Trademark Infringement in Nepal: Law, Fines, Court

Introduction

Trademark infringement in Nepal constitutes unauthorized use of registered marks that creates confusion among consumers regarding the origin of goods or services. The Patent, Design and Trademark Act, 2022 (2065 BS) governs trademark protection and enforcement mechanisms in Nepal. This legislation replaced the previous Patent, Design and Trademark Act, 1965, establishing comprehensive provisions for trademark registration, protection, and remedies against infringement. The Department of Industry under the Ministry of Industry, Commerce and Supplies administers trademark registration and maintains the official register. Understanding trademark infringement laws helps rights holders protect their intellectual property and enables businesses to avoid legal violations.

Legal Framework for Trademark Protection in Nepal

The Patent, Design and Trademark Act, 2022 provides the primary legal framework for trademark protection in Nepal. Section 18 of the Act grants exclusive rights to registered trademark owners to use their marks in connection with registered goods or services. The Act defines trademarks under Section 2(k) as any visible sign capable of distinguishing goods or services of one enterprise from another. The Trademark Regulations, 2023 (2066 BS) supplement the Act by prescribing procedural requirements for registration and enforcement. Nepal is also a signatory to the Paris Convention for the Protection of Industrial Property, which provides international standards for trademark protection and enforcement mechanisms.

What Constitutes Trademark Infringement

Trademark infringement occurs when unauthorized parties use identical or deceptively similar marks without permission from registered owners. Section 24 of the Patent, Design and Trademark Act, 2022 defines infringement as using a registered trademark or similar mark that creates likelihood of confusion among consumers. The following actions constitute trademark infringement under Nepalese law:

Using an identical or similar mark on goods or services for which the trademark is registered without authorization from the owner.
Applying a registered trademark to packaging, labels, or advertising materials without proper consent from the trademark holder.
Importing, exporting, or selling goods bearing counterfeit trademarks that infringe upon registered marks.
Using a mark that is phonetically, visually, or conceptually similar to a registered trademark in a manner that deceives consumers.
Removing or altering genuine trademarks on products and replacing them with different marks without authorization.

Trademark Infringement Legal Provisions

Section 24 of the Patent, Design and Trademark Act, 2022 establishes the legal basis for trademark infringement claims. This provision grants registered trademark owners the right to prevent third parties from using identical or similar marks without consent. Section 25 addresses well-known trademarks, providing protection even without registration if the mark has acquired reputation in Nepal. Section 26 outlines exceptions to infringement, including fair use for descriptive purposes and prior use rights. The Act recognizes both civil and criminal remedies for trademark infringement, allowing rights holders to pursue multiple enforcement avenues simultaneously based on the severity of violations.

Civil Remedies for Trademark Infringement

Civil remedies provide trademark owners with mechanisms to stop infringement and recover damages. Section 27 of the Patent, Design and Trademark Act, 2022 authorizes courts to grant injunctions restraining further infringement activities. Rights holders can file civil suits in District Courts having jurisdiction over the place where infringement occurred. The following civil remedies are available under Nepalese trademark law:

Permanent or temporary injunctions prohibiting defendants from continuing infringing activities or using disputed marks.
Monetary compensation for actual damages suffered by trademark owners due to infringement activities.
Account of profits requiring infringers to surrender profits earned through unauthorized use of registered trademarks.
Delivery up or destruction of infringing goods, packaging materials, and promotional items bearing counterfeit marks.
Publication of court judgments at the infringer’s expense to restore the trademark owner’s reputation.

Criminal Penalties and Fines

Section 28 of the Patent, Design and Trademark Act, 2022 establishes criminal penalties for trademark infringement. Offenders face imprisonment for terms ranging from three months to three years depending on the severity of violations. The Act imposes fines between NPR 25,000 and NPR 100,000 for trademark infringement offenses. For repeat offenders, courts may impose enhanced penalties including longer imprisonment terms and higher fines. Criminal prosecution requires filing complaints with police authorities or directly with the District Government Attorney’s Office. The Department of Industry can also initiate criminal proceedings for trademark violations discovered during market surveillance activities.

Offense Type	Imprisonment Term	Fine Amount (NPR)
First-time infringement	3 months to 1 year	25,000 to 50,000
Repeat infringement	1 year to 3 years	50,000 to 100,000
Commercial-scale counterfeiting	2 years to 3 years	75,000 to 100,000

Court Jurisdiction and Procedure

District Courts exercise original jurisdiction over trademark infringement cases in Nepal. Plaintiffs must file civil suits in the District Court having territorial jurisdiction over the defendant’s residence or place of business. Section 27 of the Patent, Design and Trademark Act, 2022 grants courts authority to hear trademark disputes and grant appropriate remedies. The Muluki Civil Procedure Code, 2074 governs procedural aspects of trademark litigation including pleadings, evidence, and appeals. High Courts hear appeals from District Court decisions, while the Supreme Court exercises final appellate jurisdiction. Courts may appoint technical experts to assess similarity between marks and evaluate likelihood of consumer confusion.

Filing Trademark Infringement Cases

Trademark owners must follow specific procedures when filing infringement cases in Nepalese courts. The process begins with gathering evidence of infringement including samples of counterfeit goods, photographs, and witness statements. Plaintiffs should prepare detailed plaints describing the registered trademark, evidence of infringement, and requested remedies. The following documents are required for filing trademark infringement cases:

Certified copy of trademark registration certificate issued by the Department of Industry.
Evidence of trademark use in commerce including invoices, advertisements, and sales records.
Samples or photographs of infringing goods, packaging, or promotional materials bearing disputed marks.
Affidavits from witnesses who can testify regarding consumer confusion or damage to trademark reputation.
Power of attorney if the trademark owner is represented by legal counsel or authorized agents.
Court fee receipts as prescribed under the Court Fee Act, 2018 (2075 BS).

Evidence Requirements in Infringement Cases

Courts require substantial evidence to establish trademark infringement under Nepalese law. Plaintiffs must prove ownership of valid trademark registration and demonstrate unauthorized use by defendants. Section 27 of the Patent, Design and Trademark Act, 2022 places the burden of proof on trademark owners to establish infringement. Evidence must show that the defendant’s mark is identical or deceptively similar to the registered trademark. Plaintiffs should demonstrate likelihood of consumer confusion through market surveys, expert testimony, or evidence of actual confusion. Documentary evidence including purchase receipts, shipping records, and advertising materials strengthens infringement claims significantly.

Defenses Against Infringement Claims

Defendants in trademark infringement cases can raise several defenses under Nepalese law. Section 26 of the Patent, Design and Trademark Act, 2022 recognizes legitimate exceptions to trademark infringement. Prior use rights protect parties who used marks before the plaintiff’s registration date in good faith. Descriptive fair use allows using common terms or phrases that happen to be registered as trademarks. The following defenses are available in trademark infringement proceedings:

The defendant’s mark is not identical or deceptively similar to the plaintiff’s registered trademark.
The defendant has prior use rights predating the plaintiff’s trademark registration in Nepal.
The use constitutes fair use for descriptive purposes without creating consumer confusion.
The plaintiff’s trademark registration is invalid due to lack of distinctiveness or prior conflicting rights.
The defendant is using their own name or address in good faith without intent to deceive consumers.

Border Measures and Customs Enforcement

The Customs Act, 2064 (2007 BS) provides border measures to prevent importation of counterfeit goods into Nepal. Trademark owners can record their registrations with the Department of Customs to facilitate detection of infringing goods. Customs officials have authority to suspend clearance of suspected counterfeit goods pending investigation. Section 17 of the Customs Act allows rights holders to request customs authorities to detain suspected infringing goods. The Department of Customs coordinates with the Department of Industry to verify trademark registrations and assess potential violations. Effective border enforcement prevents counterfeit goods from entering Nepalese markets and protects consumers from substandard products.

Role of Department of Industry

The Department of Industry serves as the primary administrative authority for trademark matters in Nepal. This department maintains the official trademark register and processes registration applications under the Patent, Design and Trademark Act, 2022. The Department conducts market surveillance to identify counterfeit goods and unauthorized trademark use. Officials can initiate suo moto actions against trademark infringers discovered during inspections. The Department also provides administrative remedies including cease and desist orders before formal court proceedings. Trademark owners can file complaints with the Department requesting investigation and enforcement actions against suspected infringers.

Preliminary Injunctions and Interim Relief

Courts in Nepal can grant preliminary injunctions to prevent irreparable harm during trademark litigation. Section 27 of the Patent, Design and Trademark Act, 2022 authorizes courts to issue interim orders restraining infringement. Plaintiffs must demonstrate prima facie case of infringement and likelihood of irreparable injury without interim relief. The balance of convenience must favor granting injunctive relief to protect trademark rights. Courts typically require plaintiffs to provide security or undertakings before granting preliminary injunctions. Interim orders remain effective until final judgment or until courts modify or vacate them based on changed circumstances.

Damages and Compensation Calculation

Courts calculate damages in trademark infringement cases based on actual losses suffered by rights holders. Section 27 of the Patent, Design and Trademark Act, 2022 authorizes monetary compensation for trademark infringement. Plaintiffs can claim lost profits resulting from consumer confusion and diverted sales to infringers. Courts may award reasonable royalties representing the value of unauthorized trademark use. Enhanced damages are available for willful infringement involving deliberate copying of well-known marks. The following factors influence damage calculations in trademark cases:

The duration and extent of infringing activities including geographic scope and sales volume.
The degree of consumer confusion caused by the defendant’s use of similar marks.
The infringer’s profits attributable to unauthorized use of the plaintiff’s trademark.
The trademark owner’s lost sales and diminished market share due to infringement.
Costs incurred for investigation, enforcement actions, and corrective advertising to restore brand reputation.

Well-Known Trademarks Protection

Section 25 of the Patent, Design and Trademark Act, 2022 provides enhanced protection for well-known trademarks. These marks receive protection even without registration in Nepal if they have acquired substantial reputation. The provision implements Article 6bis of the Paris Convention regarding well-known marks. Courts consider factors including duration of use, advertising expenditure, and market recognition when determining well-known status. Well-known trademark owners can prevent use of identical or similar marks on dissimilar goods if such use damages their distinctive character. This extended protection prevents dilution of famous marks and unauthorized exploitation of established brand reputation.

Counterfeiting and Criminal Prosecution

Counterfeiting represents the most serious form of trademark infringement under Nepalese law. Section 28 of the Patent, Design and Trademark Act, 2022 treats commercial-scale counterfeiting as a criminal offense. Police authorities can conduct raids and seizures of counterfeit goods based on complaints from trademark owners. The District Government Attorney’s Office prosecutes criminal cases in District Courts having jurisdiction. Criminal proceedings can run parallel to civil litigation, allowing rights holders to pursue both remedies simultaneously. Convicted counterfeiters face imprisonment, fines, and confiscation of infringing goods and manufacturing equipment used in counterfeiting operations.

Appeal Process in Trademark Cases

Parties dissatisfied with District Court decisions can appeal to High Courts under the Muluki Civil Procedure Code, 2074. Appeals must be filed within thirty-five days from the date of judgment or order. High Courts review both factual findings and legal conclusions made by District Courts. The Supreme Court exercises final appellate jurisdiction over trademark disputes through discretionary review. Appeals to the Supreme Court require special leave and typically involve significant legal questions. The following grounds support appeals in trademark infringement cases:

The lower court committed errors in interpreting trademark law provisions or applying legal standards.
The judgment is contrary to evidence presented during trial proceedings.
The court failed to consider material evidence or admitted inadmissible evidence affecting the outcome.
The damages awarded or remedies granted are excessive, inadequate, or inappropriate under the circumstances.
Procedural irregularities occurred that prejudiced the appellant’s right to fair hearing.

Alternative Dispute Resolution

Alternative dispute resolution mechanisms provide efficient alternatives to court litigation for trademark disputes. The Arbitration Act, 2055 (1999 BS) governs arbitration proceedings in Nepal. Parties can include arbitration clauses in licensing agreements to resolve future trademark disputes. Mediation offers informal settlement opportunities before initiating formal court proceedings. The Department of Industry facilitates mediation between trademark owners and alleged infringers in appropriate cases. Alternative dispute resolution reduces litigation costs, preserves business relationships, and provides faster resolution compared to court proceedings. Settlement agreements reached through mediation or arbitration are enforceable in courts under Nepalese law.

International Trademark Protection

Nepal’s membership in the Paris Convention provides reciprocal trademark protection for foreign marks. Section 25 of the Patent, Design and Trademark Act, 2022 recognizes priority rights under international treaties. Foreign trademark owners can claim priority based on applications filed in convention countries within six months. However, Nepal has not yet acceded to the Madrid Protocol for international trademark registration. Foreign businesses must file separate applications in Nepal to obtain trademark protection. The Department of Industry accepts applications from foreign applicants through authorized local agents. International trademark owners should monitor Nepalese markets and enforce rights against local infringers to maintain brand integrity.

Trademark Licensing and Authorized Use

Trademark licensing allows owners to authorize third parties to use registered marks under controlled conditions. Section 20 of the Patent, Design and Trademark Act, 2022 recognizes trademark licensing arrangements. License agreements must specify the scope of authorized use, quality control measures, and duration of licenses. Licensees can use trademarks only within the scope of granted licenses without infringing trademark rights. Trademark owners retain responsibility for maintaining quality standards and monitoring licensee compliance. Unauthorized use beyond license terms constitutes trademark infringement subject to legal remedies. Proper licensing agreements should be recorded with the Department of Industry to establish authorized use.

Trademark Watch and Enforcement Strategy

Proactive trademark monitoring helps rights holders detect and address infringement early. Trademark owners should conduct regular market surveillance to identify unauthorized use of their marks. The Department of Industry’s trademark register should be monitored for confusingly similar applications. Online marketplaces and social media platforms require monitoring for counterfeit goods and unauthorized sellers. The following enforcement strategies protect trademark rights effectively:

Sending cease and desist letters to infringers demanding immediate cessation of unauthorized trademark use.
Filing oppositions against confusingly similar trademark applications during the publication period.
Conducting test purchases to gather evidence of counterfeit goods for enforcement actions.
Coordinating with customs authorities to intercept counterfeit imports at border checkpoints.
Educating distributors, retailers, and consumers about genuine products and authorized channels.

Role of Axion Partners in Trademark Protection

Axion Partners stands as the leading service provider for trademark registration and enforcement in Nepal. The firm provides comprehensive trademark services including registration, opposition proceedings, and infringement litigation. Axion Partners maintains extensive experience handling complex trademark disputes in Nepalese courts. The firm’s legal team includes specialists in intellectual property law with deep understanding of trademark jurisprudence. Axion Partners assists clients with trademark portfolio management, licensing agreements, and enforcement strategies. The firm coordinates with the Department of Industry and customs authorities for effective trademark protection. Businesses seeking trademark registration or enforcement services benefit from Axion Partners’ expertise and proven track record.

Frequently Asked Questions

What is the penalty for trademark infringement in Nepal?

Trademark infringement carries imprisonment from three months to three years and fines between NPR 25,000 to NPR 100,000 under Section 28 of the Patent, Design and Trademark Act, 2022. Repeat offenders face enhanced penalties including longer imprisonment terms and higher fines.

How long does trademark infringement litigation take in Nepal?

Trademark infringement cases typically take two to four years for final judgment in District Courts. The duration depends on case complexity, evidence volume, and court workload. Appeals to High Courts and Supreme Court extend the total litigation timeline significantly.

Can I sue for trademark infringement without registration?

Well-known trademarks receive protection under Section 25 even without registration if they have acquired substantial reputation in Nepal. However, registered trademarks enjoy stronger legal presumptions and easier enforcement compared to unregistered marks in infringement proceedings.

What evidence is needed to prove trademark infringement?

Plaintiffs must provide trademark registration certificates, evidence of unauthorized use, samples of infringing goods, and proof of consumer confusion. Documentary evidence including invoices, photographs, and witness statements strengthen infringement claims in court proceedings.

Can customs officials seize counterfeit goods in Nepal?

Customs officials have authority under the Customs Act, 2064 to suspend clearance of suspected counterfeit goods. Trademark owners must record registrations with the Department of Customs and provide sufficient evidence to justify detention of suspected infringing goods.

What is the limitation period for trademark infringement cases?

The Muluki Civil Code, 2074 prescribes a three-year limitation period for filing civil suits from the date when the cause of action arose. Criminal complaints for trademark infringement must be filed within one year under the Criminal Procedure Code.

Can I get compensation for trademark infringement?

Courts award monetary compensation under Section 27 of the Patent, Design and Trademark Act, 2022 for actual damages, lost profits, and reasonable royalties. Enhanced damages are available for willful infringement involving deliberate copying of registered trademarks.