Trademarks Mark More Than Trade Now

Introduction

The classical function of trademark law was to identify the source of each good or service in the market. Trademarks were meant to help consumers distinguish between similar ones. As per its definition, a trademark is a “distinctive mark capable of graphical representation, which is used in commerce and is distinguishable from other marks in the market”[1]. However, of late, trademarks have come to symbolise status, social affiliation, and personality[2].

This blog argues that the expansion of trademark protection in such a manner raises concerns along the lines of market competition, constitutional expression, and cultural freedom.

Has Trademark Law Taken A “Luxurious” Turn?

Way back in 1979, the House of Lords recognised the secondary meaning acquired by a mark amongst the public, and permitted an action against misrepresentation by a trader, aimed at injuring the goodwill earned by the former mark[3]. The Indian statute reflects this position by protecting the character and repute of a well-known trademark[4]. A well-known trademark has been described as referring to marks known to a relevant section of the public as a result of its extensive promotion and prior recognition of its well-known nature[5]. This signals a shift away from the foundational tenets of trademark law.

Today, the market is driven by competition, and an enterprise’s worth is determined by the value of its brand. As the American Marketing Association describes it, a brand is “any distinctive feature like a name, term, design, or symbol that identifies goods or services”[6]. This definition is very similar to that of trademarks. The two also bear characteristics of attribution, as a result of their symbiotic cause-and-effect dynamics. Branding attributes a market reputation and well-known nature to a trademark. It causes a mark to be recognised by consumers for its attached goodwill, luxury, social status, sustainability, and the like, as the case may be. More often than not, while purchasing a product, consumers look at the utility of a commodity as well as what the use of the same would reflect about them. Hence, marks have come a long way in not only identifying sources of goods and services, but also being a tool of a consumer’s expression of their personality.

This is where the concept of trademark dilution comes into play.

Trademark Dilution

The first reference to the importance of protecting trademarks against dilution can be traced back to 1927, when Frank I. Schechter wrote, “the preservation of the uniqueness or individuality of the trademark is of paramount importance to its owner”[7].

The Indian Judiciary has explained the doctrine of dilution to refer to the use of a well-known trademark or a similar trademark for dissimilar goods or services, that injures the reputation and source-identifying characteristics of the well-known mark, despite not causing consumer confusion[8].

Dilution has been identified to occur in two ways:

i) Blurring, which is caused by the use of the defendant’s mark such that it weakens the distinctiveness of the plaintiff’s mark, albeit by application to dissimilar goods or services; and

ii) Tarnishment, which is caused by the use of the defendant’s mark such that it harms the reputation of the plaintiff’s mark in the market.[9]

In Indian law, Section 29(4) of the Trade Marks Act, 1999 (“Trade Marks Act”) has been judicially interpreted to extend to actions against infringement through trademark dilution. In Kamdhenu Ispat Ltd. v. Kamdhenu Pickles & Spices Ind. (P) Ltd.[10], the Hon’ble Delhi High Court recognised the following prerequisites for a claim against dilution to succeed: i) similarity of the impugned mark and the injured mark; ii) the reputation of the injured mark in India; iii) the use of the impugned mark in bad faith; and iv) the injury caused by the use of the impugned mark (“…taking unfair advantage of, or is detrimental to the distinctive character or repute of the registered trade mark”). Each of these elements must be established individually[11].

The legislative intent behind the wording of Section 29(4) has been explained in the following terms: the word “detriment” with relation to the “distinctive character” introduces the concepts of dilution and blurring, while “repute” relates to the concepts of tarnishment and degradation; and the existence of the disjunctive “or” between “distinctive character” and “repute” has been interpreted to make the provision applicable in cases wherein a mark may lack distinctiveness, but still hold a reputation[12].

What is pertinent to note here is that neither the ways of trademark dilution, nor the ingredients of the same, require consumer confusion to be proven. The law has been extended to protect the brand itself.

Indian Courts & Brand Identity

When we talk of a mark being associated with goodwill, the first example that comes to mind is that of a luxury item. After all, no mark reflects a higher social affinity of a consumer than that of luxury goods like Gucci, Armani, Louboutin, Porsche, etc. Indian courts have, time and again, recognised the value of affording stronger protection to well-known brands across different product categories.

In Daimler Benz Aktiegesselschaft v. Hydo Hindustan[13], the Court restrained the sale of undergarments under the name of “Benz” since the mark “Benz” dealt in automobiles and had acquired distinctiveness and goodwill among consumers by the use thereof. Despite it being highly unlikely that a consumer would be misled into believing that the car company sold underwear, the Court was of the opinion that such use of the mark would dilute the former’s repute. Further, in ITC Ltd. v. Philip Morris Products SA[14], the Court extended protection to trade dress, i.e., the “overall look and feel” of a mark and its associated products. These decisions reflect that the judiciary, too, believes that now, trademarks protect brand identity, and not only determine a product’s source or origin.

How Does Brand Identity Affect the Market & Free Speech?

The reputation of a brand is attributable to an enterprise’s efforts and its socio-cultural reception. Hence, assigning absolute control to brands over their trademarks becomes problematic.

Market

Broad and unfettered trademark rights may permit a brand to raise severe hindrances to new market entrants. For instance, when a well-known brand claims rights over a certain colour, competitors, including those acting in good faith, find it difficult to produce goods without facing legal hurdles[15]. This works against competition law by way of diminishing fair competition, reducing innovation, and granting monopolistic, arbitrary, and unfair rights to a brand. Trademark law, as it stands today, is not fully equipped to address and resolve this issue.

Free Speech

A wide scope of trademark law can interfere with human expression, especially noticeable in creative arts. Artists engaging in art, satire, or socio-cultural commentaries may often make references to brands to make a point. When an artist begins to monetise such work, the same may be treated as commercial exploitation. In fear of legal actions, several artists may avoid doing so altogether. This creates a “chilling effect” on speech, with expression being stifled not by law directly, but by the fear of being sued. Trademark law, thus, begins to wear the shoes of being a tool used to indirectly suppress speech.

In the United States, courts have permitted the use of trademarks in “expressive works” by artists, even without the trademark owner’s consent, unless the use is misleading. It has been held not to constitute a legitimate “use in commerce”.

On the contrary, in India, the law permits “honest practices in industrial or commercial matters”[16]. However, there has been little clarification with regard to artistic contexts. The Constitution of India protects the freedom of speech and expression[17]. In light of the same, stricter judicial scrutiny is called upon.

Towards Carving Out A Middle Ground

Trademark law must be remodelled to provide for a smooth integration of branding, competition, and cultural expression. To achieve this, i) protection against dilution shall only be granted in cases of harm beyond a reasonable doubt; ii) non-commercial expressive uses of trademarks shall be protected; and iii) trademark rights shall not be assigned an absolute nature, to the extent that they may seek to unfairly block competition.

Conclusion

Although trademarks have stepped away from their traditional role, their inherent roles in commerce must be retained. They should not be granted a scope wide enough to encroach upon constitutional rights. A careful balance must be ensured to prevent the market from becoming a monopolistic one.

Author: Daisy Banakhede, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.

[1] Trade Marks Act, 1999, §2(1)(zb), No. 47, Acts of Parliament, 1999 (India).

[2] Kevin Lane Keller, Conceptualizing, Measuring, and Managing Customer-Based Brand Equity, 57(1) J. Mark. 1-22.

[3] Erven Warnink Besloten Vennootschap v. J. Townend & Sons (Hull) Ltd., [1979] A.C. 731.

[4] Supra, note 1 at §11(2).

[5] Id, at §11(6).

[6] Branding, AMERICAN MARKETING ASSOCIATION, https://www.ama.org/topics/brand-and-branding/.

[7] Frank I. Schechter, The Rational Basis of Trademark Protection, 40(6) Harv. L. Rev. (1927), 813-833, at pg. 822.

[8] Tata Sons Ltd. v. A.K. Chaudhary, 2009 SCC OnLine Del 687.

[9] Panavision Int. L.L.P. v. Toeppen, 141 F. 3d 1316 [9th Cir 1998].

[10] 2010 SCC OnLine Del 3609.

[11] Intel Corp Inc v. CPM United Kingdom Ltd., 2009 ETMR 13.

[12] Bloomberg Finance LP v. Prafull Saklecha, 2013 SCC OnLine Del 4159.

[13] 1993 SCC OnLine Del 605.

[14] 2010 SCC OnLine Del 27.

[15] Christian Louboutin Sas v. Pawan Kumar, 2017 SCC OnLine Del 12173.

[16] Supra, note 1 at §30(1)(a).

[17] INDIA CONST. art. 19(1)(a).