ADDRESSING THE CONCERN OF TRADEMARK TROLLING: RECOGNITION OF THE RIGHTS OF THE PRIOR USER AND THE WAY AHEAD

Introduction

Intellectual Property has been widely regarded as a basic requirement for entrepreneurs from all backgrounds to avoid hindrances while rightfully benefitting from their creations. While patents and copyrights possess large audiences, one could claim that they are exceptionally influential in some fields more than others. However, trademarks have a universal application throughout the world as they are required to protect the most basic representations of one’s innovation. Trademarks have been accessible to people of all classes and have not been restricted to a particular stream or industry due to the very fact that there has to be a graphical representation of one’s innovation regardless of the previously mentioned factors.

However, a rising concern within the trademarks industry itself is that of ‘trademark trolling’ which was inevitable due to globalisation and the large-scale growth of available protection. A question that may arise in the minds of the readers and must certainly be addressed is as follows – What is trademark trolling and how does it occur? In simple terms, trademark trolling is a situation wherein certain individuals, who are already aware of a business’ reputation and previously earned goodwill,[1] try to register similar trademarks in jurisdictions or trademark classes that may or may not have been explored by the business previously. This situation has caused havoc in the trademarking process as companies that have built up their reputation from scratch, suffer from several forms of trademark infringement.[2] These individuals known as ‘trademark trolls’ generally benefit from such situations by settling for a payment in exchange of the trademark. They generally have no losses incurred in initiating these actions as they refrain from using the trademarks for a genuine cause.[3] In similar scenarios, companies have been strong-armed as their plans that were thought out for months would face unnecessary delays and they would have to infer serious losses unless they paid the price agreed upon by the troll.

The infamous registration of TESLA trademarks by Mr. Zhan Baosheng can be considered as trademark trolling. The well-reputed entity, TESLA, was compelled into entering a settlement agreement to avoid long drawn-out litigation which would have severely interrupted their operations.[4] Similarly, a France based vintner Castel Frères suffered the consequences of trademark trolling when a court ordered them to pay over $5 million to Li Dao Zhi. The troll company had registered the Chinese translation of their wine brand and sought damages for infringement when the former began selling cases of wine under the registered mark. This decision was later suspended by the Chinese Supreme Court; however, significant losses would have occurred in litigation.[5]

It is imperative to note that the above-mentioned examples are based in China, a jurisdiction that recognises Prior Registration rights through the First to File principle, and thereby inevitably permits and legalises trademark trolling to an extent. In this article, the author aims to establish the First to Use principle, recognised in common law countries like India, as the solution to unethical infringement claims brought by trademark trolls, thereby protecting Prior User rights of proprietors.

The First to Use Principle – A Common Law Benefit for Trademark Owners

The First to Use principle is upheld in common law countries such as India, the United States, Australia and Canada and it allows for trademark owners to merely use their trademarks in practice for their goodwill to be established which thereby allows them to protect such marks in court. The recognition of the principle in a legislation was officially brought about by the France ‘Manufacture and Goods Mark Act’ in 1857.[6] This principle allows for businesses to begin using their marks as long as it does not infringe on other marks and if unique, they possess the right to such a trademark and can register for the same. It is imperative to note that this allows for the previously established goodwill of companies to be protected as such goodwill is then identified by courts as a previously existing entity as opposed to the trademark troll’s vague justification of the trademark usage.[7]

To put forth an illustration, Sony, a world-renowned company famous in the electronics industry, was in the process of releasing its new gaming console known as the ‘Playstation 5’, which according to previous nomenclature, would be trademarked as the ‘PS5’. However, a trademark troll acquired this trademark in India prior to the console’s release in India and this caused a back and forth of trademark infringement cases.[8] In H&M, Hennes & Mauritz Ab & Anr v. HM Megabrands Pvt. Ltd. & Ors., the court identified the unfair registration of the trademark by the trademark troll and immediately ordered for an injunction against the same.

Prior User Rights: Strengthening the Case of the First to Use Principle

Derived from the concept of the First to Use principle, the rights of the Prior User must be recognised as opposed to recognising the Prior Registration principle. The Prior Registration principle dictates that the person who registers their trademark first is entitled to its benefits as opposed to the person who can prove prior use. This actively enables trademark trolling and is a derivate of the First to File principle which is recognised in countries like China, Japan and Germany.[9]

However, in India, the discourse around the implementation of the principles was brought up in the case of M/S Superflo Pvt Ltd. v. M/S Sandhyamani Associates[10] wherein the trademark ‘Superflo’ had first been implemented by the plaintiff in the year 1986 but they failed to acquire a trademark even after applying for registration. The defendants took advantage of the situation and registered the trademark in 2003 and this was clear case of trademark trolling as the defendants had previously engaged in similar activities with two other trademarks. If the Prior Registration principle were to take precedence, then there would be a clear infringement on the goodwill of the plaintiff and hence, it was imperative for the courts to recognise the Prior User’s Rights. In cases such as Milmet Oftho Industries v. Allergen Inc.,[11] Century Traders v. Rohan Lal Duggar Co[12] and N.R. Dongre v. Whirlpool Corporation,[13] there has been a clear recognition of the Prior User’s rights and they have taken precedence in Common Law jurisdictions to allow for the protection of the goodwill and reputation of companies.

In contemporary times, this discourse becomes even more relevant to stress on the need for protection in the cyber space so as to prevent ‘Cyber-Squatting’ cases wherein trolls acquire domain names to prevent previously established businesses from carrying out their day-to-day activities on the web. In Marks and Spencer v. One in a Million,[14] cyber-squatting was identified as a serious concern and it was held that the perpetrator of such an act must face an injunction accordingly. Additionally, in Acqua Minerals Ltd. v. Pramod Borse and Anr.,[15] the burden of proof was put on the trolls as it was for them to justify the usage of the trademark and in the absence of a valid explanation, it would be assumed that the trademark was being acquired to gain profits through unfair means. Thereafter, there has been a wave of cyber-squatting cases in India that have enhanced the protection that can be availed by owners.

Prior Use Recognised in Indian Legislation: Section 34 of the Trademarks Act, 1999

Section 34 protects rights of individuals who have been using their marks continuously for a considerable duration. The provision establishes that no party with a registered trademark will be allowed to violate the rights of another party who has been using a similar/identical mark, in the same class of goods or services, prior to (i) the first date of use of such trademark or (ii) the date of registration of the trademark.

The key elements to the following provision are – (i) the marks in contention must be in similar classes based on goods or services (as per the NICE classification) (ii) the usage of the unregistered mark must be continuous in duration and must not have been interrupted (iii) the unregistered mark must have been in use prior to the date of registration of the latter mark or the first date of use established in the registration of the latter mark.[16]

To put forth an illustration – ‘A’ has been using their mark continuously since 2010. ‘B’ registers a similar/identical mark in the same class as ‘A’ in the year 2016. Considering that ‘A’ has been using the mark from 2010 and the registration of ‘B’s mark took place in 2016, ‘A’s rights are protected under Section 34 of the Trademarks Act, 1999.

Similarly, in the same illustration, if, during the application, ‘B’ submits an Affidavit of Use which claimed that ‘B’ has been using such mark since 2012, ‘A’s rights would still be protected under Section 34. However, if ‘B’ claimed that their usage of the mark dates prior to 2010, then ‘A’ would not possess any protected rights under this section.

Through the precedent established by M/s R.J. Components and Shafts v. M/s Deepak Industries Limited,[17] even if a user has not registered their mark, they can still have their rights protected under Section 34 as long as continuous use prior to, the date of registration or date of claimed use of the other mark, can be proved.

Conclusion

            While trademark trolling has been addressed in common law jurisdictions through the usage of the First to Use principle and by recognizing the rights of a Prior User, there has to be better protection offered to trademark owners in other jurisdictions that currently implement the First to File principle. The growth of businesses in the current day and time is inevitable and trademark owners that can avail protection in common law jurisdictions must be provided with similar levels of protections in other countries as well. An end to trademark trolling must be brought soon by either adding relevant provisions in statutes by agreeing upon international guidelines or by recognizing the “First to Use” principle universally.

[1] Scott A. McKenzie, 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 (1998).

[2] Miriam Bitton, Rethinking The Anti-Counterfeiting Trade Agreement’s Criminal Copyright Enforcement Measures, 102 J. Crim. L. & Criminology 67 (2012).

[3] Scott Baldwin, Don’t Sit and Wait: Stopping Trademark Squatters, United States Patent and Trademark Office (Last Visited on Apr. 7, 2021), https://www.uspto.gov/learning-and-resources/newsletter/inventors-eye/dont-sit-and-wait-stopping-trademark-squatters.

[4] (2014) No. 09258 San Zhong Min (Zhi) Chu Zi (2014).

[5] Shrabani Rout, The Menance of Trademark Trolls, Mondaq (Jun. 18, 2018), https://www.mondaq.com/india/trademark/711132/the-menace-of-trademark-trolls.

[6] A Brief History of Trademarks, Sherinian Law, https://sherinianlaw.net/intellectual-property-law/trademarks/a-brief-history-of-trademarks/ (last visited Apr. 6, 2022).

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

[8] Hemani Seth, Sony’s PS5 trademark dispute in India resolved, The Hindu Business Online (Oct. 28, 2020), https://www.thehindubusinessline.com/info-tech/sonys-ps5-trademark-dispute-in-india-resolved/article32963847.ece.

[9] Anita Mar, Trademarks: First-to-use and First-to-file Countries, Trademark Angel (May. 5, 2019), https://trademarkangel.com/trademarks-first-to-use-and-first-to-file-countries/.

[10] M/S Superflo Pvt. Ltd. v. M/S Sandhyamani Associates, (2015) SCC OnLine Del 14403.

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

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

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

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

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

[16] Trade Marks Act, 1999, § 34, No. 47 of 1999, India Code

[17] M/s R.J. Components and Shafts v. M/s Deepak Industries Limited, (2017) 244 DLT 502.

 

Submitted by :

VIVEK BASANAGOUDAR

Intern_CIPRA.

Guided by :

Jnana Teja Bandi.

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