Trademarks and Market Distinctiveness: Analyzing the Antitrust Implications of Branding Strategies
Trademark and branding roles in Business Strategy
Due to fierce competition in India nowadays, having a brand is essential. Branding also refers to a company’s brand and its products’ identification, standards, and warranties. Businesses like Reliance and Tata acquire this trust, which in turn cultivates client loyalty and aids in the company’s growth. Business-savvy customers stick with their preferred brands, which boosts sales and serves as a publicity stunt. Opportunities exist to establish premium prices, increasing a company’s profitability and position in the market. The Trade Marks Act of 1999 of India governs the functioning of TM, which is essential to brand protection to safeguard many facets of brands. When a trademark is used to produce high-quality services, provide consistent and positive customer service, advertise effectively, and provide high-quality goods and services, it becomes a brand. A trademark primarily serves as a legal indication. In any event, when the company works to make the trademark aspects visible and fulfills customer expectations, customers create a connection between the trademark and specific qualities, traits, and experiences. This association aids in the trademark’s development into a reputable and acknowledged brand in the marketplace.[1]
Brand extension and the challenges
Companies can extend their brands into new product categories or markets by employing unusual trademarks, which capitalize on the power of their existing brand value. For example, to capitalize on the relationship between their brand and the distinctive aroma, a company with a registered scent trademark may extend into related products such as candles, home fragrances, and personal hygiene items. The smell trademark for Hasbro Play-Doh is registered. Even though it is mostly known as a modeling compound for kids, this opens up possibilities for home scents, personal care products, and even toys that are based on that beloved childhood scent. In terms of branding and marketing tactics, unconventional trademarks have a lot to offer, but companies must get beyond a few challenges to fully benefit from these non-traditional assets. For non-traditional trademarks, obtaining legal protection can be a challenging process. In contrast to traditional trademarks, which are unique by nature, non-traditional trademarks may require substantial evidence of acquired distinctiveness or secondary meaning to be registered. This procedure can take a long time and may involve significant branding and marketing expenses to achieve the necessary distinctiveness. Furthermore, it could be harder to protect and enforce unconventional trademarks than ordinary ones. Additionally, companies must carefully consider the cultural and geographic effects of their unorthodox trademark selections. Elements like as colors, sounds, or scents may be given different meanings or implications by different cultures and geographical regions, which could impact consumer perception and brand approval.[2] Section 4 of the Competition act, 2002 states that no business or organization may misuse its position of power when a business or organization, either directly or indirectly, enforces unfair or discriminating practices, it is considered an abuse of power conditions associated with the acquisition or sale of products or services; or the price of goods or services, especially predatory prices. Limits or restricts the production of goods, the provision of services, or the market for them; or advances technical or scientific knowledge about goods or services to the detriment of consumers; or engages in practices that in any way deny access to the market; subjects the completion of contracts to the acceptance by other parties of supplementary obligations that are unrelated to the subject matter of the contracts by nature or commercial usage; or exploits its dominant position in one relevant market to enter or defend another relevant market.[3] The promotion of brands has to be fair and not be an Abuse of dominant power.
Imposition of trademark for the market campaigns
Trademarks are essential tools for increasing a startup’s exposure and commercial power, going beyond their function as merely legal safeguards. By representing the brand’s dedication and guiding ideals, they create a bond between the business and its customers. To effectively leverage the potential of trademarks, entrepreneurs need to incorporate them into all aspects of their corporate branding and marketing campaigns. To strengthen the brand’s image, this includes using the trademark consistently in all communications, product packaging, marketing collateral, and digital footprints. Brand equity is built by such steadfast commitment to branding and trademark use. Customers’ loyalty and willingness to pay extra for products or services under the brand’s umbrella are positively impacted as this intangible asset increases. Startups should make trademark visibility a top priority in all important areas where potential clients may congregate. Under the Competition Act, of 2002, section 3 provides an anti-agreement that “no enterprise or association of enterprises or person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition, or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India.”[4] In the market, trademarks can be used both offensively and defensively. On the defensive side, they can be used to protect a brand’s unique niche and reputation by pursuing legal action against any unlawful use, and on the offensive side, they can be used to fend off competitors through distinctive brand positioning. Additionally, a strong trademark can open doors for business growth through strategic alliances, franchising, licensing, and even attracting investors who are drawn to the strong value of the protected mark. Essentially, the smart use of trademarks is crucial for opening doors for the startup’s growth as well as for solidifying a market position. This strategic application is the result of the thorough trademark strategy discussed in this discourse, which includes understanding its significance and handling post-registration responsibilities. When trademark enforcement is done properly, it serves as a deterrent to possible infringers as well as strengthening a startup’s standing in the market. It demonstrates how determined the business is to protect its brand assets. Additionally, it protects the reputation of the brand, enabling the startup to keep the exclusive benefits of its trademark all of which are critical for maintaining a competitive advantage.[5]
Doctrine of Acquired Distinctiveness
Acquired destructiveness is a crucial tool for balancing the demands of the customer with the interests of the trademark owner. By acknowledging the transformational potential of consumption and time. This theory encourages innovation in the business world. It gives trademark owners the ability to spend money on branding and marketing initiatives to create a distinctive connection between their products and services and the relevant mark. Customers also profit from the guarantee of constant quality and source of identification that a distinguishing brand offers. Additionally, the theory is essential for encouraging fair competition. Since descriptive and generic terms are fundamentally part of the public domain, giving them exclusive rights would unnecessarily limit competition. However, the legal system guarantees that only those marks that truly serve as source identifiers and have developed distinctive character over time are eligible to trademark protection by requiring acquired distinctiveness to be proven.[6] “Section 9 of the trademark, 1999 provides that devoid of any distinctive character, that is, ones that cannot be used to differentiate one person’s goods or services from another, and which are solely composed of marks or indications that have become customary in the current language or the legitimate and established practices of the trade.”[7]
Non-used Trademark issues
The fact that not all registered trademarks are truly used on the market is a problem that should be considered while analyzing trademark data. Several tactics might be linked to a trademark deposit. On the one hand, it can be utilized to successfully signal and sell the things that are available on the market. However, a lot of businesses file trademarks that they don’t utilize. This can relate to several different tactics. In certain situations, businesses may choose to consider multiple possibilities before selecting a new brand, but they will only select one in the end. Furthermore, certain businesses might just file trademarks for strategic reasons not to use them. They might do this to prevent rivals from using certain names or signs; different descriptive names are sometimes lodged to restrict the options available to rivals or to obtain licensing income. They might also do this to avoid damaging a brand’s reputation (for example, Red Bull has deposited a large number of trademarks that incorporate the word “bull”). As a result, certain trademarks are never used in the marketplace. However, those trademarks that are not in use are not inconsequential. For instance, they are prone to reflecting the importance that businesses place on particular trademarks, which they genuinely wish to keep safe from being defamed. Additional information regarding the value of the other trademarks can then be obtained from the data of non-used trademarks.
Conclusion
Under the purview of competition law, the brand must be promoted, and only pertinent or trademark symbols may be utilized. The trademark is crucial for building customer loyalty. It aids in the company’s identity search and demonstrates healthy market rivalry, both of which give customers a useful identifier. Companies must carefully balance the use of trademarks to create distinctive, profitable businesses with activities that could harm consumers and reduce competition.
Author: Amritanshu, in case of any queries please contact/write back to us at support@ipandlegalfilings.com or IP & Legal Filing
[1] https://www.mondaq.com/india/trademark/1544664/building-a-strong-brand-identity-the-role-of-trademarks-in-business-strategy
[2] https://www.theippress.com/2024/12/01/how-do-unconventional-trademarks-impact-branding-and-marketing-strategies/
[3] Competition Act, 2002 S.4
[4] Competition Act, 2002 S.3(1)
[5] https://trademarkfactory.com/the-role-of-trademarks-in-building-a-competitive-advantage.
[6] https://aklegal.in/acquired-distinctiveness-doctrine/
[7] Trademark act 1999, S.9(a) and (c).
