The Doctrine Of Trademark Dilution And Its Impact On Popular Brands

THE CONCEPT OF TRADEMARK DILUTION

Certain brands build an association with certain quality of goods/services. The use of similar brands for unrelated goods while may not cause confusion as to the source may however lead to dilution of the brand.

Say, if an entity uses the mark “Aple” for its hair oil, it creates an association in the minds of the consumers with respect to the well-known trademark “Apple” for mobile phones. Here, it can be argued that “Aple” for hair oil will reduce the exclusivity and distinctiveness of “Apple” trademark, even if it is for different goods and services. The use of a “famous” mark by a third party causes the dilution of the trademark and its exclusivity is diminished, even if there is no association of the trademark “Apple” with hair products. The use of the “Aple” mark is arguably unfair, taking advantage of the goodwill that “Apple” has built over a period of time.

Well reputed trademarks that are directly linked with a set genre of goods/services like “ROLEX” for watches or “AMUL” for dairy products or “BATA” for shoes and if someone uses the said popular marks for different goods, it will result in dilution of the trademarks’ distinctiveness and reputation.

TYPES OF TRADEMARK DILUTION:

1. Blurring – When the relevant customers start associating a well-recognised mark with a new and a different source, it results in blurring the link between the famous mark and the goods/services provided under it. The doctrine of “dilution by blurring” was set out in DLF Limited Vs. Sohum Shoppe Limited and Ors ^[1]where it was stated that if an unauthorised entity blurs the sharp focus of a mark which commands ‘one mark, one source’, then others will also jump on the bandwagon and as a cumulative continued blurring, substantial injury will be caused to the famous mark.                         
2. Tarnishing – Tarnishment occurs when a famous mark is unauthorizedly used by linking the said mark to products/services that are of poor quality or portray the famous mark in an unpleasant or unacceptable context, it is likely to reflect adversely upon the reputed marks’ goodwill.

TRADEMARK DILUTION IN INDIA

One of the first instances where the doctrine of trademark dilution was acknowledged and applied in India was the landmark case of Daimler Benz Aktiengesellschaft & Anr. v. Hybo Hindustan case^[2] (the Mercedes case), wherein Mercedes filed a suit for a permanent injunction against Hybo Hindustan for using the mark ‘Benz’ along with ‘three-pointed human being in a ring’ in relation to undergarments. The Delhi High Court ruled in favour of Mercedez restraining Hybo Hindustan from using the above mark for being deceptively similar to the Mercedes’ well-known trademarks “Benz” and “three-pointed star”. The Court emphasised that such a well-known mark is not up for grabs for anyone as the name ‘BENZ’ is associated with one of the finest cars in the world and cannot be used by any trader particularly for undergarments, which negatively impacts the credibility of the Mercedes’ trademark. It is pertinent to note that the word “dilution” was nowhere used in the judgement barring at one place as “in my view, the defendant cannot dilute, that by user of the name “Benz” with respect to a product like under-wears.”

EVOLUTION OF THE LAW OF TRADEMARK DILUTION IN INDIA

To broaden the framework for the doctrine of trademark dilution and to better secure the well reputed trademarks, the Trade Marks Act, 1999 came into force upon replacement of the Trademark & Merchandise Marks Act, 1958. The concept of trademark dilution was introduced under Section 29 (4) of the Act, though the Act per se doesn’t state the words “trademark dilution”.

The main elements of Section 29 (4):

1. the senior mark is registered and commands goodwill and reputation in India and,
2. the infringing mark must be identical or similar and,
3. the infringing mark is used for different goods or services, and
4. the infringing mark has been used without due cause and
5. the use of the infringing mark amounts to taking unfair advantage of or is detrimental to, the distinctive character or repute of the registered trademark.

In the landmark judgement of ITC Limited vs Philip Morris Products Sa and Ors. ^[3] ITC sued Philp Morris alleging that its mark ‘M’ on Marlboro cigarette pack is diluting ITC’s well established ‘W’ Namste mark of the Welcome group. The High Court in accordance with Section 29(4) of the Trademarks Act, 1999 laid down the essentials for determining the dilution of a trademark. The Court observed that ITC has never used the mark on the cigarettes and that the reputation of ITC’s mark could not be extended to mid to high priced cigarettes and the trademark dilution cause of action did not survive.

Harmonious construction of Section 29 (4)

A bare reading of Section 29(4) makes it clear that all its sub-clauses have to be read holistically and the complete enactment must be taken into account. The intention of the legislature is further evident since the word “and” is employed at the end of clauses (a) and (b) of Section 29 (4). Additionally, Section 29 (4) clearly applies to use of the trademark in relation to dissimilar goods/services to those for which the trademark is registered. This is the essence of Section 29(4) and also lays the basis of the difference between the Section 29 (2) and Section 29 (4). While Section 29 (2) covers similar or identical goods/services, Section 29 (4) is applicable only to goods/ services which are not similar. The Hon’ble Supreme Court in Renaissance Hotels Holdings, Inc. v. B. Sai Vijaya^[4], while setting aside the judgement passed by the Hon’ble High Court of Karnataka in B. Sai Vijaya vs Renaissance Hotels Holdings; has observed on the above two points. It was noted that the Hon’ble High Court erred in taking only clause (c) of Section 29(4) into consideration in isolation while overlooking clauses (a) and (b). Moreover, the Apex Court also brought out the difference between Section 29 (2) and 29 (4) while comparing the goods and services. The legislature has therefore, carefully provided the test and standards for infringement in relation to identical or similar goods or services and provided a separate test for infringement in respect of dissimilar services. 

CONCLUSION

To conclude, it can be seen from various judgements of the Hon’ble Courts that the provisions of Section 29 (4) are often misinterpreted and extended to matters of infringement in relation to similar goods/services, whereas the present Section is applicable only to dissimilar goods and services. Moreover, selective reading of Section 29 (4) (c) by the various Courts while ignoring the essentials of Section 29 (4) (a) and (b) is erroneous as has also been observed by the Apex Court in the resent matter of Renaissance Hotels.

[1] DLF Limited Vs. Sohum Shoppe Limited and Ors 2015 SCC OnLine Del 12565

[2] Daimler Benz Aktiengesellschaft & Anr. v. Hybo Hindustan –  AIR 1994 Delhi 239

[3] ITC Limited vs Philip Morris Products S.A. and Ors. 2010 SCC OnLine DEL 27: 2010 DLT 166 177

[4] Renaissance Hotels Holdings, Inc. v. B. Sai Vijaya, (2022) 5 SCC 61.