This article has been written by Akhil Goyal.
Trademark refers to any word, mark, image and any expression that can be represented graphically and used by businesses or persons commercially. The life of a trademark can be indefinite depending on its usage. It varies depending on its usage and commercial exploitation by the owner.
As long as the mark is being commercially exploited by its owner, the mark has a life, and is known as a valid or a live trademark and the owner is vested with the common law right of passing off to prevent its mark from any unauthorized or illegal use by the 3rd party. However, when the owner of the mark abandons the use of such mark, the owner losses all the rights vested to protect the mark against any unauthorised use and such mark becomes available to use by any 3rd party.
These trademarks which are not in commercial use and have become abundant are known as dead marks and when such dead marks are used by 3rd parties they are known as Zombie trademarks.
Lives of trademark
A trademark has two lives, Statutory and Commercial Life. The Statutory Life is the life of mark on the register and is governed by the Trade Marks Act, 1999. Statutory life of mark comes by virtue of the statute and ends with the statute i.e. through abandonment or failure to renew.
The second life i.e. Commercial Life of a trademark is its use in commerce, it begins from the time when the mark was 1st used and continues till the mark remains active in the market. The commercial life of the trademark is independent and is not affected by the statutory life of the mark.
Trade Marks law is a country-specific law and varies from country to country. In various countries including India, prior adoption/use is considered superior to prior registration while other consider registration of mark superior than adoption.
Trademarks in India are governed and regulated by the Trade Marks Act, 1999. The Act provides for statutory recognition and protection of trademarks.
Death of a trademark
A Trademark has infinite life, it does not die merely because of the expiry of the statutory period, rather it continues to live till it is used commercially. Therefore, a trademark is considered clinically dead only when it is no more in use, even when its statutory life has expired. There can be multiple reasons which could lead to the death of a trademark, including:
- When the mark is not in use or is not exploited commercially by the proprietor;
- In case the partnership business fails to transfer after death of partners;
- In cases where the proprietor fails to provide a satisfactory reply/respond to the registrar if any, after filing for registration of such mark;
- In case wherein the proprietor loses a case for using its trademark;
- If the proprietor of the trademark fails to renew its registered trademark timely. In India, the Trade Marks Act, 1999 provides a window of 1 year from the date of expiry to renew the mark failing which the mark is declared invalid and dead; and
- In situations wherein the mark/word becomes common/generic and loses its distinctiveness.
Residual reputation of dead trademark
A trademark that has been in use for many years leaves an impact on the mind of the public and even if such a mark dies or is discontinued, it holds a reputation in the market and people still relate to the mark owing to its goodwill and reputation. This residual or aftermath goodwill of the mark is termed as Residual Reputation of the dead trademark. The Courts have therefore formulated a period of 1- 2 years from the date of death of trademark to identify residual goodwill of the dead Trademark.
Dead trademarks under the Trade Marks Act, 1999
Though trademarks have no specified life, the Indian Trade Marks Act, 1999 restricts the registration of marks for a period of 10 years. Section 25(1) of the Act limits the registration of marks for a period of 10 years from the date of registration. Such provision was added to ensure that no person can claim monopoly over the mark which is not in use and has been abandoned by the owner of the mark.
However, this does not mean that the mark will fall into the public domain after 10 years of registrations. The Act provides for renewal of the Trademark after every 10 years for continuing the registration and statutory protection of the mark. Section 25(2) of the Act Provides for renewal of trademark for another period of 10 years. Further, this renewal can be done by the owner of the mark for unlimited times till the mark is in use.
Such renewal of the Trademark can only be done within 6 months from the date of expiry. In case the owner fails to renew the Trademark within the time frame, the registrar shall remove the mark from the Trademark Journal. However, the owner of such mark is given another chance to restore the mark within 1 year from the expiry of the trademark, if the registrar deems fit to do so.
A specific process is to be followed by the Registrar to remove the mark from the trademark journal. The Act obliges the Registrar to send notice before the expiry of a trademark to the registered proprietor of the date of expiration and if such renewal is not done, the registrar may remove the trademark from the register.
In case the registrar fails to notify the registered proprietor about such expiry, the registrar cannot proceed to remove the said mark. Registrar has statutory duty to inform registered proprietor about trademark renewal.
Even after removal of trademark, such trademark is deemed to be registered for a period of 1 year from such removal for the purpose of any application for registration of the similar mark by any 3rd party unless it is proved that the removed mark is not in use since 2 years immediately preceding its removal or where the mark is distinct from the removed mark and there exists no similarity between the two.
In the case where the proprietor of the mark fails to renew or restore its trademark even when he is using the mark. The proprietor can file a fresh application for registration of its mark with prior user details. In India, prior adoption is considered superior to prior registration. However, where a 3rd party has filed for registration of such mark or has already registered a similar or same mark, the owner cannot restrain them from using it.
The term “zombie trademark” refers to trademarks that were previously discontinued and are now being resurrected, but still have some customer recall, security, goodwill, and loyalty. Such a degree of recognition need not necessarily be large, even a small degree of recognition will make the mark a Zombie trademark.
Often known as Ghost Trademarks or Orphan Trademarks, these marks have a consumer recognition and residual goodwill. Despite the fact that the products and services are no longer offered under the label, customers nevertheless associate the mark with the good due to its goodwill and are more favourable toward the brand as a whole. However, there is one more requirement for a zombie trademark to exist: the trademark. The mere existence of residual goodwill, on the other hand, does not qualify a mark as a Zombie trademark. It is when the mark with residual goodwill is used by 3rd for similar or identical goods as that of the previous owner of the mark.
Zombie trademarks usually involve 3 parties i.e. the real owner of the trademark, the adopted owner of the trademark and the consumer purchasing goods and services. Though the original owner has abandoned the trademark, it might still have interest in the mark for the fact that the mark has goodwill and reputation in the market.
A mark with residual reputation is usually adopted by 3rd parties relying on reputation, goodwill and consumer recognition of the mark. Adopting a mark with residual goodwill brings with itself various benefits to the new owner. The old mark will be more appealing in the market thus saving time and money to promote and establish the mark. People will relate to the mark as that of the previous owner and help the new owner to grow and develop swiftly. However, on the other hand, such zombie trademarks will have a negative effect on the people.
People will consume the products or services under the zombie trademark with a deception that such goods or services are being offered by the old owner only. Further, the new proprietor has no responsibility to offer goods or service of the same quality as of the previous owner thus degrading the reputation of the previous owner in the market and deceiving people about the true owner and quality of the product under the mark. Hence, owing to the mistaken belief of the mark, people will consume the goods or services relating it with the true owner of the mark.
Though the trademark owner loses rights over the mark for non-use of mark, abandonment or loss of distinctiveness, the owner is still vested with the right to protect its mark till it shows that there is residual goodwill of the mark and that people still recognise the mark with the owner only. However, the above situation is only true for the marks which are registered. It becomes nearly impossible for the owners of unregistered users to claim distinctiveness even after non-use of the mark. Unregistered trademarks are, of course, more vulnerable to zombie trademarks and residual goodwill. Unregistered trademarks can lose their trademark value if the owner abandons them or if the mark becomes commonplace in commerce.
Zombie trademarks: Legal position in India
The Concept of Zombie Trademarks is not statutorily recognised in India. Though the courts have tried to deal with it, however, there are only a few judgements that have categorically recognised this concept. The Delhi High Court in the recent decision of Boman R Irani vs. Rahid Ahmad Mirza held that though the mark is not in use by the real owner, it still might have goodwill and people recognise the mark with the previous owner only and in such cases, the mark cannot be used by 3rd party and such part shall not be allowed to gain benefit from use of such mark.
The matter in the present case was for the use of the mark “YEZDI” which was initially used by Plaintiff in 1969 for manufacturing motorcycles, however, later the Plaintiff abandoned the use of its mark. The defendant in 2015 adopted the identical mark for manufacturing and selling of foot wares and claimed that the mark was not in use since 4 decades. Plaintiff, on the other hand, contended that the mark was still well known among the consumers including biker gangs and has immense goodwill and reputation in the market.
The Court while striking a balance held that although the plaintiff hadn’t been using the mark, the defendants were injuncted from claiming that their footwear under the YEZDI trademark was not in any way inspired or associated with YEZDI motorcycles.
Commercial misuse and usage is undeniably one of the foundations of trademark law. A trademark owner is not permitted to squat on his trademark rights. That much is obvious. The problem of zombie trademarks and residual goodwill, on the other hand, makes trademark law both fascinating and harmful.
If a Zombie trademark falls into the wrong hands, it can be lethal to a previous owner’s credibility. Commercial misuse and usage is without a doubt one of the most critical elements of trademark law. It’s pointless to register a trademark, use it for a while, and then abandon it for no good reason. Before leaving trademarks with widespread market awareness and significant goodwill, owners should think carefully. If it is found that the original owner of the mark actually abandoned it, the owner no longer has legal rights to enforce the mark, and the mark becomes open game for anyone to use for goods and services that are similar to or identical to those provided by the original owner.
Those who use abandoned marks to boost their own brand value must do so with extreme care, lest they be charged with falsifying and wrongly applying for trademarks under Section 101 of the Trade Marks Act, 1999.