Moving Beyond the Doctrine of Dilution in the Context of Well-Known Trademarks

Abstract

This article seeks to argue against the doctrine of dilution for adjudicating on infringement of well-known marks and explores the doctrine of deceptive similarity as a potential solution. It establishes that the doctrine of deceptive similarity, as used by the court before the introduction of the Trademark Act of 1999, is not enough to solve all the issues which have arisen due to the doctrine of dilution and argues for the incorporation of the “Harm” factor in this doctrine.

Keywords: Well-Known Marks, Doctrine of Dilution, Doctrine of Deceptive Similarity, Magnitude of Harm

I. Introduction

Recently, the Delhi High Court, in the case of Burger King Company LLC v. Virendra Kumar Gupta, declared “Burger King” as a well-known trademark. With this addition, there are now close to 100 marks recognised as well-known trademarks in India. A well-known trademark is defined under section 2 (1) (zg)  of the Trademark Act of 1999 (hereafter referred to as “The Act”) as a mark that is so well-known to a substantial segment of the population which uses a particular good or service that the use of such mark for any other good or service would likely indicate a connection between the other good or service and the good or service for which it was originally known.

A well-known trademark is thus a particular kind of trademark that has gained considerable repute among the users of the goods or services it produces. An example of such a trademark is the bitten apple logo of Apple Inc. Due to such wide recognition by the public, these marks are accorded protection, which is higher than that of ordinarily registered trademarks. Unlike ordinary registered trademarks, not only are these marks protected against similar classes of products for which the mark is used, but also for other classes of products in which the mark might not even be in usage.

Another stark difference between an ordinarily registered trademark and a well-known trademark can be seen in the methods provided in the Act to analyse the infringement of such marks. While in the case of ordinarily registered trademarks, the method provided by the Act to determine an infringement is that of deceptive similarity, in the context of well-known the method which is provided is that of trademark dilution.  Before the enforcement of the Act, it was the doctrine of deceptive similarity which was used in order to adjudicate with regard to the infringement of well-known trademarks. However, the Act has specifically provided for the usage of the doctrine of dilution to adjudicate on matters of infringement of well-known marks, and hence, with the enforcement of the Act in 2003, the Courts have given priority to the doctrine of dilution while adjudicating on matters related to well-known marks. One case in point to demonstrate this phenomenon is that of Ford Motor Company v. Mrs C.R. Borman in which the Delhi High Court ruled that if a trademark enjoys a significant reputation in India, there is no requirement to prove deception or likelihood of confusion which may occur due to the challenged trademark.

This article aims to critically analyse the effects of such cumulative usage of the concept of well-known trademarks and the doctrine of dilution. Firstly, the article will explain the doctrine of dilution and how the synchronous use of well-known marks with the doctrine of dilution is detrimental to consumer welfare and market competition. The article then argues for moving beyond the doctrine of dilution and back to the doctrine of deceptive similarity, albeit with some amendments. The article finally concludes by summarising the entire argument.

II. The Blending of Well-Known Marks with the Doctrine of Dilution: The Perils

The doctrine of dilution marks a fundamental shift in the extent and scope of trademark protection. It was used by the Delhi High Court in the case of Daimler Benz Aktiegesellschaft v. Hybo Hindustan (“Daimler Benz”) in 1993, even before the introduction of the Act. As opposed to the theory of deceptive similarity, which focuses on the potential deceptiveness or confusion that another mark could cause about the true owner or the source of the mark, this theory focuses more on preserving the uniqueness and singularity of the well-known trademarks. Trademark dilution usually occurs in two ways- blurring or tarnishing. The former focuses on the attenuation or the toning down of the trademark, while the latter focuses on the slandering of the reputation of the trademark and is usually evoked when the well-known mark is associated with products of lower quality, thus diminishing the reputation of the mark.

When the doctrine of dilution is applied in the context of well-known trademarks, the results have been detrimental to market competition and consumer welfare. Firstly, the doctrine of dilution deviates from the very purpose for which trademarks were envisaged and developed. The main aim of the development of trademarks was to ensure source identification and protect consumers from deception, thus reducing consumer confusion and search costs, in turn ensuring consumer welfare. Instead of focusing on consumer welfare, the doctrine of dilution shifts the focus to enhancing the profits of the owners of trademarks. The doctrine of dilution has led to the commercialisation and propertization of trademarks, which has absolved it for the very purpose for which it was envisaged, i.e., consumer welfare. The proponents of this doctrine argue that in the modern era, it is not the quality of the product that matters to the consumers; rather, it is the value associated with a particular mark that influences consumers. While this may be true, there is no reason to suggest that such marks cannot be protected by traditional doctrines such as deceptive similarity. The practical purpose of this theory simply appears to extend maximum protection and to shield certain marks from market competition.

Another effect of blending these concepts is that it has led to arbitrary decisions by the Court for trademark infringement suits in the context of well-known marks, at least in the Indian context. Unlike the U.S.A., where the Courts have, on various occasions, developed various tests   to determine if dilution could have taken place, the Indian courts have provided blanket protection to well-known trademarks without analysing whether any actual dilution of the reputation of the mark has taken place.

In Daimler Benz , the automobile company Mercedes Benz filed a case of injunction against the defendant Hybo Hindustan, which had used the sign of three humans in a ring for undergarments, which the plaintiff contended was similar to that of its trademark. In this judgement, the Court completely relied upon the mark’s reputation and refused to analyse if there was any actual dilution of using the mark on two different classes of products altogether. A similar stance was seen in the case of Aktiebolaget Volvo v. Volvo Steels Ltd. As in the previous case, the plaintiff and defendant were involved in the production of different classes of products altogether. Here also the Court refused to analyse whether any actual dilution occurred.

Apart from the arbitrariness in decisions as demonstrated above, another harm resulting from the blending of well-known marks and the doctrine of dilution is trademark bullying by the owners of the well-known mark. The concept of a well-known mark extends the protection of marks to all other classes of products, irrespective of whether or not the mark is used for those classes of products. Meanwhile, applying the doctrine of dilution for analysing the trademark infringement of such well-known marks ensured that the basis of protection of these well-known marks in all sectors is to preserve the singularity of these marks. The cumulative application of both of these concepts created a situation where the owners of the well-known marks were given more power than what they had earlier, i.e. the power to control their marks even in unrelated circumstances. This created an increase in trademark bullying. 

According to the United States Patent and Trademark Office, trademark bullying can be defined as “trademark owner that uses its trademark rights to harass and intimidate another business beyond what the law might be reasonably interpreted to allow”. It has been noted that there have been several cases where the powerful and wealthy owners of these well-known marks have tried to initiate baseless legal proceedings against relatively small companies. These small companies often cannot afford the financially draining legal battles and, instead, choose to change their marks altogether. Such arm-twisting tactics by these wealthy corporations have been encouraged and stimulated by combining both concepts.

In the case of Apple Inc. v. Signs in the Light LLC, the defendant, Stephanie Carlisi, had filed for a trademark named “Franki Pineapple” as her stage name. Apple opposed this and claimed that the names were both fruits and would lead to the dilution of its trademark. Although ultimately leading to a compromise in favour of the defendant, this case is an apt representation of the instance of bullying by the owner of a well-known trademark who utilises both the concepts of a well-known mark and the doctrine of dilution to maintain dominance regarding its mark. Unlike this case, many other companies or individuals had to ultimately bow down before the unreasonable demand of Apple as they did not have sufficient financial resources to battle a giant like Apple Inc.

III. The Return to the Doctrine of Deceptive Similarity: A Potential Solution

The courts have used the doctrine of deceptive similarity several times while adjudicating on matters related to the infringement of well-known marks. It may be a potential solution to solve the problems which the blend of well-known trademarks and the doctrine of dilution have cumulatively caused. However, the doctrine of deceptive similarity, as used by the courts in the previous form cannot solve all the problems related to the synchronous use of well-known marks and the doctrine of dilution, and certain amendments are required to solve the problems as mentioned above effectively.

From the above section, three major problems regarding the usage of the doctrine of well-known marks along with the doctrine of dilution have been described- a) It deviates from the very purpose of trademarks, b) it leads to arbitrary decisions, especially in the Indian context, and c) it leads to trademark bullying by the owners of such well-known marks. Using the doctrine of deceptive similarity in its earlier form to analyse well-known marks will solve the first problem, as this doctrine focuses on the deception or confusion which is likely to arise in the minds of consumers due to the contested mark, thus reverting to the original function of source identification and consumer welfare. Moreover, such a blend between these two concepts might also solve the second issue of arbitrariness. Unlike the doctrine of dilution, where the Indian courts have not evolved any particular test to determine any actual dilution which may occur due to the trademark which has been challenged, the Supreme Court, in the case of Cadila Healthcare Limited v. Cadila Pharmaceuticals Limited, determined the criteria for evaluating and detecting deceptive similarity. However, it is the third problem that this blend of well-known marks and doctrine of deceptive similarity cannot solve completely. 

Even if the doctrine of deceptive similarity in its earlier form is exclusively used to analyse the infringement of well-known marks, the bullying by the owners of such well-known marks will not completely subside. A case which proves this point is the dispute between Monster and Vermonster. In this case, the famous energy drink brand Monster, owned by Hansen Beverage, contended that the name of the beer Vermonster would lead to confusion in the minds of the consumer and sought to use the doctrine of deceptive similarity along with its famous tag to compel Vermonster to change its mark, even the products sold both of these brands varied even though the names of the companies, as well as the products sold by them, were fairly distinct. Despite all of this, Vermonster was advised to change its name due to the financial power of Hansen Beverage. Ultimately, a social media campaign by the owners of Vermonster against this bullying led to a compromise where it was allowed to retain its name.

This issue can be resolved by amending the doctrine of deceptive similarity and raising the standards to prove an infringement in the case of well-known marks. The doctrine of deceptive similarity in its earlier form only focuses on the confusion likely to occur in the consumer’s mind through the contested mark. This doctrine can be further expanded to factor in the magnitude of harm which might be caused due to such confusion. A separate standard could be set for competitive and non-competitive products. In the case of competitive products, a presumptive conclusion of harm could be assumed in favour of the owner of well-known marks. In the case of non-competitive products, they could be further classified into two other categories- one closely resembling the well-known mark and the other where the relation between such products is remote. The condition of presumptive conclusion could be extended to such non-competitive products which are so closely related to the well-known marks. However, for those products remotely related to the product for which the well-known mark was granted, a requirement could be imposed upon the owner of such a well-known mark to prove the harm that has ensued upon such a product. Making the doctrine of deceptive similarity more objective, well-defined and stringent will dissuade such owners of well-known marks from initiating baseless legal proceedings and would ensure the speedy disposal of such cases, thus reducing litigation costs, which play a major role in such trademark bullying. The adoption of such an amended version of the doctrine of deceptive similarity, along with the concept of well-known marks, will ensure the solving of all three issues highlighted in the above section to a great extent.

IV. Conclusion

This article does not advocate for a radical change to solve the issues caused by the synchronous use of well-known marks and the doctrine of dilution. Instead, it advocates for a return to a doctrine which has previously been used by the Courts to adjudicate on the infringement of well-known marks, i.e., the doctrine of deceptive similarity. It acknowledges that the doctrine as used by the Courts earlier can solve many issues related to the synchronous use of well-known marks and the doctrine of dilution. But it also showcases that the doctrine of deceptive similarity in its earlier form cannot solve all the issues. Hence, the article proposes incorporating a harm factor in the doctrine of deceptive similarity in the context of well-known marks. This will help solve all the issues mentioned in this article. In conclusion, it advocates moving beyond the doctrine of dilution to the doctrine of deceptive similarity, albeit with some caveats.

This article is a part of the DNLU-SLJ (Online) series, for submissions click here.

Japmeet Singh Bajaj

Student, National University of Advanced Legal Studies, Kochi