the absence of stringent punishment encourage counterfeiters who usually leverage the demand for low technology and high consumption products. That is why companies like Cummins and Meritor have largely remained unaffected. Cummins supplies engines to mining, railways and power generation where the Mean Time before Failure (MTBF) and Maximum Time before Restoration (MTBR) are vital parameters. “The customers’ low tolerance for downtime makes them reach out to OEMs for spare parts,” said Vipul Tandon, vice president, Cummins Sales & Service-India. High technology genuine replacement parts that enhance performance and strategy, like NanoNet fuel filters, restrain customers from buying fakes. However, for low value spares the company has seen significant increase in spurious parts from China. This can be curbed by OEMs educating customers on quality maintenance and assisting authorities on enforcement.

SynchroconesSynchrocones-Original and Fake

There is no dearth for law as India has the Contract Act, Sale of Goods Act, Essential Commodities Act, Consumer Protection Act, Standards of Weights & Measures Act, Patents Act, Copyrights Act, Trade Marks Act and the Designs Act. What action can be taken with the prevailing laws when the means of enforcement is the one that actually stands in the way for effective prevention of malignancy? According to Amarjit Singh, Consumer Protection Act will come in handy if the end user is affected by spurious parts. The Act deals in issues relating to protection, enforcement, mediation and arbitration with reference to IP. ‘Parts’ are classified as those not visible in a vehicle but functional and these are either subject matter of patents or in public domain. Those that are visible or decorative are classified as ‘fittings,’ protected by the Designs Act. Trade Mark Act protects the name or the identity while Copyright is on the parts that are impossible to make without technical drawings or blueprint.

Ramani says the Designs Act is weak; the maximum punishment is a fine of about Rs 2,000. The 2005 amendment diluted the Trade Marks Act. There is a clash between the two acts as it exists in India and other countries. Elsewhere, unlike in India, it is sufficient if companies register under Trade Marks Act, as the Copyright is inherently registered. In India, most MNCs and local companies have not registered their logo under Copyright Act while registered under Trade Marks Act, which is sheer cussedness on their part says Ramani.

The earlier law allowed a subinspector to conduct raids, confiscate material and arrest the shop owner. The amended law gives this power to an Assistant Commissioner of Police in the cities, and Deputy Superintendent of Police in the districts. These officials are not trained to identify fakes and are busy with other responsibilities so no action is taken. The law, however, allows them to refer cases back to Trade Marks authorities. So, Ramani says, counterfeiting can be contained but never eliminated. Kandaswamy informs there are no laws specific to automobile sector in India, most Acts are widespread.

greaves“We have conducted more than 10 raids in the last three years in south state capitals. We raided two retail shops (Vikas Auto Centre and Jain Auto Centre) in Bangalore in 2011 and the owners were arrested for selling INEL duplicate parts like CDI etc” says G N Balasubramaniam, head-aftermarket, India Nippon Electricals Limited. Recently C3i seized fake spark plugs worth Rs 80 lakh in Delhi. Even crankshafts, camshafts and common rail direct injection systems are manufactured by counterfeiters now. To prevent this several companies including INEL have initiated use of holographic stickers on cartons, besides ensuring timely supplies. According to Ramani, ‘loyalty programme’ for mechanics has failed as the difference between the incentives provided by the OE part maker and the profitability out of fake parts is unavoidably huge.

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