Reputation on the line in trade mark dilution

With globalisation and rapidly evolving business trends, it has become critical for businesses to extend their intellectual property protection oversight beyond traditional practices. When it comes to trade marks, especially those that are famous or well-known, the principle of trade mark dilution may assist owners.

Trade mark dilution is a legal concept involving the unauthorised use of a famous or well-known trade mark in a manner that diminishes or dilutes its distinctiveness and reputation. While dilution is not explicitly defined under the Trade Marks Act, 1999, section 29(4) sets out when trade mark dilution may occur. A registered trade mark is infringed by a person who, not being a registered proprietor or a person using by way of permitted use, uses in the course of trade a mark which is identical with or similar to the registered trade mark; is used in relation to goods or services which are not similar to those for which the trade mark is registered; the registered trade mark has a reputation in India, and the use of the mark without due cause takes unfair advantage of or is detrimental to the distinctive character or repute of the registered trade mark.

Under section 29(4), trade mark dilution may happen when a mark that is identical or similar to a well-known registered mark is created and used on goods or services that are not similar to the ones covered under the registration of the well-known mark.

In ITC v Philip Morris Products SA & Ors, the Delhi High Court held that four essential elements were required to establish a case of trade mark dilution. They are that the diluting mark in question is identical or similar to the affected senior mark; the senior mark possesses a reputation in India; the diluting mark in question is used without due cause, and the diluting mark in question is used to take unfair advantage of, or violate, the distinctiveness or reputation of the registered trade mark.

In the case of Caterpillar v Mehtab Ahmed and Ors, the same court, in explaining the concept, held that if any subsequent user adopted a similar or identical mark for the same goods, it would lead to a reduction in the value of the mark of prior use and also result in dilution of such mark. The court held that an act of trade mark dilution is a commercial invasion as a trade mark is like property and an unauthorised party cannot trespass on it.

The court also decided that the dilution of a trade mark leads to blurring, that is smearing, or partially affects the descriptive link between the mark of a prior user and its goods. Such an act reduces the value or force of a trade mark, while also gradually diminishing its commercial value. The court also identified another kind of dilution in the form of tarnishing, that is sullying, degrading, or impairing the distinctive quality of the trade mark of a senior user.

When determining disputes over trade mark dilution, courts in India have not generally considered any balance of convenience in the favour of the subsequent user. For instance, in the case of Aktiebolaget Volvo of Sweden v Volvo Steels Ltd of Gujarat, the Bombay High Court held that even if the defendants had to change their name having used it for the previous seven years, they were not likely to suffer greatly. However, the same could not be said of the damage that the plaintiff Volvo would suffer due to the dilution or debasement of their brand name Volvo. The case was decided in favour of the plaintiff Volvo even though it had no presence in India in respect of the goods sold by the defendant and merely had the intention of entering the Indian market with its luxury automobile goods.

From these authorities, it can be concluded that the reputation of a well-known trade mark not only encompasses territorial limits but also covers the areas that fall beyond the scope of the goods or services for which the mark is used. Trade mark dilution happens when a mark is blurred or tarnished. It also involves the activity of free riding on the goodwill or reputation gained by a well-known mark. For trade mark dilution to occur, it is not necessary that the act results in loss, injury, or damage to the well-known mark. The concept thus involves watering down or erosion of the uniqueness and goodwill of the brand even when no confusion is likely to happen in the minds of consumers.