Khadi trademark: Why Modi govt is so worried about protecting this IP

Prime Minister Narendra Modi, in his monthly address to the nation "Mann ki Baat", said his appeal to the people of India to adopt Khadi yielded positive results as sale of Khadi on Dhanteras and Diwali spiked. Khadi and handicrafts sales have gone up by 90 per cent compared to last year which has helped all those who are employed in this sector. On the occasion of Dhanteras, Delhi's Khadi Gramodyog recorded sales of one crore rupees, and the sale of khadi products -which include garments and other items -shot up over 89% to Rs 814 crore during April-September 2017, compared to Rs 430 crore a year ago with Modi emerging as a brand ambassador of sorts. In today's BS special, the author discusses the urgent need to protect the Khadi IP.

We have in past months looked at some interesting cases that have come up in the Intellectual Property (IP) domain as they intersected the marketing and communication of brands, and impacted the existence and longevity of these brands, and all that they stood for. In these very columns, we have carried pieces on, ‘Image trademark for Taj Mumbai: Smart or senseless?’ (June 21, 2017), ‘Blue border and IP: God bless (and protect) the Saint Mother Teresa and her stripes’ (July 10, 2017) and ‘Why ‘Brand’ Mother Teresa is surrounded by controversy’ (July 25, 2017). In the recent past an equally interesting case has surfaced on the legal ownership of Khadi, use of the word ‘Khadi’ and intellectual property rights surrounding it. 

In recent days, the use of the KHADI trademark by a German company Khadi Naturprodukte GbR has got the Indian government very worried, and the government now wants to take steps to prevent the Germans from using the Khadi trademark. The German company manufactures and sells shampoos, oils, soaps, and gels etc. that are made from natural ingredients primarily in the European Union.

The Khadi Village and Industries Commission (KVIC) which comes under the Ministry of Micro, Small and Medium Enterprises (MSME) has registrations for the mark KHADI and KHADI GRAMODYOG in classes 3 (soaps; perfumery, essential oils, cosmetics, hair lotions etc.) and 25 (clothing, footwear and headgear) in India.However, according to the online records these marks haven’t been renewed for long and one of the marks has actually been withdrawn. Interestingly, class 3 and 25 have a number of applications for the mark KHADI from individual applicants and even companies not affiliated to the government and some of them have even been actually registered. The German company doesn’t seem to have a trademark application in India though they have registrations in the EU and USA. While KVIC seems eager to take action against the German company in the EU it would be interesting to see if they are as enthusiastic about taking action against the other registrants in India related to the Khadi mark. But we will discuss that a little later.

The German Company obtained registration for the mark KHADI in Europe (classes 3, 21 and 31) and USA (class 3) in May 2012 and February 2013 respectively. The Community Trade Mark (CTM) Database, which contains details regarding trademarks in Europe, indicates that the mark is pending cancellation, however, details regarding the same could not be accessed despite efforts. Also, the registration is limited to classes 3, 21 and 31 and the mark is not being used to the market the khadi cloth in particular. However, it is relevant to make note that KVIC manufactures and sells village oil, soap and other natural products and these overlap with the products being sold by the German company.What is even more interesting is that the packaging of some of the German company’s goods is almost identical to that of KVIC’s products sold in India making it a case not just of trademark infringement but also of ‘passing-off a likeness’ which in simple terms means copying.

Reports in Indian newspapers suggest that the Government’s course of action is to apply for cancellation of the mark in US and Europe (cancellation proceedings are already pending) and also to apply for the registration of the mark KHADI in these jurisdictions with a view to provide protection for this mark beyond India.

Trademark rights are territorial in nature and one needs to have a registration in that particular country to oppose registration or even use of that particular mark. Some countries follow the first-to-file approach, thereby implying that the first to file a mark will have rights irrespective of usage of the mark and some countries like India, UK, and Australia etc. follow the common law system which places more reliance on prior usage of the mark than on the date of filing. CTM system in Europe is based on the first-to-file system and therefore it might be rather difficult for India while pursuing any legal action against Khadi Naturprodukte GbR.

There are precious lessons to be learnt for the KVIC in this entire episode: 

1. The Khadi name and appellation is very valuable and worth protecting through professional filings, and regular updations, of IP applications. 

2. The KVIC needs to clearly delineate the brand Khadi and try to own it for posterity based on the lineage that the name has from the time of Mahatma Gandhi and the entire swadeshi movement. A good IP lawyer can work a persuasive argument in support and protection of Khadi for KVIC. 

3. Protecting Khadi in India, and its application to categories such as cosmetics and cloth, will not suffice in global markets. Khadi IP has to be filed and pursued in all key world markets. Individual market by market. Though, now that India is a party to the Madrid Protocol, the process of applying to many countries has become easier because it can be done through one common filing.

In all fairness, the KVIC has been getting proactive in trying to protect the franchise and sanctity of Khadi at least in domestic markets. 

On February 8, 2017 KVIC sent a legal notice to Fabindia’s New Delhi-based CEO alleging that a close scrutiny of garments sold by Fabindia revealed that while the labels stitched on the garments stated ‘Fabindia Cotton’, the removable price tags had the word ‘khadi’ on them. The notice mentioned that KVIC had corresponded with Fabindia earlier in August 2015 after the company advertised some fabric as ‘khadi’. In the correspondence, Fabindia had assured KVIC that,“As per directions issued by your office, we have stopped advertisement campaign in all media. We have also sent internal directions to stop selling the cloth with reference to khadi.”But as per KVIC, despite written assurances, Fabindia continues to sell products under the name of ‘khadi’ and has also put up prominent khadi display panels at their sales outlets, which could advertently or inadvertently mislead customers. 

KVIC insists that any marketer seeking to sell ‘khadi’ garments must, in accordance with the existing legal framework, apply for a ‘Khadi’ mark Regulation Certificate. After launching the ‘Khadi Institution Registration and Certification Sewa’ on 2nd October 2016, KVIC has made the certification procedure simpler requiring payment of Rs. 10,000 as fee and a list of 25 spinners & 5 weavers. The grant of certificate usually takes up to 45 days. 

Last year KVIC had got into a similar spat and served a notice on Aditya Birla Group’s Madura Fashion & Lifestyle. The notice was triggered by an advertisement in a newspaper to promote apparel under the brand name ‘Peter England’. Within a week, the company apologized to KVIC for using the trade name ‘khadi’ without permission and assured that it has removed the word from all the promotional materials.

KVIC is not just getting all itchy and picking fights to protect its turf on ‘Khadi’. Khadi and Village Industries Commission recently inked a deal with Arvind Ltd. to sell around one million metres of ‘khadi denim’ every year to it. An agreement between Arvind Mills Limited and Khadi and Village Industries Commission (KVIC) was signed in Ahmedabad and under the MoU, khadi denims and other khadi products made by Arvind Ltd. will bear KVIC’s certification mark. KVIC Chairman Vinai Kumar Saxena actually went on record to say, “This deal will not only enhance khadi’s sales annually by Rs 40 crore but will also increase the economic stability of khadi artisans across India, by providing them Rs. 2 crore as extra incentives”.

Parallely, fabric and apparel major Raymond has also partnered with Khadi and Village Industries Commission (KVIC) to introduce a new line of clothing under the brand Khadi by Raymond, which will directly compete with the likes of Fabindia. KVIC will certify Raymond to use Khadi mark to sell ready-made garments and fabric, which will be available at KVIC and Raymond outlets across the country. According to KVIC this joint venture is also a step towards making a radical shift in people’s perception of Khadi from a fabric that stands for nationalism to a fabric that stands for fashion. The association will add an incremental employment of 2.1 lakh man-hours for spinners and weavers. Certainly good news for Khadi!

Controversy meanwhile continues to surround Khadi. There is a pending application for Geographical Indication (application no. 492) on Khadi under Class 24 of goods categorized as ‘textiles and textile goods (handicraft)’. Section 11 of the Geographical Indications of Goods (Registration & Protection) Act, 1999 states that any association of persons or producers or any organization or authority established by or under any law for the time being in force representing the interest of the producers of the concerned goods, who are desirous of registering a geographical indication in relation to such goods can apply for a geographical indication (GI) tag. Despite there being a statutory body i.e. KVIC for the development of khadi, the GI application has been filed by the Intellectual Property Rights Association claiming to be acting on behalf of manufacturers/producers of khadi throughout India. Accordingly, in the Formality Check Report dated 10.12.2014, the Registrar pointed out the following deficiency in the GI application – How the Applicant represents the interest of the producers of Khadi? To which the Intellectual Property Rights Association replied stating that it had written letters to all Khadi movement and Sarvodaya Movements to join this application. As  of today,  no reply had been received from them. In fact in the Examination Report dated 16.09.2015, it was noted that the competence of the applicant in protecting the interest of the producers must be established by the applicant association. Also, the pre-application activity of the applicant association in relation to the protection and promotion of ‘Khadi’ is to be submitted.

We are sure this space is going to see far more action in the days to come. Stay tuned.
Carol Goyal is a lawyer by training. She is currently in New York pursuing her Masters at Sotheby’s Institute of Art. Sandeep Goyal is an advertising and media veteran of 33-years standing.

Disclaimer: Views expressed are personal. They do not reflect the view/s of Business Standard.

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