The Recent Trends in Trademark Squatting and Infringement in India
Introduction
William Shakespeare in his famous play “Romeo and Juliet” wrote “What’s in a name? That which we call a rose by any other name would smell as sweet.”[1] Shakespeare couldn’t have foreseen the importance a name could hold and that a lot is actually in a name. This is because names mean so much in today’s society, especially when it comes to business and intellectual property. A brand’s name, particularly when it takes the shape of a trademark, can define its identity, reputation, and value, making it an asset that is valuable to safeguard.
Trademarks are unique “marks”, names, symbols, signs, words or phrases that define a brand or company’s products or services. It helps to distinguish the products or services of one company from those of others in “trade” and business. Examples would be Apple, Gucci, Milton, L’oreal etc. Trademarks are governed by the Trademarks Act of 1999 and the Trademark Rules of 2017 in India which provides for registration and protection of Trademarks from fraudulent practice. This code was last amended in 2021 by the Tribunal Reforms Act, 2021.
“Trademarks, (besides defining a company) also symbolise the goodwill, which a company has established for a product or service, and provide protection for the company’s investment in that goodwill.”[2] In recent times, many people are misusing the goodwill of others by “trademark squatting”. Trademark squatting simply means “an act of registering other people’s marks as their own by squatters in other countries in order to gain benefits from original marks or real trademark owners.”[3] In this blog, the author has tried to understand the issue of trademark squatting in India and analyse some of the recent cases held by Indian Courts in relation to trademark infringement by trademark squatting.
A “trademark” is described in Section 2(zb) of the Act as “a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include shape of goods, their packaging and combination of colours” while a “mark is defined in Section 2(m) of the Trademarks Act as including “ a device, brand, heading, label, ticket, name, signature, word, letter, numeral, shape of goods, packaging or combination of colours or any combination thereof;” Further, a registered trademark is one which is registered after fulfilling the requirements in a region. The law says that it is not compulsory to register a trademark however, a registered trademark enjoys more protection especially under the special provisions for it while unregistered trademarks can only be protected under the common law.
For a trademark to be registered, there are certain requirements that may be unique to different countries. In India, one of the basic requirements of a trademark to be registered is that it should be able to distinguish one person’s goods or services from those of others. (Section 9 (1)(a))[4], meaning it must be distinct. Further, since trademark is a regional right, owners of trademarks need to register their rights in every nation where they want protection. However, in the era of global market and globalisation, it is only a matter of fact to copy a brand’s name and mark for one’s own company. “A typical scenario is for a squatter to register the trademark of a foreign brand and wait until the foreign brand owner enters the local market.”[5] Therefore, whenever a well-meaning company enters a new market, it frequently has to contest with trademark squatters and are often compelled to purchase the rights to its own trademark. In India as well as other developing countries, many companies are registering themselves under an existing foreign brands’ name and capitalising on the goodwill, brand-name and overall success of it. “The term is derived from “squatting” which is the act of occupying an abandoned or unoccupied space or building that the squatter does not own, rent or otherwise have permission to use.”[6] This is because more than often, the “squatters” have no intention to actually trade under the brand name. In fact, they only have a malafide intention to register it before the brand or company could enter the local market. The integrity of trademark law is seriously threatened by such exploitative strategies, which emphasises the necessity of court action to defend and preserve the rights of rightful trademark owners.
In China, a company named Proview had registered a trademark of “iPad” in 2000 for an identical class of products as Apple’s iPad and when Apple intended to register itself in the country, they had to pay a hefty sum to buy the rights over its own name. It must be noted that Apple existed previously in many countries before “iPad” was incorporated by Proview therefore, it can be easily perceived that the sole aim of the company was to squeeze out money from the giant in hopes of making a quick profit. There are similar cases of Starbucks and Hermès contended in China over trademark squatting and usually brands are bound to settle in fear of losing the market.
In India, a recent important case in this regard is Volans Uptown LLC vs. Mahendra Jeshabhai Bambhaniya[7]. Here, the trademark of the Plaintiff “Botanic Hearth” was registered in the US in 2017 and the Plaintiff had filed an application for registration in India and Canada in 2020. However, the Defendant filed an application for a trademark same and identical as the Plaintiff under the same class in 2022 in India which was then opposed by the Plaintiff. Here, the Plaintiff filed a lawsuit against the defendant, accusing it of squatting and trademark infringement of “Botanic Hearth” for commercial advantage. The court held that the “plaintiff is the exclusive owner and prior user of these marks” while the Defendant was a habitual infringer with over hundred trademarks squatting of popular foreign brands. Henceforth, a permanent injunction was obtained by the Delhi High Court against the defendant, preventing any unlawful use of the plaintiff’s trademark “Botanic Hearth.” Another case where trademark squatting was noted and injunction was obtained by the court in India was Whirlpool Co v. N R Dongre.[8]
A form of trademark squatting could be cybersquatting where people register identical domain names of existing trademarks in bad faith with the same aim as trademark squatting i.e. to earn a profit when the actual brand would be forced to buy such domain name from him. “By using the domain name, they have intentionally attempted to attract, for commercial gain, internet users to its web site or other on line location by creating a likelihood of confusion wit the complainant’s trade mark as to the source, sponsorship, affiliation, or endorsement of its web site or location or of a product or service on its web site or location.”[9] Sometimes squatting of domain names also has the intention to destroy the goodwill of the company which ultimately leads to bad competition.
Under Section 21[10] of the Trademarks Act, any person can oppose the registration of a trademark within a stipulated time period if they believe it is similar to their existing trademark or is being registered with malice intent in bad faith. Section 57[11] provides for the rectification or cancellation of a registered trademark that has been wrongfully registered and Section 47[12] allows the trademark to be taken down if it is not used. Under this cancellation can be sought if the mark is not being used by the squatter for a continuous period of 5 years after registration “and three months prior to the filing of the application for removal of trademark from the register.”[13] Further, even without a registered trademark, under common law, the original trademark owner can file a passing off action which is based on the reputation of the plaintiff’s trademark, protecting it from misrepresentation by the squatter, which could confuse consumers.
In addition to the above remedies, if a trademark squatting issue involves multiple jurisdictions, the rightful trademark owner can seek remedies under the Madrid Protocol, to which India has been a signatory since 2013. The Madrid Union allows a unified trademark registration process across different countries and assists in challenging squatting in multiple jurisdictions.
Conclusion
“While a registered trade mark is protected by the territorial laws of the country of its registration, it does not enjoy such protection in foreign jurisdictions in the absence of an independently registered mark in that foreign jurisdiction.”[14] This gives the chance to businessmen or infringers to “squat” over such a trademark when they do not have any legitimate interest in using the trademark for genuine business purposes but instead seek to either sell the trademark back to the rightful owner at a higher price when they apply to register. Often, they try to profit from the brand’s reputation or to prevent the legitimate owner from using it. This typically happens within the trademark registration system. It is concerning to note that the rise of trademark squatting is at its peak. With the current trend of having everything at our fingertips, it is hard to prevent the squatters from registering marks in bad faith or cybersquatting. Nevertheless, there are international unions which allow for registration of a trademark in multiple countries at once which should be opted by brands at the age of the global village. Even though many times, well-known brands are forced to reach a settlement with the infringer to close the case in countries like China. Therefore, there should be a thorough examination before the registration of any trademark so that companies with malicious intent can stop taking advantage of reputed and established but unregistered brands. However, a legitimate trademark owner still has the ability to defend their rights from trademark squatters. Further, the Indian Judiciary has upheld the rights of the legitimate trademark owners over and over again in their many judgements as per the statutory provisions.
Author: Antabikhya Gogoi , in case of any queries please contact/write back to us at support@ipandlegalfilings.com or IP & Legal Filing
References
[1]Shakespeare, W. (n.d.). Romeo and Juliet (p. 40). WilliamShakespeare.net. Retrieved from https://www.williamshakespeare.net/ebook-romeo-and-juliet.jsp
[2]Kahandawaarachchi, T. (2007). A study of Indian and US Trademark Law relating to the effect of ‘Non-Use’of a trademark.
[3]Sangsuvan, Kitsuron. (2013). Trademark squatting. Wisconsin International Law Journal, 31(2), 252-295.
[4] 9. Absolute grounds for refusal of registration.—(1)The trade marks—
(a) which are devoid of any distinctive character, that is to say, not capable of distinguishing the goods or services of one person from those of another person;
[5]Fink, C., Helmers, C., & Ponce, C. (2014). *Trademark squatters: Evidence from Chile*. World Intellectual Property Organization. https://books.google.co.in/books?id=LiyjDwAAQBAJ
[6]Jain, S. (2015). *Cyber squatting: Concept, types and legal regimes in India & USA*. SSRN. https://doi.org/10.2139/ssrn.2786474
[7] Volans Uptown LLC vs. Mahendra Jeshabhai Bambhaniya, 2024:DHC:661, MANU/DE/0589/2024
[8] Whirlpool Co v. N R Dongre [(1996) 5 SCC 714]
[9] Acqua Minerals Limited vs Mr. Pramod Borse & Anr, AIR2001DELHI463
[10] 21. Opposition to registration.—[(1) Any person may, within four months from the date of the advertisement or re-advertisement of an application for registration, give notice in writing in the prescribed manner and on payment of such fee as may be prescribed, to the Registrar, of opposition to the registration.Subs. by Act 40 of 2010, s. 3, for sub-section (1) (w.e.f. 8-7-2013)]
(2) The Registrar shall serve a copy of the notice on the applicant for registration and, within two months from the receipt by the applicant of such copy of the notice of opposition, the applicant shall send to the Registrar in the prescribed manner a counter-statement of the grounds on which he relies for his application, and if he does not do so he shall be deemed to have abandoned his application.
(3) If the applicant sends such counter-statement, the Registrar shall serve a copy thereof on the person giving notice of opposition.
(4) Any evidence upon which the opponent and the applicant may rely shall be submitted in the prescribed manner and within the prescribed time to the Registrar, and the Registrar shall give an opportunity to them to be heard, if they so desire.
(5) The Registrar shall, after hearing the parties, if so required, and considering the evidence, decide whether and subject to what conditions or limitations, if any, the registration is to be permitted, and may take into account a ground of objection whether relied upon by the opponent or not.
(6) Where a person giving notice of opposition or an applicant sending a counter-statement after receipt of a copy of such notice neither resides nor carries on business in India, the Registrar may require him to give security for the costs of proceedings before him, and in default of such security being duly given, may treat the opposition or application, as the case may be, as abandoned.
(7) The Registrar may, on request, permit correction of any error in, or any amendment of, a notice of opposition or a counter-statement on such terms as he thinks just.
[11] 57. Power to cancel or vary registration and to rectify the register.—(1)On application made in the prescribed manner to the Appellate Board or to the Registrar by any person aggrieved, the tribunal may make such order as it may think fit for cancelling or varying the registration of a trade mark on the ground of any contravention, or failure to observe a condition entered on the register in relation thereto.
(2) Any person aggrieved by the absence or omission from the register of any entry, or by any entry made in the register without sufficient cause, or by any entry wrongly remaining on the register, or by any error or defect in any entry in the register, may apply in the prescribed manner to the Appellate Board or to the Registrar, and the tribunal may make such order for making, expunging or varying the entry as it may think fit.
(3) The tribunal may in any proceeding under this section decide any question that may be necessary or expedient to decide in connection with the rectification of the register.
(4) The tribunal, of its own motion, may, after giving notice in the prescribed manner to the parties concerned and after giving them an opportunity of being heard, make any order referred to in sub-section (1) or sub-section (2).
(5) Any order of the Appellate Board rectifying the register shall direct that notice of the rectification shall be served upon the Registrar in the prescribed manner who shall upon receipt of such notice rectify the register accordingly.
[12] 47. Removal from register and imposition of limitations on ground of non-use.—(1) A registered trade mark may be taken off the register in respect of the goods or services in respect of which it is registered on application made in the prescribed manner to the Registrar or the [High Court] by any person aggrieved on the ground either— (a) that the trade mark was registered without any bona fide intention on the part of the applicant for registration that it should be used in relation to those goods or services by him or, in a case to which the provisions of section 46 apply, by the company concerned or the registered user, as the case may be, and that there has, in fact, been no bona fide use of the trade mark in relation to those goods or services by any proprietor thereof for the time being up to a date three months before the date of the application; or (b) that up to a date three months before the date of the application, a continuous period of five years from the date on which the trade mark is actually entered in the register or longer had elapsed during which the trade mark was registered and during which there was no bona fide use thereof in relation to those goods or services by any proprietor thereof for the time being: Provided that except where the applicant has been permitted under section 12 to register an identical or nearly resembling trade mark in respect of the goods or services in question, or where the 1 [Registrar or the High Court, as the case may be] is of opinion that he might properly be permitted so to register such a trade mark, the 1 [Registrar or the High Court, as the case may be] may refuse an application under clause (a) or clause (b) in relation to any goods or services, if it is shown that there has been, before the relevant date or during the relevant period, as the case may be, bona fide use of the trade mark by any proprietor thereof for the time being in relation to— (i) goods or services of the same description; or (ii) goods or services associated with those goods or services of that description being goods or services, as the case may be, in respect of which the trade mark is registered.
(2) Where in relation to any goods or services in respect of which a trade mark is registered— (a) the circumstances referred to in clause (b) of sub-section (1) are shown to exist so far as regards non-use of the trade mark in relation to goods to be sold, or otherwise traded in a particular place in India (otherwise than for export from India), or in relation to goods to be exported to a particular market outside India; or in relation to services for use or available for acceptance in a particular place in India or for use in a particular market outside India; and (b) a person has been permitted under section 12 to register an identical or nearly resembling trade mark in respect of those goods, under a registration extending to use in relation to goods to be so sold, or otherwise traded in, or in relation to goods to be so exported, or in relation to services for use or available for acceptance in that place or for use in that country, or the tribunal is of opinion that he might properly be permitted so to register such a trade mark, on application by that person in the prescribed manner to the [High Court] or to the Registrar, the tribunal may impose on the registration of the first-mentioned trade mark such limitations as it thinks proper for securing that that registration shall cease to extend to such use.
(3) An applicant shall not be entitled to rely for the purpose of clause (b) of sub-section (1) or for the purposes of sub-section (2) on any non-use of a trade mark which is shown to have been due to special circumstances in the trade, which includes restrictions on the use of the trade mark in India imposed by any law or regulation and not to any intention to abandon or not to use the trade mark in relation to the goods or services to which the application relates.
[13] Santhalia, R. (2021, November 10). Trademark squatting – A legal overview of the recent judgments. Criminal Law Blog by Chambers of R. Santhalia. https://criminallawblog.in/trademark-squatting-a-legal-overview-of-the-recent-judgments/
[14] Bandita. (2022-2023). Cybersquatting: Infringement of IP on Fingertips. Indian Journal of Law and Legal Research, 4, 1-8.
