An Overview on the Concept of Dilution of Trademarks

An overview on trademarks, their significance, and registration

Trademarks play a crucial role in reflecting the quality of a product or service. Moreover, it provides a sense of individuality to the brand by differentiating its products and services from other competitors in a particular domain. Trademarks are a valuable asset to a company or a business. This essentially means that the value of a trademark is directly proportional to a company’s growth. A company or an individual can register their trademarks as per the legal procedures provided under the Trade Marks Act, 1999. Registering a trademark is critical since it restricts other businesses and individuals from any unauthorized use. Thus, through trademark registration, an individual or a business owner will receive exclusive ownership over a particular logo or brand name.

Introduction to trademark dilution

  • History of trademark dilution

The history of trademark dilution can be traced back to 1927. The trademark dilution theory was first propounded by Frank I. Schechter in his article titled “The Rational Basis of Trademark Protection” which was first published in the Harvard Law Review.Trademark In his article, Schechter argued that the protection of a trademark should not be merely restricted to address issues pertaining to the deception of the public, but must extend to preventing people from “vitiating the originality and uniqueness of the mark”. Frank Schechter is popularly known as the ‘father of dilution’ due to his work which laid down the framework for the doctrine of dilution.

[Image Source: Getty images]

 

  • Dilution and its types

In simple terms, trademark dilution occurs when an unauthorized party uses a trademark in a manner that would tarnish or diminish the image of a well-known trademark. Most often than not, trademark dilution occurs among businesses or individuals that do not compete with each other. Dilution is widely categorized into two types: Blurring and tarnishment. Dilution by blurring occurs when the distinctiveness of a popular trademark is impaired due to a trademark which is created by an unauthorized party. For instance, if a business uses the ‘FACEBOOK’ mark on a toothpaste, consumers may begin to associate the well-known FACEBOOK mark with the toothpaste brand. This may negatively impact Facebook’s brand image. On the other hand, dilution by tarnishment occurs when a person or a business unauthorizedly uses a mark in an offensive, inappropriate or absurd context. Generally, unauthorized parties create infringing marks to insinuate beliefs or messages that go against the core values of the original mark’s owner. For instance, the unauthorized use of the “WHOLE FOODS” mark to associate it with food items that use hydrogenated fats, artificial colors, and flavors can be considered as an example of trademark dilution by tarnishment. Apart from blurring and tarnishment, the European Union has recognized a type of dilution termed as ‘free-riding. Freeriding occurs when an unauthorized party uses a well-known mark to imply that there exists an association between the unauthorized party and the owner of the well-known mark. Generally, free-riding occurs when an unauthorized party attempts to monetize or profit out of a well-known mark’s goodwill and image. Time and again, brands or individuals who manufacture products that are entirely unrelated to the well-known mark’s owner partakes in dilution by free-riding. For instance, the use of the ‘GOOGLE’ mark on restaurants may amount to dilution by free-riding since the unauthorized party may capitalize out of Google’s goodwill and brand image.

The doctrine of dilution of trademarks

The doctrine of dilution of trademarks refers to a principle in trademark law that protects a trademark from any form of disintegration. As per the doctrine, 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.

  • Trademark dilution in India: Laws, cause of action, and exceptions

Section 29(4) of the Trade Marks Act, 1999 deals with trademark dilution. However, the term ‘dilution’ has not been defined under the Act. Section 29(4) of the Trade Marks Act enumerates the conditions that classify as dilution:

(4) 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.

Thus, section 29(4) enumerates that trademark infringement in the form of dilution may occur if an infringer creates a mark that is identical or similar to a well-known registered mark and is used on goods and services that are not covered by the registration. Additionally, if an infringer takes unfair advantage of the well-known mark because it has a distinctive character and when the infringer’s mark may tarnish the image of the well-known mark, it may amount to infringement in the form of dilution. The pre-requisites for establishing trademark dilution have also been elucidated in the case of ITC v. Philip Morris Products SA and Ors. The case has established that an infringement through dilution may occur if the impugned mark is similar to the well-known part, the well-known mark has a reputation in India, the impugned mark has been used without due cause and the use of the impugned mark is detrimental to the distinctive character of the impugned mark.

However, there exist certain conditions under which the infringing mark shall not be considered dilution. This includes situations wherein the mark is used for criticizing, parodying, news reporting, commentary, educational purposes, and entertainment purposes. Such situations may fall under the ambit of descriptive or nominative fair use and hence, cannot be considered as trademark dilution. Moreover, the advertising or promotion activities that permit a brand’s consumers to compare goods or services are permissible and will not be actionable as trademark dilution.

Author: Sanjana, a BBA LLB student of  Symbiosis Law School (Hyderabad), in case of any queries please contact/write back to us at vidushi@khuranaandkhurana.com or Khurana & Khurana, Advocates and IP Attorneys.

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