Prior User versus Prior Registration Proprietor: The Indian Judiciary’s Stance on Protecting Businesses from Trademark Trolling

Introduction

The World Intellectual Property Rights Organization (WIPO) defines Trademarks as, “a sign capable of distinguishing the goods or services of one enterprise from those of other enterprises”. [i] This essentially means and encompasses, that a trademark can be any word, a combination of words, letters, numerals, drawings, symbols, 3D features, sounds, fragrances or colour shades et al[ii]. In today’s world, a trademark acts as a distinct identity for a business and its reputation and goodwill, and hence, that makes its protection extremely essential for the growth of any venture.

With the globalization of trade, trademarks have also been opened up to a global audience. This increase in exposure has consequently led to a spike in instances of infringement[iii], wherein another entity tries to benefit from the goodwill of a well-reputed business’ trademark.[iv] In this scenario, arises the situation of “Trademark Trolling” or “Trademark Squatting”, wherein a trademark identical to another business’ mark, is registered by a local entity in some other (or the same) country, only to be let go of, after receiving payment in the form of a settlement by the aggrieved party.[v] In such cases, more often than not, the infringing party or “the troll” does not have any real intention to use that mark, and only gets it registered (before the other party does) just so as to make a profit out of the other party’s helplessness.[vi] One might wonder how it is possible for a third party to get a trademark registered that is already being used (but has not yet been registered) by another party? This is because different countries follow either of the two systems when it comes to registration of a trademark – first-to-use and first-to-file.[vii]

First-to-use and First-to-file w.r.t. Trademark Trolling

First-to-use and first-to-file refer to principles, followed in different countries, which determine whether trademark rights will arise on account of first commercial use, or on account of getting registration first. Most countries in the world such as China, Russia, Japan, Germany et al, follow the first-to-file principle[viii] and hence the parties which get a trademark registered first in such countries get the trademark protection. On the contrary, countries like the United States, Canada, Australia, and even India[ix], follow the first-to-use principle, and hence, the parties which start using the trademark first in commerce in such countries, get the trademark protection.

The difference in approach in such countries is mainly because of the distinction of the first-to-use principle having evolved from the common law[x] which is not practiced in all jurisdictions. Countries such as China stringently follow the first-to-file principle, and as a result, have been witness to a number of cases of trademark trolling (keeping aside the recent Uniqlo judgment).[xi] There are numerous cases wherein trademarks of famous businesses abroad, have gotten registered by Chinese locals, in China, only to result in those aggrieved businesses coming to a settlement with the locals, and in turn, facing huge losses.

Attempts at trademark trolling happen in India as well, one of the most recent ones being the PS5 trademark trolling case, wherein an Indian local got the PS5 mark registered before the company Sony could.[xii] There was also the case of H&M; Hennes & Mauritz Ab & Anr v. HM Megabrands Pvt. Ltd. & Ors.[xiii] wherein the Court had issued an injunction against the defendants for indulging in a clear case of trademark trolling. The Indian judicial discourse on trademark trolling is filled with insights and the courts have time and again tried to maintain the balance of justice, whenever the situations arose.

Indian Judicial Discourse over Prior User versus Prior Registration Proprietor Principle

Amongst others, the question of prior use and late registration was discussed in M/S Superflo Pvt Ltd v. M/S Sandhyamani Associates[xiv]. In this case, the plaintiff had filed a suit seeking permanent injunction restraining things like trademark infringement, passing off, unfair competition, etc. Here, the plaintiff was a sanitary-ware manufacturing company that was incorporated in 1986 and had been using the trademark “Superflo” since that very year. The plaintiff company had built an extremely strong market reputation and had a known presence, both domestic and international.

The defendant company was said to have received registration of the mark “Superflo” in 2003 (for Class 6 and 7) and had been using it since 2000, while the plaintiff company had applied for the registration in 1995 (having used the mark since 1986), but was made to withdraw the application, after which the defendants got the registration instead. It was alleged by the plaintiff that the defendants had also, in the past, obtained registration for the names “Bossini” and “Roka”, which were both internationally well-known sanitary-ware brands, thus shining a light on the history of the defendant’s mala fide intentions over trademarks.

In this case, the defendant tried to oppose the plaintiff’s claims by calling it guilty of “delay, latches, and acquiescence” because of the fact that the plaintiff approached the Court only after 14 years since the trademark was first used by the defendant in 2000, and registered in 2005. This claim was denied by the plaintiff, stating that the cause of action arose in 2013 when the plaintiff was first made aware of the situation and had since taken appropriate steps. Additionally, in M/s. Bengal Waterproof Ltd. v. M/s. Bombay Waterproof Manufacturing Co.[xv] the court had held that a new cause of action would arise every time a fresh deceitful act was committed; that means that whenever a party infringes upon the trademark rights of another, a fresh cause of action would arise, and hence the issue of “delay” does not hold ground in such cases.

Coming to the debate of “prior-user” and “registered proprietor”, the Courts have time and again given precedence to the interests of the prior user. Cases such as Century Traders v. Rohan Lal Duggar Co.[xvi], N.R. Dongre v. Whirlpool Corporation[xvii], Milmet Oftho Industries v. Allergan Inc.[xviii]have all seen preference being given to the prior user than the prior registration proprietor, and this right emanates from common law and not statutory provisions. [xix]

Trademark Trolling in the Cyber-Space

Protection against trademark trolls also exists in the cyber-space, wherein domain names are many a time a target of something known as “Cyber-Squatting”. Cyber-squatting is essentially similar to trademark trolling in the sense that it refers to a situation where a person registers or uses a domain name with the intent of profiting off the goodwill of someone else’s trademark. [xx] Indian courts have time and again protected trademark rights over the cyber-space as well.

In Satyam Infoway Ltd. v. Sifynet Solutions Pvt. Ltd. [xxi] the court had observed that “a domain name may have all the characteristics of a trademark”. In Marks and Spencer v. One in a Million, (1998) FSR 265 [xxii] it was held that any person who deliberately commits cyber-squatting must expect to receive an injunction against the act. The Court had observed in the case, that the domain name could not have been chosen for any other reason other than the fact that it was related to a well-known entity, and that the public was likely to be deceived; which in turn pointed clearly to the intention of the troll. Similarly, in Acqua Minerals Ltd. v. Pramod Borse and Another, [xxiii] the Court had clearly held that unless and until a person does not have a credible explanation as to why they chose an already existing name for registration as domain name/trade name, knowing full well of its goodwill and reputation, there is no inference to be drawn other than the fact that the person chose that name to profit off its reputation and goodwill.

Conclusion

As businesses and the cyber-space grow, the issue of trademark trolling will continue to persist. In countries following the first-to-file principle, the menace can be more severe, but in countries following the first-to-use principle, emanating from the common law, the trademark protection rights of entities have a higher chance of being protected owing to the wealth of jurisprudence on the same. India has more often than not had a favorable stance against trademark trolls, and the 2017 Amendment also included certain steps, such as a hike in the registration fee[xxiv], so as to prevent frivolous registrations. Frequent changes and updates to the laws surrounding trademarks will help the country in keeping up with newer trends in this area, and certainly, a robust trademark regime will fare well for India, nationally and internationally.

This article can be cited as:

Malveka Nautiyal, Prior User versus Prior Registration Proprietor: The Indian Judiciary’s Stance on Protecting Businesses from Trademark Trolling, Metacept- Communicating the Law, accessible at https://metacept.com/prior-user-versus-prior-registration-proprietor:-the-indian-judiciary’s-stance-on-protecting-businesses-from-trademark-trolling.

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References

[i] What is a Trademark?, WORLD INTELLECTUAL PROPERTY ORGANIZATION, available at https://www.wipo.int/trademarks/en/.

[ii] What kinds of Trademark can be Registered?, WORLD INTELLECTUAL PROPERTY ORGANIZATION, available at https://www.wipo.int/trademarks/en/.

[iii] Miriam Bitton, Rethinking The Anti-Counterfeiting Trade Agreement’s Criminal Copyright Enforcement Measures, 102, J. CRIM. L. & CRIMINOLOGY 67, 68 (2012).

[iv] Scott A. McKenzie, Comment, Global Protection of Trademark Intellectual Property Rights: A Comparison of Infringement and Remedies Available in China Versus the European Union, 34, GONZ. L. Rev. 529, 530-531.

[v] Scott Baldwin, Don’t Sit and Wait: Stopping Trademark Squatters, UNITED STATES PATENT AND TRADEMARK OFFICE, available at https://www.uspto.gov/learning-and-resources/newsletter/inventors-eye/dont-sit-and-wait-stopping-trademark-squatters.

[vi] WILLIAM M. PRIDE & O.C. FERRELL, MARKETING 407 (2012).

[vii] Anita Mar, Trademarks: First-to-use and First-to-file Countries, TRADEMARK ANGEL, May 5, 2019, available at https://trademarkangel.com/trademarks-first-to-use-and-first-to-file-countries/.

[viii] Id.

[ix] Vikrant Rana & Akriti Thakur, Trademark Rights and Protection in India, LEXOLOGY, Mar. 1, 2018, available at https://www.lexology.com/library/detail.aspx?g=51704e3b-5ebb-4dad-852f-991d02a0c1a7#:~:text=Is%20ownership%20of%20a%20trademark,first%2Dto%2Dfile%20rule.

[x]Widerman Malek, Trademark Law: First to Use v. First to File, WIDERMAN MALEK: ATTORNEYS AT LAW, Apr. 1, 2013, available at https://www.legalteamusa.net/trademark-law-first-to-use-v-first-to-file/.

[xi] A Crushing Defeat for Trademark Trolls, DECHERT LLP, Aug. 21, 2019, available at https://www.dechert.com/knowledge/onpoint/2019/8/a-crushing-defeat-for-trademark-trolls.html.

[xii] Tech News, Sony PS5 Launch Could Be Delayed in India Because of a Delhi Man, THE QUINT, Oct. 8, 2020, available at https://www.thequint.com/tech-and-auto/tech-news/sony-playstation-5-launch-in-india-could-be-delayed#read-more.

[xiii] H&M; Hennes & Mauritz Ab & Anr v. HM Megabrands Pvt. Ltd. & Ors/ IA-7259/2016.

[xiv] M/S Superflo Pvt Ltd vs M/S Sandhyamani Associates, IA No. 20568/2014 in CS (OS) 3210/2014.

[xv] M/s. Bengal Waterproof Ltd. v. M/s. Bombay Waterproof Manufacturing Co., AIR 1997 SC 1398.

[xvi] Century Traders v. Rohan Lal Duggar Co. AIR 1978 Delhi 250.

[xvii] N.R. Dongre v. Whirlpool Corporation (1996) 5 SCC 714.

[xviii] Milmet Oftho Industries v. Allergan Inc. (2004) 12 SCC 624.

[xix] S. Syed Mohiden v. P. Sulochana Bai (2015) 7 SCALE 136.

[xx] Cybersquatting: What It Is and What Can Be Done About It, NOLO, available at https://www.nolo.com/legal-encyclopedia/cybersquatting-what-what-can-be-29778.html#:~:text=Cybersquatting%20is%20registering%2C%20selling%20or,a%20profit%20to%20those%20businesses.

[xxi] Satyam Infoway Ltd. v. Sifynet Solutions Pvt. Ltd (2004) 6 SCC 145.

[xxii] Marks and Spencer v. One in a Million, (1998) FSR 265.

[xxiii] Acqua Minerals Ltd. v. Pramod Borse and Anr, 2001 (21) PTC 619 (Del).

[xxiv] Dipak Rao & Nishi Shabana, India: The Trademark Rules, 2017, MONDAQ, Mar. 24, 2017, available at https://www.mondaq.com/india/trademark/579734/the-trademark-rules-2017.