Role of Trademark in Protection of Consumer Rights

With the advancement of intellectual property rights in the modern era, the role of the trademark in protection of the rights of consumers has become more significant. Read the article for insight.

Introduction

A trademark is an identity that certain products or services are provided by a certain person or entity. A trademark is given to provide legal protection to marks of the trade like brand names, signs, symbols etc. Trademarks are distinctive signs used to differentiate between identical or similar goods and services offered by different producers or services providers.

It may be a distinctive word, phrase, logo, Internet domain name, graphic symbol, slogan or other devices that is used to identify the source of a product and to distinguish a manufacturer’s product from others. Here, the term ‘distinctive’ means unique enough to help consumers recognize a particular product in the market place.

Trademark Law in India

Section 2(1)(zb) reads “trademark” means a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include the shape of goods their packaging and combination of colours and

• In relation to Chapter XII (other than section 108), a registered trademark or a mark used in relation to goods or services for the purpose of indicating or so as to indicate a connection in the course of trade between the goods or services, as the case may be, and some person having the right as proprietor to use the mark and
• in relation to other provisions of this Act, a mark used or proposed to be used in relation to goods or services for the purpose of indicating or so to indicate a connection in the course of trade between the goods or services, as the case may be, and some person having the right, either as proprietor or by way of the permitted user, to use the mark whether with or without any indication of the identity of that person and includes a certification trademark or collective mark.[1]

India enacted the Trademark Act 1999 and the Trademarks Rules 2002 to ensure adequate protection for domestic and international brand owners, in compliance with the TRIPS Agreement. Section 159(1) of the said enactment repealed the Trade and Merchandise Act 1958. The intendment and purpose of trademark legislation are to protect the trader and consumer against dishonest adoption of one’s trademark by another with the intention of capitalizing on the attached reputation and goodwill. The said enactment introduced plethora of changes including[2] –

• Registration of trademarks for services
• Enhanced protection for well- known trademarks
• Part A and Part B registration system abolished
• Filing of multi-class applications permitted
• Incorporated provisions for registration of collective marks.

Economic Importance of Trademarks

The trademarks play an important role in the commercialization and growth of the industry. It is an asset, which forms the foundation of any business to the ultimate purchaser or the consumer. It is the trademark, which provides a link between the goods and the manufacturer. The reputation built by a trademark on account of its quality or performance coupled with customer satisfaction influences the customer’s mind for repeat orders.

The customer may not even know the name or the address of the manufacturer but it is the mark, as an ambassador of the manufacturer, which weights his decision to buy or not to buy a particular branded product. It takes a long journey for any manufacturer to establish goodwill or reputation of his trademark in the eye of the ultimate purchaser so as to reap long-term benefits. The publicity of the trademark by the proprietor also plays an important role in a reputation built up exercise.

Trademarks establish goodwill between the source of a product or service and the consumer. A well-chosen and well-publicized trademark often have value far beyond the physical assets of a company.

Trademarks uniquely associate a product or a service with a particular source, even if that source is unknown to the consumer. Thus, trademarks help businesses build and retain demand for their products and services while enabling consumers to quickly identify and make a purchase decision based upon a recognized trademark. Because of their value, it is vital for every company–be it a multinational conglomerate or a one-product start-up business–to make every effort to protect its trademarks.

The goodwill built up by a manufacturer in respect of his good is an invaluable asset over which every manufacturer has ownership. This goodwill is an intangible commodity. The intellectual property regime protects not the intangible, but rather their tangible manifestations. The goodwill is manifested in the trademark of the manufacturer. The trademark forms the link between the goods and the manufacturer using which the manufacturer of particular goods may be identified.[3]

Consumer and What are Consumer Rights

Under the new Act, “consumer” is defined as,

• buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose or
• hires or avails of any service for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such service other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person, but does not include a person who avails of such service for any commercial purpose.

Explanation – For the purposes of this clause,

1. the expression “commercial purpose” does not include use by a person of goods bought and used by him exclusively for the purpose of earning his livelihood, by means of self-employment
2. the expressions “buys any goods” and “hires or avails any services” includes offline or online transactions through electronic means or by teleshopping or direct selling or multi-level marketing.[4]

Rights of Consumer

• Right to be protected against the marketing of goods, products or services which can be hazardous to life and property
• Right to be informed about the quality, quantity, potency, purity, standard and price of goods, products and services
• Right to be assured of access to goods, products and services at competitive prices.
• Right to be heard at appropriate forums
• Right to seek redressal against unfair trade practices that are involved in the exploitation of customers
• Right to consumer awareness

Mechanism of Protection

The financial approach of trademark protection is to protect the interests of the consumer. It helps the consumer to locate and identify the product with little research. Protection of trademark facilitates consumers from being deceived by the counterfeiting marks selling low-quality products, at the same time trademark protection aims at ensuring the interest of trademark owner by rewarding him for investment and creates goodwill for his product.

The quality of a product is identified by a consumer through the brand name associated with it. The quality experienced by the consumer, called ‘felt quality’ leads him to the same brand and its particular product with the expectation of experiencing the same ‘expected quality’. It endeavours to ensure the consistency in quality of the product and retains the patronage of loyal customers.

The registration of a trademark bestows upon the owner the exclusive right to use that mark. Thus; it is the owner’s responsibility through advertisement and publicity to educate the consumers on the unique features of his product as against products of other manufacturers leading to a high level of consumer awareness of the goods and its manufacturer. Now, lots of alternatives are available for almost every product. So, the manufacturer or the owner of a trademark has to come up to the expectations of the consumers to make his trademark acceptable to them.

Section 11 (2) of the Trade Marks Act, 1999 states, “A trademark which – (a) is identical with or similar to an earlier trademark, and (b) is to be registered for goods or services which are not similar to those for which the earlier trademark is registered in the name of a different proprietor -shall not be registered if or to the extent the earlier trademark is a well-known trademark in India and use of the later mark without due cause would take unfair advantage of or be detrimental to the distinctive character or repute of the earlier trademark”[5]

Passing Off: As a Common Law Remedy for Trademark Infringement

In India, protection of goodwill is maintained through the action of passing off for both registered and unregistered trademarks. It is a common law remedy when wrongful utilization of reputation and goodwill of another is prevented as it is seen as deception against the public with an attempt to pass off his goods.

Cadilla Healthcare Ltd v. Cadilla Pharma Ltd[6] – the passing off depends upon the principle that nobody has the right to represent his goods as the goods of somebody else. The modern tort of passing off lays down the main elements that is it should be a misrepresentation in the course of trade to prospective customers or ultimate costumers of goods or service supplied by him which is calculated to injure the business or goodwill of another trader which causes actual damage to the goodwill or business of the trader by whom the action is bought or will probably do so.

The Supreme Court of India has defined passing-off in Cadila Case as the species of unfair trade competition or of actionable unfair trading by which one person, through deception, attempts to obtain an economic benefit of the reputation, which the other has established for himself in a particular trade or business. “Passing-off” has not been defined in the Trade Marks Act, 1999, but the expression has been used under certain provisions of the Act.

For the success of a claim against passing-off, the plaintiff has to pass the classical trinity test. This test was first used in Perry v. Truefitt[7] and was later upheld in the landmark case of Reckitt & Colman Products Ltd. v. Bordan Incorporation[8].

The test requires the plaintiff to prove the presence of the following three elements in the act of the defendant:

1. that the plaintiff had acquired a reputation or goodwill in his goods, name or mark,
2. there was a misrepresentation, whether intentional or unintentional, which was done by the defendants by the use of the mark of the plaintiff or by any other means (which includes the use of similar marks) and which led the purchasers/consumers to believe that the goods and services which were being offered by the defendants are goods and services of the plaintiff or were associated with the plaintiff’s goods and services,
3. that the plaintiff has already suffered damage or is likely to suffer damage due to such misrepresentation.

The Apex Court of India has also upheld this test and has applied it in the case of Laxmikant V Patel v. Chetanbhat Shah[9].

Advertising Value and Unfair Trade Practises

Trade Marks Act, 1999 has incorporated the provisions related to this concept in Sections 29(8) and 30(1). According to the statute, it is permissible, with certain limitations to unfair trade practices. ‘Unfair trade practice’ has been defined u/s 36A of Monopolies and Restrictive Trade Practices, 1969 that stands repealed now.

Another statute Consumer Protection Act, 1986 provides protection against unfair trade practice but in the cases of ‘comparative advertising’, the parties are firms (whose products are endorsed by the advertisements), which would not come in the ambit of ‘consumers’ to approach the consumer forum. Nevertheless, judicial pronouncements are playing an important role to determine the extent of comparative advertising[10].

Trademark Act, 1999 permits comparative advertising u/s 30 (1). But with certain limitations which are provided u/s 29(8) which reads as “A registered trademark is infringed by any advertising of that trademark if such advertising:- a) takes unfair advantage and is contrary to honest practices in industrial or commercial matters; b) is detrimental to its distinctive character; c) is against the reputation of the trademark”[11].

Conclusion

With the advancement of intellectual property rights in the modern era, the role of the trademark in protecting the rights of consumers become more significant. In a way, a trademark is a specified set of promises from the manufacturer to the consumer. So, a consumer can claim damages if his reasonable expectations are not fulfilled. Further, since the use of a trademark enables the manufacturer to distinguish his product from that of the others, the consumer becomes fully aware of the advantages of using that particular product. Trademark helps consumers by protecting their rights and hence its role cannot be undermined in the present scenario.

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[1] Trademarks Act 1999, Available Here

[2] Id.

[3] http://www.domaindisputesindia.com (link not working)

[4] Gazette, THE CONSUMER PROTECTION ACT, 2019, Available Here

[5] Trademark Act 1999

[6] Cadila Healthcare Ltd v. Cadila Pharma Ltd., AIR 2001 SC 1952, 10. (Kripal J)

[7] [1990] 1 All E.R. 873

[8] AIR 2002 SC 275

[9] RK Patel & Co & Ors v. Shri Rajdhar Kalu Patel & Ors., 2007 Bom L R 739

[10] Amit Singh, Tulip Suman, Thripura V, Interfaces and Synergies between Intellectual Property Rights and Consumer Protection Law in India: An Analysis, Available Here

[11] Supra note 5

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