TRADE MARK DILUTION vis-à-vis THE JEEP-ROXOR DISPUTE

Roxor vs Jeep

Jeep-Roxor Trade Dress Issue

Fiat Chrysler Automobiles (FCA) has moved the US International Trade Commission (USITC) against Mahindra & Mahindra to stop the sale of Mahindra’s Roxor ATV, alleging that Mahindra is violating the Trade Dress of the Jeep Brand. FCA has complained that the off-road Roxor’s design is similar to that of Jeep's traditional design. FCA has stated that due to the manufacture of Roxor in India and its assembly in the US, the cost of Roxor is low and thus resulting in the underselling of Jeep. The FCA also claims that the Roxor infringes some of the design elements from the Jeep brand, such as the “boxy body shape with flat-appearing vertical sides and rear body ending at about the same height as the hood,” and has produced the photographic evidence to suggest similarities between the Jeep and the Roxor.

FCA’s Allegations

The allegations made by FCA against Mahindra and Mahindra could be summed up as two major issues:

  1. Mahindra has infringed Jeep’s trade Dress
  2. Mahindra has diluted Jeep’s trade mark

To establish whether there’s any such infringement or dilution, it becomes imperative that we first understand the concept of Trade Dress and the concept of dilution.

  1. What Is Trade Dress Infringement?

    1. What is a Trade Dress?

A Trade Dress is different from a Trade Mark[1]. Trade dress refers to the overall appearance of a product. It is an umbrella term and includes shape (Coca-Cola Bottles[2]), colour (Red Soles of Louis Vuitton Shoes[3]), design (Herme’s bag designs[4]), texture (use of braille markings on products), the packaging (Colgate’s Toothpaste Pack), labels (Levi’s Red Tabs on Jeans), presentation. It also encompasses the manner of promotion or advertisement including the use of distinctive graphics, configurations, and marketing strategies.

Courts have found a variety of trade dress to be distinctive – the bean shaped window used by Jelly Belly Candy Company, GOLDFISH’s fish-shaped crackers, Hershey's KISS chocolates, Taco Cabana’s restaurant décor, the number 007 as a reference to James Bond, etc. have all been held to be trade dresses, the infringement of which would result in legal action.

In the US, protection against trade dress infringement is provided for in the Lanham Trademark Act. Similar statutes and various common-law doctrines also provide protection to trade dress to ensure fair competition.

The law of trade dress generally serves four purposes[5]:

  • to protect the economic, intellectual, and creative investments made by businesses in distinguishing their products.
  • to preserve the good will and reputation that are often associated with the trade dress of a business and its merchandise.
  • to promote clarity and stability in the marketplace by encouraging consumers to rely on a business's trade dress when evaluating the quality of a product.
  •  to increase competition by requiring businesses to associate their own trade dress with the value and quality of the goods they sell.

While it is advantageous for businesses to register their trademarks, service marks, and trade names with the government, trade dress has no formal registration requirements and receives legal protection simply by being distinct and non-functional.

  1. How to Prove Infringement of Trade Dress?

To establish a claim for trade dress infringement, a company must demonstrate the distinctiveness of its product's appearance. However, such a protection cannot be granted for any feature that is functional in nature. Goods that are packaged or promoted in an ordinary, unremarkable, or generic fashion normally receive no legal protection under the law of trade dress. Simultaneously, something as simple as a grille on the front end of the Jeep automobile may be considered sufficiently original if the manufacturer takes deliberate and tangible steps to promote that aspect of the vehicle over a long period of time or if the public associates that grille with FCA.

  1. Distinctiveness

While the Lanham Act does not mention the requirement of a showing of distinctiveness, courts have universally imposed that requirement. Thus, the plaintiff must show that consumers perceive the particular trade dress as identifying the source of a product. Even if a mark is found to be not inherently distinctive, it still can be said to be distinctive if it has acquired a secondary meaning. Thus, the mark should be such that the consumer has created an association between the trade dress and the source of the trade dress (the company).

In the present case, Jeep has acquired recognition for its overall appearance and the general reaction to Mahindra’s Roxor was to associate it with FCA’s Jeep[6]. The FCA owns all rights for Jeep Trade Dress and has standing to bring an action for trade dress infringement under the United States Lanham Act and additionally, has strong rights in its Jeep Design Marks based on use and recognition of them, under Section 43(a) of the United States Lanham Act. These factors will make it difficult for Mahindra to prove that they are not infringing upon Jeep’s trade dress.

  1. Functionality

The Lanham Act doesn’t provide for protection of a trade dress of a functional nature. If trademarks were allowed for the functional features of a product, then the owner of such a trademark would end up achieving a monopoly over these features regardless of whether they qualify as patents, thereby affecting competition.

In the case of Qualitex[7], the court says that a manufacturer could not use the shape (special illumination-enhancing shape) as a trademark because, after the patent expired, this would be a hindrance to competition.

A quick review of the jeep’s history[8] would highlight that the jeep was built in the manner in which it was to serve a functional purpose[9] – to serve the US Army. Mahindra might hold on to this straw to prove that the features are functional and hence not protectable as trade dress. The Roxor is an off-road vehicle and is therefore suitable rugged terrains which other vehicles might not be able to tread. But other features, such as the use of the grille and the boxy shape would be difficult to justify and thus this argument would be weak at best.

FCA has stated that Roxor dilutes its brand and has thereby sought an injunction against Mahindra. To determine whether there is a dilution of brand, we need to understand the concept of dilution.

  1. What Is Trade Mark Dilution[10]?

    1. Dilution as a Concept

The Federal Trademark Dilution Act 1995 prohibits marks that dilute the distinctiveness of famous marks in the United States. Under this statute, the owner of a famous mark can stop others from commencing use of a mark in commerce which is likely to dilute his own famous mark, even in the absence of actual or likely confusion, competition or actual economic injury. The goods and services for which the mark will be used are irrelevant in determining likelihood of dilution.

To qualify as famous, a mark must be “widely recognized by the general consuming public of the United States, and must satisfy, inter alia, the duration, extent and geographic reach of advertising and publicity for the mark; the amount, volume and geographic extent of sales of goods or services offered under the mark; the extent of actual recognition of the mark; whether the mark is registered in the United States

There are 2 limitations to a mark being declared famous in the United States – Firstly, it must be distinctive (whether acquired or inherent). Secondly, fame in a limited geographic market in the United States or in a specialised market is insufficient.

There are two ways by which a famous mark can be said to be diluted: blurring and tarnishing.

  1. Blurring applies when a person uses a trademark in a manner which diminishes the uniqueness of a famous trademark. It is an association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark. To illustrate, if someone adopts the famous mark Sony to provide goods and services unrelated to electronics, such as shoes, then such a use may dilute or blur the distinctiveness of the Sony mark such that it becomes associated with additional sources instead of a single source.
  2. Tarnishing happens when the use of the mark is such that it would negatively impact the reputation of the famous mark. It is an association arising from the similarity between a mark or trade name and a famous mark that ends up harming the reputation of the famous mark. Thus, if someone adopts the tradename Patanjali to produce and sell liquor, the use may dilute the Patanjali mark by tarnishing the goodwill and reputation associated with the Patanjali mark. If the mark becomes associated in the eyes of consumers with liquor, the goodwill attached to the family-friendly, environmentally-positive brand will presumably be damaged.

In the present factual matrix, Mahindra has not made any use of Jeep’s brand name or trademark in any form whatsoever. So, the claim that Mahindra’s sale of Roxor dilutes the Jeep brand name is baseless and holds no ground. While the impression is that Roxor looks similar to Jeep, there seems to be no evidence to show that Roxor rides on the Jeep brand name or attempts to tarnish it negatively.

  1. Proving Dilution[11]

In March 2003, in a case[12] the US Supreme Court laid down that the federal dilution law, unlike traditional trademark law, was intended to protect the famous marks and not the consumers. It stated that to claim dilution, the owner of a famous mark must demonstrate that actual dilution, and not the likelihood of dilution, has occurred. Thus, dilution can only be proven by evidence of actual harm to the famous mark.

FCA claims that consumers will attribute any defects or negative impressions of the Roxor to FCA thereby harming FCA’s reputation and the intangible goodwill associated with its brand. It also claims that there is a substantial threat that consumers will perceive the Roxor as having quality issues, as not being as durable and off-road capable as expected for Jeep brand vehicles, or as simply not worth the price being charged for them. It must be noted that FCA does not provide any substantial evidence to show any such negative impact. Instead, they have stated what could bee termed as mere speculations as to dilution thus, not providing enough grounds for remedy.

  1. Remedies Against Dilution[13]

Generally, the only remedy available is an injunction against further dilution. However, if the plaintiff can prove that the defendant wilfully intended to ride on the reputation of the famous mark or to cause dilution of the famous mark, then other remedies such as attorney’s fees, damages, defendant’s profits would also be available.

Should the FCA, despite the odds, be able to prove that there’s any trademark dilution, the only remedy they could get is an order of injunction asking Mahindra to stop the sale of Roxor in the US. FCA’s sale of Jeep products has been on the decline before Roxor was even introduced to the market. Thus, any claim for damages should not be entertained.

  1. Exceptions to Dilution

The Act makes clear that certain actions will not deemed as dilution. Fair use (whether in advertisement or parody), non-commercial use, and all forms of news reporting and news commentary would not constitute dilution under the Act.

Mahindra need not claim any defence because prima facie, FCA does not have enough evidence to back their claim for Trademark dilution.

Conclusion

A careful perusal of the complaint made by FCA and a quick glance over Mahindra’s Roxor would show that, there is no trademark violation per se because the logos and the names of the vehicles are not similar at all. The word “Mahindra” is clearly and boldly visible on Roxor’s body. Thus, FCA’s claim of Trademark Infringement does not seem to hold good. And essentially, the Roxor and the Jeep have different specifications that end up causing a difference in how these two operate off road[14].

In the end, it boils down to infringement of Trade Dress. To determine whether the Roxor is an infringement of Jeep’s Trade Dress, the question that needs to be addressed is whether the Roxor looks so much like a Jeep that the public, instead of finding it similar, confuses it entirely with a Jeep model. And it would seem like Mahindra would have a tough time proving their case[15]. Thus, the test for likelihood of confusion[16] becomes important.

Section 43(a) does not state in expressive terms as to in whom the likelihood of confusion must exist. As a rule, an appreciable number of ordinarily prudent purchasers of the products in question should have been misled or confused. However, section 43(a) does not always require that the likelihood of confusion be among the actual consumers or the potential consumers of a manufacturer or business. The Fourth Circuit Court has laid down that a trade dress infringement could be based on a likelihood of confusion among the general public if such public confusion will adversely affect the plaintiff’s reputation with all the parties it interacts with.[17]

The likelihood of confusion is determined on the basis of the overall visual impression of the parties’ products or services in terms of a number of factors[18] (such as strength of dress; proximity of goods; similarity of dresses; evidence of actual confusion; marketing channels used; type of goods and degree of care likely to be exercised by purchaser; defendant’s intent in selecting dress; and likelihood of expansion of product line). Confusion, however, must be likely among a substantial number of consumers. Only a few misled consumers are insufficient to maintain a cause of action.

The Second Circuit Court has also extended the likelihood of confusion to the general public based on an adverse impact on the trademark user’s reputation[19]. Actual confusion is not the standard for trade dress infringement; rather, it is enough to show that confusion is likely among consumers. This is different from trademark dilution where the plaintiff would require actual evidence to show harm caused by dilution. Thus, FCA could claim that Mahindra’s Roxor is likely to cause confusion amongst the general public with respect to its apparent counterpart Jeep. However, this could be a tall claim because while most magazine and journal reports point out to the similarity between the Roxor and the Jeep, none of them mention that the Roxor is being mistakenly confused for Jeep or vice versa. Additionally, FCA would have to prove that its goodwill/reputation suffers an adverse impact because of Roxor.

We hope this article was a useful read. 

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[12] Moseley v. V Secret Catalogue, Inc., 537 U.S. 418 (2003).

[17] Communications Satellite Corp. v. Comcet, Inc., 429 F.2d 1245, 1251 (4th Cir. 1970).

[18] Adidas-Salomon AG v. Target Corp., 228 F. Supp. 2d 1192 (D. Or. 2002).

[19] Dallas Cowboys Cheerleaders, Inc. v. Pussycat Cinema, Ltd., 604 F.2d 200, 205 (2d Cir.1979).

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