What is the impact of trademark dilution and how to prevent it?

Trademark Dilution refers to unauthorised use or application of a registered trademark which erodes the overall distinctiveness of that registered and established trademark. Mainly trademark dilution occurs between businesses or individuals that do not compete with each other. There are primarily two categories of trademark dilution i.e., blurring and tarnishing.

Blurring as the name suggests occurs when a there is a likelihood of confusion in the minds of the consumers as to the brand name i.e., the impugned trademark is so similar to the registered trademark that it tarnishes the uniqueness of the latter. For instance, if a business starts using the trademark “Adidas” for computers, it dilutes the unique sportswear connection of the mark.

On the other hand, tarnishing occurs when the status and reputation of an already registered trademark is injured. This can happen when the defendant uses the mark in a way which is offensive or associates it with inferior products or services. For example, a cartoonist depicts the famous character of Harry Potter in an obscene or offensive way, it could tarnish the well established reputation of that character.

IMPACT OF TRADEMARK DILUTION

Trademark Dilution can have several impacts on the brands as well as on consumers.

Dilution diminishes the uniqueness of a brand, as in some cases the class of goods or services could be similar, reducing the brand’s power to justify higher prices or attract loyal customers. This can lead to huge amount of losses to the brands.

Trademark Dilution may act as a barrier on a well-known mark’s ability to expand into new goods or services. It also reduces the licensing opportunities for brands as a diluted trademark is less attractive to potential licensees due to its weakened distinctiveness or tarnished image.

Not only brands but consumers are equally affected by trademark dilution. A trademark is not only a symbol, logo, name etc. but an identifier of the quality, authenticity and trust. Dilution often blurs these indicators and causes confusion among consumers.

If we talk about tarnishment, then the overall image and reputation of mark is damaged leading to scepticism about the whether the mark still stands for quality and reliability.

PREVENTIVE MEASURES TO AVOID TRADEMARK DILUTION

· Choosing a distinctive brand name:- By choosing a catchy and unique brand name which includes imaginative words an individual or company can avoid the potential risk of trademark dilution.

· Conducting market research:- Maintain a careful watch on the market and conduct prompt market research. If you believe your trademarks will be diluted or become generic names, you should promptly and proactively take legal action to defend your rights.

· Strong Brand Management:- One can build a strong brand by choosing a mark in a distinctive and consistent way. Creating a brand identity and value among consumers also reinforces the exclusive link with the owner.

· Online Protection:- It is essential that one must register domain names and variations of the mark to prevent cybersquatting and also use digital takedown mechanisms on platforms like Instagram, YouTube etc.

· Legal Remedies:- We can also seek legal remedies such as injunctions i.e., restraining the third parties from using the mark, damages i.e., recovery of monetary compensation where the brand’s reputation is harmed or destruction of infringing goods to prevent their circulation in the market.

LANDMARK JUDGEMENT ON TRADEMARK DILUTION

ITC LIMITED VS.PHILIP MORRIS PRODUCTS SA & ORS. 2010 (42) PTC 572 (Del.)

A dispute arose between ITC Limited, and Philip Morris & Others regarding the alleged trademark dilution. ITC alleged that “W” Namaste logo was diluted by Philip Morris’s logo which was an inverted “M” logo used with its Marlboro cigarette brand in India.

The Court highlighted that unlike traditional infringement, where likelihood of confusion is central, dilution requires the plaintiff to establish:

1. Identity or similarity between the marks,

2. Reputation of the mark,

3. Use of the mark without due cause, and

4. Resulting detriment to distinctive character/repute, or unfair advantage.

The standard under Section 29(4) is stricter: the test is not “deceptively similar” but requires a higher degree of identity or similarity. Applying this, the Court denied ITC’s plea for temporary injunction, holding that ITC failed to satisfy the stringent requirements for establishing dilution at this stage.

CONCLUSION

The pace at which the world economies are growing and businesses are expanding across borders, it is pertinent that brands and their reputation remains protected. Trademark dilution poses a severe threat to a brand’s integrity. It can cause huge economic losses to brands as well as distort the image of well known brands through tarnishment. As new start-up businesses are being established, it is also important to create intellectual property awareness among people and the possible legal remedies that are available in case of infringement.