Doctrine of Dilution under Trademark Law

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Introduction

Trademark protection is one of the areas of intellectual property that drew a lot of judicial and legislative attention in the second half of the twentieth century. The impact of globalisation and changing business patterns had a significant impact on trademark protection stretching beyond its traditional limits. The idea of trademark dilution is a radical example of this trend of growth in the context of trademarks. The grounds for trademark law are distinct from those for other types of lP because trademark law discourages greater development.

Trademark dilution is a type of brand infringement in which the owner of a well-known trademark can ban others from using the mark on the grounds that such usage will tarnish the trademark’s reputation or uniqueness. Dilution protection, unlike typical trademark infringements, applies to trademark uses that do not cause consumers to be confused about who manufactured a product. Dilution protection law, on the other hand, tries to keep sufficiently strong and well-known trademarks from losing their unique identification with a particular product in the public mind.

Unlike typical trademark infringements, dilution protection extends to trademark uses that do not lead consumers to be confused about who made a product. Dilution protection law, on the other hand, aims to prevent sufficiently strong and well-known trademarks from losing their public perception of being associated with a certain product. Dilution protection law, on the other hand, tries to keep sufficiently strong and well-known trademarks from losing their unique association with a particular product in the public mind. (I.e. When we speak of Coca Cola we remember only the soft drink. Similarly when we speak of Rolls Royce, Benz we associate it with the car alone but when somebody else uses a similar mark like Rolls Royce or Benz for a chocolate, then the mark will remind two products in the minds of the consumer). Blurring, or fundamentally basic dilution, which blurs a mark from association with only one product to signify other products in different markets (such as “Kodak Shoes”), and tarnishment, which is the weakening of a mark through unsavoury or unattractive connotations. Tarnishment is not recognised as an incorporated notion in all dilution protection laws.

Historical Background

In the United States, trademark infringement and unfair competition statutes are thought to have originated in English common law. The Lanham Act of 1946 is the current federal trademark legislation. Unlike other intellectual property rights, which are derived from the US Constitution’s Patent and Copyright clauses, trademark law is derived from the Commerce Clause and is based on a philosophy of protecting consumers from deception and fraud. Trademark protection was created to safeguard customers from being misled by infringing marks, as well as producers from unfair business practises. The evolution of the idea of trademark dilution is riddled with contradictions. The idea of “trademark dilution” is thought to have been first applied by a German court in 1925, when the producer of the mouthwash “Odol” was able to have the same mark used in reference to a railroad and steel company cancelled. However, others believe that the doctrine was espoused in England in 1898. In the case of Eastman Photographic Material Co. v. John Griffiths Cycle Corp., the court refused to allow the camera manufacturer to profit from the use of ‘Kodak’ bicycles, despite the fact that they were not designed to work with Kodak cameras. The Kodak doctrine, as it is called, was the first notable departure from standard trademark protection.

Analysis of Section 29(4) of the Trademark Act

Infringement of an unregistered trademark is prohibited under the Act, but passing off actions in this respect are not barred under Section 27. Section 28 gives the owner of a properly registered trademark the exclusive right to use the trademark in connection with the products or services for which it was registered, as well as the ability to sue for trademark infringement. Section 29(4) states that “where the defendants’ mark, though identical or similar to the plaintiff’s registered trademark, is used in relation to goods or services that are not similar to those of the plaintiff, if the plaintiff’s registered trademark has a reputation in India and use of the defendants’ mark without due cause takes unfair advantage of, or is detrimental to, the plaintiff’s distinctive character or repute. 

The trademark must be registered and have a good reputation in India in order to be used under Section 29(4). As a result, instead of the Act’s definition of “well-known trademark,” the word “reputed trademark” is used here. The legislature’s objective is unclear as to why there was a substitution. However, courts have tried to bring a distinction between the two in a few cases that have come before them, though not successfully. 

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Section 29(4) of the Trademark Act has brought about a much needed protective umbrella for well-known trademarks. The first two conditions required to determine dilution of goodwill in trademarks under Section 29(4) of the Trademark Act are not difficult to establish; however, the third condition, i.e. what is a well-known mark, suffers from serious vagueness and complications due to a lack of guidelines, and courts have had to rely on foreign case law from the UK and the US to fill the void. There are also additional glaring inconsistencies that frequently undermine the courts’ ability to interpret clauses relating to well-known trademarks, some of which are noted below:

1. The term “well-known mark,” as defined in Section 2(1)(zg) of the Trademark Act, contains no criteria for evaluating whether a mark is well-known, resulting in uncertainty. The words “a mark that has become so to a significant portion of the public who consumes such goods or receives such services” might be interpreted in a variety of ways.

2. The ambiguity of the meaning of well-known marks wreaks havoc on Section 11 enforcement provisions, making it all the more vital to establish rules for determining whether trademarks qualify as well-known marks. 

3. The expression “registered trademark has a reputation in India” as used in Section 29(4), if viewed from a layman’s standpoint, refers to a well-known trademark. 3. However, it raises an objection to the Parliament’s use of two different formulations in Section 29(4): “registered trade mark having a reputation in India”; and “well-known mark” in Sections 2(1) (zg) and 11(2) of the Act.

4. Section 29(4) makes no mention of bad faith adoption of a mark as a criterion in determining whether the defendant’s action amounts to dilution of the plaintiff’s well-known mark.

Doctrine of Dilution as an independent cause of action

The Trade and Merchants Act 1958 governed trade mark law in India prior to the 1999 Act. The Act provided for defensive registration of well-known marks and passing off action under Section 47 [26]. In Daimler Benz Aktiegessellschaft & Anr. v. Hybo Hindustan, the idea of dilution was first addressed in India.

Dilution was previously regarded as a type of passing off based on a finding of misrepresentation and the probability of consumer confusion before the new Act came into effect. However, under Section 29(4) of the new Act, the doctrine of dilution is impliedly recognised as a separate cause of action. Though the potential of misunderstanding or deception is still required to demonstrate dilution as a result of passing off activity, the Act of 1999 has made a significant shift away from it.Despite significant advancements, whether through court rulings or statutory recognition, the theory of dilution is still not qualified to be called a distinct cause of action, and it still owes a portion of its life to passing off action.

Prior to the enactment of the Trade Marks Act, 1999, the trademark law in India was governed by Trade and Merchandise Marks Act, 1958. The well-known marks under the TMM Act were protected under Section 47 which provided for defensive registration of well-known marks and passing off actions. The test for whether a well-known mark was acceptable for defensive registration was whether the likelihood of deception was the deciding factor in evaluating whether it was eligible for registration under this section. It’s worth noting, however, that the Trade and Merchandise Marks Act didn’t define “well-known trademarks,” and the term was created through judicial interpretation. Owners of well-known marks often availed of this provision by registering their marks either in all classes or in selected classes of interest.

In the well-known case of Bata India Ltd. v. Pyarelal & Co., the plaintiff, Bata India Limited (Bata), sued the defendants for passing off by utilising the mark BATAFOAM for rubber foam used in mattresses, sofas, cushions, and automotive seats. In India, the plaintiff’s mark BATA is a well-known footwear brand. Plaintiff claimed that the defendants deceived customers by utilising the mark BATAFOAM, and that such deceptive and mala fide behaviour amounted to passing off the plaintiff’s goodwill and reputation. The plaintiff’s reputation may be harmed as a result of this image. According to the cour, Bata is a well-known brand name in the marketplace, and its use is likely to cause not only deceit in the minds of ordinary customers, but also injury to the plaintiff-Company.

Issue in Trademark Law in India

The “likelihood of dilution” technique has been used frequently in India. This is because, with the exception of this provision, the Trademark Act is primarily geared toward consumers. As a result, the dilution level should not be lowered without good reason, especially where the Act already provides an alternative and anticipatory remedy under section 11(2). Furthermore, Section 29(4) positive wording is a carbon copy of English legislation, and courts in that jurisdiction have required dilution to be proven. In the case of Colgate Palmolive v. Anchor Health & Beauty, the plaintiffs were Colgate Palmolive and the defendants were Anchor Health & Beauty. The Delhi High Court ruled that a large replication of a trade dress could lead to not just confusion but also erosion of the colour combination’s individuality. 

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The High Court of Delhi observed in Frito-Lay India v. Guru Prasad Enterprises that imitating product packaging and colour schemes would generate confusion and deceit, resulting in passing off as well as dilution of the plaintiffs’ brands, labels, and packaging. Because there is a clear misunderstanding about a trademark’s reputation, the government should step in and make the required changes. It should be clarified if repute is a narrower phrase than well-known trademark, as the Indian courts have ruled, or whether it refers to the same thing as the Act and foreign cases suggest.

Common Elements of Doctrine of Dilution 

A well-known mark is one that has a high level of reputation or recognition. A well-known mark is one that, because of its widespread reputation, may be afforded more protection than regular marks. The Trademark Dilution Revision Act of 2006 in the United States stipulates that a well-known mark must be widely recognised by the general public. There can be no claim of dilution if the mark is not at least well known. The mark must also be distinctive or have acquired distinctiveness, and the diluting acts must be likely to distort or tarnish the mark. Being well known is also an essential feature of dilution in the European Union, but the scope of the notion of reputation is left to the courts to define, as the European Union Trade Mark Regulation (EUTMR) does not define it. In most jurisdictions, judges and trademark offices decide on a case-by-case basis whether a mark is famous or well known. Some countries, on the other hand, do not require a well-known mark for dilution protection.

Anti-dilution measures protect the owner of an unusually strong or well-known mark from experiencing a decrease in the strength or value of that mark due to another, allegedly similar mark, rather than protecting consumers from being confused about the source of competing similar or related goods or services due to the similarity of the marks (regardless of how that allegedly similar mark is used).

Case law in numerous jurisdictions in the United States traditionally suggested that a plaintiff was required to establish real dilution of its mark before receiving relief. When the federal Lanham Act (Trademark Act of 1946) was amended to add a dilution cause of action, this was interpreted in the same way. In response to the case law, the United States Congress passed the Trademark Dilution Revision Act in 2006. The federal statute was changed to codify the notion that a plaintiff just needs to establish a chance of dilution to be granted remedy. It might be easier to offer proof that dilution is likely rather than that it is occurring. 

In the case of Mattel, Inc. v. 3894207 Canada Inc., the Supreme Court of Canada confirmed its use of the possibility of dilution/depreciation requirement, rather than proof of actual dilution.

Conclusion

Even though courts have acknowledged the doctrine of dilution as a remedy independent of an infringement action under Section 29(4), it owes its development and flourishing to the protective cloak of passing off. Thus, clarity in the provision is essential to make it a successful independent cause of action by resolving the concerns outlined above. Even though it is not a consumer-centric rule, trademark dilution must be freely adopted in Indian trademark law. It is possible that modifications to the Trade Marks Act of 1999 will be sufficient and may even be preferable to separate legislation.

It is clear that India’s trademark statute falls short of providing the necessary safeguards for trademarks, particularly in the areas of dilution, unregistered trademarks, and cross-border reputation. The concept of dilution of well-known trademarks needs to be enshrined in law in order to raise awareness among traders and consumers, reduce the number of infringements, and provide consumers with high-quality goods. The new Trademark Act of 1999 is a step forward in preventing dilution, however the current Indian situation still demands a separate legal authorization to prevent dilution and match international protection criteria.

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