With the presence of global entities in India like Apple, Amazon Etc Intellectual property rights of these entities in India becomes indispensable. As a result of this, business owners are required to be conscious of ways that their IP rights, specially Trademark, is protected globally. In 2012 Apple faced an issue with its Trademark registration due to Trademark squatting and ended up paying a hefty penalty of $60 million to the owner of “IPad” Trademark in China. Amazon could also face such litigation in India as they introduced Prime, Echo and Prime Music in India but have not taken Trademark protection of it in the office of Intellectual property rights under the particular classes. They have taken registration of these brand names in class 9 which is about computers and electronic devices. 

To understand Trademark squatting in a better way WIPO (World Intellectual Property Organization) defines Trademark Piracy (Trademark squatting) as “the registration or use of a generally well-known foreign trademark that is not registered in the country or is invalid as a result of non-use”. This happens when a foreign company wants to register their brand name in the country and they are not able to register their rand name as that brand name already exists in that country, then original company is not able to register their brand name and end up paying heavy price to such company to stop the usage of that brand name. 

We can see that Trademark squatting is a niche area in Trademark disputes. For MNCs we can see that once MNCs have gained popularity and goodwill worldwide then local infringers try to register their trademarks in order to sell their products and to make huge profits out of it. With respect to the general rule, the exclusive right of the trademark owner is territorial in nature and therefore laws relating to trademarks vary from country to country. Trademark squatters take advantage of such law enforcement, which becomes a hurdle when companies become multinational.

Trademark squatting is largely seen in China as their “First to file” method is applied and not “First to us” method. In First to use Trademark the first user of the Trademark obtains the exclusive right  whereas in “First to File” system, the applicant who applies frst for the Trademark registration will get the protection. Therefore, it is always advisable for firms who are anticipating expansion into other countries, especially China, to file for the Trademark registration in that country.

In 2016, a famous basketball star received a favourable verdict from the Supreme Court of China, the legal battle was against Qiaodan Sports, a Chinese Sportswear company using the chinese brand transliteration of Jordan’s name as its Trademark. 

In Spite of various conventions including Paris Convention, TRIPS Agreement, Madrid Protocol as well as WIPO joint recommendation concerning well known marks, these are not enough to counter this problem. In India Protection of foreign Trademarks with respect to the trans-border reputation principle are provided under Trademark Act.

The principle that is followed in India says that the reputation of the good should benefit its owner even in a foreign land where the goods are not being sold. However, in the landmark judgment of Toyota case modified this principle and said that trans-border reputation can only be considered if there are customers of the claimant’s product in the claimed jurisdiction and that such customer’s exist before the infringer activity was established.

The problem of Trademark squatting should be tackled both domestically and internationally. Further with regard to the dispute resolution, although WIPO has regulation for it, it depends on both of the parties as squatters generally prefer their home country for dispute resolution.

Business leaders must make business plans and strategies to protect their trademark before entering the markets internationally. International registration of trademarks is still not a prevalent practice. First to use policies are also practiced in the United States of America as in India. The best way to stop Trademark squatting is to assert the filing that is done with bad faith. Bad faith filing generally refers to an intentional dishonest act by not fulfilling legal or contractual obligations, misleading another, entering into an agreement without the intention or means to fulfill it, or violating basic standards of honesty in dealing with others’ ‘. However these can be expensive and time taking to prove. Bilateral and multilateral treaties between the countries can also ensure protection of Trademark in one country as well as in the signing country. Undoubtedly, this is a multifaceted issue that needs to be solved at every level. 

To get protection from Trademark squatting, contact BIAT Legal LLP.

Leave a comment

Your email address will not be published. Required fields are marked *