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IP Protection in the Cosmetics Industry

Any talk about cosmetics is incomplete without a discussion about their side effects on the human body. The concern about safety is embedded in cosmetics since they come in direct contact with the human skin. Consumers tend to use, and swear by, tried and tested products that are safe to use for their body and have gained popularity due to their quality.

The Drugs and Cosmetics Act, 1940 defines “cosmetic” as "any article intended to be rubbed, poured, sprinkled or sprayed on, or introduced into, or otherwise applied to, the human body or any part thereof for cleansing, beautifying, promoting attractiveness, or altering the appearance, and includes any article intended for use as a component of cosmetic."[1] Given this broad definition, besides makeup, products such as shampoos, soaps, cleansers, toners, moisturizers, conditioners, etc. also fall within the scope of the term. Since all cosmetic products essentially come in contact with the human body, brand conscious consumers are naturally over-cautious about the kind of products they use for their skin and hair, and are always on a look-out for reliable brands that give them the assurance of complying with quality standards, rather than just serving the purpose of beauty enhancement or cleansing. The need for building consumer confidence in cosmetics is, therefore, an aspect that brand owners cannot overlook. In order to preserve the goodwill and reputation in a brand and to prevent its dilution, it becomes imperative to delve into the protection of IP rights of cosmetics brand owners.

The cosmetic industry spends significant sums of money in research, development and formulating products. The most common IPRs in the field of cosmetics are patents, trademarks and trade secrets. The “beauty secret”, as we usually call it, is indeed a trade secret that cosmetic brand owners should secure and safeguard at all costs. Trademark registrations are considered one of the most effective ways of protecting a brand’s identity and ensuring that customers looking for a particular product know exactly where they must go. Besides the source of origin, trademarks embody consumers' expectations, and, often, compel consumers to stay loyal to their preferred brand.

Patenting is another step taken by the cosmetics brand owners to prevent other commercial entities and individuals from creating counterfeit or low-quality cosmetic products which are sold at cheaper rates. It is believed that one of the first cosmetic patents, which was awarded for a deodorant in the United States, dates back to the year 1888. Following this, in 1907, L’Oréal, one of the leading companies in the beauty & cosmetics space, got its first one-of-a-kind invention of a lead-free and effective hair dye patented (French Patent No. 383 920). The trend continued with L’Oréal recently launching a new beauty tech innovation product, named “Perso”, a smart home device that can be installed on any smartphone, and enables its consumers to create their own personalized lipsticks. Needless to say, L’Oréal’s AI based app, Perso, works with the help of a patented motorized system[2].

While genuine products of established and reliable brands leave no stone unturned to comply with the prescribed quality standards, counterfeit products not only lack the desired quality and fail to meet the required standards, but are also extremely dangerous for human skin. Cropping up of counterfeits in the market not only leads to financial losses to genuine brand owners, but also takes a hit on a products’ goodwill and reputation. Therefore, the need to enforce IP rights against counterfeiters and infringers is all the more important.

It is widely known that Indian courts take infringements in the pharmaceutical industry extremely seriously. Likewise, the cosmetics industry, if not regulated or monitored carefully, can adversely impact human health and body. With the rise in the number of counterfeit and infringing products in the cosmetics marketplace, the toxic ingredients and chemical formulae used in unauthorized products that have not undergone the mandated testing procedures, can have far reaching effects on human health.

The Drugs and Cosmetics Act regulates the import, manufacture and distribution as well as labelling and packaging of drugs and cosmetics in India. In 2018, the Drug Controller General of India issued notices to popular e-commerce websites for selling/offering for sale adulterated, unregulated, spurious, unlicensed and illegally imported cosmetics, that were being sold without evaluating their safety and quality, and were, thereby, not fit for human application. Although the e-commerce websites could take the defence of being 'intermediaries' under the Information Technology Act, 2000, the Delhi High Court, in the 2018 case of L’oreal v. Brandworld & Anr. [CS(COMM) 980/2016] concerning the sale of counterfeit L’OREAL products through the e-commerce platform, ShopClues, denied such intermediary protection to ShopClues. The court observed that, since ShopClues guaranteed that all the products sold through its website are “100% genuine", and also added a separate category to report replicas on its website, ShopClues did not qualify for the exemption of being an intermediary.

As per the Drugs and Cosmetics Rules 1945, all cosmetic products which are imported for sale in India have to be mandatorily registered with Central Drugs Standard Control Organization which has been appointed as the licensing authority. The purpose of this requirement is to regulate irregular/indiscriminate import of cosmetics by traders with no accountability for their content, no mechanism to cater to customers who are dissatisfied with the quality of these counterfeit products and to check the sale of sub-standard cosmetics in India. Despite this, however, the Indian regulatory framework with respect to cosmetics has major loopholes, thereby making the process of approval of cosmetic products cumbersome and time consuming. This essentially results in cosmetics being marketed illegally. The importance of IP protection and enforcement in the cosmetics industry cannot be underplayed. With the market size of the cosmetics industry being in billions, the cosmetics brands need to be more vigilant than ever in protecting their IP and reputation.

[1] Section 3 [(aaa)] of the Drugs and Cosmetics Act, 1940 [2],photo%20with%20their%20smartphone%20camera.

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