Increased globalization and industrialization have led to so many people coming into the business and registering their trademarks for commercial gain. Trademarks are the USP of a commercial business. The growth and enlargement of a business depend upon how well and distinctly can the customers identify the trademark and products associated with that particular trade name. The trademark carries with it the goodwill and reputation of the business with which it is associated. This paper aims at explaining the meaning and essentials of trademark dilution, the historical background, and law to protect dilution, detailed insight into the doctrine of trademark dilution, forms of trademark dilution, remedies available, and suggestions to be incorporated in the present regime of trademark law in India.
Introduction
With the advent of industrialization and globalization, the expansion of trade and business has enlarged the market exponentially. It has given scope to so many emerging industries to bring their brand to the market and establish their business not just in the source country but across the globe. It has led to increased competition and the eagerness to bring forth their trademark in the economy. This has tremendously influenced the need for trademark protection worldwide.
Trademark is any mark in the form of words, letters, logos, symbols, shapes of goods, packaging or compilation of colors, etc. which is unique to a company engaged in the activity of trade and commerce. Such trademark represents a particular brand in the market and the product it manufactures. It signals to the mind of the buyer, the source or identity of the producer/ manufacturer of that article.[1]Trademark helps a customer make a distinction between two brands and sort his preferences accordingly. For it to be recognized by its customers, it is essential that a trademark shall be capable of being graphically represented and shall distinguish such goods and services offered by a particular company from that of others.
This factor of being ‘distinct’ and ‘unique’ to that of its owner, brings with it the value, reputation, and goodwill of that particular brand and the goods sold by that company. When such brands develop a certain sense of superiority in the market and gain a reputation for the quality of their product, they get recognized by the general public. As these trademarks gain market dominance and are known to the public at large, they are accepted as ‘well-known’ trademarks[2] and are demanded repeatedly by their customers.
A company, including the owner and his team, put in a lot of hard work, money and invest their valuable time in leveling up their brand and introducing new ways and strategies to attain a distinct position in the market. It is this hard work and labor depicted in the form of a trademark that helps a particular brand to sustain itself in the race for a longer period of time. Thus, it is important that marks similar to a well-known trademark are not used by any other company, even though they are not manufacturing or offering similar kinds of goods and services. This, while not creating a ‘likelihood of confusion’, rather blurs and tarnishes the uniqueness and distinct character of that well-known mark and alters consumer perception about that particular brand in the market. This copying of well-known trademarks is often termed as ‘trademark dilution’.
Trademark Dilution: Meaning and Essentials
The concept of trademark dilution can be understood with an example – When we mix ink with water, the ink dilutes in water and forms a solution. Both water and ink become an entity and it is hard to make a distinction between the two. This is what happens when two similar trademarks come into the market. One does not stand unique to the other and hovers upon each other’s reputation leading to material and immaterial losses.
Trademark dilution arises when a third party uses a mark or a trading name in commerce that is sufficiently similar to a well-known mark such that it weakens its uniqueness and distinctiveness and is detrimental to the reputation of such a registered trademark. The infringer uses such a mark in connection with goods or services that do not compete with those connected to the famous mark .i.e. confusion or deception per se is therefore not a necessary ingredient to constitute dilution.[3] The primary intent behind such trademark dilution is attaining profit based on someone’s name and goodwill without making substantial individual efforts.
Essentials of Trademark Dilution
- The mark should be similar or identical to the injured well-known trademark.
- The well-known mark must have a reputation in the market.
- Use of the mark must be without due cause.
- Use of the mark is detrimental to its uniqueness and distinctiveness and amounts to taking unfair advantage.[4]
When all these essentials are identified by the party claiming for damages, then it constitutes trademark dilution.
Exceptions to Trademark Dilution
Any fair or rightful use of a mark similar to a well-known trademark including in connection with either –
- Advertising or promoting it for the purpose of making a comparison between goods and services by its consumers.
- Identifying, commenting, or criticizing the owner of the well-known trademark or the goods and services offered by him.
- Any news reporting or commentary upon such a well-known mark.
- Any non-commercial use of the mark.
- Marks that include parodies – For Example- In the case of Louis Vuitton Malletier S.A. v. Haute Diggity Dog[5], where a company manufacturing apparel for dogs under the mark ‘Chewy Vuitton’ was considered as a parody for the plaintiff’s famous mark ‘Louis Vuitton’. This was not an instance of trademark dilution.
Historical Background and Evolution of The Law to Protect Trademark Dilution
Trademark Dilution was first said to be thought of by Frank Schechter in 1927 where he elaborately explained in his paper that – “the true function of a trademark is to identify a product as satisfactory and thereby to stimulate and further purchases by the concerning public”[6].
There is much confusion while tracing the source of the concept of trademark dilution and thus laws formulated in India for the protection of intellectual property are said to be a result of a mixed bag of laws from across the world. Laws and certain conceptions discussed therein derive their source from English Common Law and the US legislations (Lanham Act, 1946) where laws of trademark infringement and unfair competition are discussed in detail. Such legislations form the basis of trademark laws in India.
The concept of trademark dilution was not there under the Trade and Merchandise Marks Act, 1958. It was much later introduced under the Trade Marks Act, 1999 which came into force in 2003. Till then, a lot of dilution cases came into the forefront and were not given proper aid due to the absence of any relevant laws in place. The Delhi High Court, in Daimler Benz Aktiegesellschaft v Hybo Hindustan[7], granted an injunction against the defendant for using a similar trademark i.e. a circle with the word ‘Benz’ for an unrelated product such as vests and briefs. Up until now, laws related to dilution were not introduced and the court without using the word ‘dilution’ pronounced their judgment. This sparked a lot of conversation among traders and led to the introduction of the concept of trademark dilution under Sec 29(4) of the Trade Marks Act, 1999. This section introduced the doctrine of dilution and specified what constitutes infringement in the form of dilution.
The Doctrine of Trademark Dilution and The Rule of Law in India
The doctrine of trademark dilution is a concept of trademark law that allows the owner of an eminent (well-known) trademark to bar or prevent others from using that mark in a way that would minimize its individuality and distinctiveness. It is the power given to the well-known trademark owner to prevent others from using such marks or conducting fraudulent activities of copying similar trademarks for unrelated goods. This ensures that the owner of the well–known trademark does not lose his source identity and also maintains the reputation of the mark and the company that it belongs to. This doctrine is based on the preservation of the distinctive quality of a trademark and any third party use that diminishes this distinctiveness is considered to be a dilution[8]
Trademark dilution theory grants protection not only to competing goods but extends it to non-competing goods as well. This is because even in absence of any confusion, such third-party usage causes injury to the mark holder as it has the propensity to dissipate the identity of the mark within the public consciousness. When this happens, the customers start associating the trademark with a new and different source thus blurring the descriptive link between the mark and the goods. This tapers the commercial value of the mark slice by slice.[9] Thus, the doctrine empowers the trademark holder more than tricks its consumers into buying unoriginal products.
The basis of the doctrine of trademark dilution is given under Sec 29(4)[10] of the Trade Marks Act, 1999. This section is applied to those marks which are registered under the act, are well-known trademarks, and have a reputation in India. Infringement in the form of dilution is said to have occurred when –
- There is a use of a mark identical or similar to a registered trademark having a reputation.
- Such use is in relation to goods or services which are not similar to those covered by the registration.
- When the person takes unfair advantage of the reputed mark and poses barriers in maintaining its distinctive character.
In the case of Tata Sons Ltd. vs Manoj Dodia &Ors[11], the Delhi High Court stated that the ‘Doctrine of Dilution which has recently gained momentous, particularly in respect of well-known trademarks emphasizes that use of a well-known mark even in respect of goods or services, which are not similar to those provided by the trademark owner, though it may not cause confusion amongst the consumer as to the source of goods or services, may cause damage to the reputation which the well-known trademark enjoys by reducing or diluting the trademark’s power to indicate the source of goods or services.’
Another provision under Section 11(2)[12] of the Trademark Act extends protection to well-known marks across all classes. It implies that if AMUL is a well-known mark in respect of dairy-based products, the said mark cannot be used or registered even in respect of electronic items.
The doctrine of trademark dilution thus is an obvious reflection of an ever-increasing demand for extending more and more protection to famous trademarks. The need of the hour is to strengthen this law and bring more clarity under Sec 29(4) regarding what all categories of trademarks shall be protected under the law of dilution and what other elements need to be taken into consideration while protecting such marks.
Forms of Trademark Dilution
Trademark dilution can happen in two ways or forms:
- Dilution by Blurring
- Dilution by Tarnishing
Dilution by Blurring
When there is an association between marks having similarity with a well-known trademark such that it impairs the distinctiveness of such a well-known mark is said to be dilution by blurring. Such association blurs the link between the trademark and the goods and leads to devaluation or tapering of the commercial worth of the products manufactured under such a well-known trademark. For example (hypothetical) – the trademark of a well-known car manufacturing company ‘Rolls Royce’ is used by a baker who bakes cream rolls. Another famous example is a car company logo ‘Buick’ used on the box of aspirin medicine. This constitutes trademark dilution, tampers the uniqueness of such mark, and withdraws consumer belief.
To constitute dilution by blurring it is important to establish:
- The degree of similarity between the two marks and whether it is inherent or acquired.
- The extent of substantially exclusive use of the mark by the infringer.
- The amount of recognition the well-known mark has in public.
- Whether there was any intention or actual association between both the marks.
Dilution by Tarnishing
When there is an association between marks having similarity with a well-known trademark such that it is detrimental to the reputation of such a well-known mark, is said to be dilution by tarnishing. It is the weakening of the mark by any unsavory or unflattering association.[13] When positive connotations attached to a well-known trademark are used by traders for negative engagements, it leads to tarnishing the reputation of such a mark. For example – When a mark similar to a popularly established brand ‘Coca-Cola’ which manufactures an aerated drink is used on bottles containing alcohol. Another example can be, selling a t-shirt with bigoted cartoons under the mark of ‘Amazon’, thus tarnishing the image of the web-retailer Amazon.[14]
The object behind diluting a well-known trademark by tarnishing its reputation is to invade the business of such a well-known brand and degrade its goodwill in the market. The idea is to lower its value and commercial worth.
Difference between Dilution by Blurring and Dilution by Tarnishing
In a US case of Mead Data Central Inc. v. Toyota Motor Sales[15], the court explained the difference between both forms of dilution and held that blurring means ‘the whittling away of an established trademark’s selling power through its unauthorized use by others upon dissimilar products’ and tarnishing occurs when an impugned mark links such a mark to products of poor quality or portrays such mark as unsavory, thus reflecting adversely upon such owner’s product.
Remedies for Trademark Dilution
Trademark dilution hampers the monopolistic status and identity of the owner of a well-known trademark and creates a situation where the chances of market domination are lowered remarkably. It effectuates lowering the commercial worth of the trademark and leads to recurring loss due to such dilution practices. Thus, it is important to recognize certain remedies in law to prevent further loss and to keep intact the reputation that the well-known trademark beholds.
Remedies available for trademark dilution are mostly in the form of civil and administrative remedies. Civil remedies comprise injunctive reliefs which can either be interlocutory, temporary, ad interim, or even permanent and perpetual injunctions. Administrative reliefs include raising opposition against similar marks, rectification, and recorded with customs to prevent import and export of such goods that bear a mark obtained on dilution.
The Delhi High Court in the case of Bayerische Motoren Werke AG v. Om Balajee Automobile (India) Private Limited[16] granted an ad-interim injunction to the plaintiff and restrained the defendants, from manufacturing, exporting, importing, or offering for sale, advertising, or in any manner dealing with goods, not limited to e-rickshaws, bearing the mark “DMW” or any other mark which is identical or similar to the plaintiff’s “BMW” trademarks. It was stated that mere dishonest adoption of a well-known trademark used for dissimilar goods and services is a valid ground of infringement.[17]
If the defendant willfully tries to trade on the owner’s reputation by dilution, the plaintiff is entitled to avail other kinds of remedies such as damages or accounts of profits; delivery up and destruction of infringing goods, seeking cancellation of the infringing mark, preventing registration and also claim attorney’s fees. All these remedies available under the common law help in preventing further dilution and are making sure that the reputation of a well-known trademark stays intact in the market.
Conclusion
Trademark dilution is a concept that is applicable in cases of well-known trademarks registered in India. The definition of a well-known trademark specified under Sec 2(zg) is ambiguous in terms of whether well-known trademarks also include famous trademarks. There is no distinction under the Trade Marks Act, 1999 regarding the applicability of the doctrine of trademark dilution on famous marks as well. However, India being a member of WTO has adopted certain factors as mentioned in the resolution of WIPO which penned down factors to be considered while determining whether a trademark is well known or not. Despite these factors mentioned under Sec 11(6) and 11(7) of the Act, pose a dilemma. This confusion needs to be clarified and clearer and more to the point laws need to be added to the statute.
Trademark dilution as incorporated under the Trade Marks Act, 1999 under Sec 29(4) is thought to be a form of infringement. But, with a lot of interpretations made by the Indian Judiciary in matters concerning trademark dilution, it has been observed that both these concepts of ‘dilution’ and ‘infringement’ are not exactly similar, or rather one is not a subset of the other. There is a significant difference as pointed out in the case of Shell Brands International AG & Anr. V. Gagan Chanana & Others[18], the Delhi High Court while disposing of two applications discussed the differences between Trademark Dilution and Trademark Infringement. It held that –
- No presumption of confusion arises in the case of dilution as opposed to trademark infringement in relation to similar goods.
- In the case of dilution, the trademark owner has to establish two elements besides others, i.e. the use by the rival mark would lower its reputation and the rival use is malafide. Also, the degree of harm suffered or likely to be suffered has to be prima facie established.
Therefore, misconstruing this practice to be similar to infringement, calls for even more confusion. Thus, clear and specific provisions under Trade Marks Act, 1999 must be incorporated so that this practice can be eradicated from the commercial market and stricter laws shall be put in place to lower the risks of damaging the reputation of well-known trademarks through trademark dilution.
References:
[1]V.K Ahuja, Law Relating to Intellectual Property Rights, 3 Ed, 271.
[2] Definition under Sec 2(zg) of the Trade Marks Act, 1999 as – “well-known trademark”, in relation to any goods or services, means a mark which has become so to the substantial segment of the public which uses such goods or receives such services that the use of such mark in relation to other goods or services would be likely to be taken as indicating a connection in the course of trade or rendering of services between those goods or services and a person using the mark in relation to the first-mentioned goods or services.
[3] Ford Motor Co. v. C.R. Borman
[4]ITC v Philip Morris Products SA &Ors. 2010 (42) PTC 572 (Del.)
[5]507 F.3d 252 (4th Cir. 2007)
[6] Frank I. Schechter, The Rational Basis of Trademark Protection, Harvard Law Review, Vol. 40, No. 6 (Apr., 1927), pp. 813-833 (21 pages).
[7]AIR 1994 Delhi 239
[8]Dilution under Trademark Law (2019), https://www.lawteacher.net/free-law-essays/business-law/dilution-under-trademark-law-business-law-essay.php
[9]Caterpillar Inc v. Mehtab Ahmed and others , 25 PTC 438 (Delhi), 2002, 441-42.
[10] A registered trade mark is infringed by a person who, not being a registered proprietor or a person using by way of permitted use, uses in the course of trade, a mark which—
(a) is identical with or similar to the registered trade mark; and
(b) is used in relation to goods or services which are not similar to those for which the trade mark is registered; and
(c) the registered trade mark has a reputation in India and the use of the mark without due cause takes unfair advantage of or is detrimental to, the distinctive character or repute of the registered trade mark.
[11]CS(OS) No. 264/2008
[12]A trade mark which-
(a) is identical with or similar to an earlier trademark; and
(b) is to be registered for goods or services which are not similar to those for which the earlier trademark is registered in the name of a different proprietor,
shall not be registered if or to the extent, the earlier trademark is a well-known mark in India and use of the later mark without due cause would take unfair advantage of or be detrimental to the distinctive character or repute of the earlier trademark.
[13]Manisha Singh, Acting against Trademark dilution, International Law Office, 2006, https://www.internationallawoffice.com/Newsletters/Intellectual-Property/India/Lex-Orbis/Acting-against-Trademark-Dilution
[14]Niti Gupta, Trademark Dilution in India, 2018, https://www.intepat.com/blog/trademark/trademark-dilution-india/
[15]875 F.2d 1026 (2d Cir. 1989).
[16]CS (COMM) 292/2017
[17]AnoopVerma, Dishonest adoption of a well-known trademark for dissimilar goods and services – A ground of infringement, Lakshmikumaran & Sridharan Attorneys, Delhi, 2020.
[18](44) PTC 193 (Del) (2010).
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