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A Convergence of Trade Names and Trade Marks: A Case Comment
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Finalising a name for a company is often a strenuous task, with personal preferences clashing with market perception analysis, existing brand names, statutory requirements, etc. Selecting a name for your product is generally further simplified when one believes in creating a brand of products under one company, thereby utilising the company’s name in the name of the product.
In most instances, where companies tend to use the same name for both their trade name as well as their trademark, the line tends to be blurred when it comes to an infringement action, as is the case in N Dinesh Kumar v. Shweta Khandelwal.[1]
To understand the question that arose in the suit, it would be wise to understand how the law views these two concepts differently.
The Distinction between Trade Name and Trademark
A trade name is quite simply the name the company trades in or does business in, and in most cases this is the corporate name of the company, whereas the trademark is how the company wishes to establish itself in the market as, and how it would like the consumer to identify its products as such. At times, the trade name can be incorporated within the trademark, but when companies look to diversify into different products, the trademark may exist de hors the trade name.
The more important distinction lies in how the law treats the two concepts, and that brings us to the Trademark Act, 1999 (“the Act”). Infringement actions for a registered trademark lie under Sections 29(1), 29(2) and 29(4), with sub-sections (1) and (2) pertaining to similar goods or services and sub-section (4) pertaining to dissimilar goods or services. The standards for evaluating an infringement action in such cases involves evaluating the similarity between the marks, as well as the similarity between the goods or services[2]. In the latter case, the evaluation utilizes the reputation that the registered trademark has garnered, as an evaluation of the similarity of goods or services would not render a result.
However, Section 29(5) is slightly more nuanced, in the sense that the range of infringement is narrower. A registered trademark is infringed when an unauthorized user uses the registered trademark as his trade name or part of his trade name, or as his business concern or part of his business concern. In such cases, the standard for evaluation of an infringement action involves identifying the part of the trade name containing the registered trademark, as well as that the infringer is dealing in the same goods or services that the mark is registered in[3].
The line of differentiation here is that there is no question about similarity or dissimilarity of goods or services. An action under Section 29(5) requires that the alleged infringer deals only in those goods or services for which the registered trademark is registered in.
The Facts of the Case
The facts of the Karnataka High Court decision merit a summary. The suit was filed by the Respondent, the proprietor of the mark Matru Ayurveda and trading as Matru Herbals, against the Appellant, the proprietor of the mark Matruveda and trading as Matruveda Herbals. The Respondent’s device, Matru Ayurveda (TM Appn. No. 3063975), has been registered in Class 3 for a number of herbal cosmetics, while the Appellant’s device, Matruveda (TM Appn. No. 3806687), has been registered in Class 5 for herbal supplements.
The suit at hand involved a claim that the trademark of the Appellant was so deceptively similar that despite having been established earlier, the sales of the Respondent have been impacted by the actions of the Appellant. The trial court, upon an application by the Respondent, granted an order of temporary injunction against the Appellant restraining the Appellant’s use of the mark from infringing the trademark of the Respondent, as well as quite curiously the trade name of the Respondent.
While the trade name may be included within the registered trademark, what Section 29(5) clearly talks about is infringement of a trademark by a trade name, and not the infringement of a trade name. In the present case, the Respondent’s claims have been focused on the loss of business owing to the products sold by the Appellant, and has never questioned the aspect of the Appellant trading in a name incorporating the trademark of the Respondent. Which is what the High Court took note of in its judgment.
The Holding of the High Court
The High Court took special notice of the portion of the judgement where the trial court states “On perusal of the tradename of the plaintiff and defendant, it appears that both the marks are phonetically and deceptively similar”, and pointed out that in this case, as the trade names are contained within the composite mark, the question falls to infringement of the trademark, which therefore involves the evaluation from the eyes of a ‘quintessential common man’ having the ‘wisdom of Solomon’ and the ‘trained eyes of Sherlock Holmes’.
The High Court also observed that where an element appears to be used by other proprietors dealing in other products in the market, the evaluation of the device marks must then turn to the unique features of the respective device marks, to ascertain whether those unique features then become deceptively similar, as purchasers would turn to those unique features to distinguish the mark from others. This principle is dependent on the existence of such a commonality in the market being proved to the satisfaction of the court. The Court thus set aside the order of temporary injunction and ordered a fresh hearing of the matter by the trial court.
Conclusion
What thus stands is but the foundation of device marks and their essential characteristics. As the courts have stated previously, device marks carry the weight of their registration in their appearance, as an average common man having an imperfect recollection looks to the overall design and scheme of the mark when differentiating between products.
The question of trade names thus does not arise when the action lies with respect to an infringement of the mark as a whole, and in this case, it would seem that the requirements of Section 29(5) are not attracted, owing to the registration of the marks in different classes, and dealing with different products.
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[1] M. F. A. No. 790/2021 (Kar)
Assignment and Licensing of Trademarks in India
The Trade Marks Act 1999 was amended to suit advancing trade practices and to abolish unfair competition among brands. The Act is enacted with an intention to protect the rights of a proprietor who invests money, time and work into his trademark and building its reputation in the market, and the consumer should get equal protection from being cheated into buying a product of a sub-standard quality, just because it was displayed with either the same mark by a person who is not the proprietor or authorized user of the mark, or a mark that is deceptively similar to the proprietor’s mark.
The Act allows a registered proprietor to assign or license out the use of his trademark. The assignment and licensing can be made with or without the goodwill of the business concerned. A trademark need not be registered to be assigned or licensed.
Assignment of a trademark
Section 2(b) of the Trade Marks Act 1999 describes “assignment” as an assignment in writing by an act of the parties concerned. Assignment is the transfer of proprietary rights. Proprietary rights over a few goods or services, or over all the goods or services registered by the proprietor may be assigned, unless it is an associated trade mark. It can also be in favour of more than one person if they operate in different countries.
An assignment thus should be made in writing, where rights are transferred legally, but a trademark cannot be assigned or transmitted if such an assignment creates multiple rights in more than one person as it could deceive or create confusion in the general public.
The assignment of a trademark has to be registered with the Registrar of Trademarks within a period of six (6) months from the date of assignment (or with a permitted extension of three more months). The Registrar will then advertise the assignment so as to inform the public of such assignment. Though the registration of an assignment is not mandatory, it is better to get it registered since an assignment that is not registered will not be a valid proof of the assignment.
Licensing:
Licensing occurs where the owner or authorized user of a trademark, allows a licensee to use his trademark for a royalty paid to him for a particular term.
Licensing is done by a licensing agreement containing the terms and conditions of use of the trademark by the licensee. The terms must include – names of the parties, terms of sub-licensing, duration of the license, territory for usage of the trademark, specification of the goods and services to be manufactured under the mark, royalty to be paid and term for such payments, terms for quality control, security terms, and termination of the license among others.
Licensing can be done through-
- Merchandising: This is a type of licensing where a simple product is enhanced with the attachment of a famous brand name. This is also the most popular way of advertising used by many famous trademarks. For example, we see famous trademarks on mugs, bags, phone covers, etc.
- Franchising: Here, a licensee pays a royalty for the rights to exactly implement the licensor’s business model and use the licensor’s trademark on the permitted goods and services. A famous example is that of the ‘Café Coffee Day’ outlets.
- Co-branding: Here, proprietors of two trademarks coordinate with each other to derive mutual benefits from the goodwill enjoyed by both marks. A very popular brand like ‘Dell’ co-brands with ‘Intel’ processors.
- Brand enhancement: Here, a licensor may team up with another to use his brand name on a different product.
Assignment and Licensing of trademarks help the proprietor to generate more revenue, enact broader and easier territorial expansion, enjoy protection from illegal use of one’s marks, develop easy advertisement across different places, increase consumer recognition and popularity among other benefits.
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10 THINGS TO CONSIDER WHILE SELECTING A TRADEMARK
Choosing a good trademark is very important for any business. We have to consider many points in choosing a good trademark.
1. It should be easy to speak, spell, read and remember.
Eg. Tata, Puma, Adidas
2. Avoid selecting a trademark that is identical to other trademarks in the same line of business. However, you may select a trademark that is similar, but not confusingly similar.
Eg. You cannot select “InventiveTree”, to sell IP services under that trademark, while an earlier trademark, “InvnTree” exists, and covers IP services. However, you can select “InnovationTree”, to sell IP services under that trademark, while an earlier trademark, “InvnTree” exists, and covers IP services.
3. Do not select trademarks that are similar to well-known trademarks.
Eg.Tata, Sony, Honda, Google,etc.
4. Avoid selecting descriptive marks that merely describe the goods or services.
Eg. “Coffee shop” for a coffee bar, “Fragrances” for a store selling perfumes, “Running shoes” to sell shoes
5. Avoid using popular family names.
Eg. ‘Aggarwals’, ‘Shetty’s’, ‘Kapoor’
6. Make the mark fanciful and arbitrary. It is always preferred to make up or invent new words or phrases or use ordinary words that are not directly associated with the product.
Eg. “Amul” for dairy products, “Myntra” for clothing.
7. Avoid selecting adjectives which have a direct reference to the character or the quality of a product.
Eg. “Perfect Apparel” for clothes, “Fast cars” for automobiles
8. Avoid selecting a trademark that is being used by someone else in a foreign country.
Eg. ”Banana Republic”, “Target”, “John Deere”
9. Avoid selection of Geographical names, as nobody can have a monopoly right over it.
Eg. “Darjeeling tea” to sell tea, “Banaras Silk” to sell sarees
10. Avoid adopting marks that contain scandalous or obscene matter or that are likely to hurt religious sentiments.
Eg. Use of holy books as trademarks are prohibited like “Ramayana” for incense sticks.
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Trademarking Surnames: How Fair is your Use?
Before we look at the decision of the Delhi High Court, it would be wise for us to look at the provision of Section 35:
35. Saving for use of name, address or description of goods or services.—
Nothing in this Act shall entitle the proprietor or a registered user of a registered trade mark to interfere with any bona fide use by a person of his own name or that of his place of business, or of the name, or of the name of the place of business, of any of his predecessors in business, or the use by any person of any bona fide description of the character or quality of his goods or services.
The scope of Section 35 does seem to grant a proprietor a veritably large field to apply his own name in the course of his trade, given the lack of any limitations contained within the statute. Not surprisingly, the torch has been passed on to the courts to illuminate the boundaries of the provision.
The facts of the decision of the Delhi High Court in Anil Rathi vs. Shri Sharma Steeltech (India) are rather straightforward. The Plaintiff, holding the sole power to issue licenses to use the mark ‘RATHI’ under an MoU and Trust Deed between all the members of the family, found that the defendants had been issuing licenses to use the mark without authorization, and therefore filed an infringement suit to restrain such use. The Defendant argued that since the mark “RATHI” had been registered by the two companies of two separate members of the Rathi family, there was no exclusive ownership over the mark, and that every member of the Rathi family had a vested independent right to use the mark under Section 35, by virtue of being a member into the Rathi family. He also contended that this right under Section 35 also extended to the grant of licenses to use the mark.
The Delhi High Court returned a finding in favour of the Plaintiff stating that the terms of the MoU and the Trust Deed were sufficiently clear in holding that the registered proprietor of the mark ‘RATHI’ was the senior most member of the Rathi family, and therefore being the senior trustee, he was competent to file a suit for infringement. Further, the Court agreed with the contentions of the Plaintiff that Section 35 did not extend the bona fide use exception to instances of granting licenses or use by any legal entity. With regards to bona fide use, the Court applied an in casu determination, basing its findings on the grounds that since the MoU and Trust Deed had been entered into not only to prevent exploitation by outsiders of the mark, but also to establish a mechanism for use of the mark by the various member-factions of the family.
Given that the Defendant was a party to both these agreements, and subsequently an implication of awareness was thrust upon him, he could not have been held to be acting in a bona fide manner when he engaged in applying the ‘RATHI’ mark to various legal entities and granting licenses of use for the same. The Court found that all these instances operated as an infringement to the statutory right of use held by the Trust, and therefore could not enjoy the protection under Section 35.
Thus, we may conclude that bona fide use of a person’s name would not extend to granting licenses of the same to other entities when it would be deceptively similar to the mark of a registered proprietor. The Court also placed reliance on a number of precedents in arriving at such a decision. Tracing these cases back, the guiding rule for determining how fair one’s use lies in the origination of the disputed (or even infringing) mark, by way of seeing how the defendant decided to use the particular mark, and what is the reason behind using that similar mark. To elucidate, in Dr. Reddy’s Laboratories Ltd. vs. Reddy Pharmaceuticals Ltd., the defendant’s reason for using a similar mark was that the surname of the Managing Director was ‘Reddy’, and in this case, this was deemed to be an insufficient reason. In both Adiga’s Abhiruchi & Ors. vs. Adiga’s Fast Food and Manju Monga vs. Manju Mittal, the Court noted that when the user of the infringing mark had attempted to make cosmetic changes to their mark in order to resort to the sanctuary of Section 35, it could not be stated that such use was bona fide.
While this decision may come to prohibit licensing of a proprietor’s own name when it is in conflict with a registered mark, one question does arise as to whether this would block all future instances of the proprietor from engaging in franchising or licensing deals, especially when he/she has been operating under Section 35 for a number of years. One might say that in such instances, the only option for any proprietor using his own name as the mark for his business would be to thereafter file for registration of his mark claiming acquired distinctiveness (however the door still remains open for opposition proceedings), and thereby, in a scenario of obtaining a successful registration of the same, would he/she then be entitled to engage in franchising and licensing actions with respect to his/her mark.
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Judgement to increase transparency in functioning of the Trademark Registry
A recent judgment makes it mandatory for the Registrar to record in writing the grounds for refusal or conditional acceptance of the application for registration of Trademarks.
This deviates from the prevailing practice in which the Registrar could refusal or conditional accept registration of Trademarks without recording the grounds for the same. Subsequently, the Applicant could apply to the Registrar seeking grounds for refusal or conditional acceptance. Such a practice was consistent with the provision of Rule 36(1) of the Trade Marks Rules, 2017, which is reproduced below.
36. Decision of Registrar.— (1) The decision of the Registrar under rules 33, 34 or 41 shall be communicated to the applicant in writing at his address of service and if the applicant intends to appeal from such decision he may within thirty days from the date of such communication apply in Form TM-M to the Registrar requiring him to state in writing the grounds of, and the materials used by him in arriving at, his decision.
While the prevailing practice was consistent with the aforementioned rule, Section 18(5) of the Trade Marks Act, 1999, requires the Registrar to record in writing the grounds for such refusal or conditional acceptance.
18. Application for registration.
(5) In the case of a refusal or conditional acceptance of an application, the Registrar shall record in writing the grounds for such refusal or conditional acceptance and the materials used by him in arriving at his decision.
Taking into cognizance the inconsistence between the provision of Section 18(5) and Rule 36(1), the Court held that Section 18(5) prevails over Rule 36, thereby making it henceforth mandatory for the Registrar to communicate grounds for refusal or conditional acceptance of application for registration of trademark.
Useful download: Judgement in the matter of Intellectual Property Attorneys Association Versus The Controller General Of Patents, Designs & Trade Marks & Anr
Contemplating effectiveness of proposed amendments to Drugs and Cosmetics Rules in tackling the menace of deceptively similar trademarks
The problems faced by brand owners and consumers who deal with trademarks that are identical or deceptively similar are well known. In most such cases, consumers may be end up buying one product thinking its another, leading to inconvenience. However, when such confusions occur in pharmaceutical products, it may not just be a matter of inconvenience, but could have far reaching consequences. This very problem of pharmaceutical products marketed under trademarks that are confusingly similar is sought to be addressed in India by an amendment proposed to the Drugs and Cosmetics Rules, 1945.
The proposed amendment may be attributed to the directions given by the High Court of Delhi in a suit between Curewell Drugs & Pharmaceuticals and Ridley Life Science, although Indian courts have dealt with many cases involving drugs bearing confusingly similar names. The draft proposes to introduce the below recited rules to address the issue of drugs bearing confusingly similar names.
“In case the applicant intends to market the drug under a brand name or trade name, the applicant shall furnish an undertaking to the licensing authority that such or similar brand name or trade name is not already in existence so that the brand name or the trade name to be used by the applicant shall not lead to any confusion or deception in the market.”
It is pertinent to note that, Section 17B of the Drugs and Cosmetics Act, 1940 empowers the drug licence granting authority, Drug Controller General of India (DCGI), to raise objections in case of drugs bearing confusingly similar brand names, which is also pointed out by the Court. In view of said section, it is not clear how the proposed amendment to the Rules further empower DGCI to proactively tackle the problem.
One may argue that it is not the lack of provisions in appropriate statutes to deal with the problem, rather it is the lack of procedures and infrastructure to effectively implement the provisions, that has led to the problem not be effectively addressed. The Court in fact recognises this and has issued directions for consideration by the authorities to tackle the problem effectively. The directions are listed below.
- Creation of a secured platform, to be under the supervision of the DCGI, which is accessible to all State FDAs, both for access of data and for uploading of data.
- Creation of a “master electronic database” of all the approved brand names for manufacture and sale of drugs issued both by the DCGI and the State FDAs and making the same available to all state FDAs and Drug controllers through a secured platform. The list to be maintained and made available both brand wise and manufacturer wise, on the secured platform.
- List of registered trade marks under Class 5 for pharmaceutical and medicinal preparations be obtained from the Controller General of Patents, Trade marks and designs and be made available to the approving authorities at the Central level and State level.
- Access to the data be given to Drug Inspectors/Drug Controllers across the country;
- Drug Inspectors/Drug Controllers to conduct regular and periodic inspections as per the Act and the Rules to ensure that the drugs that are being manufactured in a particular unit are duly licensed for. The reports of the said inspections to be submitted through the secured platform;
- Periodic and regular reports of drug inspectors should be compulsorily submitted to the respective licensing authorities on the secured platform and a mechanism be set up for review of the said reports at the State level;
- Periodic meetings ought to be held at the central level, to review the status of manufacture and sale of drugs across the country, under the aegis of the DCGI;
- Strict action in accordance with law ought to be taken against those manufacturers who manufacture drugs without licences, who indulge in adulteration or contamination of drugs etc. A periodic report as to the number of actions taken, ought to be uploaded on the secured platform of the DCGI.
Implementing procedures and developing technology platforms in line with the directions above is certainly the way forward if the authorities wish to tackle the problem proactively and effectively. We certainly hope that such long-term solutions, though time consuming and resource intensive, are implemented, given the serious consequence that may result from the problem of drugs being marked under deceptively similar trademarks.
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Deceptively Similar Marks: Registration Allowed If Services/Goods are Different Although Within the Same Class
Brief Facts of the Case
Karnataka Co-Operative Milk Producers Federation Ltd. (KMF), has been producing and selling milk and milk products, since 1985, under their mark ‘NANDINI’ which had been registered under Class 29 and Class 30.
M/S. Nandhini Deluxe is in the business of running restaurants since 1989 under the name ‘NANDHINI’ and had applied for the registration of the same.
The Deputy Registrar of Trade Marks had the application submitted by the restaurant chain and allowed for the registration for their mark ‘NANDHINI’ as well. The Intellectual Property Appellate Board (IPAB), however, set aside Deputy Registrar’s order, and the High Court confirmed the IPAB’s decision on the following grounds:
- The mark ‘NANDINI’ (KMF) had acquired a distinctive character and was a well-known mark;
- Products sold under the infringing mark ‘NANDHINI’ (Restaurant) were of the same classes as those under ‘NANDINI’ (KMF).
- The use of the infringing mark is different only in one alphabet but with no difference in spelling or pronunciation in the local language and would very likely to cause confusion in the minds of public if allowed to be registered for the commodities falling in the same class;
In 2015, the proprietors of ‘NANDHINI’ (Restaurant) appealed to the Supreme Court against the decision of the High Court.
Arguments by the Parties:
Proprietors of ‘NANDINI’ i.e. KMF objected to the use of the mark ‘NANDHINI’ by the Appellants (Restaurant) on the grounds that:
- It was deceptively similar to the mark of the respondent and was likely to deceive the public or cause confusion.
- KMF had long and sustained use by the ‘NANDINI’ and had acquired a distinctive character and was well-known to the public.
- The public associates ‘NANDINI’ with ‘NANDHINI’ because of phonetic similarity.
- ‘NANDHINI’ was adopted by the restaurant chain to ride on the goodwill of trade mark ‘NANDINI’ (KMF).
Proprietors of ‘NANDHINI’ Deluxe objected that:
- It was running the business of restaurant since 1989 and KMF had started using mark ‘NANDINI’ since the year 1985 only for milk and milk products and not for other products.
- Goods and services of ‘NANDHINI DELUXE’ were totally different from that of the KMF and, therefore, there was no likelihood of confusion or deception among the public.
- The monopoly under a Trademark only extends to the goods which are falling in a particular class and not the entire class of goods and the trade mark which is similar in nature can be registered for the goods which are falling within the same class but are not identical to those of the previously registered mark.
Court’s Ruling:
The Hon’ble Supreme Court granted the registration of the mark ‘NANDHINI’ by the restaurant on the condition that registration will not be given to them for milk and milk products.
The court relied on the following reasoning to determine whether a similar trade mark in respect of similar goods would cause deception and confusion in the minds of the users:
- While the goods of both parties fall under the same classes (i.e. 29 & 30), the goods of the parties differ from each other.
One (NANDINI) was concerned with the production of only milk and milk products while the other (NANDHINI) dealt in fish, meat, poultry and game, meat extracts, preserved, dried and cooked fruits and vegetables, edible oils and fats, salad dressings, preserves etc. Furthermore, ‘NANDHINI’ had also relinquished its claim for milk and milk products.
- The nature and style of the business of the appellant restaurant and the respondent federation were altogether different. One (NANDINI) was a manufacturer of dairy products while the other (NANDHINI) ran a full-scale restaurant business.
- There’s mere phonetic similarity as far as the word marks are concerned (i.e. NANDHINI/NANDINI). However, the trade mark with logo adopted by both parties are different.
The restaurant chain uses the word ‘NANDHINI DELUXE’ which is followed by the tagline ‘the real spice of life’ and a device of a lamp accompanying these words.
On the other hand, the milk federation only uses the word ‘NANDINI’ beneath a ‘Cow’ logo and is encircled by egg shape circle.
- There is a difference in not just the visual appearance but even in their products. The manner of business is different. All of these factors make it difficult to imagine that an ordinary man would associate the goods of the Restaurant as that of the Milk Federation.
- The restaurant had applied the trademark ‘NANDHINI’ in respect of goods which are used in the products/services of restaurant business. Said items do not strictly belong to Class 29 or 30. Other items necessary to run their business or render their services include stationery, furniture, utensils and crockery all of which do not fall under class 29 or class 30.
To quote the SC:
“One other significant factor which is lost sight of by the IPAB as well as the High Court is that the appellant is operating a restaurant under the trademark ‘NANDHINI’ and it had applied the trademark in respect of goods like coffee, tea, cocoa, sugar, rice, rapioca, sago, artificial coffee, flour and preparations made from cereals, bread, pastry, spices, bill books, visiting cards, meat, fish, poultry and game; meat extracts; preserved, dried and cooked fruits and vegetables; jellies, jams, fruit sauces, etc. which are used in the products/services of restaurant business. The aforesaid items do not belong to Class 29 or 30. Likewise, stationery items used by the appellant in the aid of its restaurant services are relatable to Class 16. In these circumstances, there was hardly any question of confusion or deception.”
Thus, the goods that are dealt with under the name ‘NANDHINI’ aren’t strictly under class 29 & 30. The milk and milk products, which are sold by the respondent under the trade mark of ‘NANDINI’, fall under Class 29 and Class 30 as per classification under Schedule IV to the Trade Marks Rules, 2002.
- "Nandini/Nandhini” is a generic name, representing a goddess and a cow in Hindu mythology, and it is not an invented or coined word attributed to one party.
- Referring to the judgement in Vishnudas Trading As Vishnudas vs The Vazir Sultan Tobaccoco. Ltd. JT 1996 (6), 366 1996 SCALE (5)267, it is stated that the proprietor of a trade mark cannot enjoy monopoly over the entire class of goods especially if he is not using the said trade mark in respect of certain goods falling under the same class. Refusal under Section 11(2)(b) cannot be made because both the parties started using the marks within a span of 4 years of each other and both have built a considerable reputation with the state boundaries for themselves over the years.
Thus, on all these grounds, the Supreme Court laid down that the two marks are not deceptively similar.
Conclusion:
The Supreme Court thus allowed the mark ‘NANDHINI’ to be registered and used by the restaurant based on the ground that it (device/logo) is not deceptively similar to the mark ‘NANDINI’ (device/logo) used by the respondents.
On the face of it, this decision may seem logically sound because denying registration on grounds of mere phonetic similarity, when the marks are visually poles apart and the products under them are also different, would be a hindrance to a healthy competition.
However, it would also be pertinent to note that the court seems to have overlooked the fact that in this case, ordinary person would mean any person hailing from Karnataka or one who has lived here for a considerable amount of time. To anyone, from any other part of the country, these marks would most probably be similar and confusing.
The restaurant chain operated within Bangalore and no one outside Bangalore would have plausible reason to be aware of this chain. The Milk Federation sells its products within the region of Karnataka. Hence, any one residing here for a long time would not confuse them. But, to any ordinary person from outside the city or state limits, these marks would seem to be confusing or having the same origin.
To understand this conundrum better, we can look back at the case of London Dairy v Londonderry wherein the Bombay High Court ruled that mere phonetic similarity would not amount to infringement of any sort. One mark was famous for its ice cream products. The other for its boiled confectionary. Both were sweets, but one was not confused for the other because the former had built a reputation for itself nationally while the new one was distinctly viewed by the consumers as something different. The consumers were not confused because they could differentiate between the origin of the two marks and their underlying products.
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TRADE MARK DILUTION vis-à-vis THE JEEP-ROXOR DISPUTE
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:
- Mahindra has infringed Jeep’s trade Dress
- 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.
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What Is Trade Dress Infringement?
- 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.
- 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.
- 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.
- 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.
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What Is Trade Mark Dilution[10]?
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
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[4] https://www.iptrademarkattorney.com/trade-dress-handbag-attorney-trademark-purse-hermes-birkin-bag-emperia/.
[6] https://www.slashgear.com/this-mahindra-roxor-is-a-modern-willys-with-just-one-downside-02521799/; https://autoweek.com/article/car-reviews/roxor-road-only; https://jalopnik.com/the-mahindra-roxor-is-a-reincarnated-willys-jeep-and-yo-1824020754; https://jalopnik.com/heres-how-similar-the-mahindra-roxor-is-to-an-old-jeep-1823474555; https://carbuzz.com/news/mahindra-roxor-is-one-bad-ass-mini-jeep-but-there-s-a-catch.
[10] http://www.worldtrademarkreview.com/Magazine/Issue/64/Country-Correspondents/Trademark-dilution-and-clearance.
[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).
Risks of adopting Gods’ names as Trademark
Goodwill in a trademark is built over the years by making sustained investments into the brand. After having made these investments over the years, a trademark that cannot be enforced to the fullest desirable extent is certainly a setback. One such class of trademarks that has inherent limitations as to its enforceability are names of gods. Names of gods are commonly used as trademarks in a variety of businesses in India. While some of these trademarks may have been registered, others continue to be used as unregistered trademarks. Whether registered or unregistered, enforceability of such trademarks remains a challenge. We have analyzed a case concerning one such trademark, in which judgement was passed recently, to explore the angle of registrability and enforceability.
The Bombay High Court recently passed a judgement in a case between Freudenberg Gala Household Product Pvt. Ltd (hereinafter “Gala”) and GEBI Products (hereinafter “Gebi”). Gala started using a trademark “LAXMI” in respect of its product, brooms, in the years 1995. Gala subsequently applied for and obtained registration of the trademark “LAXMI” as a “label”. Notably, “LAXMI” is the name of a popular Hindu goddess. Gebi, on the other hand adopted the trademark “MAHA LAXMI” also in respect of brooms. “MAHA LAXMI” is another name of the same Hindu goddess “LAXMI”. The primary question before the Court was whether the registered label mark “LAXMI” was infringed by Gebi by the usage of the trademark “MAHA LAXMI” in respect of identical goods, brooms. The Court ruled in favor Gebi.
In this case, succinctly put, in-principle Gale contested that the scope of protection of its registered label trademark extends to the words within the label, and not just the label as a whole. Over and above that, since the word within the label is the name of a god, Gale sought monopoly over usage of name of a god as a trademark, expressed in whichever form, with respect to a certain class of goods.
It is well established that, where a label is registered as a whole, such registration cannot possibly give the proprietor of the trade mark exclusive statutory right over any particular word or name contained therein apart from the mark as a whole. Registrar of Trade Marks vs. Ashok Chandra Rakhit Ltd. The Court applied well established principles while dealing with label/device marks, to compare the registered label mark of Gale as a whole and the mark adopted by Gebi as a whole, to find that Gebi’s mark was not infringing on the label mark of Gale.
With respect to usage of name of gods, the Court prima facie found substance in assertion that names of gods are not exclusive and such words cannot be monopolized by one party. The Court further opined in the same context that claiming and protecting the label mark is different than to claim monopoly over a common word.
In conclusion, adopting names of gods as a trademark may be a risky proposition. Even if one has adopted such a mark, one may be able to register the mark as a label or device, and registration of the mark as a word mark as such may not be feasible. Further since exclusive statutory rights may not be claimed over such words, enforcement remains a challenge.
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Far reaching repercussions of connecting zero GST provision with Trademark Registration
The Goods and Service Tax (GST), which is hailed as one of India’s biggest tax reforms came into effect on July 01, 2017. The implementation of GST has impacted almost every sector that is part of the Indian economy, including intellectual properties. The tax rates on some items are linked to their trademark status.
Items for which GST rate is linked to trademark status
The GST rate schedule provides a list of items on which tax under GST will not be applicable. However, the schedule comes with a caveat, wherein some of the items (mostly food items) in this list will attract 5% GST if such items are put in unit container and bears a registered brand name. The items that will attract 5% GST in view of said caveat are listed below.
Under chapter 4 (Dairy produce; bird’s eggs; natural honey; edible products of animal origin, not elsewhere specified):
- Natural honey, chena or paneer
Under chapter 10 (Cereals):
- All goods, wheat and meslin, rye, barley, oats, Maize (corn), rice, grain sorghum, buckwheat, millet and canary seed; other cereals such as Jawar, Bajra and Ragi
Under chapter 11 (Products of milling industry; malt; starches; inulin; wheat gluten):
- Cereal groats, meal and pellets; aata, maida, besan, flour of wheat or meslin flour, cereal flours other than of wheat or meslin i.e. maize (corn) flour, rye flour etc.
Under chapter 22 (Beverages, spirit and vinegar):
- Tender coconut water
Under chapter 31 (Fertilisers):
- Tender coconut water
There were confusions generally as to what would be considered as “registered brand name”. On 5th of July, the Ministry of Finance issued a statement (presented below) addressing the confusion.
“In this context, the notification… clearly defines ‘registered brand name’ as brand name or trade name, which is registered under the Trade Marks Act, 1999. In this regard, Section 2 (w) read with section 2 (t) of the Trade Marks Act, 1999 provide that a registered trade mark means a trade mark which is actually on the Register of Trade Marks and remaining in force.” “Thus, unless the brand name or trade name is actually on the Register of Trade Marks and is in force under the Trade Marks Act, 1999, CGST rate of 5% will not be applicable on the supply of such goods”
As can be interpreted from the above statement, any listed product that is sold under a trademark, which is registered and remains in force under the Trade Marks Act, will be levied CGST at 5%. For example, there will be no CGST on natural honey sold under a trademark that is not registered. However, natural honey sold under a registered trademark will attract 5% CGST.
Consequence
The items to which this provision applies are basic food items, towards which consumers are highly price sensitive. Hence, the choice for companies, large, medium and small, is to either maintain a registered trademark and have the consumers incur 5% addition cost, or sell under unregistered trademarks. In our view, considering the price sensitive nature of the goods, and consumers in general, the choice for the companies would be obvious. Companies are likely to refrain from applying for trademark registration covering such items, and if they have already registered, then they may apply for cancellation of registration. It has come to our notice that some of the largest players in this sector have applied for cancellation of registration.
Going forward, we anticipate that trademark applications covering such item will be few and far in between. Also, there will be requests for amendments or cancellation of registered trademarks covering such items.
In the medium to long term, we anticipate increased instances of smaller players introducing such items into the market, bearing trademarks (of course unregistered) that are identical or deceptively similar to large reputed companies. Such activities will dilute the goodwill, and may also negatively impact the reputation of established companies. Such established companies will find it difficult and expensive to stop such players from riding on their goodwill, since enforcing an unregistered trademark is far more complicated compared to enforcing a registered trademark. Although companies may appreciate the risk involved, they would be willing to take this risk considering the pricing pressure discussed earlier. Therefore, in the medium term, we see an increase in trademark litigation in this space.
While we have elaborated on the tentative risks faced by companies, in our view, ordinary consumers are the most exposed. As discussed earlier, there will be relatively more players (as compared to the conditions currently) in the market, trying to ride on the goodwill of reputed companies, and one cannot really expect products of superior quality from such players. Now considering that items of this nature are bought by anyone and everyone, literate and illiterate, there is a high possibility of consumers being deceived into buying such items thinking that it originates from a reputed source. Such confusion is highly undesirable especially in connection with food items, which are brought on a regular basis, and consumed largely on a daily basis.
Conclusion
The Government appears to have introduced the provision of nil GST on some items that are sold under unregistered trademarks to incentivise small traders. However, established companies are positioned to nullify the incentive, and most likely will, by either refraining from applying for trademark registration or cancelling registration. Additionally, the Government’s move may negatively impact the culture of intellectual property protection, which the Government is rigorously trying to foster.
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