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THE EFFECT OF TRADEMARK DILUTION: A COMPARATIVE ANALYSIS OF THE ISSUES IN INDIA AND USA
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THE EFFECT OF TRADEMARK DILUTION: A COMPARATIVE ANALYSIS
OF THE ISSUES IN INDIA
AND USA
AUTHORED BY - HARINI SUNDARRAJ
CHRIST (DEEMED TO BE) UNIVERSITY, BANGALORE.
ABSTRACT:
“ Gucci is
not a Fashion house or a Design
house, it was always a Trademark” -
Maurizio Gucci
“ Trademark dilution" refers to an event in which a junior mark
tarnished the reputation of an already
existing senior mark that is substantially similar by associating itself with
something perverse . Anti-dilution
measures typically guard well-known brands against two main types of damage : the "blurring" of a
mark through a weakening of its relationship with the original product,
and the "tarnishing" of a mark through
the formation of unfavorable connotations with it. Due to the
dilution, it will no longer be protected as a mark and lose significance to
consumers as a source of origin.
The key issue with the dilution law is that it provides a remedy without a verifiable theory of the harm or
damage. Even if the notion of dilution has recently gained recognition on both an international and domestic level, domestic jurisdictions still bear a significant
amount of responsibility for protecting trademarks from dilution. This paper
analyzes the notion of dilution from
various perspectives in various jurisdictions. The researcher has used various articles, journals, and judgments
to substantiate how the courts understand the dilution rule and elaborates on the idea with illustrations from
significant U.S. legal judgements. The way
forward will be to draw out a comparative analysis of the effectiveness
of the legal framework present in
India with that of the USA to understand the concept of trademark dilution
affecting Brand Equity.
KEYWORDS: Trademark Dilution,
Anti- Dilution, Blurring, Tarnishing, Consumers, Brand Equity.
1.INTRODUCTION:
It is very well known that Trademarks have been used centuries now even
before there was a law to govern
them. The World Intellectual Property Organization (WIPO) defines a trademark
as “ a sign capable of distinguishing the goods or services of one enterprise from those of other
enterprises.” Consequently, a trademark is a distinctive image, slogan, sign, logo, mark, or phrase
linked to a particular good for sale in order to distinguish it from
commodities sold or created by others.
Once the rights are granted, the marks become his property, giving him the
ability to legally prosecute any infringers using the mark without his consent or permission. 1
Hence the protection of any trademark becomes very important to any brand especially
big brands as their trademark serves
as their identity and their goodwill is attached to it. Hence whenever there is any infringement of the
trademark of a very well known brand then it's known as ‘trademark dilution’ under law. Trademark dilution is a type
of trademark infringement when the
owner of a well-known mark has the authority to forbid others from using it on
the grounds that doing so will likely
damage the mark's goodwill, reputation, or distinctiveness. The doctrine of dilution is however a departure from traditional trademark
law. The goal of dilution law, on the other hand, is to prevent
the value of well-known or well-known marks from being diminished
as a result of third parties using the mark. The fundamental tenet of dilution
law is that illegal third-party use
of a well-known mark, even if it does not lead to consumer confusion, can still negatively impact the mark's
goodwill and selling power since it loses its association with a
single source. 2
2.
HISTORY AND EVOLUTION OF THE DOCTRINE
OF DILUTION:
A trademark becomes the identity of a producer. When such identity
becomes global and gains universal recognition it becomes a brand and falls under the category
of well known
marks. When a famous or a
well-known mark is infringed it causes dilution of such mark. Dilution is when one famous mark is infringed it loses its exclusivity. This causes erosion
of the mark and it
1 Brajendu Bhaskar, “Trademarks Dilution Doctrine: The Scenario Post TRDA, 2005” 1 NUJS L. Rev.
640 (2008)
2 T.G. Agitha, “Trademark Dilution: Indian Approach”
50(3) JILI 341 (2008)
exhausts its stand-alone quality
and its ability to be recognized clearly
from a crowd of trademarks present in the global market.
Before the Trademarks Act 1999 was passed, the Trade and Merchandise Marks Act of 1958, which governed the law of
trademarks, did not contain the necessary
provisions to address the problem of dilution, leaving Indian courts with a
huge burden to analyze and
incorporate the problem of dilution within the trademark legal system.3
However, even though the Trademark
legislation didn't contain a dilution rule, courts still applied the theory to decide cases. Daimler
Benz Aktiengesellschaft v. Hybo Hindustan 4 is one of the
most well-known cases of trademark
dilution before the 1999 Act.
The defendant was using the mark BENZ combined with a "three pointed
human being in a ring" on
undergarments in this case. Ignoring the defendant's defense of honest
concurrent usage, the High Court of
Delhi awarded an injunction to the plaintiff, observing that replication of a
mark such as MERCEDES BENZ by anyone,
even the defendant, would result in a violation of Indian trademark law. This was the first decision
by an Indian court to address the issue of dilution of well-known marks. However the 1999 Act introduced the concept of
dilution in the Trademark law.
As per the doctrine Trademark Dilution , in order to establish the
dilution of a trademark, the onus is on the plaintiff to prove that (1) the infringer has used the junior mark which is significantly similar to the well-known mark
in order to insinuate or establish a relationship between the well-known brand and the infringer’s brand and (2) has caused economic harm to the well-known
mark’s value by diminishing its
value.
Section 29(4) of the Trade
Marks Act, 1999 deals with trademark dilution. The likelihood test does not confer any distinction solely on
“DILUTION” nor does it specifically incorporate to enforce anything that is envisaged in Section 29(4).
Section 29(1)(2) specifies that the infringement of Trade Mark
occurs only when the impugned mark is deceptively similar
or identical to the registered trademark. Hence the importance is
3 Latha R. Nair, “TRACKING THE PROTECTION OF WELL- KNOWN MARKS IN INDIA: A BEFUDDLED PATH TO NIRVANA?”
101 TMR 1419 (2011)
4 Daimler Benz Aktiengesellschaft v. Hybo Hindustan, AIR 1994 Del. 239
placed
on the “similarity of the mark” whereas Sec 29(4) posits similarity in goods
that are not related to each other.
Thus, “Dilution” form of infringement under Section 29(4) is
a wider trademark protection without as it is in respect of dissimilar or unrelated
goods and services.The plaintiff has to establish,
under Section 29 (4) apart from the similarity of the two marks or the
similarity
(i)
Has a reputation in India;
(ii)
The use of the mark without due cause
(iii)
The use amounts to taking unfair advantage
of or is detrimental to, the distinctive character or
reputation of the registered trademark.
Although dilution is not specifically mentioned in the
statute, it is mirrored by a similar ground for violation in Section 10(3) of the Trade Marks Act of 1994 of the United Kingdom. 5
3.
TYPES
OF TRADEMARK DILUTION:
Dilution follows two main categories of infringement that is dilution by
blurring of the reputed mark and tarnishment of the
same. Both contribute to the subsiding of the mark and take away the peculiarity of the well-known mark.
Even though both of them fall under the category of dilution, there is dissimilarity between the two concepts.
Dilution by Blurring: Blurring occurs when a third party's mark
makes it harder for consumers to
relate a well-known mark to the plaintiff's goods or services, or when a
well-known mark's distinctiveness has
been compromised because it has become or is likely to become associated with a similar mark or trade name. This
concept can be understood by using the mark “DELL” which is associated with Laptops. In cases where the famous mark
“DELL” is being associated with goods that are not in competition with laptops
directly but the use of the same mark to point
5 Dev Gangjee,
“The Polymorphism of Trademark Dilution
in India” 17 Trans. L. & Cont. Prob.
113 (2008)
the
source of origin of other products than the original one takes away the single
association factor of the mark on the
products of the original owner. This may not create a dilemma in the minds of the customer but does create a
mental link. Now whenever one thinks of DELL it will not just pop the image of laptops
but also other products on which such a mark has
been associated as a source recognizer.
Dilution by Tarnishment: A
mark is said to be tarnished when it is used without authorization by a third party on such products which
might create a negative notion in the minds of the consumer about that mark and thereby hurting the repute and
status of the mark. 6 In order to
establish tarnishment it is important to show that the original mark has
been used or applied on products
having substandard quality than the products of the original mark or the fact
that the mark has been applied on
products which may not be considered as dignified or products having objectionable images or notions.
4.
EVOLUTION OF DILUTION LAWS IN THE US AND INDIA:
By the year 1920, there was a major shift in the then existing trademark
law and also detection of a gap in
the protection of trademark under the law in the U.S. It was first after the
“Eastman Company Kodak Case” 7
In England, a considerable change was
observed in the conventional concept of trademark protection available in the United States.
In this case Kodak Cycle Company was successfully prohibited from using the mark
‘KODAK’ on their cycles on the basis
of the suit filed by Eastman Company who were manufacturers of Kodak cameras.
An analysis of the judgment gives a
clear understanding that the Court was of the opinion that confusion can occur even in absence of
express competition of commodities. In reality the court was not explaining deception or confusion. It rather highlighted
the importance and distinctive nature of the KODAK
mark and how it should
be protected to maintain its uniqueness. But in
6 Britt N.
Lovejoy, ‘Tarnishing the Dilution by Tarnishment Cause of Action: Starbucks
Corp. v. Wolfe’s Borough Coffee, Inc. and V Secret Catalogue, Inc. v. Moseley,
Compared’, Berkeley Tech. Law Journal
p. 619, volume 26:1, 2011, p. 623.
7 Eastman Photographic Materials Co Ltd v John Griffith
S Cycle Corporation Ltd and Kodak
Cycle Co Ltd
declaring
such judgment the Court phrased it in a manner so as to remain consistent with
the direct competition principle in
respect to goods.
In another similar instance “Wall V. Rolls-RoyceThe Third Circuit Court
of Appeals regulated that
infringement principle was not only restricted to similar or competing goods.In
this case, the Mark ROLLS ROYCE was used on radio tubes. The court in order to
justify infringement widened the
scope of reason and clubbed radio tubes and automobiles as directly contending commodities on the basis of the fact
electricity was an important element in case of automobiles and airplanes and one could assume that
the company have extended its range of product to new electric using radio tubes. This was an attempt of the Court in applying
traditional infringement principle to
unconventional problems which made the element ‘fame’ a basis of dilution.
Under the Federal Trademark Dilution Act (FTDA), only such marks which
were considered famous even before
the disputed mark has been used in trade and commerce for the first time were protected.8 The statute spoke of the famous mark
eligibility but it failed to provide clarity
on the definition of “famous” and what would be the necessary degree of
fame to be considered as famous and
be protected under the said anti-dilution statute. The courts in the U.S. were
often found to be in conflict with
each other since the FTDA was not successful in defining the term “famous” with distinction. In the case of
“New York Stock Exchange Inc. V. New York New
York Hotel LLC” 9 It was observed that the second circuit was
of the opinion that only the marks which
have naturally acquired distinctiveness could afford the protection under FTDA
while on the other hand in the case
of “Thane Intern., Inc. v. Trek Bicycle Corp.” 10 The ninth circuit differed
completely from such an opinion and was of the contrasting
view.
8 Federal Trademark Dilution
Act, 2006, United
States of America,
s. 1125(c)(1)
9 New York Stock Exchange, Inc. v. N.Y., N.Y. Hotel LLC, 2002, 2nd Circuit,
293 F.3d 550
10 8 Thane Intern.,
Inc. v. Trek Bicycle Corp.,
2002, 9th Circuit,
305 F.3d 894
a)
Analyzing the scope of Trademark Dilution
after the advent of Trademark Dilution Revision
Act (TDRA):
Subsequent to the decision
in the case of Moseley v. V Secret Catalog,
Inc 11., it was clear that there was an urgent need of modifying
the Federal Statute
and as a result the Revision Act was codified with the view of providing solutions for the existing gaps. The Trademark
Dilution Revision Act 2006
brought some major changes to the Federal Trademark Dilution Act of 1996. Under the TDRA the standard
was set much higher for marks to be regarded
as “famous”. Another
development seen under the Revision
Act was the recognition and inclusion of marks which
have attained distinctiveness rather than being fundamentally distinctive under the scope
of the Act including trade dress upon the fulfillment of certain conditions.The new Act has set the fame bar high
as it states “extensively known
among the common people”. An analysis of the term suggests that having
a reputation and being
acknowledged among the niche
trade area is not enough unless
and until it is also widely identified among the consumer.
It indicates that any company
doing business with any organization may be very well-known in that particular industry or commerce
sector but it won’t meet the standards
of fame set by the TDRA unless
such company is known to the general public. Marks
like ‘NIKE’ and 'LOUIS VUITTON'
were able to meet the fame
requirement under the TDRA.
b)
Indian
scenario:
It was in the case of ‘Daimler
Benz Aktiengesellschaft v. Hybo Hindustan
12 that for the first
time the defendant was
prohibited from using the plaintiffs’ mark but the concept of likelihood of confusion or deception was not drawn in
the case. Although this was the first case where the court employed the principle of dilution yet the judgment
concentrated more on the unfairness of the
use of the mark if permitted to use and no evaluation of the dilution or
related principles was made by the
court.
Along these lines, unmistakably before the Act of 1999 was instituted, Indian High
Courts frequently got themselves perplexed
between the ideas of ‘weakening’ and ‘passing off ’. The
11 Moseley v. V Secret Catalogue
Inc., 2003, 537 U.S. 418
12 Daimler Benz v. Hybo Hindustan, Delhi High Court,
India, 1994 A.I.R.
239
principle of dilution
was created by our courts, having considered the universally perceived benchmarks about the need to ensure protection for the famous marks whose abuse, in connection to different or non-competing products or services could “dilute” its allure.
For the purpose of grasping
how the court declared judgment
on the basis of faulty understanding of the dilution
theory, it is pertinent to analyze and examine the case of “Hamdard National
Foundation v. Abdul Jalil” 13. In this case the plaintiff
’s well-known mark ‘HAMDARD’
was used by the defendant on Basmati rice, as a result the plaintiff who was
the owner of the mark and used it in
respect of Unani medicines filed an infringement suit. Here again the court decided the case on faulty
understanding and stated that what summed up to trademark infringement in relation to non-competition goods was
“likelihood of deception”. It is already quite clear and evident that section 29(4) does not need the proof of deceptive resemblance. Reliance was based
incorrectly on the definition of “deceptive similarity” given under section 2(1) (h).
c)
Comparative
overview of US and Indian Dilution laws:
The principle of dilution is applicable to any mark only when the mark is
either famous or well-known or has a global reputation. There has been a lot of debate among the scholars regarding the difference between a
well-known mark, famous mark and a mark with reputation. Dilution legislation in the USA provides protection against
dilution only to famous marks. So for a
mark to be protected under the anti-dilution statute it must satisfy the
criteria of being famous. But when coming to India it has been observed that most of the times
drawing distinction between famous
and well-known marks have not been done successfully by the courts in India and generally the application of standard has been the level or standard applied in case of well-known marks.
Under the Trademark Dilution Revision Act of 2006, explicit provisions
have been included in respect to fair
use principle thereby providing defenses for some acts from the action of
dilution. The Indian law differs completely from the dilution laws in the USA in this aspect. The Act on
13 Hamdard National Foundation v. Abdul Jalil,
High Court of Delhi,India,IA 7385/2004
IN CS(OS) 1240/2004
trademarks
in India fails completely to provide any of such exceptions or defenses. Under
the present Trademarks Act 1999 there are provisions which expressly state that a “registered trademark” is violated by any marketing
or promotion of that recorded trademark “if such advertising is detrimental to its distinctive character or is against the reputation of the trademark.”14
5.
EMERGING
ISSUES IN THE TRENDS OF TRADEMARK DILUTION:
Trade and commerce
have become more globalized, which has given producers more opportunities
to market their goods internationally. Eventually, a brand name and global
identity are created as a result. It
is crucial for the owners in such a situation to be able to prevent unauthorized use of their highly regarded
marks by other parties. Such a symbol is distinctive enough to become a global brand that the general public can
quickly recognise.
The requirement outlined in the
Indian laws and TRIPs agreement does not require the mark to be one that is publicly recognised, even
if the idea of dilution is not explicitly referenced in either Indian
law or international law. The
reputation requirement is also less severe than what is required by US law. This is clear from a review of the parts of
the Indian Trademark Act and the TRIPS
rules that outline the requirements to be satisfied in order for a mark to be
recognised as a well-known mark.
Both of these actions call for the consent of the relevant social group and the existence of goodwill among them.
The Indian scenario is much more grave because the criteria of
recognition among the relevant sector
of the society is not very strict and quite liberal as per the definition
provided in the Indian laws. The
India legislative along with the WIPO/Paris Union Joint Recommendation, states that territory where the trademark is required to be famous in at
least one sector of the public in India by
the direction of the court or registrar, then the said mark can be termed to be
a well-known mark. These criteria further
limit the ambit of recognition of the mark and consequently additionally debilitates the protective measures
that are needed
to defend the mark under the
14 The Trademark Act, 1999, India,
s. 29(8)(c).
principles
of dilution. The definition of a well-known mark in Section 2(1)(zg) is
ambiguous because it doesn't specify
what constitutes a well-known
mark. The Court can interpret the meaning
of the word from a variety of perspectives, which could lead to disagreements.
In order to avoid irregularity and vagueness, a suitable rule or determining factor for well-known trademarks is
therefore necessary.
6. A WAY FORWARD:
It stated that the new Trademark Act 1999 is a stage forward in
prohibiting the weakening yet at the
same time the contemporary Indian situation requires for a different lawful
sanctioning for counteractive action
of weakening and to meet the standard of assurance in the worldwide level. The following suggestions can be put forth
and be considered to eradicate the existing challenges and hurdles present in the current scenario and laws
and to ensure to make the doctrine of dilution
more consistent, dependable and independent form of claim:
?
When we read sections 11 and 29(4), it is evident that
there is some form of conflict between the two. This is because
one discusses well-known brands while the other
focuses on brands with a solid
reputation. The two clauses are in opposition to one another as a result.This results in disparities between the
court's judgment and actions since it
may introduce unpredictability. It is therefore suggested that the term marks
with reputation in Section 29(4)
should be replaced with the term “well known” to provide a wider recognition and to provide a broader
subject matter of safeguard to such marks which
have global status.
?
The Section 11 enforcement requirement has been
challenged by the well-known marks' ambiguous
definition. Despite the fact that Subsections 6, 7, and 9 are used to determine whether a trademark is well-known or not.
The rules established by this Act are arbitrary, hence clarification by the Court is necessary. This emphasizes
the necessity of a specific deciding factor for well-known markings that might result in exact decisions
while regulating the instance of protection against weakening. Despite
their well-known status,
unregistered
stamps are not given any protection under the Act, which only applies to registered marks. Along similar lines,
this research suggests an administrative adjustment that would grant security to unregistered trademarks, reducing
the need for passing off requirements.
7.
CONCLUSION:
Dilution cannot be compared to traditional infringement given the
significant financial and time expenditure
made by the owner to ensure that the mark crosses the threshold of niche fame
and develops into a brand recognised on a global level for offering a certain level of quality
assurance to its customers.This leads to frequent unauthorized use of
such marks in an effort to profit
from their goodwill or notoriety. From the aforementioned, it is clear that
dilution laws cannot entirely protect
well-known or renowned marks in the absence of obstacles , even when appropriate legislation is passed and
restrictions are included. There are
several circumstances, nonetheless,
in which the allegedly infringing mark will not be seen as diluted. This covers instances in which the mark is used for
disparaging, parodying, news reporting, commentary, edifying, and amusement. Such instances can fall under the purview
of descriptive or nominal fair use, hence they cannot be classified
as trademark dilution. Additionally, trademark dilution claims will not be made in relation to advertising or promotion
activities that enable customers of a
brand to compare products or services.
Article Information
THE EFFECT OF TRADEMARK DILUTION: A COMPARATIVE ANALYSIS OF THE ISSUES IN INDIA AND USA
Authors: HARINI SUNDARRAJ
- Journal IJLRA
- ISSN 2582-6433
- Published 2023/04/26
- Volume 2
- Issue 7
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International Journal for Legal Research and Analysis
- Abbreviation IJLRA
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