Concept of trademark Bullying in India

Concept of trademark Bullying in India written by Prachi Mehta Student of MKES College of Law

Introduction-

The word ‘Bullying’ is quite familiar to most of us which mean intimidating a weaker person to do or to abstain from doing something. Unfortunately, this intimidation is not only limited to schools/colleges but also has invaded the trademark industry.

Trademark bullying means when a registered trademark owner threatens or tries to threaten another trademark owner, generally, may not be a registered one through legal actions or notices against him. United States Patent and Trademark Office (USPTO) defines the term ‘trademark bullying’ as “the act where the trademark owner that uses its trademark rights to harass and intimidate another business beyond what the law might be reasonably interpreted to allow.”

It can be explained as a vexatious practice by a trademark holder, typically a bigger organization or company to file a suit against another trademark user, supposedly a smaller company in order to intimidate or harass him under the scope of its trademark rights.

Trademark Bullying in India-

Trademark Bullying cases have started taking a toll in India. The Trademark law in India has given a bunch of various rights to the trademark owners which also includes initiating a legal proceeding against anyone who tries to infringe the trademark of the owner but the same should be in bonafide and legitimate.

Thus, to protect the smaller companies in India from the baseless infringement proceedings initiated by the larger business and to safeguard their rights a provision under the Section 142 of Trademark Act,1999 is present which states –

“ Where a person, by means of circulars, advertisements or otherwise, threatens a person with an action or proceeding for infringement of a trademark which is registered, or alleged by the first-mentioned person to be registered, or with some other like proceeding, a person aggrieved may, whether the person making the threats is or is not the registered proprietor or the registered user of the trade mark, bring a suit against the first-mentioned person and may obtain a declaration to the effect that the threats are unjustifiable, and an injunction against the continuance of the threats and may recover such damages (if any) as he has sustained, unless the first-mentioned person satisfies the court that the trade mark is registered and that the acts in respect of which the proceedings were threatened, constitute, or, if done, would constitute, an infringement of the trade mark.”

Provisions related to this are also present under the Patent Act, 1970, Copyright Act, 1957, and Designs Act, 2000.

It is observed that these smaller companies who are being targeted by the larger entities do not have enough capital to fight a case against these big companies and as a result, they give up the mark or cease its operations.

This type of bullying is considered as an aggressive type of strategy by the trademark holder to prevent the other party from using the trademark altogether which may not normally cause a threat to the trademark owner’s market value or its share.

The potential harm is caused to the smaller entity in terms of economic loss which includes rebranding the cost of the product, removal of the product from the market, loss of reputation, or incurring a heavy amount of litigation cost to defend the suit.

However, the plaintiff company may also face a backlash from its customers or general public because of its negative publicity or its reputation now being tagged as a “bully” company.

Cases related to the Trademark Bullying in India-

There are some important cases in India where the Intellectual Property Appellate Board (IPAB) and the Courts have taken Trademark Bullying as a serious issue and have decided in the favor of the smaller companies.

Crystal Knitters vs. Swarovski-

In the present case, Crystal Knitters, a textile manufacturer from Tripura, Tamil Nadu, instituted a rectification petition against the defendant company which has a big name in the fashion industry for its crystals. The petitioners stated that they had been using its trademark- ‘Crystal’ since 1971 and also had trademark registrations and copyrights in the artistic work of its trademark. Further, they stated that the defendant company was aware of its existence but still registered its trademark under ‘Crystal Glamour’ in 2005.

The defendant company in its contention to the rectification petition replied through a letter stating that Swarovski’s trademark has lapsed a long time ago and they were not interested in renewing its registration. They also added that given the current situation they did not see any point in attending the hearing.

The Intellectual Property Appellate Board in its hearing ordered to remove the trademark and that Swarovski had disclaimed ‘Glamour’ from its trademark which meant that they had claimed ‘Crystal’ as their trademark. However, the same trademark was registered under the name of Crystal Knitters in the same Class. Therefore, the defendant company’s trademark was laid down to be cancelled as they both were alike.

M/s ITC Limited vs. Nestle India Limited-

ITC Ltd had launched its Sunfeast Yipeee! Noodles in the year 2010 had two varieties and one of them was ‘Magic Masala’. In 2013, Nestle India Limited used the phrase ‘Magical Masala’ relatively for its instant noodles and advertised the same under the expression ‘Maggi extra-delicious Magical Masala’.

Thus, the plaintiff company stated that ‘Magic Masala’ is an essential feature of their trademark ‘Sunfeast Yipeee! Noodles Magic Masala’ and the defendant company had allegedly copied their trademark by sightly modifying the brand as ‘Magical Masala’.

It is to be noted that the plaintiff company had never registered the said expression for their products. Thus, ITC filed a suit for perpetual injunction against the use of their trademark by Nestle India.

The defendant company contended that the expression ‘Magical Masala’ was not used by them as a trademark but rather as a flavor descriptor. It further added that such terms ‘Magic’ and ‘Masala’ are everyday used expressions in the food industry and cannot belong to any individual person.

The Madras High Court took a note of Nestle’s contention and ordered that “Both the words ‘Magic’ and it’s derivative ‘Magical’ are common to the trade. Therefore, neither the plaintiff nor the defendant can claim any monopoly over the expression ‘Magic’ or ‘Masala’ for they are common words in Indian culinary and Indian food industry”.

It observed that ITC was using the expression as a flavor descriptor and not as a trademark and also no application for the registration of the trademark was filed with the Trade Marks Registry. Further, the court stated, “ITC has used the expression “Magic Masala” in a laudatory manner to praise the “Masala” in the sachet. Laudatory epithet cannot be given monopoly or protection as has been held by Courts… Since it is a laudatory word, it can never be monopolized.”

Bata India Limited Vs Vitaflex Mauch GmbH-

In this case, the plaintiff had filed a suit against the defendant company for restraining the defendant from making threats of legal proceedings related to the trademark which were totally baseless to the plaintiff. The plaintiff also claimed damages from the defendant for issuing groundless threats.

The major question before the High Court of Delhi was whether the legal notice amounted to legal threat or harassment and whether the plaintiff is entitled to damages and injunction for the same.

The Delhi High Court held the case in favor of the plaintiff company and stated that the threats made by the defendant were groundless, unreasonable, and wrongful. Thus, the defendant was ordered to hold back any such groundless threats in any manner whatsoever.

Jones Investment Co Inc vs Vishnupriya Hosiery Mills-

In this case, a US-based giant clothing brand, Jones Investment Co Inc of Wilmington, filed a suit against Vishnupriya Hosiery Mils located in Chennai which was using the trademark ‘Jones’ for its products.

The plaintiff company contended that this local brand (defendant) was causing confusion among the customers as the company solely was a registered owner of that trademark named under ‘Jones New York’ which was used all over the world including a variety of goods such as, clothing, footwear, hosiery, and these products have acquired a reputation in the market.

To this, the defendant company stated that it had been using its trademark since 1993 even before the plaintiff company and there cannot be any confusion among the costumers as Jones Investment’s goods are not sold in India.

The Intellectual Property Appellate Board decided the case in the favor of the defendant company and allowed the local brand to retain its trademark. It said that Multinational Companies who have no intention to sell its goods in India, cannot restrict an Indian company which has adopted the mark in bonafide and who is first in the market, cannot be prevented from using the same.

Cadbury vs. ITC Ltd-

Cadbury filed a case against ITC when the company started marketing Eclairs along with its ‘Candyman’ trademark on which the plaintiff company got an injunction. Eventually, ITC moved the Intellectual Property Appellate Board stating that the trademark hasn’t been used since 1994.

“Section 47 of the Trademark Act, 1999 states removal of the trademark by IPAB on the grounds of non-use, trademark registered without any bonafide intentions, or if there has been no proof of use for a period of five continuous years from the date of application for registration of the trademark.”

Cadbury in its defense stated that its trademark ‘Chocolate Eclairs’ was registered in India in the year 1974, and it has been used ever since. It also has its trademark for ‘Chocolate Eclairs Pop’. However, the company failed to present any evidence in this respect.

The judgment delivered by V Ravi and S Usha said there isn’t “a single evidence” to prove it. “Just the registration alone will not help the respondents to prove their use.” Further, they added, “The board in various matters on the issue of non-user has held that if the respondent does not appear to rebut the ground of non-user, it goes without saying that they have not used the mark even after several years of registration and the mark shall be canceled for non-user.”

Subsequently, Cadbury decided not to take the matter any further as the trademark was not used for years. It can be observed that non-use of the mark is also a major reason why the companies are losing their trademarks.

Defending the business against Trademark Bullying-

Trademark Bullying is an obstacle for smaller businesses to enter the market. Due to this many of these businesses are discouraged from launching their products, spreading their business in a new market, or using a certain trademark as they may face a legal consequence from the larger entities. The smaller companies can take certain measures to defend themselves from trademark bullying-

1. The company can take proper care before registering its mark in order to not infringe another company’s intellectual property rights. One should conduct proper research for any similar marks before applying for a trademark to avoid future litigations.
2. The trademark owner should keep knowledge of basic trademark laws. Basic knowledge of the same can help the owner to differentiate between a legitimate claim and an unreasonable claim or threats from the opposite party as it is very important to distinguish when the trademark is being bullied.
3. The smaller business should not voluntarily back down in front of the bullying attempt. Many trademark proceedings are initiated without appropriate inquiry. Thus, a voluntary move can make the company lose its trademark forever.
4. The companies can always offer to settle the matter through Alternative Dispute Resolution such as arbitration or mediation. This can help to save the defending cost.
5. The trademark owner should wait till the mark is fully registered, before investing in brand advertising or manufacturing products with the mark.
6. The smaller business can also publicize the bullying. This can lead the bully company to take back its suit due to negative publicity which can hinder its reputation and brand name.
   A trademark is one of the crucial elements of a company. It becomes an identity for a company and makes it easy for consumers to find the business. Therefore, protecting the trademark from the ‘bullies’ should be prominent for the business owners.

Conclusion-

To conclude, all infringement notices cannot be termed as threats or trademark bullying. It is very important for the person initiating the legal action that it is within the scope of his rights and reasonable claims. For the defendant companies who are being harassed and suffered can always resort to courts.

They can claim compensation for the loss incurred or a claim of defamation depending on the severity of the trademark bullying from the bully company. The theory of Trademark bullying is slowly catching up in India and it can be seen that Courts are not restraining themselves to protect the small/local business against the big brands.