India: Standards Applicable To Dilution Cases Different From Those Of Trademark Infringement In Respect To Similar Goods

Last Updated: 9 June 2011
Article by Sonam Lhamu Bhutia

In the case of Shell Brands International AG & Anr. V. Gagan Chanana & Others, the Delhi High Court, while disposing two applications, one by Shell Brands International AG & Anr (Plaintiffs) seeking temporary injunction and the second by Gagan Chanana (Defendants) for stay of the proceedings under Section 124 of the Trademarks Act, 1999, discussed the differences between Trademark Dilution and Trademark Infringement.

This particular case involved Shell Brands International, the owners of the "SHELL" brand and several trademarks in conjunction with, used in connection with a host of business activities, the best known among which is its retail service stations , oil and gas production and exploration on land and at seas. In their written submissions, Shell Brands pointed out that they produce approximately 3% of the world's oil and about 3.5% of the world's gas, further in a survey of public brand awareness, the brand was recognized by 54% of general public and as such their brand is a well known brand in the world and has acquired distinctiveness over the years. They traced their presence in India to 1928.

It was alleged by Shell Brands that in 2007 they became aware that Gagan Chandana who was engaged in marketing auto cables and machinery under the style "M/s. Honesty Machinery Store", was marketing goods under the "SHELL" brand. Under such circumstances, they stated that an ad interim order was imperative as the Defendant was seeking to appropriate their well known mark and sell goods which may not be of the same good quality as the Plaintiff's products, thereby leading to injurious association. They further alleged that the Defendant cannot be permitted to dilute the well-known mark under the pretext of marketing dissimilar goods.

On the other hand, it was contended by the Defendant that the Plaintiff had deliberately concealed material facts from the Court, which would disentitle them from the equitable order of injunction.

The Court, while not disputing the fact that the Plaintiff's "SHELL" mark had acquired a distinctiveness stated that the question to be considered though was whether the Plaintiff's claim for interim injunction could be sustained. The Court opined that the charge against the Plaintiff for not mentioning in its suit averments that the Defendant was also a registered owner of the trademark and that they had applied for rectification of the registered mark "SHELL" in the Defendant's name, was very relevant and well founded.

The Court then stated that in the present case, where the Plaintiff claims that the Defendants use of the impugned mark would tarnish or tend to tarnish or dilute the distinctiveness of the mark, it becomes essential for the Court to reiterate the principles of Dilution. It was stated that although a claim to dilution is statutorily recognized by Section 29 (4), yet in view of the parliamentary prohibition, the standards applicable to such claims is different form those applicable in relation to trademark infringement in relation to similar goods, the Courts therefore have to adopt a different approach. The distinction between the aforementioned two were then discussed as follows:

  • No presumption of infringement arises in the case of Dilution as opposed to trademark infringement in relation to similar goods.
  • In the case of Dilution the trademark owner has to establish two elements besides others, i.e. the use by the rival mark would lower its reputation and the rival use is mala fide. Also, the degree of harm suffered or likely to be suffered has to be prima facie established.

The Court then dismissed the Plaintiff's claim for temporary injunction stating that the "SHELL" word is a common word capable of varied meanings. Moreover, the use by the Defendant was only of the word with no other embellishments as opposed to the use by the Plaintiff. Further, the use of the mark by the Plaintiff and the Defendant was for different products. The fact that the Plaintiff had abandoned the opposition to the Defendant's application for registration in 2004, meant that there was delay on their part to approach the Court thereby allowing the defendant to carry on with their activities.

With regard to the Defendant's claim for stay, the Court said that there is no doubt that under Section 124 (1) (b), where the Defendant raises the plea of being owner of a similar mark they should thus be protected under Section 30, the suit would have to be stayed. However, in the present case the suit was framed by the Plaintiff in such a manner so as to encompass the claim for infringement as well as passing off, although the heading of the suit is a claim for passing off. In such circumstances to Court opined that Section 124 would not be attracted.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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