NATIONAL LAW SCHOOL OF INDIA UNIVERSITY,

BANGALORE

Project Assignment on:

TRADEMARK DILUTION : AN ANALYSIS

Submitted as per course requirement of Research Methodology

Submitted to:

Prof. H. K. Nagaraja

Submitted by:

NIVEDITA SINGH

ID No. 895

1st year LLM (Business Laws)

ACKNOWLEDGMENT

I take this opportunity to express my profound gratitude and deep regards to my guide
Professor/Mentor Nagaraj for his exemplary guidance, monitoring and constant
encouragement throughout the course of this thesis. The blessing, help and guidance given by
him time to time shall carry me a long way in the journey of life on which I am about to
embark.

With profound gratitude

Nivedita Singh
CHAPTER 1

INTRODUCTION

It is the onrush dawning of industrial revolution due to which there was evolution of
competitive market economy certain symbols, marks and devices were used by the
manufacturers to ascertain and characterize their goods. A Trademark comprises of words,
names, symbols, colour combinations which are used as a means of singularizing their own
goods and extricating them from the goods of others. Adopting a perennial nature of the
trademark, it remains unchanged throughout thus entitling the author to use the mark for the
aspects of trade perpetually. In confirmation to the economical utility the efficacy of
trademark is widely accepted amongst all the markets and business communities. The
concept of Dilution in trademark is yet not imbibed as a specific provision or it can be said
that the concept is yet not made express and binding in all the International regimes though it
has already taken place in number of soft laws. Thus the advent of the dilution is taken with a
different approach in different countries. For Example- The treaties like Trade Related
Aspects of Intellectual Property Rights have been using the term “well known mark” while
the United States grants the hand over for protection of famous marks and Europe feeds and
feathers “mark with a reputation”.

The project aims at exploring and analysing the concept of dilution in trademarks and its
circumstantial growth in various other nations like US, UK and INDIA. The objectives of
Trademark Law primarily deal with demarcating and individualising the marks of different
manufacturers for the purpose of avoiding double-dealing, duplicity and confusion in the very
source and origin of the products. Thus are commonly cited as ‘identifying marks’ or
‘distinctive marks’. 1 The distinctiveness of Trademark also plays a major role in the
protection of goodwill of the trade and business. A trademark is known for its standard and
quality which it provides in the respective goods and services and the law relating to
Trademark is said to endorse and encourage the fiscal coherence and effectiveness.2

In Indian context it was the Indian Merchandise Marks Act,1889 which came as a directive
covenant for Trademarks. In English Context the primitive statute brought in was way back
in 1266 with the name of Bakers Marking Law,1266 in which stamps and pinpricks on the
loaves of bread were used as a distinguished mark on the goods. Infringement in trademark
occurs when the identical mark is used by another to make deceptively similar goods as
original goods thus using the goodwill market of the original goods for the purposes of
profits. But if the same mark is used by some other trader for a different business or venture
which is unconnected then it does not fall in the four corners of infringement as doubt and
uncertainty will have no room in consumers mind regarding the similarity of the two. Though
representation of same mark for two different goods doesn’t lead to the path of infringement
it is still not permitted put into application any such practice as it will bring about DILUTION
IN THE MARK. There would be a fall on the graph of the consumers as they won’t be able
to put up with the specific recognition of one mark for one product there if there would be

1
Satyam Infoway v Sify Net Solutions(2004) 28 PTC 566,569 (SC)
2
Frank I. Schechter, “The Rational Basis of Trademark Protection” [1927] 40 Harvard Law Review,Pg.813 at 25.
variety of goods representing one trademark. A person having the business of garage was not
qualified for the authorised use of the name ‘Ford Motor Garage’ as in all cases it was
leading to the confusion that there is some connection to the Ford Motor Car Company
which ultimately would lead to dilution of their trademark.3 This is just one instance for the
better understanding of the concept of dilution but in express terms what would be the
criterion for measuring dilution is yet not brought into line in various dominions across the
globe.

This concept of trademark dilution is getting major concerns and is being discussed in various
jurisdictions for a concrete provision to be made upon it. In various academic discussions it
has been clearly found out that the concept itself is very multifarious and complex.
Trademark bears the trust of consumers with it in respect of persistent and uniform source
and quality. Trademarks in a wider concept are taken as a commodity, brand and quality
descriptive and facilitates the progression and ripening of brand personas anchoring as the
goodwill buyers and the most valuable assets for a lot of companies. The consumers on the
global commercial market are facilitated in their choice of brand and products through the
trademark those products wear, thus casting a different economical efficiency due to the
particular brand choices of consumers. It is often quoted that “ a trademark is that which
makes tomorrow’s business something more than an accident.”4

Hitherto, Trademarks are significantly important for businesses of companies but at the same
time they are equally delicate and dilapidated. The well known trademarks are so subject to
attack by unscrupulous businesses by bringing a slight change in the original trademark and
putting the consumers in the state of confusion by looking at the product so similar which is
as identical and good as original one widely circulated in the market. A woman accessories
maker who picks up the name “Accessorize” as a mark of its new accessories in defiance of
the previous registration of the mark or a cosmetic makers using “Wallgreens” as his mark
despite of wallgreens having its own goodwill in hair and skin products are said to cause
obvious and undeniable trademark infringements.

Its more of a practice of reaping the fruits of reputation and consumer preference of the well
known and distinguished marks without getting woven into violations of trademark or
fulfilling criteria of unfair competition laws. Dilution is in itself an unstructured and
indeterminate concept as the use of the same mark for any other product in the commercial
market would most likely lead to the consumer confusion and even if it doesn’t then also the
use may nonetheless be taken as contributing to the dilution.

In the United States it was in the year of 1995 that Federal Trademark Dilution act was
adopted under the able assistance of President Clinton which had the impact of taking the
anti-dilution laws seriously and thus defining what in actual sense causes dilution thus
stretching the cause of action throughout the nation.

3
Ford Motor Company of Canada and Anr. v Ford Service Centre MANU/DE/1774/2008
4
UNITED STATES TRADEMARK ASSOCIATION, TRADEMARKS IN ADVERTISING AND SELLING 1 (1966)
This project is aimed at probing and scrutinizing the consumer protection law vis-à-vis the
Trademark dilution law. To have a better understanding of the dilution and its significance,
its important to specifically understand the fluctuations in functional aspect of trademark law.
What are the percussions of the dilution encounter why and how dilution affects the
economic efficiency of any business or company.

To capitalize the recognized mark of any business with no impact of undermining consumer
preference is being done for sole profit purposes. The quality and reputation has taken such a
place in commercial market that no consumer thinks of compromising with the same so in
today’s scenario the services are lent only under a mark or brand name which is easily
distinguishable than others.

What is the requirement of protection of a Trademark? This question was answered by Frank
Schechter in 1927, he stated that ‘It is well described that the only reasoned premise for the
protection of Trademark is the safeguarding of its uniqueness.’ 5 Frank Schechter is the
pioneer of “dilution as a recognised theory” who desired separating the trademark rights
entirely from consumer confusion as in the twentieth century the infringement concept was
there to prevent the first hand competitors in the market. In twentieth century the Trademarks
were not seen as only the product identifiers but rather a use too diverse was there, they were
instead used as basis of sale of goods as the consumers trusted the mark in terms of quality
and accountability.

It was found out by Frank Schechter that consumer contentment and gratification constitutes
the real and actual importance and the user is pinned on a particular trademark and its
goodwill because of the service and quality assurance and consumer concerns are less by
origin and distinguishment. This aspect in itself manifest that quality parameter and
affirmation of trademark would get affected if it would be used on other goods of non
competing character and thus would lead to deception thus sabotaging the previous original
user and confusing the customer irrespective of not being used for the same kind of products.

Quality representation function of trademark is the essence of the marketing economy of any
business or company as it not only impacts the consumer minds regarding quality assurance
of it being on very higher or lower margins but also introduces and maintains the quality
consistency. If a comparison is drawn in automobile sector between ‘Audi’ and ‘Hyundai’ so
both of them are essentially at different levels in terms of luxuries they offer but the
consumer with the trademark ‘Hyundai’ demands whatever quality they offer a consistency to
be maintained all through.

The project in itself refers to various international instruments like TRIPS and Paris
Convention which have explicitly recognized the the dilution theory and have given major
heed to what can be done to compensate for the injury caused by dilution to senior user.

5
Frank I. Schechter, The Rational Basis of Trademark Protection, 40 Harvard Law Review 813.820-22 (1927)
AIMS AND OBJECTIVES

This paper aims at analysing how significantly the dilution theory in trademark affects the
well known marks and their marketing businesses due to the use of same trademarks on other
non-competing businesses. This paper also aims at quantifying the formulae of dilution not
only in national and international regime but also looks through the strategic internet based
dilution in which there occurs the play of domain names which are deceptively similar.

The Objectives of the research are –

1. To have a critical and comparative outlook of the functional aspects of Trademark.

2. To examine the product differentiation function and the Quality Guarantee function of
to better analyse what constitutes dilution
3. To the examine the role played by the advertising function in protection of
competitive domain and in putting the trademark so at ease to see through the notions
of infringement.
4. To examine the WIPO model provisions and recommendations in the International
recognition of concept of dilution.
5. To critically examine the aspects where likelihood of consumer confusion in senior
and junior user occurs.
6. To examine the variant aspect of what constitutes protection under dilution?
7. To analyse and study all the types of dilution in order to provide better understanding
of trademark misappropriations.

HYPOTHESES

The hypotheses of researcher is that the specific criterion of what constitutes dilution and
specific provisions regarding what qualifies protection against dilution shall be clearly
determined by legislative action in Trademark law as the dilution is yet not an advanced and
developed doctrine with no set standards and criterions.

RESEARCH QUESTIONS

Based on hypothesis following research questions are framed-

1. Whether the consumer protection model is in consonance with Dilution law in recent
trade advances?
2. Whether the anti-dilution statutes adopted in international regimes put with the
purpose of getting in line with consumer confusion test?
3. Whether the development of dilution theory has been analysed to be successful in
getting the protection to trademark owners?
4. Whether the impact of having deceptively similar domain names also leads to the
path of dilution?
5. Whether the limits put on dilution by various anti-dilution statutes end up solving the
problem of veiled misappropriation?
6. How far does the likelihood of dilution could hold the junior user of trademark as
unscrupulous manifestation of trademark?
STATEMENT OF PROBLEM

Trademarks are accorded protection because of their distinctiveness, economic efficiency and
utility but on the same hand they are most fragile and are easily subject to infringement. The
problem consists in the use of same trademark for the non-competing goods or it can be said
that goods of altogether different kind. If the same trademark in this advanced market
economy exists two different goods it will be constituting losses and unfair use to the senior
user of trademark.

IMPORTANCE OF PROBLEM

It is important to take into account that the infringement and dilution are two entirely
different aspects which are sworn on different branches of trademark law. In infringement
issues there is the highest probability of distraction regarding the origin and source of goods
due to use of deceptively similar trademark for the same products. In Dilution, a presumption
is raised that the trademark is getting whittled away or becoming less effective.

RESEARCH METHODOLOGY

The researcher has made a doctrinal research therefore all emphasis is laid on the secondary
sources of data namely, Books, Articles, Reports and Internet Sources. The style of writing
would be analytical and descriptive with profound explanation of concepts wherever
necessary. Sincere endeavours have also been made to maintain the lucidity of the language.

MODE OF CITATION

The researcher has followed the Blue Book method of citation.

SCOPE AND LIMITATION

The scope of the paper is restricted to dialogue in relation to prospects, theme and concerns
affiliated with dilution in various dominations and jurisdictions. References are drawn from
various relevant case-laws, commentaries and legislative measures. Words like goods
products, services shall mean to be used interchangeably thus having the same meaning.

REVIEW OF LITERATURE

 BOOKS

K C Kailasam, “Law of Trade Marks including International Registration under

Madrid protocol & Geographical Indications”, Lexis Nexis, New Delhi 2017.

According to author’s point of view, that the provisions relating to dilution after being
incorporated in trademark law remained untouched in a lone case for a long time. Reinstating
the true aspect for which trademark law came into effect is identity protection and
consistency in quality for the products offered by a manufacturer or business. The
requirement of Anti-dilution Laws and why and how the Kodak and odol case is the starting
point of dilution. In its specific chapters it is also covered that why just the very existence of
confusion test was not suffice and in a wide network there was an urgent need of dilution test
to cover the widest amplitude of trademark.

V K Ahuja, “Law Relating to Intellectual Property Rights”, Lexis Nexis, New Delhi
2019.

In this book the author has dealt with all the IPRs in a very detailed manner analysing each
and every thing in a detailed manner. As far as Trademark law is concerned, the author views
that identification and distinguishment of goods and signification of quality and source and
the prime tool for advertising purposes. It also mentions the co relation between the domain
name, passing off and dilution theory. How they affect each other into a co-extensive
networking. Author also explores the judicial and legislative inclination achieves dual impact
due to the dilution: it provides the sustenance of the exclusivity and goodwill which has
created immense market for any trademark and also bypasses the use of trademark in a
disproportionately broad property right.

Tony Martino, “Trademark Dilution” Oxford University Press, 2014.

The author in this book has examined that a series of events on which complaints were found:
a pipemaker put a word of caution on a shirtmaker, a magazine publisher restricted the
modiste or milliner, and jeweller filed a suit for permanent injunction against the motion
picture studio. The author while giving critical comments made out that in all the above
mentioned cases the weighed side is of the user who was senior or who used the mark
previously for his named products thus restraining the whittling away of trademark.