IPR and Criminal Liability

Section 63 of the Copyright Act, 1957 states that if any person who knowingly infringes or abets the infringement of the copyright in any work, such a person commits an offense punishable with imprisonment and fine. Recently, in M/s. Knit Pro International vs. State of NCT of Delhi & Anr., the Supreme Court held that S.63 of the Copyright Act is a non-bailable offense. Considering the fact that people now-a-days are less aware about Intellectual Property Rights, declaring S.63 as nonbailable offense might not be justified as it might be used as a weapon to harass the innocent.

This paper is an attempt to shed light on the implications of declaring S. 63 of the Copyright Act as cognizable and non-bailable offence in M/s. Knit Pro International Vs. State of NCT of Delhi & Anr. (Criminal Appeal No. 807 of 2022). The paper will analyze the above-mentioned judgment and its implications on Intellectual Property Rights (IPR) via various Indian High Court judgments and International Jurisprudence.

M/s. Knit Pro International vs. State of NCT of Delhi & Anr.

Facts:

The appellant filed an application u/s 156(3) Cr.P.C. and registered FIR against the respondent u/s 51, 63, and 64 of the Copyright Act read with S. 420 IPC. Thereafter, the respondent filed a petition before the High Court to quash the criminal proceedings on the ground that S.63 of the Copyright Act is not a cognizable and non-bailable offence. The High Court allowed the petition and quashed the criminal proceedings holding that S.63 of the Copyright Act is non-cognizable offense. Thereafter, a petition was filed in the Supreme Court of India challenging the said order of the High Court.[1]

Issue:

Whether the offence under Section 63 of the Copyright Act is a cognizable offence as considered by the Trial Court or a non-cognizable offence as observed and held by the High Court?[2]

Held:

The Supreme Court referred to the punishment mentioned in S. 63 of the Copyright Act which states “… less than six months but which may extend to three years…”[3] The problem arose from the fact as to where do the phrase ‘may extend to three years’ falls under First Schedule of the Cr.P.C. An offence punishable with imprisonment for three years and onwards but not more than seven years is a cognizable offense while offences punishable with imprisonment for less than three years or with fine only are non-cognizable offense. The Supreme Court held that “extend to three years include three years” and therefore, S. 63 of Copyright Act is a cognizable and non-bailable offence.[4]

The Supreme Court of India did not provide any reasonable explanation for declaring S. 63 of Copyright Act as a non-bailable offense. Thus, one needs to look into the jurisprudence set by the Indian High Courts to analyze the reasons as to why the phrase ‘may extend to three years’ includes ‘three years’.

International Jurisprudence regarding criminal liability in IPR

The TRIPS Agreement nowhere mentions about a criminal liability for infringing Intellectual Property Rights except in case of counterfeit or piracy.[5] The U.S. Trademark Law, 2013 provides for only civil actions against the alleged infringer. For example, §.32(15 U.S.C. § 1114) of the U.S. Trademark Act states, “shall be liable in a civil action“.[6]

But the Trademark Counterfeiting Act of 1984 provides for criminal penalties for intentional trafficking in counterfeit goods. §.506 of the U.S. Copyright Act provides for criminal liabilities for infringing copyright rights wherein the punishment may extend up to 10years of imprisonment. The UK Trademarks Act and the UK Copyright Act also provides for criminal liability for making or dealing in infringing articles where the term of punishment extends up to 10 years of imprisonment.[7] §.146 of the Trademarks Act 1995 (Australia) imposes criminal liability for falsely applying a registered trademark of imprisonment up to 5 years or fine. In Belgium, infringement of trademarks can attract criminal liability under s. 179 s.192 of the Belgium Criminal Code.[8]

The Chapter 7 of the Copyright Act 1996 (Finland) provides for penal sanctions and liabilities for copyright infringement under the Act.8 Article 48 of the Law of Russian Federation on Copyright and Neighboring Rights states, “Violations of copyrights and neighboring rights envisaged by this Law shall assume civil, criminal or administrative responsibility in keeping with the legislation of the Russian Federation.”[9] In other words, violation of copyrights in Finland can also trigger criminal liabilities.

On observing the various legislations across the globe, it can be deduced that there is an imposition of criminal liability for infringing the intellectual property rights where some legislation provides for punishments up to 10years. While the maximum period of imprisonment provided under the Indian laws extend up to 3years.

Although criminal penalties might help in deterring the offender or reducing the crime rate in relation to intellectual property, the cost of such penalties is much higher as it discourages creativity and innovation. In my opinion, criminal penalties should only be imposed for indictable offenses, related to intellectual property, which are of very serious nature.

Indian High Courts on IPR as cognizable and non-bailable offence 

Various judgments have been passed on the issue whether, the offence under Section 63 of the Copyright Act is a cognizable and non-bailable offence? In 2002, the court in Jitendra Prasad Singh vs. State of Assam held that may extend to three years’ includes imprisonment as long as three years and thus, S.63 is a non-bailable offense.[10] In Amamath Vyas vs. State Of A.P. 2006, the court rejected the decision in Jitendra Prasad Case and held that s.63 is non-cognizable and bailable offence.

The court further held that “punishment for a term which may extend to three years under the Copyright Act is not similar to the expression punishment for three years and upwards” of the Criminal Procedure Code.[11] If certain offence does not fall under classification III, does not mean that such offences automatically falls in classification II of Part II of First Schedule.

Further, in State Govt. of NCT of Delhi vs. Naresh Kumar Garg, the Delhi High Court held that S.63 of the Act is a bailable offence and that the ratio of Avinash Bhosale vs. Union of India would also apply to Copyright Act wherein Section 135 (1) (ii) of the Customs Act, which uses the same expression as in S.63 of Copyright Act, is bailable offence.[12]

But later in Nathu Ram vs. State of Rajasthan, 2021 and in Piyush Subhashbhai Ranipa vs. The State of Maharashtra, 2021, the court held that S.63 of Copyright Act and S. 103 of the Trade Marks Act is non-bailable and cognizable offences.[13]

Similar view was taken by the High Court of Karnataka in ANI Technologies Pvt. Ltd. vs. State of Karnataka, 2022 where the court held that S.63 of the Copyright Act is nonbailable and cognizable offence.[14] It was finally in M/s. Knit Pro International vs. State of NCT of Delhi & Anr., the Supreme Court settled this debate by holding S.63 of the Copyright Act as non-bailable and cognizable offence.

Impact on other Intellectual Properties

The Supreme Court interpreted the expression may extend to three years to include the imprisonment for three years, such a precedent set by the Supreme Court will also affect other laws relating to Intellectual Property Rights where the similar expression has been used by the legislature to penalize the offenders. For example, S. 103 of the Trademarks Act, S. 39 of the Geographical Indications of Goods (Registration and Protection) Act, S. 72 of the Protection of Plant Varieties and Farmers’ Rights Act and S.56 of the Semiconductor Integrated Circuits Layout-Design Act.

If any person violates any of the said provisions, such person could be arrested without warrant and getting a bail will become difficult as right to bail is no longer available for violating such provisions. Although there are no High Court Judgments where the court declared above-mentioned provisions, except S. 103 of the Trademarks Act, as cognizable and non-bailable offense, the precedent set by the Supreme Court will be referred to declare such provisions as non-bailable and cognizable offenses. But is it justified to declare such provisions relating to Intellectual Property Rights as nonbailable and cognizable offenses?

In my opinion, it is not justified and reasonable to declare provisions relating to Intellectual Property Rights as non-bailable and cognizable offenses. Firstly, there is an issue with the interpretation of the expression may extend to three years’ Punishments with imprisonment as less as 7 months or 2 years will also be considered as non-bailable and cognizable.

This goes against the Cr.P.C. where offences with imprisonment less than three years are bailable offences and might result into some unjust situations. For example, the offense of sharing copyright music unlawfully or downloading songs from pirated websites, can result in arrest of such person with no right to bail. Furthermore, S.63 of the Copyright Act includes situations where punishments of less than 6 months can be imposed if the infringement is not in the course of trade and business.

The Supreme Court’s decision renders even such situation as cognizable and non-bailable even though there is no possibility for an imprisonment of 3 years. The police officials can arrest without warrant and curb the liberty of a person since police officials are not responsible to determine whether the infringement u/s 63 falls in the course of trade and business or not.

Secondly, declaring offences under S.63 as non-bailable and cognizable also dilutes the scope of exemptions and limitations provided under S.52 of the Copyright Act. The police officials are not responsible to determine whether the use by the alleged accused is permissible under S.52 or not. They are only responsible to enforce the law which states arrest without warrant on infringement under S.63. Here, again the liberty of an individual is getting jeopardized while defeating the purpose of the Indian Constitution that secures liberty of an individual.

Thirdly, declaring infringement of Intellectual Property Rights as non-bailable and cognizable offense, also defeats the purpose of Intellectual Property laws. Excessive enforcement can lead to chilling effects which might have detrimental effects on innovation. Copyright laws aims to promote creativity by protecting the rights of the creators.

The precedent set by the Supreme Court in M/s. Knit Pro International vs. State of NCT of Delhi & Anr., dissuades creativity because the creators will always be under the threat of being arrested with no right to bail. Particularly in modem times, the number of SLAPP (Strategic lawsuits against public participation) has increased whereby suits against several creators have been filed to silence them.

The declaration of S.63 as non-bailable offense can result into multiple false litigations where the interest of the creators will be jeopardized. Similarly, in case of Trademarks, market giants usually indulge in practices whereby they try to drive out small players out of the market or make their business suffer losses by instituting cases. Legitimate trademark users will also be under threat of being arrested, given the increase in market competition, since determination of whether there was any infringement or not takes place during the trial.

Lastly, majority of the Indian population is unaware about how the intellectual property laws functions. Although ignorance of law is no excuse, one cannot set aside the fact that such a precedent might result into unjust situations for those who are innocent. Such a precedent can be misused like how the seditions laws are being misused or how S.66A of the IT Act was misused to silence critiques and dissents by the public.

The power to arrest anyone based on the accusations for infringement of Intellectual Property Rights, under the provisions which are declared to be nonbailable and cognizable by the court, can be used as a weapon to harass the innocent since there is no remedy available for the victims for such false and frivolous complaints.

India is still developing in the field of Intellectual Property Laws and Rights wherein many of the citizens are unaware of the existence of such rights. The 2022 judgment passed by the Supreme Court is hampering innovations and dissuading creativity. Such a decision of declaring S.63 of the Copyright Act can result into multiple false litigations wherein the liberty of an innocent might be curbed.

The decision not only affects Copyright laws but also other Intellectual property laws which uses the same expression as used in S.63 of the Copyright Act. Excessive enforcement in a field which is still developing can result in chilling effects which might hamper growth in such sector. Therefore, it is contended that in M’s. Knit Pro International vs. State of NCT of Delhi & Anr. 2022, the Supreme Court erred by not considering the social economic conditions of the Indian society and holding S.63 of the Copyright Act as cognizable and non-bailable offence.

This article has been contributed by Vanshika Aggarwal, student at Jindal Global Law School. The views are personal, if any.

End Notes

[1] Ms. Knit Pro International vs. State of NCT of Delhi & Anr. (Criminal Appeal No. 807 of 2022)

[2] Id.

[3] The Copyright Act 1957

[4] Ms. Knit Pro International vs. State of NCT of Delhi & Anr. (Criminal Appeal No. 807 of 2022)

[5] Agreement on Trade Related Aspects of Intellectual Property Rights

[6] U.S. Trademark Law, 2013

[7] UK Trademarks Act and the UK Copyright Act. https://www.legislation.gov.au

[8] Belgium Criminal Code.

[9] Law of Russian Federation on Copyright and Neighbouring Rights.

[10] Jithendra Prasad Singh v. State of Assam (2004) 2 GLR 271,

[11] Amamath Vyas v. State of Andhra Pradesh 2 [2007 CRI LJ 2025 (AP)]

[12] State Govt. of NCT of Delhi v. Naresh Kumar Garg 2013 SCC OnLine 1142

[13] Nathu Ram vs. State of Rajasthan, 2021 & Piyush Subhashbhai Ranipa vs. The State of Maharashtra, 2021

[14] ANI Technologies Pvt. Ltd. vs. State of Kamataka, 2022