Trademarks – Definition, Objectives, Types, Registration Process, Infringement

In this article we will learn about Trademarks Objectives, Types, Rights, Protection of goodwill, Infringement, Passing off, Defences, Domain name.

What is Trademark?

• A trademark is a distinct element that helps identify the origin of goods or services from a particular entity, separating them from those offered by others. This element can take various forms, such as words, phrases, symbols, designs, or even combinations of these elements. The fundamental purpose of a trademark is to provide a unique identifier that is easily recognizable in the marketplace.
• In legal terms, trademarks are governed by specific laws. Under these, a trademark is defined as a mark that can be represented graphically and must be capable of distinguishing one person’s goods or services from those of another. This differentiation can occur through various forms such as the shape of products, their packaging, or a unique combination of colors.
• The term “mark” in trademark law is broad and encompasses several forms of identification. It can include devices, brand names, headings, labels, tickets, or even personal signatures. Additionally, words, letters, numerals, and shapes can also serve as trademarks, depending on their usage. By offering such a wide range of possibilities, trademarks provide businesses with multiple ways to ensure their products or services are uniquely identifiable.
• Therefore, the trademark serves a dual function: protecting businesses from market confusion and ensuring consumers can reliably associate specific products with their corresponding source.

Definition of Trademark

A trademark is a unique word, symbol, phrase, or design used to identify and distinguish the goods or services of one business from those of others. It serves as a legal protection for branding and helps prevent market confusion.

Purpose of a Trademark

1. Source Identification
   The primary purpose of a trademark is to distinguish the goods or services of one entity from those of others. It acts as a visual symbol that helps consumers identify the origin of products, whether it’s a word, design, name, or color combination. This unique identifier allows consumers to link the product to a specific company or brand.
2. Quality Assurance
   Trademarks provide an assurance that the goods or services associated with them maintain a certain level of quality. Since a trademark represents the source, it indirectly promises consistency, ensuring that consumers can rely on the mark for trusted and expected standards.
3. Consumer Decision Making
   Trademarks help consumers make informed decisions by differentiating products and services in the market. When people recognize a trademark, they associate it with the characteristics, quality, and reputation they expect from that brand, making their purchasing decisions easier and more reliable.
4. Legal Protection
   Trademark protection gives the owner exclusive rights to use the mark, preventing others from copying or imitating it. This legal safeguard ensures that only the rightful owner or those authorized by the owner can use the trademark, which helps maintain the integrity of the brand.
5. Encouraging Innovation and Competition
   Trademarks promote competition by rewarding businesses for creating distinct and high-quality products. A well-protected trademark ensures that businesses can invest in innovation and marketing without fear of unfair competition or counterfeit goods damaging their reputation.
6. Preventing Consumer Confusion
   Another critical purpose of a trademark is to protect consumers from confusion in the marketplace. By clearly identifying the source of goods or services, trademarks help prevent situations where counterfeiters or competitors might use similar marks to mislead buyers.
7. Facilitating International Trade
   Trademarks also play a role in global commerce. A protected trademark allows businesses to expand into international markets with the assurance that their brand identity will be legally protected, enhancing their ability to grow and operate in various regions.
8. Building Goodwill
   Trademarks contribute to the development of goodwill for a company. Goodwill is the value derived from consumer trust and loyalty in a brand, built through consistent quality and service over time. A strong trademark fosters this loyalty, encouraging repeat business and enhancing the company’s reputation.

Types of Marks

1. Trademark
   A trademark is used to identify and differentiate physical goods from one producer or seller compared to others in the marketplace. It is a visual mark, often including a combination of letters, symbols, or designs, that helps a company create a distinct brand identity. While trademarks primarily apply to tangible products, the term is commonly used to refer to both goods and services.
2. Service Mark
   Similar to a trademark, a service mark identifies and distinguishes the source of a service rather than a physical product. Companies that provide services, such as restaurants, software development, transportation, or healthcare, use service marks to protect their brand. The legal framework for service marks is essentially the same as for trademarks, offering similar protections against misuse.
3. Certification Mark
   A certification mark is used by one entity to certify that another entity’s goods or services meet specific standards regarding quality, material, or method of production. These marks are not owned by the producer of the goods or services, but rather by a certifying body. Examples include the ISO mark, Hallmark, or the Underwriters Laboratory (UL) seal, which certifies safety and quality standards.
4. Collective Mark
   A collective mark is used by members of a group or organization to signify membership in that group. These marks are often seen in labor unions, professional societies, or associations and are used to indicate that a particular product or service originates from a member of that organization. Collective marks are not owned by individual traders but by the organization itself, which sets the rules for their use.

Acquisition of Trademark Rights

Trademark rights can be acquired through two primary systems: Use and Registration. These models differ in how they establish ownership of a trademark, with each system being adopted in different jurisdictions around the world.

1. By Use
   Under the “use” model, trademark rights are established based on the actual use of the mark in commerce. Ownership is determined by the time the trademark was first used in trade. This model prioritizes the factual use of the mark, which historically was the basis for trademark rights. For instance, the early French trademark legislation from 1857 utilized this principle. However, due to various drawbacks, France shifted to the registration model in 1964, now enshrined in the Code of Intellectual Property, which stipulates that trademark rights are acquired through registration.
2. By Registration
   The “registration” model grants trademark rights through formal registration. In this system, the first party to register a trademark acquires the rights, regardless of prior use. This approach is prevalent in many jurisdictions, including India. Under this model, the registration of a trademark confers several exclusive rights and protections:
   • Exclusive Use
     Registration provides the proprietor with the exclusive right to use the trademark concerning the registered goods or services. This exclusivity is enforced through legal mechanisms designed to prevent unauthorized use.
   • Legal Remedies
     Registered trademark owners can seek legal relief in cases of infringement. This protection extends to similar or identical marks used on the same, similar, or even dissimilar goods or services, depending on the scope of the registration.
   • Preventing Confusion
     Registration prohibits others from using or registering the same or a confusingly similar mark for the same or similar goods or services. This provision helps maintain the distinctiveness of the trademark and prevents market confusion.
   • Protection of Well-Known Marks
     For well-known trademarks, registration prevents the use or registration of similar marks even for dissimilar goods or services. This higher level of protection helps safeguard the reputation and distinctiveness of prominent brands.
   • Regulation of Use
     Registered trademarks cannot be used in business papers or advertisements by others, especially in comparative advertising, unless it adheres to honest commercial practices. This restriction helps prevent misuse that could damage the trademark’s reputation.
   • Rights to Restrict Usage
     The trademark owner has the right to prevent others from using the mark as part of their business name or in relation to similar goods or services. Registration consolidates the rights of a previously unregistered mark, enhancing its legal protection.
   • Conversion of Common Law Rights
     A trademark in use prior to registration can be converted into a registered trademark, granting it the benefits of statutory protection. Prior use confers common law rights, which are elevated upon formal registration.

Transfer of Trademark

• Concept of Transfer
  The transfer of trademark rights, also known as an assignment, involves shifting ownership and associated rights from one party to another. The party transferring the rights is referred to as the assignor, while the party receiving the rights is called the assignee. This transfer can encompass the entire set of rights or a portion thereof.
• Types of Transfers
  • Full Transfer: The assignor may transfer all their rights in the trademark to the assignee. This type of transfer relinquishes any control, involvement, or claim by the assignor over the trademark.
  • Partial Transfer: Alternatively, the assignor may choose to transfer only specific rights. For instance, a copyright owner might assign only certain economic rights related to their work.
• Assignment Agreement
  An intellectual property assignment agreement is a formal contract that effectuates the transfer of trademark rights. This document specifies the terms under which the assignor transfers ownership to the assignee, usually in exchange for a monetary consideration. Once executed, the assignor no longer retains any rights or claims to the trademark.
• Legal Framework
  According to Section 37 of the Trade Marks Act, 1999, the registered proprietor has the right to assign the trademark, subject to any prior rights recorded in the trademark register. The assignment can be complete or partial and may include or exclude the goodwill associated with the business. The principle established is that the assignor cannot transfer more rights than they hold.
• Written Assignment Requirement
  As stipulated in Section 2(1)(b) of the Trade Marks Act, 1999, the assignment must be documented in writing. Both the assignor and the assignee must execute the assignment agreement, ensuring that the document is a mutual agreement rather than a unilateral decision.
• Implications of Transfer
  • Without Goodwill: A trademark can be assigned with or without the goodwill of the business. When transferred without goodwill, the assignee obtains the trademark rights but not the associated business reputation.
  • Scope of Assignment: The assignment can be specific to the goods or services for which the trademark is registered, affecting how the trademark can be used by the assignee.

Types of Assignment of Trademark

1. Complete Assignment of a Trademark
   • Definition: This type of assignment involves the full transfer of trademark ownership and all associated rights from the assignor to the assignee.
   • Characteristics: The assignee acquires all the rights to the trademark, including the ability to further transfer these rights to another party if desired.
   • Implications: After a complete assignment, the assignor relinquishes all rights and control over the trademark, while the assignee holds full rights.
2. Partial Assignment of a Trademark
   • Definition: In this scenario, the assignor transfers ownership rights to specific products or services only, while retaining rights to other products or services.
   • Characteristics: The assignor maintains control over the remaining part of the trademark not transferred to the assignee.
   • Implications: The assignor can continue to use the trademark for the products or services not involved in the partial assignment. This type of assignment allows selective transfer of trademark rights based on business needs.
3. Trademark Assignment with Goodwill
   • Definition: This type of assignment includes the transfer of not only the trademark rights but also the associated business reputation and customer goodwill.
   • Characteristics: The assignee inherits the trademark along with the goodwill that contributes to its market value and consumer recognition.
   • Implications: The assignee benefits from the established reputation of the trademark, which can enhance the promotion and marketability of the product or service.
4. Trademark Assignment without Goodwill
   • Definition: Here, the assignor transfers the trademark rights but excludes the transfer of the associated goodwill and market reputation.
   • Characteristics: The assignee receives the trademark without the benefits of the brand’s established reputation. The assignor retains rights to use the trademark in different business contexts.
   • Implications: This form of assignment, also known as a gross trademark assignment, allows both the assignor and assignee to use the trademark in their separate business fields. The assignee’s use of the trademark is limited by the absence of goodwill, which may affect the trademark’s market value.

Registration of Assignment

The process of registering the assignment of a trademark involves formal procedures that ensure the transfer of ownership is legally recognized and documented. This process is governed by the Trade Mark Act, 1999, specifically Section 45, which outlines the following steps and requirements:

1. Application for Registration
   • Procedure: When a person acquires a registered trademark through assignment, they must file an application with the registrar to record their new ownership.
   • Details Required: The application must be submitted in the prescribed format, and the applicant should provide evidence of the assignment to substantiate their claim.
   • Registrar’s Role: Upon receipt of the application, the registrar will process it and update the official records to reflect the new proprietor of the trademark in relation to the specified goods or services.
2. Evidence and Verification
   • Additional Proof: The registrar may request further evidence or statements if there are doubts about the authenticity of the submitted documents or statements.
   • Purpose: This step ensures that the transfer of rights is legitimate and that the documentation accurately reflects the assignment.
3. Assignment Agreements
   • Importance: Assignment agreements are critical in intellectual property transactions as they formalize the transfer of trademark rights between parties.
   • Function: These agreements are written contracts that detail the terms of the transfer, including the extent of rights being assigned and any conditions attached.
   • Protection: The agreement ensures that the assignor’s rights are transferred to the assignee, providing legal protection and regulating the interests of all parties involved.
   • Monetary Aspect: The assignment often involves financial transactions, where the assignor receives compensation for the transfer of their rights, reflecting the commercial value of the trademark.
4. Formalization and Enforcement
   • Legal Framework: The assignment agreement serves as a legally binding document that confirms the assignee’s complete ownership of the trademark.
   • Implications: Once registered, the assignment is recognized by law, and the assignee gains all the rights associated with the trademark as stipulated in the agreement.

Selecting and Evaluating Trademarks

Selecting a Mark

The process of selecting a trademark is multifaceted and involves several strategic steps:

1. Initial Selection Methods:
   • Companies may use various methods to generate potential marks. These can include internal contests, where employees propose designs and names, or collaborations with branding agencies that conduct market research and create logos or designs.
2. Screening and Evaluation:
   • After a mark is selected, it must be thoroughly evaluated to ensure its suitability for use and registration. This step is critical to avoid future issues such as wasted resources or potential legal disputes.
3. Criteria for Evaluation:
   • Scandalous or Offensive Marks: The mark must not be scandalous or offensive, as this would lead to rejection under the Lanham Act.
   • Consent Requirements: If the mark includes the name of a living person, their consent might be necessary.
   • Generic and Descriptive Marks: Marks that are generic or merely descriptive of the goods or services offered might not be eligible for protection.
   • Statutory Protection: The mark should not conflict with existing statutory protections.
   • Foreign Terms: Marks incorporating foreign terms must be assessed for potential conflicts or misunderstandings.
4. Documentation:
   • Law firms specializing in trademarks often use questionnaires or datasheets to collect essential information about the mark from clients, which helps in evaluating its potential.

Evaluating a Trademark

The evaluation of a trademark is essential for understanding its value, which can be complex due to its intangible nature. Here’s a detailed approach to evaluating trademarks:

1. Historical Evaluation:
   • Begin by examining the historical aspects of the trademark, such as the investment made in its development, the profit margins associated with it, and its historical significance.
2. Valuation Methods:
   • Income Approach: This method assesses the trademark’s value based on its potential to generate income. It involves estimating future cash flows and risks, and converting these into a present value.
   • Market Approach: This approach compares the trademark with similar marks in the market. It involves analyzing market trends, royalty rates, and transaction prices of comparable intangible assets.
   • Cost Approach: This method calculates the cost incurred in creating and promoting the trademark. It considers both direct costs and indirect expenses associated with branding.
3. Additional Factors:
   • Qualitative and Quantitative Characteristics: Assess both the qualitative aspects (e.g., brand reputation) and quantitative metrics (e.g., sales figures) of the trademark.
   • Contracts and Agreements: Evaluate any existing contracts or agreements related to the trademark.
   • Market Position and Sustainability: Consider the current market position of the trademark and its potential for future sustainability.
   • Capital Structure: Analyze how the company’s capital structure may affect the trademark’s value and make adjustments as needed.

Trademark Registration Process

Trademark registration is a critical step in protecting a brand’s identity and ensuring legal rights over its use. The process involves several structured stages:

1. Preliminary Considerations
   • Before initiating the registration process, the following parties can apply for trademark registration:
     • Private firms
     • Individuals
     • Companies, including Limited Liability Partnerships (LLPs), Private Limited Companies, Public Companies, and Partnerships
     • Non-Governmental Organizations (NGOs)
   • In cases involving NGOs and LLPs, the application must be made in the name of the organization or business entity. The applicant must submit an application in writing, specifying the trademark, the goods or services associated with it, the applicant’s name and address, and a power of attorney. The application must be in English or Hindi and filed at the appropriate office.
2. Trademark Search
   • Purpose: Conducting a trademark search is essential to avoid conflicts with existing trademarks. It helps determine if similar marks are already registered or pending registration.
   • Process: The search provides insight into potential legal disputes and helps prevent wasted resources on a mark that could face registration challenges or litigation.
3. Filing Trademark Application
   • Choosing a Class: Trademarks are categorized into 45 different classes based on the nature of goods or services. The applicant must select the appropriate class for their mark.
   • Submission: The application can be filed either online or offline at the Trademark Registry. Upon submission, an official receipt with a trademark application number is issued for tracking purposes.
4. Examination
   • Duration: The examination process typically takes 12 to 18 months.
   • Evaluation: The examiner will assess the application and may accept it unconditionally, conditionally, or reject it.
   • Publication: If accepted, the trademark is published in the Trademark Journal. If conditional or rejected, the applicant must address the objections or fulfill conditions stated in the examination report.
   • Hearing: If objections are not resolved, a hearing may be requested. If the examiner is convinced of the mark’s eligibility, it will proceed to publication.
5. Publication
   • Objective: Publication allows third parties to oppose the registration of the trademark if they have grounds to do so.
   • Opposition Period: There is a 3-4 month period during which objections can be filed. If no opposition is received, the trademark proceeds to registration.
   • Opposition Handling: If opposed, a fair hearing is conducted, and a decision is made by the Registrar.
6. Registration Certificate
   • Issuance: After successful publication and resolution of any opposition, a registration certificate is issued under the seal of the Trademark Office.
   • Validity: This certificate formalizes the legal protection of the trademark.
7. Renewal
   • Frequency: Trademarks must be renewed every 10 years.
   • Perpetuity: The registration can be renewed indefinitely, ensuring long-term protection of the brand.

Required Documents for Filing

• Identity and Business Proofs: Such as Aadhar Card, Driver’s License, Passport, or Voter’s ID.
• Logo with Tagline: If the application includes a logo, it must be in black and white format and match the description in the application.
• Brand Name & Logo: The logo must include the brand name.
• User Affidavit: Required if specific user data is claimed.
• Proof of Trademark Use: Documentary proof such as invoices or registration certificates.
• MSME or Start-Up Recognition: For entities seeking a rebate, a certificate of registration under MSME or Start-Up India scheme may be required.
• Form TM-48: This form allows an attorney to file the trademark application on behalf of the applicant.

International Registration

The international trademark registration system is governed by two treaties:

• Madrid Agreement: Concluded in 1891, with various revisions and amendments.
• Protocol: Established in 1989 to enhance flexibility and compatibility with domestic laws.

Both treaties facilitate the protection of trademarks across multiple countries. They are open to states party to the Paris Convention for the Protection of Industrial Property. States and organizations that become parties to the Madrid system can secure international protection for their trademarks.

What is Trademark Infringement?

• Trademark infringement occurs when a party uses a trademark without authorization, in a way that is identical or confusingly similar to a registered trademark. This illegal use can cause confusion among consumers about the source of goods or services. In such cases, the infringing mark may deceive or mislead consumers into believing that the goods or services are associated with the original trademark holder.
• The Trademarks Act, 1999 governs trademark laws in India. This legislation provides guidelines for the registration, protection, and penalties related to trademarks. Trademark infringement is treated as a violation of intellectual property rights, and legal consequences follow when an unauthorized party uses a mark that could lead to confusion regarding the source of the products or services.
• The Indian Patent Office, under the authority of the Controller General of Patents, Designs, and Trademarks, handles trademark protection in India. When a trademark is infringed, the trademark holder can take legal action to stop the infringing party and seek damages. This protection extends not only to national trademarks but also to international trademarks in countries with similar laws.
• Infringement often happens when a mark is used that is “deceptively similar” to an existing registered trademark. This means that an average consumer, upon seeing the mark, could mistakenly assume it is associated with the original brand, causing confusion in the market.

Types of Trademark Infringement

Trademark infringement can be categorized into two main types: direct infringement and indirect infringement. Each type has distinct characteristics and legal implications.

1. Direct Infringement

Direct infringement occurs when an unauthorized party uses a trademark in a manner that infringes upon the rights of the registered trademark holder. Key elements of direct infringement include:

• Unauthorized Use: The infringement only takes place when the mark is used by someone who is not authorized by the trademark holder. If the mark is used with the holder’s permission, it does not constitute infringement.
• Identical or Deceptively Similar Marks: The unauthorized use must involve a trademark that is either identical to or deceptively similar to the registered trademark. “Deceptively similar” means that there is a possibility of confusion among consumers regarding the source of the goods or services. It does not require proof of actual confusion, just the likelihood of it.
• Registered Trademark: Protection under the Trademarks Act, 1999 is available only for registered trademarks. If a mark is unregistered, disputes are resolved under common law principles, such as the tort of passing off, which addresses harm to the goodwill of a business.
• Class of Goods or Services: For direct infringement to be established, the unauthorized use must occur within the same class of goods or services as the registered trademark. This means that the infringing mark must be used in connection with products or services that fall under the same classification as those covered by the registered mark.

2. Indirect Infringement

Indirect infringement refers to situations where a party is held liable for contributing to or facilitating direct infringement. Although the Trademarks Act, 1999 does not explicitly address indirect infringement, it is governed by broader legal principles. There are two main types of indirect infringement:

• Vicarious Liability: Under Section 114 of the Act, if a company commits an infringement, the company itself, along with individuals who have control over the infringing activities, can be held liable. The key elements include:
  • Control: The person must have the ability to control the activities of the principal infringer.
  • Knowledge and Contribution: The person must be aware of the infringement and must have contributed to it.
  • Financial Gain: The person may derive financial benefits from the infringement.
  • Exception: The only exception to vicarious liability is if the company or individual acted in good faith and was unaware of the infringement.
• Contributory Infringement: This involves a person who:
  • Knowledge: Knows about the infringement.
  • Material Contribution: Provides significant assistance to the direct infringer.
  • Inducement: Encourages the direct infringement.
  • No Good Faith Exception: Unlike vicarious liability, contributory infringement does not allow for a defense of good faith; the contributory infringer is held accountable regardless of intent.

Penalties for Trademark Infringement

In India, trademark infringement is treated as both a civil and criminal offense, subject to various penalties and remedies. The legal framework allows for comprehensive action against those who infringe upon trademark rights.

Civil Penalties and Remedies

1. Temporary Injunction: This is a court order that prevents the infringer from continuing their infringing activities while the case is being decided. It is designed to prevent immediate harm to the trademark holder.
2. Permanent Injunction: If the court rules in favor of the trademark holder, a permanent injunction may be issued to prevent the infringer from using the trademark indefinitely. This remedy aims to provide long-term protection against future infringements.
3. Damages: The court may award damages to the trademark holder for losses incurred due to the infringement. These damages compensate for the harm done to the brand’s reputation and financial loss.
4. Account of Profits: The infringer may be required to pay the trademark holder the profits they made from using the infringing mark. This remedy aims to ensure that the infringer does not benefit financially from their wrongful actions.
5. Destruction of Infringing Goods: The court may order the destruction of goods that bear the infringing trademark. This helps to eliminate any products that could confuse consumers and harm the trademark holder’s brand.
6. Cost of Legal Proceedings: The court may also award the trademark holder the costs incurred in pursuing legal action. This includes attorney fees and other related expenses.

Criminal Penalties

1. Imprisonment: Infringement may lead to imprisonment for a minimum of six months, extending up to three years. This penalty aims to deter individuals and entities from engaging in trademark violations.
2. Fines: Offenders may also face fines ranging from a minimum of Rs 50,000 to a maximum of Rs 2 lakh. The financial penalty serves as a deterrent and punishment for the infringement.

Trade Secret Considerations

In addition to trademark issues, the protection of trade secrets is another critical aspect of intellectual property law. Trade secrets are valuable, confidential information that provides a competitive edge to a business. To qualify for protection, trade secrets must be:

• Valuable: The information must offer an economic advantage to the holder.
• Not Publicly Known: It must not be accessible to the general public or competitors.
• Subject of Efforts to Maintain Secrecy: Reasonable measures must be taken to keep the information confidential.

Facts

1. Did you know the world’s oldest registered trademark still in use is the Bass red triangle from 1876?
2. Can you believe sounds like NBC’s chimes or MGM’s lion roar can be trademarked?
3. Did you know some companies trademark scents, like the smell of Play-Doh?
4. Have you heard that specific colors can be trademarked, like Tiffany & Co.’s blue or UPS’s brown?
5. Did you know celebrities often trademark their catchphrases, like Paris Hilton’s “That’s Hot”?
6. What’s the longest trademarked word? It’s “Mammaste,” combining “Namaste” with “Mama,” used by Mamma Chia.
7. Did you know trademarks can last indefinitely, as long as they’re renewed and still in use?
8. Can you imagine that while individual emojis can’t be trademarked, some emoji combinations can be?
9. Did you know there’s a phenomenon called trademark trolling, where people file trademarks just to sell them for profit?
10. Did you know even shapes can be trademarked, like the Coca-Cola bottle or Toblerone’s triangular chocolate bar?
11. Have you heard of the long-standing trademark dispute between Apple and The Beatles’ Apple Corps over their logos?
12. Did you know registering a trademark in the U.S. can take between 8 to 12 months?
13. Did you know August 5 is National Trademark Day, celebrating the first U.S. trademark law passed in 1881?
14. Can you believe Beyoncé and Jay-Z trademarked their daughter Blue Ivy’s name?
15. Did you know trademarks aren’t automatically international and must be registered in each country or through treaties like the Madrid Protocol?
16. Did you know trademarks can lose protection if they become too generic, like “aspirin” or “escalator”?
17. Did you know WWE had to change its name from WWF after a trademark battle with the World Wildlife Fund?
18. Did you know common words like “Apple” can be trademarked, but only for specific products or industries?
19. Did you know there are over 3 million active trademarks in the U.S.?
20. Have you heard Google once tried to trademark its April Fools’ joke, “Google Nose,” a fictional search engine for smells?