India: What’s In A Brand Name? Ask Companies!

Last Updated: 11 August 2014
Article by PSA

Introduction

Brand name establishes a correlation between the products of the company and the minds of the consumer. Courts have generally used the brand in relation to a trade mark. The term "trade mark" is inclusive of the term "brand" but not all popular brands may be a registered trade mark. Brand name acquires distinctiveness and a secondary meaning in the business and trade circles and people come to associate the brand name with a certain standard of goods and services. Any attempt by another person to use that name in business and trade circles is likely to and in probability will create an impression of a connection with the same group of companies. This article gives an overview of the manner in which courts have recognized protection of popular brand, legal enforcement in the event of abuse of brand and the best practices for legal enforcement of brand name.

1.0 Recognition of Brand name by Indian Courts

Though the Trade Mark Act, 1999 ("TMA") does not define "brand name", however, the word "mark" has been defined1 to include the word "brand" within its fold. This word has been defined in Chapter 9 of the Central Excise Tariff Act, 1985 as "a brand name or trade name, whether registered or not, that is to say a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating, or so as to indicate a connection in the course of trade between such specified goods and some person using such name or mark with or without any indication of the identity of that person".

The courts in India have recognized the concept of "brand names" and have provided protection for it whenever there has been an infringement. In the case of NR Dongre Vs. Whirlpool Corp2even though the product of the company was totally absent from the Indian market, the Supreme Court ("SC") on the ground that its volume of advertising was sufficient enough to have reached the relevant section of the public, provided protection to the trade mark. Thereby the SC recognized the trans-border reputation of the brand "Whirlpool". SC held in Montari Overseas Ltd. v. Montari Industries Ltd.3 that "while adopting a trade name, a person is required to act honestly and bona fidely and not with a view to cash upon the goodwill and reputation of another". It applies well to the situation where the trade mark becomes synonymous with a corporate name. Eventually any product with the same name in the market is likely to be associated with the company irrespective of the kind of product. However, brand name which is a registered trade mark cannot ipso facto confer exclusivity to use the name for all goods and services. Primarily, TMA gives protection for trade marks in the class of goods and services for which registration is granted. TMA, however, recognizes the concept of well-known trade mark4 and protection on the ground of dilution5 for well-known trade mark.

In the matter of Kamdhenu Ispat Limited Vs Kamdhanu Pickles and Spices India Private Ltd.6, the plaintiff was a well known trade mark associated with steel and allied goods while defendants started selling pickles with the same trade name. The courts held that there was no linkage between the defendant's marks and plaintiff's goods so as to cause detriment to the plaintiff and undue advantage to the defendant and the case was dismissed. It may be noted that the courts have refused to grant protection merely on the ground of reputation7. Four distinct elements have to be proved in order to claim protection by way of dilution i.e. (a) the impugned mark is identical and similar to the trade name; (b) the trade name has reputation in India; (c) the use of impugned mark is without due cause; and (d) the use of impugned mark amounts to taking advantage of, or is detriment to the distinctive character or reputation of the registered trade mark.

2.0 Legal action in the event of abuse of law

i. Under TMA

Section 29 of the TMA contemplates two situations for action of infringement of registered trade mark to be initiated by its proprietor. Firstly, when the infringing trade mark is used in relation to similar goods and services and which is likely to cause confusion with the registered trade mark to the public. Use of trade mark in similar class of goods and services is completely prohibited. Secondly, in case of well-known trade marks the infringement action can be filed for use of infringing mark in relation to dissimilar goods also. In the second instance, the trade mark owner should be able to prove the reputation in India along with the proof that the mark has been used without due cause. In any event, suit for passing off shall prevail under section 27(2) where the company has to prove that the infringing mark was intended to pass off goods under the pretence of the brand name. Criminal action can be taken under sections 102 and 103, in the event of falsification or false application of trade mark on goods/packages containing goods bearing the registered trade mark for packaging, filling, wrapping of spurious goods with imprisonment up to 3 years and fine up to Rs 1 lakh.

ii. Under Copyright Act

Where the brand name has been infringed for products protected under the Copyright Act, 1957, the company can bring a civil suit for infringement under section 55 for injunction, damages in order to prohibit the person from continuing the act of infringement of copyright. Additionally, criminal action can be taken under sections 63 & 64 that empower police to seize all counterfeit copies and also provide for imprisonment up to 3 years and fine.

iii. Under Patents Act

Where the company has been conferred rights as a patentee under Patents Act, 1970 with exclusive rights to make, distribute or sell the invention in India. Under its section 108, the court may grant suit for injunction and at the option of the plaintiff, either damages or accounts of profit. The court may also order that the infringing goods be seized, forfeited or destroyed as the court deems fit under any circumstances without payment of any compensation.

iv. IP Enforcement Rules

Finally, the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 strengthens the security at the Indian border to prevent entry of counterfeit goods into the country. Section 110 of the Customs Act, 1962 ("CA") empowers Customs to seize any goods that are liable for confiscation under Section 111 and 113 of CA, including prohibited goods, that is, goods which amount to infringement of the Indian Copyright Act, Indian Trade mark Act, Indian Penal Code, etc. Thus, if one attempts to export or import goods that are prohibited under any law, it can be confiscated by Customs in exercise of its power under the CA. In CISACO Technologies v. Shrikanth8, the Delhi High Court, held that the statutory authorities should prohibit import of such products which would result or abet in the violation of the proprietary interest of a person in a trademark/trade name and issued directions to the Collector of Customs to notify all ports not to permit any consignment other than that of the plaintiff to be imported.

As an immediate relief, where the defaulters have been identified, the brand owner can claim temporary injunction under order 39 rule 1 of Code of Civil Procedure, 1908. The remedy for counterfeiting lies in criminal action under sections 478 to 488 of Indian Penal Code, 1860 read along with section 156 of Code of Criminal Procedure, 1973 wherein the company can make a complain before the magistrate for permission to search and seizure of goods by the police in order to recover the counterfeit goods.

As a word of caution, under the Legal Metrology Act, 2009 and its corresponding rule, every package should bear the name, address, telephone number, e-mail address of the person in company to be contacted for consumer complaints. Declaration of this nature shall help in keeping track of problems faced by the customers and also complaints in the event of counterfeit products prevalent in the market. Advertisement on the website or any other medium to educate the customers of the manner to distinguish the fake and genuine products will also help.

Conclusion

It is pertinent to note that irrespective of the legal remedies available, vigilance on the part of the company can mitigate the loss. The company should register IP under the respective IP statutes. It will be easier to prove infringement where the IP is registered. Where IP has not been registered the suit has to be initiated in the court on account of relief for protection of brand name. The court while deciding on the matter pertaining to brand name may look into numerous factors such as9 (a) reputation or goodwill, (b) the amount spent on advertisement derived from the annual returns, (c) impressive figures of growth of business over the years, etc. Hence, the company should maintain complete records to prove the brand name existence in the event of litigation. There should be a constant update of the customer list (wherever possible) such that in the event of infringement, the list may be produced in the court as proof of popular brand. To avoid any form of counterfeit goods available, the company must take all steps to ensure that the package is tamper proof.

To conclude, the brand owner should take all protective steps to secure its brand as brand is the image that sells the products of the company. With the growing online media, the online reputation is also crucial and company should not only register its domain name or brand name as domain name but also protect it from hackers and use it constructively in the networking sites to further promote its interest. Protection of brand name ensures protection of reputation, recognition, reliability and customer loyalty for the company, which essentially translates into larger sales and revenue growth.

Footnotes

1 Please see section 2(j) of TMA

2 (1996) PTC (16)583

3 1996 PTC (16)

4 Under section 1(1)(zg) of the TMA as a mark which has become synonym to the goods and services and when used in relation to other goods or services would be likely to be taken as indicating a connection to the original mark

5 Dilution is a specie of infringement of mark, by use in respect of dissimilar goods and services recognized under section 29(4) of TMA where the use of trade mark is found to be detrimental to the distinctive character or reputation of an earlier well-known trade mark

6 173(2010)DLT540

7 Raymond Limited Vs. Raymond Pharmaceuticals 2010(112)BomLR2945

8 2005(31)PTC53

9 Pizza Hut International LLC and Pizza Hut Inc. Vs Pizza Hut India Pvt. Ltd. 2003(26)PTC208(Bom)

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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