“Trademark dilution” involves an unauthorized use of another’s trademark for goods and services that do not compete with, and have little connection with, those of the original trademark owner’s goods and services.
The section 29(4) of the Trade Marks Act, 1999 encompasses the principle of trademark dilution, which reads as follows:
(4) A registered trade mark is infringed by a person who, not being a registered proprietor or a person using by way of permitted use, uses in the course of trade, a mark which—
(a) is identical with or similar to the registered trade mark; and
(b) is used in relation to goods or services which are not similar to those for which the trade mark is registered; and
(c) the registered trade mark has a reputation in India and the use of the mark without due cause takes unfair advantage of or is detrimental to, the distinctive character or repute of the registered trade mark.
The entire structure of Section 29(4) is different from the earlier part, and in effect expresses Parliamentary intent about the standards required for a plaintiff to establish dilution of its trademark, in relation to dissimilar goods or products. Under Section 29 (4) apart from the similarity of the two marks (or their identity) that his (or its) mark –
(i) has a reputation in India;
(ii) the use of the mark without due cause;
(iii) the use (amounts to) taking unfair advantage of or is detrimental to, the distinctive character or repute of the registered trade mark.
Importantly, there is no presumption about trademark infringement, even if identity of the two marks is established, under Section 29 (4).
The cause of action for trademark dilution traces its roots to Frank Schechter’s 1927 article in the Harvard Law Review, The Rational Basis of Trademark Protection. In this article, Schechter observed that many courts had grown impatient with “old theories of trademark protection,” which he believed were insufficient to “serve the needs of modern business.”
The Hon’ble Supreme Court has summarised the discussion on dilution by McCarthy in following terms:-
a) The traditional likelihood of confusion test applies to passing off.
b) If a mark is a well-known mark, then the argument of dilution is to be considered in the absence of confusion.
c) Dilution is a doctrine which should be strictly applied.
d) Standard of distinctiveness required to protect a mark from dilution is very high.
e) Not every trade mark can be protected against dilution.
f) If a mark enjoys a regional reputation it does not deserve protection under the law of dilution.
g) A reputation on a national scale, especially while testing the mark for unrelated goods, is required to be protected under dilution.
In case of trade mark dilution allegation the plaintiff has to fulfil a more stringent test (than the deceptive similarity standard of mark) of proving identity or similarity. In the case of logos and other marks, the application of the “identity” or “similarity” test has to result in a conclusion that the rival marks bear a very close resemblance, seen from an overall perspective. Thus, when considering bringing dilution claims, trademark holders should cast a wider net, looking to factors beyond similarity of marks, and prepare their cases accordingly.
Forms of Dilution:
- Blurring: weakening of the distinctiveness of a famous mark. This is the traditional notion of dilution—using an identical or virtually identical mark on or in connection with goods and/or services that may be completely different from and unrelated to the plaintiff’s goods and/ or services. The belief is that a mark that is highly similar or identical to the plaintiff’s unique, distinctive and well-known mark can detract from consumers’ strong association of the plaintiff’s mark with the plaintiff’s goods and services.
- Tarnishment: Weakening of the distinctiveness of a famous mark, usually through inappropriate or unflattering associations. Examples include using a similar mark, or a term that plays on one’s mark, in association with offensive content, with subject matter critical of the mark owner and its beliefs or philosophies. Tarnishment can also involve using the mark to attract the mark owner’s customers to directly criticize or attack the mark owner or its product or service.
- Free-riding : Enjoying the benefit of positive association with a well-known mark and its prestige. It is sometimes referred to as unfair advantage. Activity that constitutes free-riding does not have to create confusion in the marketplace or cause actual harm to the mark owner.
In India prior to the Trade Marks Act, 1999, the trade mark dilution case was dealt under passing off action. In case of Kirloskar Diesel Recon Pvt. Ltd and Ors vs Kirloskar Proprietary Ltd. and Ors (AIR 1996 Bom 149), it was held that passing off action lies even for dissimilar goods and services. It was held as follows:
- In the case of trading name which has become almost a household word and under which trading name a variety of activities are undertaking, a passing off can successfully lie if the defendant has adopted identical or similar trading name and even when the defendant does not carry on similar activity. Even if the defendant’s activities in such circumstances are remote, the same are likely to be presumed a possible extension of plaintiff’s business or activities. In the instant case, the Respondents have established that word ‘Kirloskar’ has become a household word and their businesses cover variety of activities and that there is even a common connection with some activities of the respondents and activities of the Appellants……………….
The Delhi high court in the Daimler Benz Aktiegesellschft and Anr. V. Hybo Hindustan (AIR 1994 Delhi 236) it was held as follows:
In my view, it is but right that the defendant should be restrained from using the word “Benz” with reference to any underwear which is manufactured by them, and in my view, injunction should issue, restraining the defendant to cease and desist from carrying on trade in any undergarments in the name of “Benz” and “Three Pointed Human Being in a Ring”, forthwith.
In case of Larsen & Toubro Ltd. vs Lachmi Narain Trades. & Ors (149 (2008) DLT 46) it was held as follows:
12…………….As rightly held by the learned Single Judge the test of “field of activity” is no more valid. The question really is one of real likelihood of confusion or deception among the consumers and the resultant damage to the plaintiff. The legal position on the subject is fairly well settled by a long line of decisions rendered by this Court as also the Apex Court.
- We have, in the light of the above pronouncements, no difficulty in holding that the dissimilarity in some of the products in which the parties trade does not make any material difference insofar as the grant or refusal of injunction against the defendants in the facts and circumstances of this case are concerned.
The USA has special law for trade mark dilution in form of Trademark Dilution Revision Act of 2006 (TDRA).
In case of Levi Strauss & Co. v. Abercrombie & Fitch Trading Co., the Ninth Circuit held that a showing of dilution does not require “that the junior mark is identical, nearly identical or substantially similar to the senior mark”. The following was held while reversing and remanding the case to the District Court:
 Finally, our review of the district court’s balancing of the relevant factors convinces us that application of the incorrect standard affected its dilution determination. According to the district court, degree of similarity was only one of three factors that weighed in Abercrombie’s favor. The district court assumed, without deciding, that Levi Strauss also had two factors—acquired distinctiveness and degree of recognition—that weighed in its favor. Thus, application of the correct, less-demanding standard could have tipped the balance in favor of Levi Strauss. The degree of similarity between the Ruehl and Arcuate marks may be insufficient to support a likelihood of dilution, but that conclusion can come only after consideration of the degree of similarity in light of all other relevant factors and cannot be determined conclusively by application of an “essentially the same” threshold.
Thus dilution is the blurring or tarnishing of the image or persona of a well-known trademark by use of a similar mark typically on unrelated goods, or in a manner that tends to reduce its distinctiveness. The dilution doctrine grew out of common law principles. It has now become part of the trademark law and provides protection to trademarks even where claims of trademark infringement are not viable.
In case of ITC LTD. vs PHILIP MORRIS PRODUCTS SA AND ORS. the Hon’ble Delhi High Court held following:
49. As commented earlier, the analogy of tests evolved in infringement actions where similar goods or services are in question appears to be inapposite, after the enactment of Section 29 (4). The plaintiff has to fulfil a more stringent test (than the deceptive similarity standard) of proving identity or similarity, where trademark dilution is complained. Applying the reasoning of the decisions cited previously, it is held that a “global” look, rather than a focus only on the common elements of the mark, is to be taken, while considering if the impugned or junior mark infringes, by dilution, an existing registered mark…………………………………………
Advocate Bombay High Court.