The ownership of a trademark as a general rule vests in the person, who puts the mark on the product. Thus where a manufacturer himself is putting a mark on the product, the presumption of proprietorship of the trademark is in his favour. The distributor /importer of such product cannot claim ownership or goodwill in the said trademark as the use of the mark by the distributor/importer is deemed to be a use by the manufacturer who has put the mark on his product. Mere use of the expression "imported by / marketed by" on the advertisements carried out by the importer/distributor cannot displace the presumption of ownership and goodwill of the brand vesting in the manufacturer of the product. A statement to the customer that the product being sold is merely an imported product without anything connecting the brand with the importer is an indication that the product as well as the affixed trademark belongs to the foreign manufacturer.
Thus the relevant consideration in this regard would be to "who invented the trademark", "who first affixed it on the product", "who maintains the quality of the product" and "with whom the relevant public identifies the goods", "to whom it looks for warranty and redressal of complaints" and "who possesses the goodwill associated with the product".
The presumption of ownership of a trademark vesting in the manufacturer may, however, be rebutted by the importer/distributor when he orders the manufacture of the goods or controls the production of the goods or affixes the trademark on the goods for the first time before selling the product, or uses his own packaging/label so as to convey a connection between him and the brand. What is essential in this regard is that the customer should come to identify the product and the trademark affixed on it with the distributor/importer so much so that a customer on seeing the product should mentally associate it being that of a particular distributor/importer. But while considering the claim of a distributor/importer, there is a need to evaluate the acquisition of domestic goodwill in the trademark by a foreign manufacturer in addition to the goodwill already enjoyed by it on foreign shores. If, however, the importer/distributor is able to establish that the customer has come to identify the trademark with it rather than with the manufacturer, the distributor/importer may be able to claim the ownership in the trademark in the domestic market. The most important test in this regard is as to whether customer identifies the trademark with the manufacturer or with the importer/distributor, the presumption of law being that the ownership of the trademark vests in the manufacturer, who puts the mark on the product, and the onus to displace this legal presumption, being on the importer/distributor. This test was recently applied to a trademark ownership dispute between a Chinese company, Double Coin Holdings Ltd dealing in tyres and an importer Trans Tyres (India) Pvt Ltd importing tyres from the Chinese company. The dispute was on who owns the intellectual property rights in the mark "Double Coin" in India?
The Court after evaluating the facts and circumstances of the case though it fit to discuss that awareness of public on actual identity of the source of good is not necessary. The material point is recollection of the customer in connecting a product to a particular source on seeing that product and, therefore, the relevant consideration would be as to what that source is? Whether is it of the manufacturer or the importer/distributor?
If the product has no reference to the foreign manufacturer and the importer / distributor is selling the product in his own packaging as well as managing the advertising and promotion himself alone, then a customer on seeing the product again later in all likelihood may identify the importer / distributor as the source of the goods. If, however, a manufacturer is responsible for the packaging and affixing the brand name on the product without any added packaging done at the end of the importer / distributor so as to connect the product with him, it would be difficult to say that the customer is likely to identify the importer/distributor as the source of the good even if the advertisement and promotional expenditure is incurred by the distributor/importer alone. Hence, whether, while selling the product, the foreign origin of the product is concealed, becomes an important factor to be taken into consideration in this regard.
Goodwill in a brand does not come to be created only on account of its promotion and advertising. The primary reason for a trademark acquiring goodwill in the market is the quality of the product, which is sold under that name. If a product is of inferior quality, no amount of advertisement and promotion can build the brand under which the product is sold. The brand building and promotion supplements the efforts of the manufacturer, who is primarily responsible for maintaining quality of the product.
The Court following the dictum that in disputes between the manufacturer and the distributor/importer with respect to proprietorship of a trademark, the decision would depend on peculiar facts of each case, the guiding factor being that as a general rule, the brand belongs to the manufacturer and not to the importer/distributor, and after going through the materials on record - held that in the facts and circumstances of this case the customer, on coming across a tyre / tube being sold under the name Double Coin, is likely to connect the product to the Chinese manufacturer. If Trans Tyres is allowed to get tyres / tubes manufactured from another source and sell them under the brand name "Double Coin", it is likely to confuse the customer and may also deceive him because he would buy the product believing that he was purchasing a Chinese tyre of a superior quality manufactured by Double Coin Holdings Ltd. The Court felt that it is necessary that only those products be sold under the name Double Coin, which is manufactured by Double Coin Holdings Ltd., China.
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.