Falsification of “ISI Mark” on Products – How to Effectively


 

Falsification of “ISI Mark” on Products –
How to Effectively Combat this Menace?
A.L. Makhijani*, FCS, Advocate, Delhi.
It is not uncommon to find
products being marketed with
false ISI Marks. How the
existing law deals with such
offences, how ISI Mark is
different from trade marks,
what ISI certification means
and a host of related and
interesting issues are discussed
lucidly.
This article draws the attention of the readers, including the Government of India, consumer
associations and other stakeholders, to the endemic threat of “false/unlicensed use of ISI
Mark on goods” and “sale of goods with fake ISI Mark” by unscrupulous manufacturers/
dealers, which has been the cause of immense concern to the consumers but unfortunately
both the Government of India (Department of Consumer Affairs, which is administratively
responsible both for the “Bureau of Indian Standards” as also for “Consumer Protection”) as
well as the Bureau of Indian Standards (BIS) simply wink at this menace and pay only lip
service to this serious issue. Falsification of ISI Mark is more hazardous in respect of the
products for which ISI Mark has been made compulsory by the Government on considerations
of health and safety of the consumers. This article also seeks to (i) explain as to how the
existing penal provisions in the Bureau of Indian Standards Act, 1986 (in brief “BIS Act”) are
grossly inadequate to the gravity of the problem and (ii) make out a case for substantially
increasing the penalties for combating the menace of falsification of ISI Mark, on the pattern
of the Trade Marks Act, 1999. Being highly tilted in favour of the industry, the existing
provisions in BIS Act have virtually thwarted recourse to the legal remedy (by making it very
costly and time-consuming) against the people guilty of falsification of ISI Mark and sale of
goods with fake ISI Mark. It is also our case that BIS has neither the wherewithal nor the will
to take on the culprits. In view of these considerations, it is imperative for the Government to
bring the offences of “falsification of ISI Mark” and “sale of goods with fake ISI Mark”, which
are criminal in nature, within the purview of the police so that the general public, including
consumers, are empowered to effectively access the regular crime prevention machinery
when they detect “falsification of ISI Mark on goods” and “sale of goods with fake ISI Mark”.
Bureau of Indian Standards
The Bureau of Indian Standards (BIS) – formerly the Indian Standard Institution (ISI) – was set
up as a statutory national standards body under the BIS Act, 1986 for the harmonious
development of the activities of standardization, marking and quality certification of goods
and for matters connected therewith or incidental thereto. The two main activities of the
Bureau are (i) formulation of Indian Standards for goods and services and (ii) certification of
goods. The Bureau enjoys a virtual monopoly in regard to these two activities. Of late, the
Bureau has also been engaged in the certification of management systems, commonly referred
to as ISO certification. In the field of management system certification, Bureau is in competition
with other national and international certification bodies. The Indian Standards formulated
by the Bureau, as on 31.3.2007, were 18315.
BIS is more particularly known to the general public for the ISI Mark put by the manufacturers/
dealers on the goods by virtue of licences granted by BIS in accordance with the product
certification scheme as laid down in the BIS (Certification) Regulations, 1988, issued in exercise
of the powers conferred by section 38 of the BIS Act, 1986. As on 31.3.2007, 22994 certification
licences had been granted by BIS for various products covering about 1000 Indian Standards.
The ISI Mark, referred to as the “Standard Mark” in the BIS Act, 1986, is a quality mark. It
guarantees to the consumers that the product on which it has been put conforms to the quality
specifications as laid down in the relevant Indian Standard and for which it is licensed for use.
In case of goods with false or misleading ISI Mark, it is the consumers who suffer the most as
they use the fake products not conforming to the health and safety parameters laid down in
the relevant Indian Standards.
*Former Director (Legal), Bureau of Indian Standards.
Articles Articles
Product certification scheme
Generally, the product certification scheme is voluntary in nature.
However, on considerations of health and safety of consumers, ISI
Mark has been made compulsory by the Government for a number
of products e.g. LPG cylinders/stoves, cement, clinical
thermometers, plastic feeding bottle, packaged drinking water/
natural mineral water, steel products (tubes, wires, sheets, bars,
tinplates, etc.), electrical goods (cables, wires, appliances,
accessories, filament, lamps, immersion water heater, iron, stoves,
radiators, switches, fuses, circuit breakers, etc.). Compulsory ISI
Mark has been ordered by the Government either under the control
orders issued under Essential Commodities Act, Food & Drug
Adulteration Act, etc. or under section 14 of the BIS Act, 1986. In
view of these facts, falsification of ISI Mark on goods under
compulsory certification, being quite hazardous, assumes vital
significance from the standpoint of consumer interests. In fact, BIS
earns most of its revenues from the certification activities in respect
of items under compulsory certification.
Whether the certification is voluntary or compulsory, whether
the compulsory certification has been provided under Control
Orders or under BIS Act, BIS is obliged to ensure (i) the purity of
the ISI mark on the products and (ii) expeditious apprehension of
and adequate punishment to persons responsible for “falsification
of ISI Mark” and “sale of goods with false ISI Mark”. The BIS Act
must realize these goals; and if it has not been possible to
accomplish these goals even after 20 years of the BIS Act coming
into force, there is imperative need to strengthen the penal regime
laid down in the Act.
How BIS deals with violations
Having noted the above introductory facts, the issues for
consideration are (i) whether the BIS is equipped to effectively
deal with the situations of”falsification of ISI Mark on goods”
and “sale of goods with false ISI Mark” by unscrupulous nonlicensee
manufacturers and traders in a vast country like India
and (ii) whether the punishments provided in the BIS Act for
these offences are harsh enough to deter the errant violators. As
for the capacity of the BIS to effectively check and prosecute the
culprits, it would be worth noting that this organization does
not possess any regular enforcement machinery. There is no
specially trained cadre of officers/staff exclusively for
enforcement work. Some officers/staff are diverted from time to
time from other cadres for handing enforcement work on stopgap
basis. BIS has a few regional and branch offices whose skeleton
enforcement resources are no match to the gravity of the menace
of “falsification of ISI Mark” and “sale of goods with false ISI
Mark” in a vast country like India with 600 districts and 6 lakh
villages. Even if BIS decides to have separate enforcement
machinery, it cannot position the human resources in every
district of the country. The issue of regular enforcement machinery
in BIS was once considered by a Parliamentary Committee where
BIS regretted its inability to afford such a set-up. Given these
facts, the BIS cannot be expected to be accessible to the general
public for reporting cases of “falsification of ISI Mark on goods”
and “sale of goods with false ISI Mark”.
How effective are the legal provisions
Now, let us consider whether the present provisions of the BIS
Act are sufficient for meeting the enforcement needs or whether
this Act needs to be amended for effectively dealing with the
challenges of “falsification of ISI Mark” in a vast country like
India. The Government should also seriously address the issue
whether the criminal offences of “falsification of ISI Mark” and
“sale of goods with false ISI Mark” should be brought within the
domain of regular police machinery which is present throughout
the country. This would also empower the general public to
report such cases to the police, as in the case of goods with false
trade marks under the Trade Marks Act, 1999.
The penal regime as laid down in BIS Act has following features:-
(i) Misuse or improper use of ISI Mark (Standard Mark) is of
two types as provided under Section 11 of the Act namely
(a) use of ISI Mark without a licence (b) use of ISI Mark by
a licensee on goods not conforming to the relevant Indian
Standard. It is the first category i.e. “use of ISI Mark by a
non-licensee” which involves “falsification of ISI Mark on
goods” and is a cause of concern. The second category of
“improper use by licensee” is administratively addressed
by BIS in terms of the provisions of the Certification Scheme
i.e. by way of Stop Marking or other administrative actions
against the licensee in terms of the licence. Violations of
section 11 are punishable under section 33.
(ii) As regards section 14, under which compulsory certification
of products is provided, although its violation is punishable
under section 33, this section does not spell out the acts which
will constitute violations. To this extent, Section 14 would
also need to be amended or conversely this section would
need to be excluded from the purview of section 33.
Section 14 provides for compulsory use of ISI Mark on
products covered under the Scheduled Industry, as defined
in Industries (Development & Regulation) Act, 1951. There
would be many goods which may not be covered by IDR
Act. Therefore, if the Government wants to notify
compulsory certification for all kinds of goods, as deemed
necessary for consumer interest, it should appropriately
amend section 14 so as to remove the limitation of
Scheduled Industry.
(iii) Penalty for violations, provided in section 33, are
imprisonment for a term, which may extend to one year,
and/or fine which may extend to Rs. 50,000.
(iv) In terms of section 34 of BIS Act, cognizance of offences
under BIS Act can be taken by the court only on a complaint
made by or under the authority of the Government or BIS
or any consumer or any recognized association. Thus, the
BIS Act only provides for “complaint route” for filing cases
against violations including those relating to misuse of ISI
Mark. The jurisdiction of police for investigation of offences
under BIS Act has thus been excluded, with the result that
the general public cannot report such violations to the
police and the only course left to them is to file complaint
in the court which is both time-consuming and expensive.
The existing penalties under BIS Act have failed to make any
impact on the menace of “falsification of ISI Mark” and “sale of
Falsification of “ISI Mark” on Products – How to Effectively Combat this Menace?
Articles
goods with fake ISI Mark” on account of the following reasons:-
(a) The penalties are too meagre to create any deterrence in the
minds of offenders. Generally, the charged parties get away
with paltry fines. There has been no case of imprisonment
so far since the inception of the BIS Act, 1986.
(b) The “complaint route” for initiating proceedings against
offenders, which is both costly and time-consuming, is
another serious limitation, due to which there are no reports
of any complaints having been filed by consumers or
recognized associations. So far, only BIS has filed complaints
in courts, the number of which is far too less vis-a-vis the
prevalence of the menace. The average cost of filing and
pursuing a complaint case in a court is Rs. 1 lakh involving
about 2 years’ court proceedings. It is virtually impossible
to expect any consumer to devote Rs. 1 lakh and two years
just for pursuing one complaint under BIS Act. Therefore,
the existing provisions of BIS Act virtually rule out filing
of complaints by general public against the “falsification
of ISI mark” offenders.
(c) The above two limiting factors of “meagre penalties” and
“complaint route” have seriously impacted the effective
enforcement and prevention of misuse of ISI Mark.
The above conclusions about inadequacies of the existing
provisions are fortified by the following data obtained from BIS
under RTI Act:-
Year No. of No. of cases decided
complaints Acquitted Convicted
filed by Fined Imprisonment
BIS in
courts
2001 17 02 07 -
2002 17 02 04 -
2003 14 - 09 -
2004 95 04 10 -
2005 171 01 22 -
2006 316 07 56 -
2007 124 01 63 -
2008 61 03 35 -
Total 815 20 206 -
Notes : (i) Maximum fine imposed by the courts under section 33 so
far is Rs. 50,000/-.
(ii) Maximum imprisonment sentence pronounced by the different
courts under BIS Act is 06 months. However, as per records, no
imprisonment sentence was undergone by the accused.
It would be seen from the above facts that during the 8 years’
period 2001-08, only 815 cases were filed by BIS in courts against
those using false ISI mark on products, out of which 20 were
acquitted, 206 fined (maximum fine imposed Rs. 50,000 only)
and no body was imprisoned. As per information, there have
been a few cases in which imprisonment sentences (maximum 6
months) were pronounced but in no case the imprisonment was
actually undergone by the guilty. This shows that the culprits
were ultimately let off in appeals. The information also discloses
that 589 cases were either dismissed by courts or the same are
pending for periods ranging between 1 to 7 years.
The above data furnished by BIS also points to certain other
disturbing features about the impact of the existing penal
provisions under the BIS Act as also the earnestness on the part of
BIS to take on the culprits. Filing and pursing of single complaint
case under BIS Act costs about Rs. 1 lakh and about 2-3 years
litigation. As against this, maximum fine of Rs. 50,000 imposed so
far, coupled with absence of any imprisonment having been
undergone by any guilty so far, very clearly and conclusively
points to the toothless character of the existing penal provisions of
the BIS Act. What is the point of filing a complaint in court and
incur an expenditure of more than Rs. 1 lakh, when the offenders
are ultimately to be let off with fines ranging between Rs. 5,000 to
Rs. 50,000? The enforcement activity of the Bureau has also been
inconsistent. The number of cases filed in a year have ranged from
14 to 316. Thus, the enforcement drive of BIS has mostly been
listless. These facts undoubtedly establish that not only the BIS Act
lacks teeth, the BIS’ enforcement machinery, effort and will do not
match up to the enormity and prevalence of the menace.
COMPARISON BETWEEN ISI MARK AND A
TRADE MARK
(1) There is close similarity between “falsification of trade
mark” under Trade Marks Act, 1999 and “misuse of ISI
Mark” under BIS Act, 1986. ISI Mark has all the ingredients
of a Trade Mark. In fact, ISI Mark is the Trade Mark of BIS.
ISI Mark is more sacrosanct than an ordinary Trade Mark
in as much as ISI Mark seeks to guarantee the quality of the
product whereas an ordinary Trade Mark only denotes
connection between the goods and the proprietor of the
trade marks. Therefore, from the standpoint of consumer
interest, ISI Mark scores much higher than a trade mark.
Now, let us see the penal provisions existing in the Trade
Marks Act, 1999 for (i) applying false trade marks, trade
descriptions, etc. and (ii) selling goods or providing services
to which false trade marks or false trade description is
applied. “Falsifying” and “false application” of trade marks
cover the following situations:-
(i) Making of trade mark or a deceptively similar mark
(ii) Falsifying any genuine trade mark, whether by
alteration, addition, effacement or otherwise
(iii) Applying such false or deceptively similar mark to
goods or services or any package containing goods
(iv) Use of any package bearing a mark which is identical
with or deceptively similar to the trade mark of the
proprietor for the purpose of packing, filling or
wrapping therein any goods other than the genuine
goods of the proprietor of the trade mark.
(2) The penalties provided under sections 103 and 104 of Trade
Marks Act for application of false trade marks and sale of
goods with such false trade marks are (i) imprisonment of
6 months (minimum) to 3 years (maximum) and (ii) fine of
Falsification of “ISI Mark” on Products – How to Effectively Combat this Menace?
Articles Articles
Rs. 50,000 (minimum) to Rs. 2 lakhs (maximum). In case of
second or subsequent conviction, Section 105 of the Trade
Marks Act provides for enhanced penalties of (i) minimum
imprisonment of one year, maximum remaining 3 years
and (ii) minimum fine of Rs. 1 lakh, maximum remaining
Rs. 2 lakhs.
(3) As per section 115 (3) of Trade Marks Act, offences
constituted by sections 103, 104 and 105 pertaining to
falsification of trade marks and sale of goods with false
trade marks, as discussed above, have been made
cognizable.
(4) The comparison between the provisions for dealing with
misuse of ISI Mark and Trade Mark, as existing in the BIS
Act, 1986 and Trade Marks Act, 1999 leads to following
conclusions:-
(i) ISI Mark of BIS is, in terms of public good, critically
more important than an ordinary trade mark.
(ii) The activities of “falsification of ISI Mark” and “sale
of goods with false ISI Mark” are exactly the same
activities as “falsification of trade marks” and “sale
of goods with false Trade Mark”, as defined in Trade
Marks Act.
(iii) While “falsification of trade marks” and “sale of
goods with false trade marks” attract imprisonment
of 6 months to 3 years (one year to 3 years in case of
second and subsequent convictions), falsification of
ISI Mark only attracts an imprisonment of one year,
with no requirement of minimum imprisonment. In
terms of fine also, Trade Marks Act provides for higher
punishment vis-à-vis BIS Act. The offence of “sale of
goods with false ISI Mark” is in fact not referred to
under BIS Act, 1986.
(iv) Trade Marks Act makes these offences cognizable
whereas the BIS Act keeps these offences noncognizable.
(v) Under Trade Marks Act, anybody can activate the
enforcement machinery by reporting the violation to
the police, in BIS Act the machinery can be set in
motion only by filing a complaint in the court which
is both costly and time-consuming.
(vi) The Trade Marks Act does, however, provide for
certain safeguards in as much as cognizance of offences
can be taken only by a police officer not below the
rank of DSP and before making search and seizure,
the police officer shall obtain the opinion of Registrar
of Trade Marks and shall abide by the same.
(vii) As regards offences under Trade Marks Act, other than
those relating to “falsification of trade marks” and
“sale of goods with false trade marks” (Sections 103,
104 and 105), cognizance of offences can be taken by
the court only on complaint by Registrar of Trade
Marks (refer to section 115 (1) of TM Act).
(5) As may be seen from the above analysis, the penalties
provided in BIS Act for dealing with falsification of ISI
Mark by non-licensees are quite soft when compared to
similar offences committed in relation to trade marks under
Trade Marks Act. Considered from the viewpoint of public
good, falsification of ISI Mark should attract penalties
higher than those provided for similar offences in relation
to Trade Mark.
In the light of the foregoing facts and comparison between the
penalties provided in the Trade Marks Act, 1999 and the BIS Act,
1986, following amendments to the BIS Act, 1986 are necessary
for adequately dealing with the offences of “falsification of ISI
Mark” and “sale of goods with false ISI Mark”:-
􀂄 Section 11(1) of BIS Act, which deals with the use of ISI
(Standard) Mark by the non-licensees should be amended
so as to distinctly provide for “falsification of ISI Mark”
and “sale of goods with false ISI Mark” on the pattern of
section 102 of the Trade Marks Act, 1999.
􀂄 The offences relating to “falsification of ISI Mark” and “sale
of goods with false ISI Mark” by non-licensee
manufacturers/dealers should attract the penalties as
provided in sections 103, 104 and 105 of the Trade Marks
Act, 1999 for similar offences i.e. (i) imprisonment of
minimum 6 months (one year in case of second and
subsequent offences) and maximum of 3 years and (ii)
minimum fine of Rs. 50, 000 (Rs. 1 lakh in case of second
and subsequent offences) and maximum of Rs. 2 lakhs.
These offences under section 11(1) of BIS Act should also be
made cognizable. Section 33 of the BIS Act, 1986 may be
amended accordingly.
􀂄 As regards offences under section 11(2) pertaining to
improper use of ISI Mark by licensees, the existing scheme
of regulation and penalties may continue. The offences
by licensees may not fall under the purview of the police
and the existing system of filing of complaint in court by
BIS etc. may continue. In view of these facts, the proposed
amendments will not lead to any harassment of
licensees.
􀂄 Section 34 of BIS Act, 1986, which provides for cognizance
by the court only on complaint from BIS etc., may be
restricted to offences other than “falsification of ISI Mark”
and “sale of goods with false ISI Mark”. As regards
“falsification of ISI Mark” and “sale of goods with false ISI
Mark”, it may be provided that cognizance can be taken by
a police officer not below the rank of DSP, on same pattern
as provided in the Trade Marks.
The above proposed amendments to the BIS Act, 1986, besides
strengthening the penalties, will also make available the regular
police machinery for dealing with cases of “falsification of ISI
Mark” and “sale of goods with false ISI Mark”. In order to prevent
harassment, the Government may provide for consultation by
police with the BIS before taking cognizance of offence, on the
pattern of the Trade Marks Act, 1999.
It is hoped that the Government would consider the above
suggestions for amendment to BIS Act, 1986 dispassionately taking
into account the overall interests of consumers. 􀂉
Falsification of “ISI Mark” on Products – How to Effectively Combat this Menace?


Source : ICSI -