When there is unauthorized use of a service mark or, more specifically, a trademark either on or in connection with goods and services, which is likely to cause mistake, deception, or confusion concerning the goods and services, it is called a trademark infringement. With the growth of globalization, there has been an increased supply of goods and services between countries through imports and exports, i.e., international trading. This nature of the increased transfer of goods and services between countries has also led to the rise of the possibility of trademark infringement taking place across countries. This has been due to the increased competition in markets, where firms are no longer just competing with other domestic companies but also international firms, in their own country and internationally. This paper will analyse how cross-border trademark infringement operates, and the different international treaties on protections of brands against such infringement applicable in India, as well as the treatment of cross-border trademark infringement in the Indian legislature and judiciary in terms of legal approaches and remedies.
Companies, primarily, adopt trademarks to advertise their products. However, over time trademarks signify the nature and quality of the product over a period of time and are therefore very important to a company, or entity, or person. In order to gain the upper hand in terms of innovation and technology, companies also attempt to steal company names to sell their products. When companies in another country use the brand name of a company not established in that country with the purpose of capitalizing on the name of such a company’s brand name, it is called cross-border trademark infringement. In such a situation, another company or firm uses the name of the widely known company to sell their products due to the confusion created by having the same name. In the current world market scenario, names have powerful implications. For example, Samsung and Apple not only stand for companies that produce phones, but they are brands that also stand with the quality of product and service provided by them. So, cross-border trademark infringement is a problem of trademark infringement that takes place internationally instead of domestically. Such infringement on trademark rights has become infinitely easier with the widespread use of the internet, increased travelling and technology, making it easier to create cheap replications of branded products. Counterfeits are an extremely used method for expensive branded products like Louis Vuitton, Gucci, Chanel, and other such brands, where second, third and fourth copy of each of their product is available, distinguished by a few insignificant differences.
This problem is amplified for many reasons, including and especially due to the issue of the company’s trademark having been procured in only one country. When a product is launched in a particular country, it only takes the trademark rights of that country. However, the notice of the product launch is worldwide, and every competitor of the company based in other countries has notice of such product. In order to save their product from trademark infringement in international markets, the firm needs to take the trademark rights of the product internationally. Gaining such an international permit is not an easy task and takes up time. So, until such an international permit is received, other companies will have the time to misappropriate the brand name of such famous brands and make it their own. More often than not, companies, despite having extensive popularity find that their name has been appropriated by some other company, which is no way, shape, or form related to their brand. This can result in trade disputes where the famous company has to rely on its global reputation and goodwill since the company cannot apply for infringement considering they have not yet received trademark rights in the country. Therefore, it is essential to understand the forms of legal recourses available when such an issue with a trademark arises.
Trademark, as evident, is an international concept, and it enables a person to distinguish between the goods and services provided by different companies, firms, or entities. Considering the impact of globalization, trademark issues now cross borders. Therefore, when there is any form of dispute arising in terms of a trademark, it is essential that there is some form of consensus on which law is to be applied. Currently, four primary trademark laws are applicable internationally, or the conventions and protocols that influence the making of trademark laws in any country signatory to such protocol. Firstly, there is the Paris Convention, 1883, or the Protection of Industrial Property which India signed in 1998. The second agreement is the Trade-Related Aspects of Intellectual Property Rights (“TRIPs”) created by the World Trade Organization (“WTO”). The third is a recommendation created by the World Intellectual Property Organization (“WIPO”) called the WIPO’s Joint Recommendation Concerning Provisions on Protection of Well-Known Marks as a directory structure for forming trademark laws for member countries. Lastly, there is the Madrid System based on two agreements, the Madrid Agreement, 1891, and the Madrid Protocol, adopted in 1989.
The Paris Convention applies solely to industrial property. Industrial property, here, includes marks, patents, utility models, trade names, industrial designs, repression of unfair competition, and geographical indicators. The signatory countries of this convention are duty-bound to provide to nationals of other countries the same protection it provides to the nationals of their own country. Moreover, the convention dictates that well-known trademarks are to be given protection by signatory countries, even if the mark has not yet been registered in their country. Furthermore, if an applicant has applied for the trademark in another country, which is a signatory of this convention and then proceeds to apply for a trademark in another signatory country for the same goods and services or mark, then it will be assumed that the application had been made in the second country on the same day as the first one. However, the protection provided to well-known trademarks is limited to when a company uses a confusingly similar mark to provide the same goods. If the company is not involved in the same business, such protection is not accorded to it.
The TRIPs Agreement mainly removed the problems with the Paris Convention and added clauses to make protection better for well-known trademarks. The agreement only outlines the minimum standard of protection afforded to companies in signatory countries and directs these countries to change their trademark laws to include such protection. Countries have the right to extend these rights according to their preferences and needs. TRIPs Agreement firstly extended the protection of well-known marks to services, which was limited to goods under the Paris Convention. The agreement also added a clause stating that countries are to look at the knowledge of the public with regards to the trademark involved in the dispute to check whether it deserves the status of a well-known mark.  Finally, the agreement added that even if the goods and services provided by the companies are different, the one with a higher reputation can bring an action to protect their trademark, unlike the Paris Convention. However, this protection under TRIPs against dissimilar goods and services is only available if the trademark of the better-known company was already registered in the country.
WIPO’s Joint Recommendation Concerning Provisions on Protection of Well-Known Marks (“WIPO’s Joint Recommendation” or “The Recommendation”) was created to correct the loopholes in TRIPs and Paris Convention. The Recommendation sets a clear outline as to how a country is to decide what a well-known mark is. For this purpose, the Recommendation under Article 2(1) provides a non-exhaustive list to member countries to help them determine whether the mark is a well-known mark. The list is non-exhaustive, as member countries have the right to add their own tests in these determination factors, and the test or factors provided by the Recommendation are merely directory and not compulsory for any country to apply. Moreover, finally, the Recommendation fixed the issue with the TRIPs Agreements Article 16(3), which required mandatory registration for protection in dissimilar goods and services cases and removed such requirement.
To become a signatory of the Madrid System, it is enough if the country is a signatory of the Paris Convention and can then become a party to either Madrid Agreement or Madrid Protocol, or both. India signed the Madrid Protocol on 8th April 2013 and is yet to join the Madrid Agreement. The Madrid Agreement aimed to create a mechanism where it becomes possible for people to make one international registration applicable to every country instead of filing for different trademarks in different countries. The protocol is intended to simplify the intentions of the Madrid Agreement in terms of international trademark registration. Thus, the Madrid system’s main aim remains to make the international system of filing for trademarks easier and allow one single trademark registration to protect the trademark in the signatory countries.
Indian Statutes and Actions Against Cross-Border Trademark Infringement
The rights of a company or entity concerning their trademark fall under the company’s Intellectual Property Rights (“IPR”). Intellectual property allows an owner or inventor to have a monopoly over their creation. IPR, in India, is governed under The Patents Act, 1970 (as Amended in 2005), The Trademark Act, 1999, and The Copyrights Act, 1957. The Trade-Mark Act, 1999 operates as the prevailing act governing trademarks disputes. Before the application of the Trademark Act, 1999, the first act to regulate trade in India was the Trademarks Act of 1940, followed by the trade and Merchandise Marks Acts of 1958. The UK Trademarks Act heavily influences the Indian Trademarks Act, and the prevailing act has been influenced by the UK Trademarks Act of 1994. Until this act, foreign companies or entities had barely been provided with any protection under Indian statutes.
The new act has also been drafted keeping in mind the TRIPS Agreement, 1994, as well as WIPO’s Joint Recommendation, of which India is a signatory. In the new act, the Indian legislature and judiciary have departed from the original idea of foreign companies or plaintiffs having to acquire a trademark in India in order to win a dispute. Now, the Indian government and courts have preferred to rely on the foreign or international reputation of brands as well it provides protection for “well-known trademarks.” These sections have been provided by the Indian legislature in order to protect foreign companies in case there is a breach of their trademark in India; that is, there is cross-border trademark infringement in India. Well-known mark, here, stands for when the mark or logo of a specific company has become so prominent that the use of a similar mark or logo will create a belief that the product belongs to such company. Such marks or logos should create uncertainty or confusion in the buyer’s mind, who believes that the goods and services belong to the company with a better reputation. They can, therefore, also lead to a detriment in the reputation of such a company.
Moreover, foreign companies are protected from local companies making a trademark registration using their logos or brand names by the Trademark Act, 1999. The statute provides for conditions where a trademark can be rejected on the grounds of similarity of goods and services which is already covered by an earlier trademark which provides the same goods and services; on the basis of similarity of a trademark already existing. Additionally, section 11(7) of the act is based on the WIPO Joint Recommendation but has made the test for the same much smaller. It specifies that a trademark will be rejected based on the number of consumers or potential consumers as well as the number of trade channels used by the trademark to determine whether it is well known. If it is, it cannot be acquired by another company.
Furthermore, section 9 of the act provides for absolute grounds of refusal to register trademarks. If trademarks are devoid of any distinctive characteristics to set them apart from other such trademarks and it is hard to distinguish its goods and services from another company’s, such can be refused. Lastly, if the trademark is bound to cause confusion or is likely to deceive people into believing that the goods and services provided are from another company, they will not be approved.
Following these foreign statutes, Indian statutes, now, also recognize and protect trade-dress. Trade-dress, much like a trademark, is an unregistered source identifier. In Walmart Stores Inc. v. Samara Bros Inc., the court defined trade-dress as an identifier. The design, colour, packaging, or schematic arrangement can distinguish a particular product from the rest. During cases of trade-dress, the court needs to look into whether the shape, colour, printing, and so forth would lead to any form of confusion between products of the two companies and do so, the distinctive features of both need to be looked at. Thus, Indian statutes have grown to protect the trademark rights of companies as is suitable for the country, while keeping in mind the various international treaties it is a signatory of.
The matter of jurisdiction is decided by the relevant instruments as well as the national rules of the country. Relevant instruments in India include Trademark Act, 1999, Paris Convention, TRIPs Agreement and the Madrid Protocol. The Trademark Act, 1999, decides which court is competent to decide the matter at stake. In matters of infringement, the case goes to the District Court where such alleged infringement has occurred.
The Trademarks Act, 1999 provides both civil and criminal remedies to companies whose trademark rights have been infringed upon. Under civil remedies, a company can get a permanent injunction against the company that used its trademark. A permanent injunction stops a company from doing an act of committing an action permanently and includes an ex-parte injunction or an interlocutory order. An ex-parte judgment is an injunction given against the defendant, with or without hearing his defence, and it operates until the defendant’s defence is presented. An interlocutory order is also a temporary order given by the court when the litigation is going on, and it operates till the final judgement is pronounced by the court.
One form of ex-parte order includes the Anton Pillar Order that the court can pass if it believes that the defendant is likely to get rid of any incriminating evidence against him. The Kerala High Court used the Anton Pillar order in National Garments v. National Apparels. However, suppose there is a possibility of the defendant’s assets being cancelled or dissipated so that the judgement pronounced would be unenforceable against the defendant, in that case, the court can pass a Mareva Injunction. Under this injunction, the court has the power to freeze the assets of the defendant. The court also has the power to allow a raid on the defendant’s premise to secure any infringing goods. Such an order passed by the court is a John Doe Order and was used by the court in Taj Television v. Raj Mandal. The principle of Norwich Pharmacal Order laid down in Souza Cruz v. N.K. Jain allows the court to pass an order where discovery against a third-party, not the defendant, to the suit is needed.
One of the actions a company can institute is a case of “passing-off” to defend its rights of trademark. Passing-off is not defined in any particular act. However, it is based on principles defined under sections 27(2), 134(1)(c), and 135 of the Trademark Act, 1999. The action is based on the principle that “no man be allowed to sell his goods under the pretence that they belong to another man.” Use of the trademark is a superior defence in a passing-off action, and without the use of trademark, no passing-off action can be brought against the defendant. Another action that a company can take is “infringement” under section 134 of the Trademark Act, 1999, and is based on particulars of the offences. The mark used should be identical or very similar enough to deceive people, the goods and services must be covered in registration, and the use of the mark must be in the same course of trade so as to create the deception that it is a registered trademark. However, just proving that the registered trademark is identical or highly similar to the original trademark is enough. The mark may or may not have caused the plaintiff any injury. A critical difference between a passing-off action and infringing action was established in Durga Dutt Sharma v. Navaratna Pharmaceutical Laboratories, where the court states that passing-off action is a common law remedy against deceit, that is, where a person passes off their goods as those of another. On the other hand, an infringement suit is against a person who infringed the rights of a registered trademark. The use of a trademark is not essential in a passing-off action; however, without such proof, an infringement action cannot be brought against anyone.
The court, other than these, can also ask the defendant to pay for the petition, or to the company whose trademark was copied damages and rendition of accounts they have faced due to the defendant’s actions. Moreover, it can also ask for the delivery of the infringing goods of the defendant for their destruction to save the petitioner company from any further loss created due to the selling of these already made goods.
The Trademark Act, 1999 also deals with criminal remedies available to a company against any company, entity or person that is using their trademark. Chapter XII of the Act lays down the offences, procedures, and penalties of a criminal remedy. Suppose a company has used a false trademark or false description or has offered goods and services under false description or trademark, that is it has used another company’s trademark to pass off as that company’s goods. In such a case, the company is liable for fines ranging from $1000 to $4000 and/or imprisonment between 6 months to 3 years, depending on the nature of the breach. If there is any subsequent breach of offences listed in section 103 or section 104, the penalty can be a fine ranging from $2000 to $4000 and/or imprisonment between 1 to 3 years. Moreover, if a company falsely represents that they have registered the trademark, they can be liable to be imprisoned for up to 3 years and a fine.
Both civil and criminal actions can be brought parallelly in India. There is no need to wait for either of the actions to be over to bring up the other. Criminal action allows a company to start an action against an unknown party, and thus, the identity of infringers is not necessarily to be revealed for or during the auction. Moreover, this permission to start actions against unknown people in criminal action extends to initiating search and seizure proceedings against both unknown and known people. Allowing both actions to run together ensures that a party whose rights have been infringed is able to attain justice in all possible areas of law.
India’s judicial precedents on Cross-Border Trademark Infringement
Indian courts, before the new act, used to support the trademark rights of domestic companies over foreign companies, even though there was an apparent infringement on the brand of the foreign company. However, after India became a signatory of the TRIPS Agreement and the Trademarks Act, 1999 was passed, the judiciary started to protect foreign companies in this matter under Section 35 of the Trademarks Act, 1999. Indian courts, much like Indian statutes with respect to Trademark rights, use English or UK precedents as a guiding source. Therefore, UK precedents have been used by Indian Courts in matters of cross-border trademark infringement. But Indian courts, unlike UK Courts, do not differ between the concept of goodwill and reputation, and instead, they see both as the same concept.
One of the first cases to discuss goodwill and reputation is the same was the Kamal Trading Co. v. Gillette UK Limited, where the Bombay High Court held that goodwill of a company is not restricted to only the country where its goods are being sold. Instead, because of globalization, the awareness of the goods sold by the company is known worldwide through magazines, news, and other such mass media. Thus, the goodwill of a company is spread to countries even where its goods are not sold, and as a result, the mark under which its goods are sold acquires a worldwide reputation. Other courts throughout the country then followed this approach.
However, it was only in 1996 that one of the first cases regarding cross-border trademark violations came to an Indian court. The case was Whirlpool Co. v. N.R. Dongre, which was presented firstly to a Division Bench of Supreme Court of India. here, there was a conflict over the trademark of washing machines named “whirlpool.” The respondent, here, had, after looking at the trademark name of the American company whirlpool in magazines and other such forms of advertisement, registered his own washing machine company named whirlpool in India. The court ruled in favour of the petitioner, that is, Whirlpool Co., stating that its reputation was not intrinsic to its country and instead had cross borders with the use of commercial advertisements in magazines that were available in India. Additionally, the court stated that the appliance sold by the company was a standard amenity in every house and was not bound by class. No one should be allowed to bank on the reputation and goodwill which has been acquired by someone else for their benefit. The respondent here appealed to a bigger bench of the Supreme Court, which upheld the decision of the Division Bench.
In giving the decision, the Division Bench had to first look into and then define the concept of trans-border trading. In defining it, Justice Lahoti stated that knowledge and awareness of goods and services provided by a company or brand are important indicators. Both of these indicators in countries where it is not available, need to present in order to decide whether the company’s reputation and goodwill surpass beyond the border it is available in. If these indicators are present, then the company can bank on the same for any dispute arising out of trademark violation across borders. This case thus established the “trans-border reputation” doctrine in India, which is now to be followed in such issues.
Following this, another case presented before the Delhi High Court raised a similar issue where the court relied on the doctrine of “trans-border reputation” established in the Whirlpool case. It was reiterated by the court in Blue Cross and Blue Shield Association v. Blue Cross Health Clinic, that even though the foreign company had not registered its trademark in India, because it had a worldwide reputation, which exceeded the country it supplied its goods and services in, another company in India could not use its trademark. Thereafter, the Supreme Court in Ruston & Hornby Ltd. v. Zamindari Engineering Co., held that there is no necessity for a company to be carrying on business in the country for it to be eligible to bring an action of passing-off since its reputation is enough for such an action. In Milmet Ofto Industries & Ors. v. Allergen Inc., as well as Playboy Enterprises Inc. v. Bharat Malik, the court, held that an international company has the right to restrict the use of a mark outside of its country, i.e., in India if it has sufficient worldwide reputation.
The trans-border or cross-border reputation test was also applied in a 2013 Indian case of dissimilar goods, where a Chennai-based restaurant used the name “ZARA” for their establishment and the fashion brand ZARA filed an infringement suit against them. The court, while keeping in mind the brand’s trans-border reputation as well as the fact that ZARA had already filed a trademark for its name in India in 1993, the case was held in favour of the ZARA fashion brand. The same issue was also seen in the case of Louis Vuitton v. Louis Vuitton Dak, the former is a fashion brand and the defendant was a South Korean restaurant that used a similar logo and packaging as the petitioner. The court ruled in favour of Louis Vuitton, the fashion brand, and fined the restaurant $1250 for trademark infringement.
Due to the growth of technology, the issue of trans-border or cross-border trademark infringement, now, can also take place on the internet. Internet is an important facilitator in terms of spreading information as well as creating advertisements for a company’s goods and services. However, it has been noted that this allows for trademark infringement in terms of marks, logos, and goods and services provided by a company internationally. Another issue that can arise is the infringement of the trademark of a company through the domain name. In domain name infringement, one company uses another company’s name on their country’s internet service and refuses to give up such domain name. In the landmark case of Yahoo! Inc. v. Akash Arora, the Delhi High Court held that a registered domain is equivalent to trademark registration and is thus, entitled to equal protection. It was held in Arun Jaitley v. Network Solutions Private Limited  that a person or company cannot make use of a well-known name as a Domain name without having a sufficient reason or cause to keep it in their possession. Doing so would be considered as bad-faith registration and violative of the Internet Corporation for Assigned Names and Number (“ICANN”) policy. However, these rights established by judicial precedents for domain names are not extended to allow a company or entity to police the domains of some other company or entity because the domain name is potentially confusing.
Due to the growth of globalisation as well as the increasing use of the internet, cross-border trademark infringement is a part of daily life. Indian law has gradually changed over the years. Initially, during the 90s, domestic companies were protected from foreign claims of trademarks. However, with India entering into agreements like the Paris Convention and TRIPs Agreement, the courts have now started to enter cases with a broader mind. The Indian government and legislature have been very proactive in making changes to statutes and making the best decision for companies or people facing the problem. Even though the Indian legislature and judiciary highly rely on UK statutes and judgements as to their guiding source, they have adapted changes according to the needs pertinent to India.
It has grown to protect the trademark rights of companies on the basis of their reputation. There are still certain gaps in this approach of the Indian judiciary. For example, if a company does not present evidence of publicity of marks, they are unable to receive the protection under the “trans-border reputation” doctrine. However, these few lacunas are to be covered over time, with the growth of a number of cases reaching the Indian judiciary. Overall, the Indian government and judiciary have been developing the law to protect the rights of foreign companies, for example, the doctrine of trans-border reputation has been extended to dissimilar goods and services as well as domain infringement, and has, therefore, resulted in increased remedies available to them. Moreover, Indian law allows a foreign company to pursue both civil and criminal remedies available at the same time, in order to provide satisfactory compensation to them. It is, therefore, safe to conclude that the current remedies in Indian law concerning cross-border Trademark infringement highly outweigh the few lacunae present in it.
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