The Case of the Early Bird and Trademark Squatting


Let’s take a huge scoop of hypothesis and say that, Ben and Jerry ice-creams forgot to register their trademark in India, and in 2016 when they tried to come into the Indian market they see that there has already been a trademark registered for Ben and Jerry in India, by one Mr. X. What Mr. X did was be the early bird and registered the trademark before Ben and Jerry, hence now either Ben and Jerry would have to fight a lengthy court battle or pay Mr. X and get the trademark. Knowing the works of the legal system, the latter seems more probable.

This article occurred to me when I read the recent report that the world famous Ikea had lost its trademark rights to the word ‘Ikea’ in Indonesia. Though not essentially trademark squatting, this case seemed like a smart move by an Indonesian and a missed opportunity for Ikea. The Indonesian rattan furniture company called “Intan Khatulistiwa Esa Abadi”, registered its acronym “IKEA” in 2013. Whereas the Swedish multinational though registered the trademark in 2010, failed to actively use the trademark for 3 consecutive years for commercial purpose, which, according to the Indonesian Trademark law meant that it could be deleted from the registry. Which did happen, and the Supreme Court upheld the trademark for the rattan furniture ‘Ikea’.

Closer home, it was the Burger Giant, Burger King which is still at loggerheads with a fast food restaurant with the name Burger King India. Under Section 47 of the Trademarks Act a trademark can be removed from the register on account of non- use for a period of 5 years and 3 months upto the date of application for the removal. The Indian Burger King in their defense stated that the USA chain had though registered the trademark in 1979 had not used it and secondly, had failed to oppose the registration of their application. This amounted to both nonuse and acquiesce. As both the gear up for vigorous expansion plans we will have to wait and see on whose table is justice served.

Though I give both the Indonesian and the Indian the benefit of the doubt, but I still feel it highly unlikely that the name was just a mere coincidence, both selling similar goods too. That too of brands that are famous the world over. But as they say… ignorance of law is no excuse.

India a safe haven for trademark squatters?

Although India allows the ‘first to file’ system of protection, it does give due weightage to usage. The system of applying for trademarks on a proposed to be used basis, helps trademark squatters to register the trademark without any actual proof of usage. It is only when the actual proprietors of the trademark find out about it, that the problem arises. With multinational companies the presence of innumerable trademarks in different countries can be an Achilles heel. It is worse when the squatters sell their own products, and dupe the public into believing they are from a trusted international brand. Due to the prominence the Indian trademark law gives to usage, all is not lost, though a lengthy confrontation is inevitable; as can be seen in the case of Burger King.

The trans-border reputation rule is also followed in India, which upholds the reputation of the brands who though do not have operations in India, are known in India on account of the presence of the brand as advertisements in the media or by any other means that familiarizes people with the brand name. When Walmart challenged a company that was using the trademark ‘Wall- Mark’, the retail multinational was able to get an injunction of account of its trans-border reputation. Though it must be stated that it is not easy to establish trans-border reputation, and it can be costly and worse, time consuming to have the squatter’s registration cancelled. India also recognizes and follows the “well- known” standard. Though to establish that an unregistered mark is well known a lengthy process of litigation is required, which not only delays the business but also creates a bad start. The notoriety of a trademark in India or internationally is also protected from misuse under common law, though again the burden of proving it lies with the owner. Considering the backlog of cases, it may take years or even a decade till there arrives a favorable judgment.  It is hence always advised to register one’s mark, even if the plans of expansion into India are in the offing. Not to forget, making sure it doesn’t fall into disuse.

In today’s like, hashtag, pin, share era a brand that becomes popular in one country can become the same in another without actually selling or actively advertising the products in that country. The internet acts like gasoline to the wild fire making sure that no good product gets unnoticed. Hence is always wise to register the trademark in other countries, after the first initial success of the brand, especially in the emerging markets. Equally important is to maintain a sound understanding of the IP laws in each country as well as keep a tab on the latest IP developments. With respect to established brands there lies even more reasons to protect one’s trademark and be on the watch for trademark squatters.

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