A trade mark is defined in the Trademark Act, 1999 under section 2(1)(i)(viii)(z). It states that a trade mark means a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others. That mark/sign can be words, letters, numerals, coloured marks, 3D signs, olfactory marks, etc. Registration of a trade mark is the most important asset for any business because:
- The owner of the mark uses the trade mark to communicate with consumers through the quality of the goods bearing the mark and through advertising also.
- If the trade mark is not protected then competitors could use the same sign for the same or similar products or signs so similar that the consumer may get confused. A trade mark protects the owner from such unfair trade practices.
- It protects the consumers from confusion and deception by recognizing the source of goods as distinguished from other similar products.
- It prevents the consumers from purchasing low-quality goods.
- It maintains the quality of the product and a good reputation among customers. It helps the trademark owner by preventing others from illegally using the trademark and hampering its customers.
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Trademark troll
A troll in common parlance means a person who intentionally posts offensive, inflammatory or provocative content on the internet with the aim of upsetting someone and disrupting online communities. But, in the trade mark world, the word troll holds a different meaning. A trade mark troll is one who seeks to register a mark or use a mark with the mala fide intention of extorting monetary benefits from the rightful owner of the same or similar mark. A trade mark troll earns money by initiating infringement lawsuits or pursuing negotiations for acquisitions and/or licenses against unsuspecting companies that have adopted the same or similar marks. IP is the most important asset that any business has. Trademarks are especially very important as they represent the identity of a brand. Trademark trolls attempt to attack this asset, and consequently, the rightful owner of the mark suffers.
First to use and first to file principles
The countries either follow first to use or first to file principle to determine who will become the owner of the trade mark in case of a conflict between two entities. Many countries such as China, Russia, Japan, etc follow the first to file principle, in which the rights to a trade mark belong to the first entity to file an application for that trade mark, even if it was used by another entity earlier. There are other countries as well such as the United States, Canada, India, etc that follow the first to use principle, in which the owner of the trade mark is the person who is the first to use the trade mark in the marketplace, irrespective of whether the trade mark has been registered or not.
Types of Trademark trolls
There are two types of trade mark trolls;
1. Opportunistic registrants
These types of trolls are common in first-to-file countries. They attempt to register well-known or recently introduced trade mark which are used or registered in other countries by some entity. They do this strategically knowing that later these entities will come to their (troll’s) country as well to register their mark and because the troll has already registered the mark in his country, he may be given the rights w.r.t to that trade mark in first-to-file countries. So, this will leave the true owner of the trade mark with no other option but to file a suit for infringement or pursue negotiations for acquisitions or licenses.
A famous case of this type of troll is a Chinese case. In this case, a Chinese businessman Zhan Baosheng had registered the trademark of TESLA in China across various classes, including cars. When Tesla motors got to know about it, they made multiple offers to purchase the mark but Mr Zhan demanded a huge amount of US $32 million. Tesla refused to pay this much amount. Both the parties instituted several suits against each other. Ultimately, they entered into a settlement in August 2014, whereby Mr Zhan would give up his registered rights while Tesla would drop its compensation demands in return.
2. Suspect trade mark users
These types of trolls are common in first-to-use countries. They adopt a trade mark (which may also include filing applications for trade mark registration) without any reason and claim to have used that mark. Their only aim is to prevent the bona fide owners of the trade mark from using the mark and threaten the true owners by calling them infringers and bringing infringement actions against the true owners.
Instances of suspect trade mark trolls include the case of H&M Hennes & Mauritz AB and Ors. v. HM Megabrands Pvt. Ltd and Ors., (CS (COMM) No.707/2016). In 2014, H&M, a Swedish fashion giant came across various products such as clothing, footwear, etc. bearing the mark of HM being sold by an Indian company – HM Megabrands Pvt. Ltd. Also, HMMPL had filed various applications for trade mark registration of HM Megabrands and an HM label mark. In the picture below, one can clearly see the huge similarity between the two marks. The right one is of HM Megabrands and the left one is of H&M. the letters H and M are the most prominent feature of both the marks. Both of these marks have used the red and white combination.
Firstly, H&M sent a cease and desist notice to HMMPL, and HMMPL refused to comply with H&M demands. HMMPL also filed a suit before the high court of Bombay against H&M for groundless threats. It also filed a rectification action at the Trade Marks Registry against H&M’s registered trademark “H&M in the stylized text”. This made H&M file a lawsuit against HMMPL for trade mark infringement before the high court of Delhi in 2016. H&M alleged that HMMPL unlawfully uses its mark and operates with similar products in the market. The main contention of H&M was that HMMPL was launched in 2011 and H&M has been producing and exporting clothing in India since 1972. According to the Indian trade mark law, exporting products in India under the trade mark will be considered as prior usage of the mark. No doubt, H&M made a physical presence in the Indian market in 2015, but H&M had entered the world market at least two decades before. The defence of HMMPL was that HM in its mark stands for Hasim Merchant, the owner of the company and H&M cannot claim monopoly over the red and white colour. The Delhi high court condemned the frivolous arguments of HMMPL and said that H&M was already a well-known global brand when HMMPL started its venture in India. The court also said that using the word megabrand will not help in differentiating the two brands, but it will reinforce the confusion. An average Indian consumer will get confused between the two marks and associate the products of HM megabrands with H&M. Thus, the court issued an injunction order to restrain HMMPL from using the mark.
Indian Law and intent to use applications
In India, the ‘first to use’ principle is followed. But, Indian law also allows proprietors to file the application for registration of the trade mark which is proposed to be used. In this case, the party which applies for the trademark earlier will get the trademark protection, though neither is required to prove prior usage. Such registration is liable to be cancelled only when it is challenged on grounds of non-usage after a 5 years period from the date it is registered. Trolls can take advantage of this provision. No doubt such registrations can be cancelled on the ground of non-use; the process of cancelling frivolous registrations can take a lot of time. An infringement suit can also be brought against the troll, but it will also take time. For example, H&M got the injunction orders against the HMMPL from the court, nearly two years later it filed a suit against HMMPL. Trolls take undue advantage of this time and unfairly restrain and exploit bonafide proprietors who want to use and register their trademarks. One of the limitations of the Indian trade mark law is also that the cancellation proceedings can be initiated on the ground of ‘no-use’, only after a 5-year time period of blanket protection period expires. The issue is that 5 years is half the lifespan of a registered trademark. Also, the litigation following the cancellation application usually also takes a lot of time. So, that time period of 5 years shall be reduced to keep a check on trade mark trolls and certainly, a robust trademark regime will fare well for India.
Steps which can be taken by the companies to avoid trademark trolls
Considering the importance of a trade mark for a country, the trade mark owners shall take measures to mitigate the risk of being trolled. The important measures are –
1. Early filing – the companies should try to get the trade mark registration as early as possible not only in the countries where one is currently doing business but also in the countries where they intend to expand in future.
2. Be Vigilant – the companies must regularly conduct searches to look for trolls and fight them at an early stage.
3. File for transliterations – the companies must file transliterations of the trademark in the local language of the country.
4. Be careful in troll-friendly countries – the companies must keep a track of the use of their own trade mark in “troll-friendly countries” (e.g. file and save invoices, commercial documents, correspondence with distributors, etc.). In these countries, one must always display in a proper way the mark as registered on products and commercial papers.
5. The companies must keep themselves updated with the local trends as in the judgments of the courts in the country, the laws of the country, etc to prevent undue usage of the trade mark.
Conclusion
Presently, trade mark trolls are not so common in India. But, the entities who are intending to expand their business in the Indian market or who are intending to register their trade mark in India shall take this issue seriously. They should secure their rights by filing the application for trade mark registration as early as possible and by quick intervention whenever they find any suspicious activity or misuse of their trade mark.
References
1. <https://www.inta.org/perspectives/mitigating-the-risk-of-trademark-trolls-in-india/>
2. <https://www.mondaq.com/india/trademark/808562/the-menace-of-trademark-trolls>
3. <https://spicyip.com/2020/11/trademark-trolls-perspectives-pitfalls-and-the-way-forward.html>
4. <http://ijrar.com/upload_issue/ijrar_issue_20543152.pdf>
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