JUDICIAL TRENDS IN INDIA RELATING TO TRADEMARK DILUTION: A CRITICAL ANALYSIS (With Special Reference to Yahoo! Inc. v. Sanjay Patel & Others 2016SCC Del 4988.) – by Bhumika Chaturvedi *

INTRODUCTION

Trademark dilution is that facet of trademark infringement, which permits the owner of a famous mark to forbid others from using that mark in a way which would harm its uniqueness. Trademark dilution refers to conduct that lessens the capacity of a famous mark to distinguish its goods or services. This conduct alters the public perception of a trademarked product that over time can devalue a famous mark and mislead the consuming public. Thus, dilution does not rely on the traditional infringement tests of a likelihood of confusion, deception, or mistake; rather dilution results when the unauthorized use of a famous mark reduces the public opinion that the mark signifies something unique, singular, or particular. The trademark dilution doctrine is an obvious reflection of the ever-increasing demand for extending more and more protection to famous trademarks.  It is quite understandable that the Doctrine of “territoriality” of the trademark is losing its hold in this technological era where territorial boundaries are becoming meaningless.

THE DOCTRINE OF DILUTION

Dilution theory discards the view that the sole function of the trademark is source identification, as archaic[1]. As per the theory, the preservation of the uniqueness and singularity of the trademark is of paramount importance to its owner[2]. According to Frank Schechter who is considered the pioneer of the dilution doctrine, Trademark is not merely the owner`s commercial signature but is an ” a silent salesman” through which direct contact between the owner of the mark and the consumer is obtained and maintained[3].

Trademark dilution usually occurs either by way of blurring or tarnishing. In case of blurring, erosion or watering down of the “distinctiveness, uniqueness, effectiveness and prestigious connotations” of the trademark is apprehended. Tarnishment happens when a 3rd party uses the mark to besmirch or debase the mark holder. Thus, dilution theory envisages injury to trademark even in circumstances when there is no confusion and even when the marks involved are non- competing[4].

TRADEMARK DILUTION IN INDIA: A JUDICIAL OUTLOOK

Dilution: A case study in Indian context prior to incorporation of the Trademarks Act, 1999.

Prior to the enactment of the Trade Marks Act, 1999 (TM Act), the trademark law in India was governed by Trade and Merchandise Marks Act, 1958 (TMM Act). The well-known marks under the TMM Act were protected under Section 47. Which provided for defensive registration of well-known marks and passing off actions. It is pertinent to note that in India, even though statutory recognition was enforced in 2003 but it should not be understood that there was no protection to the well-known mark against misappropriation in respect of dissimilar goods, before passing of the Act. Under the remedy of passing off, Indian Courts had applied dilution doctrine long back, even before TRIPS became effective in January 1996, it might not be in present form but the uniqueness of the mark was protected in some of the cases. In most cases, redress has been claimed under the head of the tort of passing off by the claimant.

  1. Daimler Aktiengesellschaft & Anr. v. Eagle Flask Industries Ltd.[5]:

In this case, the Delhi High Court stated that:

“….Trade Mark law is not intended to protect a person who deliberately, sets out to take the benefit of somebody else‘s reputation with reference to goods, especially so when the reputation extends worldwide. By no stretch of imagination can it be said that use for any length of time of the name ―Mercedes should be not, objected to. In the instant case, ―Mercedes is a name given to a very high priced and extremely well-engineered product. In my view, the defendant cannot dilute that by a user of the name Mercedes with respect to a product like a thermos or a casserole.”[6]

This judgment was the first by an Indian court which touched the concept of dilution of well-known marks. This is also the first case law in India which restrained the defendant from using the plaintiff’s well-known mark on the sole ground of free-riding, without bringing analysis of the likelihood of confusion or deception into a picture.

  1. Daimler Benz Aktiengesellschaft v. Hybo Hindustan[7]:

In this case, one of the issues before the single judge bench was whether the defendant could use the mark ‘BENZ’ on undergarments. The Delhi High Court granted an injunction to the plaintiff ignoring the defence of ‘honest and concurrent use’ and noted that replication of a mark such as of “Benz” by anyone would result in a violation of the trademark law in India. The Court, inter alia, observed that:

Such a mark is not up for grabs—not available to any person to apply upon anything or goods. That name . . . is well known in India and worldwide, with respect to cars, as is its symbol a three-pointed star[8].

  1. Honda Motors Co. Ltd. v. Charanjeet Singh[9]:

In this case, the Delhi High Court decided on the use of the trademark “Honda” by manufacturers of pressure cookers used in kitchens. The plaintiff in the present case filed an opposition and a suit for passing off, on the grounds of its international reputation and goodwill. The defendant claimed that he was the prior user of the mark in connection with pressure cookers. Moreover, the defendant claimed that since the parties’ respective goods were dissimilar, there was no possibility of any confusion or deception.

The Court, while noting that the goods were indeed different from each other, once again established the likelihood of confusion in an action for passing off, by placing reliance on the harm caused to the reputation and distinctiveness of “Honda” as a brand.

Therefore, it can be said that Indian courts without any statutory compulsion protected well-known trademark effectively and finally it was recognized and accepted by the legislature in the form of TMA, 1999.

Dilution: a case study in Indian context following the incorporation of the Trademarks Act, 1999.

Statutory provisions relating to trademark dilution were introduced for the first time into Indian law with the passing of Trade Marks Act of 1999, which came into effect in 2003. Under Indian trademark law, the concept of dilution has been mainly expressed under Section 29 (4) but there are other relevant sections which are corresponding to section 29(4). Yet since their inception, these provisions have remained on the shelf, largely untouched for half a decade. Section 29 (4) is an exception to the general scheme of the Act which requires the “likelihood of confusion” approach. ‘Dilution’ under the Section does not require a finding of confusion.

  1. Ford Motor Co. v. C.R. Borman[10]:

The plaintiff filed a suit before a single Judge of the Delhi High Court, alleging that the defendants used the mark “Ford” in connection with footwear that they were manufacturing. The plaintiff filed for a case of infringement under Section 29(4) of the Act of 1999. The single judge of the High Court granted the defendants’ motion to dismiss the plaintiff’s complaint. Finally, on appeal, the Division Bench of the High Court reversed the order of the Single Judge and noted:

“What should not be lost sight of is the fact that Section 29(4) is palpably an exception to the scheme of the Act and applies only to those trademarks which have earned a reputation in India…the Plaintiffs do not have to prove deception on the part of the Defendants or likelihood of the customer being misled because of the use of the challenged trademark.[11]

  1. ITC Ltd. Philip Morris Products SA & others:

This is by far the most pertinent judgment on the issue of trademark dilution in India. Decided by Justice Ravindra Bhatt, this case is the first comprehensive discussion of the legislative and policy components of Section 29(4) of the Act. The case is noted to be the first instance where an Indian court took the decisive step of articulating the requisites that are to be satisfied to constitute trademark dilution[12].

In the present case, the two marks in question belonged to two companies with well-established reputations in India. The plaintiff, ITC Ltd., argue that in the year 2008, Philip Morris had begun using a hollow flaming roof design similar to the “WELCOME GROUP” mark that ITC had been using in respect of its hospitality business for many years. ITC Ltd. claimed that Philip Morris has done away with its traditional roof design used for marketing Marlboro cigarettes in India and has been using a mark similar to theirs. ITC Ltd. contended that the persistent use of the mark on the covers of the Marlboro cigarettes had the effect of diluting the distinctiveness of ITC’s trademark, and thereby sought relief on the basis of Section 29(4) of the Trademarks Act, 1999

The Court, in this case, while referring to section 29 (4) of the Trade Marks Act, 1999 (the Act), recognized the essentials for dilution as under[13]:

(a)    The impugned mark must be identical or similar to the injured mark;

(b)    The one claiming injury due to dilution must prove that her/his mark has a reputation in India;

(c)    The use of the impugned mark is without due cause;

(d)    The use of the impugned mark (amounts to) taking unfair advantage of or is detrimental to, the distinctive character or repute of the registered trademark.

An analysis of the above judgments of Indian courts shows that the concept of trademark dilution in India has evolved gradually and has gone beyond the statutory boundaries. This was necessary to protect and promote the interests of proprietors of reputed and famous trademarks.

 

 

  1. YAHOO INC. V. SANJAY PATEL & OTHERS[14]: A PROGRESSIVE STEP FOR THE DILUTION PRINCIPLE

The US-based Yahoo! Inc. had filed a suit against AFPL, director Sanjay Patel and distributors Shri Jee Traders for allegedly naming their merchandise as ‘Yahoo Masala Chakra’ and ‘Yahoo Tomato Tangy’. The petitioners claimed that it violated their right[15].

The Delhi High Court has issued orders restraining Indian firm M/s Apricot Foods Pvt. Ltd (AFPL) an, from using the YAHOO! trademark or any other deceptively similar mark as part of their product name. The court held that the said infringement has the potential of diluting the YAHOO! trademark and tarnishing the reputation attached to it.

The Court has followed the preceding judgments in this regard and opined that the cross-border reputation of Yahoo! makes it imperative for the industrial players in India to refrain from doing something that has the tendency to dilute the established reputation of a trademark.

It cannot be denied that Yahoo Inc. is a globally renowned entity which is majorly known for its Web portal, search engine Yahoo! Search, and related services, including Yahoo! Directory, Yahoo! Mail, Yahoo! News, Yahoo! Finance, Yahoo! Groups, Yahoo! Answers, advertising, online mapping, video sharing, fantasy sports and its social media website. It is one of the most popular sites in the world. It is claimed to be one of the highest-read news and media websites, with over 7 billion views per month, being the fourth most visited website globally. With such credentials to its name, it would have been really difficult for the court to not pass a decree in favour of Yahoo Inc, particularly when it is a matter of trademark infringement as trademarks in the current scenario play a pivotal role in the business growth of an entity.

The court while delivering the judgment observed:

“…..The plaintiff (Yahoo Inc) has been able to prove that defendants 1 and 2 (AFPL and its director) have adopted the plaintiff’s trademark as the name of their product in order to piggyback on the reputation of the plaintiff and (its) trademark and that such adoption of the trademark Yahoo for AFPL’s snack items is undoubtedly dishonest and that AFPL has taken had taken an ‘unfair advantage’ of the Yahoo Inc trademark…..”[16]

It can be rightly pointed out that the judicial trend in India relating to trademark dilution has emerged in a very positive manner. All the above-mentioned judgments testify to the fact that the Indian judiciary has been quite vigilant whenever safeguarding the reputation of a globally recognized trademark was a concern.

 

CONCLUSION

The doctrine of trademark dilution though finds its origin in the Common Law regime but its immaculate implementation in majority of cases by the Indian judiciary is praiseworthy. Despite several decisions by Indian courts referring to dilution over the past two decades, the 1999 Act represents a fresh start. Earlier courts were therefore arguably more willing to reach a finding of dilution since consumers were also confused or deceived. However, under the new regime, dilution forms the basis for an independent cause of action and must be approached with greater circumspection. The Trademark Act 1999 is a step forward in the prevention of dilution but still, the contemporary Indian scenario necessitates for a separate legal enactment for prevention of dilution and to meet the standards of protection in the international level.

* Bhumika Chaturvedi – Dept. of Law, Barkatullah University.

Reference

[1] f. Schechter, “Rational basis of trademark protection”40harv l rev813 (1927).

[2] f. Schechter, supra note 1at 822.

[3] Frank I Schechter, “fog & fiction in trademark protection” 36 Col l rev 60 at 64 (1936).

[4] Ringling Bros- Barnun &bailey combined shows, Inc v. Utah division of travel development 170 f 3d 449 (4th cir. 1999).

[5] ILR (1995) 2 Del 817

[6] ILR (1995) 2 Del 817.

[7] AIR 1994 Del. 239.

[8] ibid.

[9] 2003 (26) PTC 1 (Del.)

[10] 2008 (2) CTMR 474 (Del.) (DB)

[11] ibid.

[12] Bharadhwaj, Pragalbh, The Curious Case of Trademark Dilution in India: Analysing the Significance of ITC Ltd. v. Philip Morris Ltd. In The Indian Trademark Regime.

[13] ibid.

[14] 2016SCCDel4988.

[15] ibid.

[16] 2016SCC Del 4988.

An Explanatory Study of the Competition Law in India with reference to the Competition Act, 2002 – by Mayank Vats *

In accordance with the provisions of the Competition Act 2002, it is prohibited and declared that any agreement between undertakings concerning the production, supply, distribution, storage, acquisition or control of goods or the rendering of services causing or likely to cause harm which could portrays significant negative effect on competition in India. There are no legislative illustrations of anti-competitive practices or behavior. This provision is very general and broad in scope. The Act also goes on to specify certain anti-competitive agreements that may be concluded or practices that may be entered into by companies providing similar or identical goods or services or cartels. According to this provision, the agreements or practices implemented by this category of companies are presumed to have a significant adverse effect on competition. They are in themselves violations of the law. Furthermore, the Competition Act, 2002 also deals with what are called vertical restraints. These are restrictions among companies at different stages of the production chain in different markets. This would cover the supply of goods as well as the services. Vertical restraints must be examined under the rule of reason. The appreciable negative effect on competition must be established in each case. The legislation also provides for certain exceptions which are really very significant. The first set of exceptions protects the right of the owner of one of the intellectual property rights under the provisions listed in the Act, to restrict any infringement of any of its rights or to impose reasonable restrictions necessary to protect any of these rights. The provisions of the Act also excludes the terms of an agreement relating exclusively to the export of goods or the provision of services abroad. As specified by the Competition Act, 2002, it also extends to the prohibition of certain practices considered as abuse of a dominant position by a company. Some of them are:

  • discriminatory pricing or commercial conditions or predatory pricing,
  • limiting the supply of goods or services,
  • denial of market access,
  • Using a dominant position in a relevant market to enter, protect, other relevant market.

A dominant position in substance is the ability of a company to act independently of competitive forces prevailing in the market or to affect the relevant market in its favour. A dominant position is generally acquired by a firm over a period of time and factors such as the state of technology, barriers to entry, scale of operations, etc., influence the obtaining of a position (dominant position). The market share of an enterprise does not determine, as in the MRTP Act of 1969, the dominant position of a firm, although it is one of the factors to be taken into account, as well as other factors, including the market shares of its competitors. The basic position is that there is no breach of the law by an enterprise simply because it enjoys a dominant position. It is only the abuse of this position by any of the anti-competitive practices set out in this law that is prohibited. The “combination” within the meaning of the Competition Act, 2002 includes mergers and acquisitions. The acquisition of shares, voting rights, assets of another enterprise beyond certain prescribed thresholds of value or control over another enterprise and merger of companies where the assets concerned exceed the prescribed value is covered in a very specific way in the legislation. Additionally, the Competition Act, 2002 also prohibits or is likely to cause a significant adverse effect on competition in the relevant market in India. It states that such a combination would be nil. It also defines the procedures for regulating combinations. In a given case, a merger might be some way of eliminating a competitor. It should be noted that prior to the introduction of this law, there was no specific provision under the Companies Act 1956 prohibiting anti-competitive mergers or acquisitions.

Reference

*Mayank Vats – Symbiosis Law School, Hyderabad.