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The central rationale for trademark protection in protecting the brand value of businesses

October 23, 2021
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This article is written by Srishti Sinha, a student at the Institute of Law, Nirma University, Ahmedabad. The article puts forth the role of trademarks in business protection and protecting the brand value of businesses. Also, it clears the basic misconception of people that trademarks’ basic intention is to protect the interests of consumers.

Introduction 

Trademarks were created to identify the economic origin of services or commodities in a certain location, but it has long been assumed that trademark law was created to protect consumers’ interests and enhance the quality of information accessible in the marketplace. Even in conventional trademark law, public interest has always played a secondary role, as seen by the countless cases where courts rejected relief despite overwhelming proof that consumers would not be misled. With the evolution and development of trademark law, it has been recognized that the primary justification for trademark protection is and should be the intrinsic interest of commercial organizations in preserving their brand value, rather than catering to public interests. 

Trademarks – an overview

Any term, phrase, symbol, design, or combination of these things that distinguishes your goods or services can be used as a trademark. It’s how clients know you and tell you apart from your rivals in the marketplace. Both trademarks and service marks are referred to as “trademarks.” For products, a trademark is used, whereas, for services, a service mark is used. A trademark helps you in the following ways: 

The use of a trademark prohibits others from copying a company’s or individual’s products or services without authorization. They also restrict any marks that have a high possibility of being confused with one that already exists. This implies that a company can’t use a sign or brand name that looks or sounds the same as, or has the same meaning as, one that’s already registered—especially if the products or services are comparable. Also, you can use symbols with trademarks. The symbol helps customers and competitors know that you’re claiming the trademark as yours. Even if you haven’t filed a trademark application, you can use Trademark (TM) for products and Service Mark (SM) for services.

Trademark laws in India 

The revised Trade Marks Act, 1999, which came into action on September 15, 2003, codified the Indian trademark law. At the same time, the previous Trade and Merchandise Marks Act of 1958 was abolished. The revised Trademarks Act of 1999 complies with World Trade Organization (WTO) guidelines and the TRIPS Agreement (Trade-Related Aspects of Intellectual Property Rights), which India is a signatory to. The Trademark Act’s goal is to give legal protection to trademark users, direct the conditions on the property, and provide legal remedies for the enforcement of trademark rights.

The Trademark Act of 1999 empowers the police to make arrests in situations of trademark infringement. The Act provides a comprehensive definition of the term “infringement,” which is commonly used. The Trademark Act stipulates fines and punishments for violators. It also lengthens the time it takes to register a trademark, as well as the time it takes to register a non-traditional trademark.

Why are trademarks important in a business

Business owners must understand why trademarks are valuable assets that may help them expand their company. Below mentioned are some of the reasons which prove that trademarks are important for businesses:

Importance of brand and its protection

The economic aspect of trademarks

According to Article 15 of the TRIPS Agreement, a trademark is a symbol that distinguishes one product or service from similar products or services. As a result, a commercial interest takes precedence over any public interest. The TRIPS Agreement is based on the WIPO (World Intellectual Property Organization), Paris Convention, which also provides trademark owners with an authorization right, which allows them to authorize a third party to use their brand in exchange for a fee. These characteristics emphasize the economic justification for trademarks and demonstrate why firms attempt to benefit from their registered trademarks.

The fundamental role of every profit-seeking firm should be the safeguarding of brand value to sustain consumer loyalty. This can only be accomplished by trademark registration, as it allows buyers to identify between items or services provided by various businesses. Furthermore, trademarks reduce transaction costs and provide vertical restrictions that are cost-effective for every business. Any firm with a trademark registration holds the exclusive right to use the mark and can sell or give nominal use rights to other businesses. Franchisors commonly use trademarks to prevent franchisees from producing goods or services created by the parent business, while allowing franchisees to focus on the distribution of such goods or services. This reduces market competition and aids the trademark owner in maintaining his or her reputation without regard for the public interest. Economists claim that trademarks serve as information capital by lowering consumer costs in determining the origin of any goods.

Case studies

In recent years, there has been a steady increase in the number of major trademark lawsuits in India. Some of the rulings were historic in terms of the precedents they established. Here’s a look at some of India’s recent major trademark disputes which show the importance of trademark in protecting the brand value of a company. Let us take three famous cases which can show the role and importance of a trademark in the protection of brand value.

Yahoo!, Inc. v. Akash Arora & Anr (1999) 

The first landmark case is of Yahoo!, Inc. v. Akash Arora & Anr (1999) which is based on cybersquatting. For the first time in India, the Delhi High Court ruled that a domain name serves the same purpose as a trademark and is entitled to the same level of protection. The defendant owned a domain name called “Yahooindia” that was identical to and phonetically similar to the plaintiff’s trademark “Yahoo!” and the domain name “Yahoo.com”. According to the Court, internet users would be deceived and misled into assuming that both domain names are from the same source. The defendant claimed that it had posted a disclaimer on its website as a defense. However, it was noted that a simple disclaimer was insufficient since the nature of the internet is such that the use of a similar domain name cannot be remedied by a disclaimer, and it makes no difference whether or not ‘yahoo’ is a dictionary term. The plaintiff’s name has acquired individuality and uniqueness as a result of its association with him. Hence, the trademark protected the brand value of “Yahoo”. 

The Coca Cola Company v. Bisleri International Pvt. Ltd. (2009)

The second most famous case is The Coca Cola Company v. Bisleri International Pvt. Ltd. (2009). In this case, Bisleri, the defendant, had sold and transferred the trademark MAAZA, including formulation rights, know-how, intellectual property rights, and goodwill for India, to Coca-Cola under a master agreement.

The defendant firm registered the mark MAAZA in Turkey in 2008 and began exporting fruit drinks under the name MAAZA. Coca-Cola, the plaintiff, sought a permanent injunction as well as damages for trademark infringement and passing off. The Court, in this case, issued an interim restraining order prohibiting the defendant (Bisleri) from using the brand MAAZA in India or for export, citing trademark infringement.

Whatman International Ltd. v. P. Mehta and Ors. (2019)

Another case in which the Court protected the brand value of a product is Whatman International Ltd. v. P. Mehta and Ors. (2019). This is the famous Indian case in which Whatman obtained a massive settlement of 3.85 crores from the defendant, who traded on its goodwill and caused damages to Plaintiff’s different intellectual property rights in the last 25 years. This was the most recent instance in which the actual worth of a trademark was recognized, and defendant’s acts of malfeasance in selling counterfeited filter papers that were an identical replica of plaintiff’s filter paper under multiple trademarks were permanently halted.

Among these cases, it can be seen that the trademarks protect the brand value of any business or product if the products are original. Also, with this protection, it ensures that there is no unfair competition that can harm the company’s goodwill. 

Conclusion 

Trademarks are helpful for business organizations as they allow the products to reach a better consumer base. The primary justification for trademark protection is and should be the preservation of brand value since trademark owners should be able to utilize their marks in whatever way they see fit. Because corporations cannot be obliged to control their products according to public demands, the public interest is just a secondary consideration. Businesses must earn a profit on their investment and utilize their resources to the fullest extent feasible. Because, typically when a corporate entity registers a trademark that is not yet renowned, there is no underlying public interest in registering that property, the fundamental goal of trademark law is to protect brand value and business. 

The primary goal of any business is to make money, and this should be the primary motivation for trademark owners to seek trademark protection. Only by creating a brand value that is identifiable and dependable will clients or the general public be able to distinguish between different items or services. As a result, the public interest is a secondary factor that motivates businesses to seek trademark protection by registering their marks, images, logos, signs, and names. The advantages derived from a company’s goodwill cannot be denied to it in the name of public interest, and this should be the most essential aspect of trademark law.

References 

  1. https://www.entrepreneur.com/article/235887 
  2. https://www.mondaq.com/india/trademark/127680/trademarks-law-in-india-everything-you-must-know 
  3. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2288154 
  4. https://www.uspto.gov/trademarks/basics/what-trademark 
  5. https://www.investopedia.com/terms/t/trademark.asp 

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