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This article is written by Ajay Kumar, pursuing Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho. The article has been edited by Zigishu Singh (Associate, LawSikho) and Smriti Katiyar (Associate, LawSikho).

Introduction

A trademark is a unique design, mark, image, symbol, mark, or phrase attached to a specific item for sale to differentiate the goods from those sold or made by others, requiring the manufacturer to identify the source of the product. Once authorised, the producer can legally exercise the rights, and the marks become his property which provides the producer with the legal right to sue the infringer. As a result, marks that have been preserved are better protected legally.

The Indian parliament replaced the Trade and Merchandise Marks Act, 1958, with the Trademarks Act, 1999, to provide better protection to the goods and services and protect fraudulent marks. The Trademarks Act, 1999 introduced the concept of trademark dilution.

Trademark dilution

Trademark dilution is a form of trademark infringement, where the owner of a well-known trademark has the right to prevent others from using their mark because it tarnishes their exclusivity or undermines their reputation. In practice, no one has the right to copy any well-known trademark or abuse the reputation of a well-known trademark. Instead, dilution protection is intended to protect a sufficiently strong and well-known trademark from losing its sole association in the public’s mind with a particular product.

History of trademark dilution

We can trace the history of trademark dilution back to 1927. The renowned author of the “Historical Foundations of the Law Relating to Trade-Marks”, Mr. Frank Isaac Schechter, first propounded the principle of trademark dilution in his article “The Rational Basis of Trademark Protection”, published in the Harvard Law Review. In his article, Schechter argued that trademark protection should not be limited to addressing issues related to the deception of the public but should extend to preventing people from “destroying the originality and uniqueness of the mark”. Frank Schechter is known as the ‘father of dilution’ because of his work which outlined the theory of dilution.

Types of trademark dilution

Trademark dilution takes place when an unauthorised party uses a trademark in a way that affects, tarnishes or blemishes the image of a well-known trademark. Mainly, trademark dilution occurs between businesses or individuals that do not compete with each other. Trademark dilution is categorised into two categories: blurring and tarnishing.

What is blurring?

Blurring occurs when a famous trademark’s uniqueness is tarnished due to a trademark created by an unauthorised party. For example, if a business uses the ‘AMUL’ mark on kitchenware, consumers may begin to associate the well-known AMUL mark with the kitchenware brand. This can lead to affecting the brand image of AMUL negatively. 

Understanding the term tarnishing

Tarnishing occurs when the status of a similar mark or well-known mark concerning a trading name is injured. This generally applies when the defendant’s use of the mark is considered offensive or associated with inferior products or services. For example, if someone sells undergarments under the mark ‘BENZ’, the use of “BENZ” on undergarments can blemish the reputation of the renowned manufacturer of the finest engineered cars BENZ. 

The act of dilution of the trademark by way of tarnishment is always with regard to well recognised, strong and famous trademarks. This has the effect of reducing or weakening the strength and identifying the value of the trademark. There is no need to establish the likelihood of confusion as to source, affiliation and connection. This is so as some potential purchasers are confused as to source or affiliation while others may not. 

The doctrine of dilution of trademarks

The doctrine of dilution is independent and distinct. The underlying object of the doctrine is that there is a presumption that the relevant Customers begin to associate the trademark with a new and different source of goods and services. The doctrine of dilution of trademarks leads to a principle in trademark law that protects a trademark from any form of disintegration. According to the doctrine, to establish dilution of the trademark, the Plaintiff has an obligation to prove that;

1 The infringer has used a mark that is precisely similar to the well-known trademark to monetize or profit from the goodwill and image of a well-known trademark.

2. The economic damage has been done by reducing the value of the well-known trademark.

The doctrine of trademark dilution in India

The word dilution has not been defined in the Trade Marks Act, 1999 but Section 29(4) of the Trade Marks Act, 1999 talks about the dilution of a trademark. This section provides that if a trademark has a reputation in India, the use of a mark identical with or similar to it, even the goods or services which are different, constitutes infringement as such use without due cause, would take unfair advantage of a reputed trademark or harm its distinctive character. So this Section postulates that a registered trademark is infringed by marks which:

1. Identical or similar to a registered trademark already having a reputation in India and is used concerning goods or services which are not identical to those for which the trademark is registered.

2. When any person takes undue advantage of an eminent mark or mark having a distinctive character.

Exceptions to dilution of trademarks

There are certain conditions under which the infringing mark shall not be actionable as dilution. This includes situations where the mark is used to criticise, parody, news reporting, commentary, educational, and entertainment purposes. Such cases may fall under the ambit of descriptive or nominative fair use and hence, cannot be considered trademark dilution. In addition, advertising or promotional activities that allow consumers of a brand to compare goods or services are permitted and will not be actionable as trademark dilution.

Case laws 

In Caterpillar Inc. vs Mehtab Ahmed And Ors, Plaintiff filed a suit for a permanent injunction against the defendant for selling various articles, including footwear, using the identical trademarks ‘CAT’ and ‘CATERPILLAR’. The Delhi High Court decreed in favour of the Plaintiff and stated that “So far as the doctrine of dilution is concerned, it is an independent and distinct doctrine. The underlying object of this doctrine is that there is a presumption that the relevant customers start associating the mark or trademark with a new and different source. It smears or partially affects the descriptive link between the prior user’s mark and its goods. In other words, the connection between the mark and the goods is blurred. It amounts to reducing the force or value of the trademark and gradually tapers the commercial value of the marks slice by slice. Such kind of dilution is not a fair practice that is expected in trade and commerce.”

In ITC Ltd. v. Philip Morris Products SA, Plaintiff owned the ‘WELCOMEGROUP’ logo, a device depicting folded hands. In a suit for dilution of trademark, the Court held that Plaintiff must pass a more rigorous test (compared to the deceptive similarity standard) of proving identity or similarity. The Court further held that a “global” look is to be taken rather than focusing only on the common elements of the mark while considering if the impugned mark infringes an existing registered mark by dilution. Plaintiff’s mark resembles a “W”, but “Namaste” is discernible. All the defendant’s previous marks resemble “M”. Considering the overall marks for the logo, without classifying the similarity or dissimilarities minutely, the Court discerns no ‘identity’ or ‘similarity’ in the overall presentation of the two. The case has established that there may be infringement by way of dilution if the impugned mark is identical to the well-known part, the well-known mark has a reputation in India, The impugned mark has been used without any reason, and using the impugned mark is detrimental to the distinctive character of the impugned mark.

In Bayerische Motoren Werke AG v. Om Balajee Automobile (India) Private Limited, Plaintiff is a German automobile manufacturing company that owns the mark ‘BMW’ and manufactures and sells automobiles under the mark ‘BMW’. The defendant was using a similar mark, ‘DMW’ in their E-rickshaws. The Delhi High Court observed that the defendant had adopted the essential characteristics of the Plaintiff’s mark and that the visual and phonetic similarity was evident. Because of this, the defendant’s mark DMW was likely to deceive and cause confusion. The Court passed the ad-interim injunction and restrained the defendant from using the similar mark. 

This decision gives due importance to the protection of well-known and reputed trademarks from the threat of dilution as infringement. It reinforces the concept that the dilution test does not equate to illusory equality.

Conclusion

The power conferred on the well-versed trademark owner is known as the concept of dilution. This philosophy will help protect the reputation of the company and prevent fraudulent acts that may occur over time. These well-known enterprises contribute to the GDP growth of our country, and it is the responsibility of the administration to defend them against unfair competition and other deceptive practices. Section 29(4) is a remedy that exists in addition to contravention action. The concept of dilution is based on the authority of the courts and the conditions laid down by them. To prevent confusion, if a trademark fails to pass court standards, it is not authorized to market in the marketplace.

References


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