Trademark dilution

Trademark Dilution Tanatcha Sukkasem Intellectual Property Right Dr. Lhingling Wei 29 March
Trademark Dilution
Trade mark dilution refers to the loss of uniqueness of a trade mark through its duplication by the competitors in the market place. To make out a case of dilution, the owner of the original trade mark must establish the uniqueness of his trade mark reputed for its product or service among the purchasing public or consumers. For example, Kodak is a trade mark of repute in the field of photography just as Rolls-Royce in automobiles and Coca-Cola in soft drinks. Reputation need not be as high as international to qualify for being reputed. Reputation is relative to the market in which the trademark is in use subject to of course the area for which he has acquired trade mark rights.
Trade Marks Act 1984 section 5 (3) confers right to the owner of the existing trade mark to prevent registration of a rival trade mark that dilutes the distinctness and exclusivity of his existing trade mark. The owner of the original trade mark is entitled under section 10 (3) of the said Act to sue the duplicator for infringement. In fact, section 5 (3) bars a trade mark from being registered if it is identical or similar to an earlier trade mark which has a reputation use of which will give unfair advantage to the new trade mark sought to be registered and/or will erode the distinctive character or reputation of the original trade mark 1.
A few case law in this regard will be illustrative of the trade mark dilution.
Richard Conroy v Smithkline Beecham PLC 2 involved similar sounding name of a product NIT NURSE, an anti-lice product sought to be registered by the applicant was opposed by Smithkline Beecham PLC on the ground that its long established product of repute namely NIGHT-NURSE, a oral decongestant would suffer from erosion of its uniqueness it had enjoyed all along in the market. Although the name NIT NURSE would not give any unfair advantage , it would be detrimental to Night-Nurse in the “ tarnishment” of a oral medicine of repute by the similar mark meant for treatment for “ blood-sucking insects”. The detrimental effect was recognized as also the diluting effect of NIGHT-NURSE’s distinct character. 3
In the United States , Federal Trademark Dilution Act passed in 1995 (subsequently amended in 1999 as Trademarks Amendment Act 1999 (TAA)) sought to protect large companies against the ‘ gradual whittling away’ of renowned brands by new entrants4 as an effort to protect big business at the expense of upcoming businesses. This is in addition State laws against dilution and trademark owners are able enjoy the twin protection. While federal law require that dilution has actually occurred, state laws required mere likelihood of dilution. Some of the states have since amended their laws in harmony with federal scheme of protection. Trademark Dilution Revision Act 2006 however seeks to expand the scope to “ likely dilution” from “ actual dilution”. The new Act s 43©(1) protects a trademark which is inherently distinctive or has acquired distinctiveness against infringement subject to the following conditions being met. 5
a) The senior mark must be famous; and
b) The junior uses senior’s mark in his trade; and
c) Use by junior is likely to cause dilution by blurring; or
d) Use by junior is likely to cause dilution by tarnishment. 6
Three broad defenses are fair uses such as parodies and comparative advertising , news reporting and non commercial use. 7
In a US case, the aggressors were a couple; the Moseley’s who had committed the unforgivable act of opening a clothing store in Kentucky called ‘ Victor’s Secret’. The more renowned company warned them off such a store name but only succeeded in making them change it to ‘ Victor’s Little Secret’. This still fell short of the demands of the renowned retailer who thought a complete change of name was the only way out8. In the Sixth Circuit it was agreed that there was possible dilution in this case. The Moseley’s lawyer insisted that the fashion giant must table actual ‘ economic harm’. Therefore, the whole business of trademarks is the prevention of any likely economic harm.
There are several functions that trademarks perform. One of them is the economic function mentioned above. Adidas and a Chinese company called ‘ Adibas’. It is clearly very easy to confuse the former for the latter. As a result a customer will end up buying from the Chinese firm at the expense of the German firm. Other functions of trademarks shall be mentioned as they arise.
Another function of trademarks is the identification function. Strasser actually decides to split this function into two parts. On one part there is the product-identifying function while on the other there is the source-identifying function9. Using the Victoria’s Secret case, the product identifying function is of more benefit to the customer.
For instance someone wishes to buy a special present for a loved one. They have in mind that specific product too and it’s available in Victoria Secret stores. They however happen to pass through one of the local stores and come across the ‘ same’ product. Unbeknown to them they end up buying an item from ‘ Victor’s Secret’. In this way they do not get the value that they anticipated. The main reason is that they could not identify the product properly. If certain products were available in certain stores, this confusion would not have arisen. In this case it’s the customer who loses.
In a similar instance, someone wishes to buy a clothing item for a loved one. They pass around town and come across a shop labeled ‘ Victor’s Secret’. They are very attracted by the prospect of finding a nice item because in their mind they are confusing it for ‘ Victoria’s Secret’. A purchase is made and the realization that they might have shopped in an unintended store either dawns on them later or doesn’t at all10. Trademarks seek to protect sellers from such ‘ mis-identification’ that might over time impact on the company’s bottom line.
Strasser also identifies the communication function. A keen reader will notice the close linkage between the identification function and the communication function that is to be discussed here. The similarity here is that poor communication, or should I say deliberately poor communication, occasion’s poor identification. Strasser suggests that the more the information that is available to the customer, the less the likelihood of trademark dilution and therefore identifying the wrong product. Pricing and quality are the only difference in case of trademark dilution. The former can be manipulated in a case where products with closely resembling trademarks also cost the same unlike the latter.
Lastly, Strasser discusses the intrinsic or advertising function that trademarks carry. On the intrinsic function Strasser states the trademarks are capable of emancipating themselves from the products in connection with which they are used’. In this case, the advertising promises much more than is available in the product. This is not to suggest that somehow there is an element of ‘ overpromising and under-delivering’. This is perhaps one way that the trademark ‘ energizer’ was co-opted when describing a tireless person as an ‘ energizer bunny’.
This discussion of trademarks cannot end without assessing their effectiveness. Trademarks might not be as effective as we would think of them. Think of the two Smartphone makers, Samsung and apple. Apple was the first of the two to make forays into this market. The company distinguished itself for its products with large screens and several applications11. Samsung matched this by producing their own products with the same descriptions. In this case, a trademark cannot cover an entire field. There are still many opportunities for rivals to attack its bottom line.
Trademarks limit competition. If we look at it dispassionately, trademarks should cover as limited an area as possible so as not to curtail the efforts of those who would certain designs or ideas to produce even better products. Therefore it’s very clear that the value of trademarks must not be diluted. Companies are very keen on protecting their trademarks for various reasons. Those reasons are mostly economic. However, as we have realized trademarks also have a communication function, an identification function and they also reflect upon the reputation of the company. Worth noting however, is that trademark dilution affects us too as consumer.
Beerline, Jennifer. ” Anti-Dilution Law, New And Improved: The Trademark Dilution Revision Act Of 2006.” Berkeley Technology Law Journal 23, no. 1 (2008): 511-535.
Bone, Robert G. ” Taking The Confusion Out Of ” Likelihood Of Confusion”: Toward A More Sensible Approach To Trademark Infringement.” Northwestern University Law Review 106, no. 3 (2012): 1307-1378.
Ilanah Simon Fhima, Trade Mark Dilution in Europe and the United States (Oxford University Press, 2011) 14
McDermott, Eileen. ” Last-ditch effort for Victors Little Secret.” Managing Intellectual Property, 2010: 151-151.
RGC Jenkins & Co, Trade Mark Dilution in the U. K. (2012) < http://www. jenkins. eu/mym-autumn-2003/trade-mark-dilution-in-the-uk. asp > accessed 17 April 2013
Richard Conroy v Smithkline Beecham PLC , Case No 0-085-03 Trade Marks Registry, Trade Marks Act 1994 < http://www. ipo. gov. uk/types/tm/t-os/t-find/t-challenge-decision-results/o08503. pdf > accessed 17 April 2013
Saunders, Kurt M, and Gerlinde Berger- Walliser. ” The Liability of Online Markets for Counterfeit Goods: A Comparative Analysis of Secondary Trademark Infringement in the United States and Europe.” Northwestern Journal of International Law & Business 32, no. 1 (2011): 37-91.
Strasser, Mark. ” A Small Step Forward: The ALI Domestic Partners Recommendation.” Brigham Young University Law Review 2001, no. 3 (2001): 1135-1174.