TRADEMARKS   BASICS

 

                T. Aparna Goud  

5/5, Pendekanti law college, Hyderabad.

 

 

Historical Approach to the subject and the background of trademarks:

 

In the earlier times traders applied their marks to the goods to indicate ownership, these are called as Proprietary marks or posessory marks.[1] As long as 3000 years ago, Indian craftsmen used to engrave their signatures on their artistic creations before sending them to Iran.  In a similar way, Merchants also marked their goods before shipment to that in the event of a shipwreck, any surviving merchandise could be identified and retrieved.

 

Medieval times saw the Guild structures[2] where they ensured that the goods were of a satisfactory quality where they required their members to apply identifying marks or signs to the goods. Within the demise of the guilds it was no longer obligatory for the traders to apply particular marks or signs for the goods.

 

During the Twentieth century, trademarks changed from being indicators of origin and hence bases on which those consumers could assume consistency of quality to their valuable assets in their own right. They help to provide consumers with an identity-for example, as a FERRARI or VOLVO driver or BUDWEISER or BUDVAR drinker.

 

What is a Trademark?

 

A trademark, or "mark," is any word, phrase, symbol, design, sound, smell, color, product configuration, group of letters or numbers, or combination of these, adopted and used by a company to identify its products or services, and distinguish them from products and services made, sold, or provided by others. The primary purpose of marks is to prevent consumers from becoming confused about the source or origin of a product or service. Marks help consumers answer the questions: "Who makes this product?" and, "Who provides this service?" As consumers become familiar with particular marks, and the goods or services they represent, marks can acquire a "secondary meaning," as indicators of quality. Thus, established marks help consumers answer another question: "Is this product or service a good one to purchase?" For this reason, the well-known marks of reputable companies are valuable business assets, worthy of nurturing and protection. The law governing marks essentially is consistent, regardless of the kind of product or service identified, or the nature or appearance of the mark employed. However, marks often are categorized according to the type of identification involved.

 

What are the most commonly encountered categories?

There are essentially seven slightly different categories of trademark. The first, and perhaps most widely known, is simply a "Trademark, Service marks, Trade dress, and Trade names

 

Trademarks:

A trademark is a mark used or proposed to be used in relation to goods for the purpose of indicating or as to indicate a connection in the course of trade between the goods and same person having he right to use the mark^[3]. Traditionally, the term, "trademark," described only marks designating products, or "good" (as opposed to services). Increasingly, however, the word is used to describe any type of mark, not just traditional "trademarks."

 

Trademarks make it easier for consumers to quickly identify the source of a given good. Instead of reading the fine print on a can of cola, consumers can look for the Coca-Cola trademark. Instead of asking a store clerk who made a certain athletic shoe, consumers can look for particular identifying symbols, such as a ‘SWOOSH’  or a unique pattern of stripes. By making goods easier to identify, trademarks also give manufacturers an incentive to invest in the quality of their goods. After all, if a consumer tries a can of Coca-Cola and finds the quality lacking, it will be easy for the consumer to avoid Coca-Cola in the future and instead buy another brand. Trademark law furthers these goals by regulating the proper use of trademarks

 

Service marks:

A service mark[4] is another type of mark. Service marks indicate the source or origin of services (as opposed to goods). Service marks’ are signs used by enterprises to identify their services, such as travel agencies, hotels, telephone companies and airlines. For all practical purposes, trademarks and service marks are subject to the same rules of validity, use, protection, and infringement.

 

Trade Dress:

Trade dress also is a type of mark. "Trade dress" refers to the overall image or impression of a product (the product's "look," and "feel"), and/or the way in which the product is packaged and presented to consumers. Generally, only those elements of a product which are nonfunctional (as opposed to functional elements, such as shrink-wrap, or a plain cardboard box); which have acquired a secondary meaning, and which inform consumers about a product's source, are considered protectible product trade dress.

 

Trade Names

Trade names are not marks. A trade name is a word, name, term, symbol, or combination of these, used to identify a business and its goodwill. Whereas, a mark identifies the goods or services of a company, a trade name identifies the company itself.

Trade names and marks are related. For example, if one business adopts a trade name similar to a mark used by another, the trade name of the first business may impede the effectiveness of the mark used by the second in identifying the source or origin of goods or services. Consumers may come to believe that the first business makes goods, or provides services, sold by the second. For this reason, conflicts can arise between trade names and marks. Trade names also can function as marks. Many companies use all or part of their business names as marks on their products, or in connection with their services. When a trade name is used by a company in this dual fashion, it becomes even more important that competing companies refrain from using a similar trade name or mark In short in legal parlance brand names are known as ‘Trade names’

 

Sound trademarks:

Signature tune has been popular with broadcasting organizations for long. The short, punchy musical riffs at the end of a commercial, usually when the company’s logo pops into the screen are the sound signatures set to be the in thing in future and so would be clamour to protect it not only as a sound recording but also as a trademark. In 2001 IBM unveiled a sound signature for its e-commerce business centres. The roar of the MGM lion and the

 ‘hoo-hoo’ of the Pillsbury Doughboy, sounds have been favourite audio logos or sound signatures for a brand and used by companies. The sound trademarks are becoming popular, as sound signatures don’t’ need translation.

 

Certification mark:

Certification mark is a mark that certifies that goods and/or services of another meet certain very specific standards of quality. A good example of a certification mark is THE GOOD HOUSEKEEPING SEAL OF APPROVAL, which is placed on kitchen products. In order to obtain and maintain a certification mark, the certifier must set forth very specific standards that the products it certifies must meet, and it must provide that anyone who makes that category of product may apply for certification. Certification marks are unusual in that the certifier never uses the mark on any products of its own; it merely licenses others to do so.

 

Collective marks ----A New Category of Marks

The collective mark[5] is different from other trademarks as a collective mark distinguishes the goods or services of members of an association of persons from the goods or services of others. The association is registered as proprietor of the trademark and the members who use the marks can do if they fulfil regulations, which are filed together with the application users[6]. Use by members, referred to as authorised users, is deemed to be the use by the proprietor

 

What prerequisites must a mark satisfy in order to serve as a trademark?

In order to serve as a trademark, a mark must be distinctive -- that is, it must be capable of identifying the source of a particular good. In determining whether a mark is distinctive, the courts group marks into four categories, based on the relationship between the mark and the underlying product: (1) arbitrary or fanciful, (2) suggestive, (3) descriptive, or (4) generic. Because the marks in each of these categories vary with respect to their distinctiveness, the requirements for, and degree of, legal protection afforded a particular trademark will depend upon which category it falls

An arbitrary or fanciful mark is a mark that bears no logical relationship to the underlying product. For example, the words "EXXON," "KODAK," and "APPLE" bear no inherent relationship to their underlying products (respectively, gasoline, cameras, or computers). Similarly, the Nike "swoosh" bears no inherent relationship to athletic shoes. Arbitrary or fanciful marks are inherently distinctive -- i.e. capable of identifying an underlying product -- and are given a high degree of protection.

 

A suggestive mark is a mark that evokes or suggests a characteristic of the underlying good. For example, the word “COPPERTONE” is suggestive of suntan lotion, but does not specifically describe the underlying product. Some exercise of imagination is needed to associate the word with the underlying product. At the same time, however, the word is not totally unrelated to the underlying product. Like arbitrary or fanciful marks, suggestive marks are inherently distinctive and are given a high degree of protection.

 

A descriptive mark is a mark that directly describes, rather than suggests, a characteristic or quality of the underlying product (e.g. its color, odor, function, dimensions, or ingredients). For example” HOLIDAY INN and “ALL BARN” and "VISION CENTER” some aspect of the underlying product or service (respectively, hotel rooms, breakfast cereal, optical services). They tell us something about the product. Unlike arbitrary or suggestive marks, descriptive marks are not inherently distinctive and are protected only if they have acquired "secondary meaning." Descriptive marks must clear this additional hurdle because they are terms that are useful for describing the underlying product, and giving a particular manufacturer the exclusive right to use the term could confer an unfair advantage.

 

Finally, a generic mark is a mark that describes the general category to which the underlying product belongs. For example, the term "Computer" is a generic term for computer equipment. Generic marks are entitled to no protection under trademark law. Thus, a manufacturer selling "Computer" brand computers (or "Apple" brand apples, etc.) would have no exclusive right to use that term with respect to that product. Generic terms are not protected by trademark law because they are simply too useful for identifying a particular product. Giving a single manufacturer control over use of the term would give that manufacturer too great a competitive advantage.  Words like Linoleum, Asprin, Celluloid, Gramaphone, Nylon, and Grapewater were at one time registered trademarks but in course of time the unchecked use of the mark by others or sometimes by the owner’s own mistake in using the marks as the product lost its distinctiveness and become generic. Under these circumstances, terms that are not originally generic can become generic over time (a process called “geniricity”), and thus become unprotected.

 

 What is the role and functions of trademarks?

General speaking, trademarks perform four functions that are deserving of protection in the courts:

1.   To identify one seller's goods and distinguish them from goods sold by others;

2.   To signify that all goods bearing the trademark come from or are controlled by a single, albeit anonymous, source;

3.   To signify that all goods bearing the trademark are of an equal level of quality; and

4.   As a prime instrument in advertising and selling the goods.

 

In addition to these four functions, it must also be kept in mind that a trademark is also the objective symbol of the good will that a business has built up. Without the identification function performed by trademarks, buyers would have no way of returning to buy products that they have used and liked. If this consumer satisfaction and preference is labelled "good will," then a trademark finds its value in allow customers to develop affinity to a particular good or service and recognize this preference in the form of a positive feedback loop (i.e., increased and repeated purchases. That being the case, it is really the good will that is represented in the trademark that is valuable. In order to tap into this positive feeling a recognizable trademark must exist, but the key ingredient is having a product or service that customers like.

 

 

What does it mean to register a trademark?

 

Registration of Trade Mark is not compulsory. However the registered Trade Marks have additional benefits when compared to unregistered Trade Marks. Registration of Trade Marks allows the Owner of the Trade Marks to file infringement suits for violation of his rights whereas the unregistered user has to search remedies in common law, he can file a suit for passing off.

 

 

What Marks are registrable?

The Trademarks Act 1999 does not define the categories of marks registrable or the requisites for registration of a mark. It defines what, marks are not registrable under two headings, namely Absolute grounds for refusal and Relative grounds for refusal and then proceeds to state the circumstances in which they may be registered.

        

Absolute grounds[7] for refusal of registration

 

 A trademark ----

(a)    Which is devoid of any distinctive character; that is to say, not capable of distinguishing the goods or services of one person from those of others;

(b)    Which indicates quality or other descriptive character of the goods or services;

(c)    Which have become customary in the current language or in the bona fide or established practice of the trade. This may relate to generic names or marks common to the trade

 

The above category of marks are registrable if they have acquired a distinctive character as results of use or is a well known trademark.

 

 

Marks not registrable[8]:

 

There is another category of marks, which are not registrable under any circumstances there are:

(a)    a mark by its very nature will deceive the public or cause confusion;

(b)   a mark which is likely to hurt the religious susceptibilities of any section of the people of India;

(c)    a mark which contains scandalous or obscene matter;

(d)   a mark the use of which is prohibited under the Emblems and Names (prevention of Improper Use) Act 1950

(e)    the shape of goods which is purely functional of necessary to obtain technical result or which gives substantial value to the goods.

 

Besides the above, although not mentioned specifically in the list of marks subject to absolute grounds of refusal of registration these are marks which r nevertheless unregisterable these are chemicals names and international non –proprietary names[9].

 

 

Relative grounds for refusal of registration[10]

 

Under this category comes:

(a)    a mark which is identical or similar to an earlier trade mark and the respective goods o services are identical or similar, or

(b)   a mark which is identical or similar to an earlier trademark, but the goods or services are not similar.

 

The above categories of marks may however be registered if the protection if the earlier trademark consents or the mark is registrable under s.12 by virtue of honest concurrent use.

In considering the second category of marks where the marks are similar but the goods are different the following across will have to be taken into account in considering their registrability:

 

(a)    the extent to which the earlier trademark is a well known trademark in India;

(b)   whether the use of the applicants mark without due cause would take unfair advantage of the earlier trademark;

(c)    whether the use of the applicants’ mark would be detrimental to the distinctive character or repute of the earlier mark.

 

 

Who may apply to register?

 

Any person claiming to be the proprietor of the trademark used or proposed to be used by him can apply. The application may be made in the name of an individual, partners of a firm, a Corporation, any Government Department, a Trust or joint applicants. The proposal to use the trademark may be by a Company to be formed or by a registered user.

 

 

What is the procedure for registration?

The statute law of trade marks was governed by the Trade and Merchandise Marks Act 1958, along with Rules 1959, which has gone under revisions to comply with various agreements India has signed during the course, and now been replaced by Trade Marks Act 1999 main reason being that it is proposed to grant trademarks to services also. The procedure for registration of trad mark si contained in Ss 18-24 of Trademarks Act 1999.

 

According to it an application may be made in the name of an individual, partners of a firm, a corporation any government department, a trust or joint applicants. The trad mark Registry having its head office at Mumbai and branch offices at Delhi, Kolkatta, Ahmedabad and Chennai keeps register of trad mark where in entry is being made once a trademark is allocated. Before or after applying for registration the applicant may apply for a report as to whether the mark or one similar to it has already been registered, or applied for. The Registrar may communicate to the applicant any objection to the mark, which mainly relates to distinctive character and similarity with already registered marks

 

Application received for trad mark allocation passes through formal and substantive examination and search to final grant of mark with 3 months of advertisement and without opposition. If the application is accepted, it will be advertised in Trad Marks Journal. Once the registration has been obtained, the owner may give notice by using the symbol ® next to the trademark.

 

 

Term of protection

 

The term of protection of trademark is unlimited. In other word, they may be owned in perpetuity, with a rider that the initial registration and each subsequent renewal is for seven years[11]. Where as India provide ten years with effect from the commencement of Trademarks, Act, 1999. But non-user of a registered trademark for a continuous period of five years is a ground for cancellation of registration of such trademark at the behest of any aggrieved party

 

 

Can trademarks be licensed?

 

The function of a trademark being to indicate origin of the product it was considered deceptive o allow the trademark to be used on goods, which originate from a different source. Unrestricted licensing of trademark was considered as trafficking in trademark, which is against public interest. However, development of modern industry and commerce has necessitated the licensing of trademarks, particularly registered trademarks, under suitable conditions and safeguards. The statue has provided for licensing of registered trademarks as registered users.

 

Licensing of unregistered trademark or of a registered trademark, except under the provisions of registered users, although not prohibited, is not recognised by law. However, many large companies particularly companies which have trading interest in different countries licence their trademarks, whether registered or unregistered under terms and conditions which are similar to those accepted for registration of permitted use.  The present Act of 1999 has provided for licensing of registered trademark without being registered as registered users under suitable conditions.[12]

 

As regards, unregistered trademarks courts have recognised licensing of unregistered trademarks as legitimate and lawful provided proper control over the use of the mark by licensee is maintained and care taken to see that the ownership of the mark is indicated to the public. This is also called as Common law licensing

 

What constitutes Trademark Infringment?

The use of a trademark in connection with the sale of a good constitutes infringement if it is likely to cause consumer confusion as to the source of those goods or as to the sponsorship or approval of such goods.  To determine confusing similarity, the marks are generally compared with respect to pronunciation, appearance, and a meaning or verbal translation. For example, although to marks might be spelled differently, if they are pronounced in the same way, they might be considered  “ confusingly similar”. Similarity of appearance is determined in the context of the general presentations of the trademark on the product. Similarity in meaning depends on the mental impact made on the consumer as a result of the psychological imagery evoked by the marks concerned. Therefore, translations of words, especially from well-known languages, are taken into account to determine whether there exists confusing similarity with the meaning the protected mark or not. Similarity, a figurative mark can be confusingly similar to a work mark, depending on the mental impression each of the marks creates. For example, the word mark “arrow” and the figurative mark consisting of a drawing of an arrow[13]evoke similar visual image in the mind.

 

So, for example, the use of an identical mark on the same product would clearly constitute infringement. If A manufacture and sell computers using the mark "Apple," his use of that mark will likely cause confusion among consumers, since they may be misled into thinking that the computers are made by Apple Computer, Inc. Using a very similar mark on the same product may also give rise to a claim of infringement, if the marks are close enough in sound, appearance, or meaning so as to cause confusion. So, for example, "Applet" computers may be off-limits; perhaps also "Apricot." On the other end of the spectrum, using the same term on a completely unrelated product will not likely give rise to an infringement claim. Thus, Apple Computers and Apple Records can peacefully co-exist, since consumers are not likely to think that the computers are being made by the record company, or vice versa.

Between the two ends of the spectrum lie many close cases, in which the courts will apply the factors listed above. So, for example, where the marks are similar and the products are also similar, it will be difficult to determine whether consumer confusion is likely. In one case, the owners of the mark "Slickcraft" used the mark in connection with the sale of boats used for general family recreation. They brought an infringement action against a company that used the mark "Sleekcraft" in connection with the sale of high-speed performance boats. Because the two types of boats served substantially different markets, the court concluded that the products were related but not identical. However, after examining many of the factors listed above, the court concluded that the use of Sleekcraft was likely to cause confusion among consumers

 

Passing off and goodwill?

The common law of passing off and the statutory regime, which protects registered trademarks found in the 1994 Trademarks Act. These regimes regulate certain signs or symbols, usually words or pictures[14], when used in connection with particular goods or services, Classic (or infamous) examples include MARLBARO for Cigarettes, DREAMCAST for computer games, the ‘golden arches’ in the shape of ‘M’ for restaurant services, and the ‘SWOOSH’ or rounded tick symbol for (NIKE) sports clothing. Under the law of passing off, the sign must have been used in trade so as to have acquired a reputation. In the case of statutory regime, the sign must have been registered, under Trade Marks Act (1999).

 

The method of passing off include: 

(1) Direct false misrepresentation, (2) adoption of a trademark, which is the same or colourable imitation of the trademark of a rival trader, (3) adoption of an essential part of a rival traders’ name, (4) copying the get up or colour scheme of the label used by a trader,

(5) Imitating the design or shape of the goods, (6) adopting the word or name by which the rival trader’s goods or business is known in the market, and many other ingenious methods

 

The first factor that needs to be proved to establish an action of passing off is goodwill. The mere fact that consumers are confused about the source of a product or service is not enough for a trader to bring a successful passing off action against another trader with whom their products are being confused[15]

 

New horizons of Passing off

The new meaning of passing off is to be discerned. The real question in each case is whether there is as a result of misrepresentation a real likelihood of confusion or deception of the public and consequent damage to the plaintiff, and if so then relief shall be granted. In the case[16] where the plaintiff has a domain name REDIFF and the defendant has adopted an domain name RADIFF simply to trade on the reputation of the plaintiff; the injunction was issued against the use of Radiff.

 

What remedies are there for Trademark and Passing off Infringment?

Two types of remedies are available to the owner of a trademark for unauthorized use of his or her mark or its imitation by a third party. These remedies are: - ‘an action for infringement' in case of a registered trademark and ‘an action for passing off' in the case of an unregistered trademark. While former is a statutory remedy, the latter is a common law remedyThe reliefs in a suit for Infringment include an injunction, restraining further use of the mark, damages or an account of profits, and as order for delivery-up of the infringing labels and marks for destruction or erasure.

 

What is the economic and legal value of trademark?

 Trademarks perform important functions for enterprises, and hence they are valuable asset[17]. This costs involved in having such an asset are of two kinds: first, those connected with the registration and renewal of the trademark and, secondly, those involved in the advertising effort in creating and maintaining the economic value of the market. Once the product to which the mark is attached is launched, the advertising effort usually continues in order to increase and maintain the goodwill[18]. The advertising costs are investments, reflected in the commercial value of the trademarks.[19] In assessing the value of a trademark as an asset, [20]one cannot look at the ‘cost’ for its fair value. A trademark, per se costs very little. Its real value as an asset is determined wholly by its strength in a free market.

 

There is a difference between the economic and the legal value of a trademark. All the registered trademarks have the same legal value and an unlimited life as long as they are renewed, but their commercial value and life expectation are widely different. Any stock of legally equal trademarks will contain the trademarks of unequal commercial value and with different economic ages and life expectations[21]

 

CONVENTION APPLICATION AND INTERNATIONAL TREATIES

India has declared certain countries as convention countries, which afford to citizens of India similar privileges as granted to its own citizens. A person from a convention country, may within six months of making an application in his or her home country, apply for registration of the trademark in India. If such a trademark is accepted for registration, such foreign national will be deemed to have registered his or her trademark in India, from the same date on which he or she made application in his or her home country.

Where the applications have been made for the registration of trademark in two or more convention countries, the period of six months would be reckoned from the date on which the earlier or earliest of those applications was made.

Although the recovery of damages for infringement of a trademark is possible only if the infringement takes place after the date of filing application for registration with the concerned trademark office in India, yet the deemed seniority in making application in home country may entitle the applicant to initiate an action in India for injunction, delivery of impugned labels etc

 

Conclusion:

Nevertheless, as a form of "property," trademarks can be alienated like any piece of property. Trademarks can be bought, sold and licensed. But because they are merely symbols of good will, trademarks must be transferred very carefully, lest the symbol and its good will go separate ways. Notwithstanding the fragile nature of trademarks, businesspeople rightly regard them as valuable assets and are willing to pay large sums to buy or license a well-known mark. In speaking of the value of trademark rights, one court said, "theoretically and perhaps practically as well, this hard-earned right is as important as money in the bank”.