Trademarks and geography
Neel Mason from Mason & Associates, specialising in intellectual property rights, speaks to Shalini Seth about copyright and trademark issues in India
In light of recent cases, what do you think is the status of trademark laws in the country?
Mason: One of the principles of this law is acquiescence – if you have allowed someone to grow you don’t have the right to stop them even though you may own the mark. In that judgement, the judge put in a line, which we had not argued. It said: “Take, for example, Taj Hotels. If tomorrow someone sets up a dhaba and calls it a Taj. You don’t expect Taj Hotels to take action against every dhaba in the country. But what if the dhaba suddenly becomes a big hotel or takes a licence? When it starts affecting your business, you take action.”
How often do these matters reach the court and what are the precedents?
Mason: In trademarks in India, 95% of matters are decided by interim orders. Depending on whether you lose or win you go on appeal. The suit will continue. We have very few judgements. But if a party has been restrained, they know that it may take five or seven years to be decided. One normally changes the brand by own initiative.
Can you give us a legal perspective on KHIL v/s ROHL case, over the use of the brand name ‘Orchid’?
Mason: In this case, KHIL was first in the in the market and owner of the trademark. The marks are deceptively similar. The essential feature of the mark is Orchid. They’ve tried to argue acquiescence and delay. In the judgement it is clear that there is no acquiescence. You may mould your relief depending on practical aspects. The substance of this is that the status quo is continuing. This is going to affect both parties since ROHL’s problem is that they cannot expand the brand now. I have a sense that both will file an appeal. I can’t see them being happy with this.
Sometimes the judgement lets the parties decide. Supposing the judgement went against you and you appealed and that is dismissed. Then the compromise can be that give us three or five years to decide. Then they can work a license agreement, or an irrevocable license. In this judgement it has given a bit to both. If ROHL wants to go on expanding, which they do, the route is cut off for them. Theoretically, it sounds fine. But the problem is now that you have to create another brand name. If you have enough in your portfolio for two brands that is fine. But you may not want to do that. The other thing is that there is a sword hanging – the suit. Eventually, it will be decided and you are running a risk of having built a reputation even further.
Is there a limitation after which you cannot challenge the use?
Mason: There is a limitation of three years. But there is a judgement, which says that each time you infringe it leads to a fresh cause of action.
Are there any cases that you can cite where there have been compromises?
Mason: Taj had a case about Jiva Spa in 2007. They were restrained from spas using the name Jiva because there was an institute of Ayurved with the same name which claimed a proprietary right in the word Jiva. The interim was argued for months. Now Taj is allowed to use the trademark Jiva for spas but they cannot sell products bearing the trademark Jiva. This was an interim order.
In case of Hilltone v/s Hilton, what should have worked is trans-border reputation, which is an established principle of law. It means that even if you don’t have an established product in the country, you still have a reputation that spills over into the country. That helps you protect your mark. This principle was set up in the 1980s when foreign companies were allowed to come in.
Does that mean that your trademark is valid even if it is not registered?
Mason: There are essentially two aspects to trademarks laws. One is your rights in a trademark are built through your reputation and goodwill. Your registration gives you an additional right.
You have protection under common law even without registration. Registration gives you stronger protection. But interestingly, a person who has a registration can be restrained by a person who is a prior user and has prior reputation.
How does trademark translate to the internet and how are disputes resolved?
Mason: The internet centre for assigned names and numbers has a dispute resolution centre. So regularly parties take action there. You file a complaint. It is an online arbitration. Within 45-60 days they decide the matter. There are only three principles that you have to be careful. The first is that you have a legitimate right. You have to show that the defendant’s registration was in bad faith.
About a year ago, Marriott had filed a case against a hotel in Delhi, which called itself The Avalon Courtyard. The website was AvalonCourtyard. Marriott filed a domain name complaint and we defended it. This was an online, international arbitration. They have established that Courtyard by Marriott is a well known mark and that they have rights over it. But our use of the website had a basis that the name of our hotel was the Courtyard. Based on the name of the hotel, we were allowed to continue the website.
What do they do to ensure that one does not trespass on another’s trademark?
Mason: You can do a search in the registry to check if someone else had registered – ipindia.nic.in. Anyone can go online and search it for India. Internationally, you have to look at every other country. Certain other countries have their own resources. In some countries it is online.
I am sure most hotel companies by now have a couple of registrations. There is only one blind spot. If there is someone who is using it and has not registered you can only assess by the market. There is no concept of a common law search in the registry. That is fairly low risk because most people who claim proprietary rights are savvy enough to apply for trademarks.
Aren’t laws specific to each country?
Mason: Trademarks are geographic. You are known in a particular country. If you are a big company you have this trans-border reputation. But not everyone can claim a cross-border reputation. Certainly, a big player can claim it. The country we are looking at should have the concept of trans-border. But it actually needs to exist. For example, a company may have trans-border in the US but may not have any in Venezuela. It depends on the kind of people, the volume of trade, whether people travel up and down. It is very specific.
You can have one company holding a trademark for India and another company holding a trademark for another country. In the last few years I have even seen a trademark registry sometimes while granting registrations restricting it to certain states in India.
If a brand is restricted to one region, then a possible solution to a trademark lawsuit could be that they could use it only in that region. There is a concept of non-use cancellation after five years, if there is an intention to abandon.
But the internet is different?
Mason: What initially happened was that there were thousands of people blocking domain names. Litigation could take years. So the internet centre for assigned names and numbers came up with this arbitration centre. When you sign an agreement to block a domain name you also consent to arbitration where the person who has assigned the name has the right to select an arbitrator. If I go and register a domain name in bad faith then the company that owns the name, even if it is not registered, can initiate proceedings under the UDRP – universal dispute resolution policy.
If the centre says that the domain name is liable to be transferred, you are given a time period to get a court order against that. There are some jurisdiction issues. That is for limited cases where there is bad faith.
So, is there no trans-category reputation?
Mason: The best way to explain this is a Delhi high court judgement against a company that was making underwear called Benzer or Benz. The defence was that there is no connection between a high level luxury car and underwear. But they lost – the fact remains that if you had Mercedes scooters, tyres, where would the distinctiveness of Mercedes Benz car remain?
If you allow that to get diluted the brand itself gets diluted.
Do you think there is any need for reforming the Indian intellectual property rights laws given the changing nature of the world?
Mason: We are at par with the rest of the world. There are proposed amendments still pending. There is no concept of an international trademark at present but there is something called the Madrid protocol by which you can file a single application and designate it in several countries – 80 to 100 – worldwide. Many countries are members. India is a member since the cabinet cleared us becoming members of the Madrid Protocol a few years ago but we have not amended our legislation for us to become members of Madrid, which means you cannot file this application based in India. This would allow us to file for several countries while being based in India, there is no reciprocal arrangement at the moment. It is only when others can apply in your country that you can apply. That will be one of the most significant changes in the way a lot of businesses in India look at trademark.
Right now if a client tells me that he has to apply in 50 countries, I have to get quotes from lawyers from those 50 countries and then send the work to them and get it done. Here you will be able to cover a lot of countries.