India is also a fast-growing trademark environment, as brand owners from around the world are drawn to the opportunities in this rapidly expanding marketplace. One of the “big four” BRIC countries (Brazil, Russia, India, China), India is well on its way to becoming a major global economic player. Trademark law in India is based on the Trade Marks Act of 1999 and the associated Trade Marks Rules, which were implemented in 2002. The 1999 act has been very important in the development of trademark law and practice in India. Reflecting the country’s rapid rise as a commercial economic player, India has experienced dramatic growth in applications for trademark registration in just the past few years.

The other side of this growth is the challenges faced by the trademark regime of India. These challenges are of varied nature, based on the reasons in the backdrop. These challenges are tackled by the judiciary of the country by evolving newer principles and guidelines, which to the max are in consonance with the international scenario. This affirmative trend in the Indian Trademark Jurisprudence has led to some extent, filling up of the gaps in the Statute. Some of the most discussed challenges faced by the Courts and solutions thus found are discussed in this paper.

Challenge No. 1 

The absence of any “Cost of Damages” provisions in the Statute has led to lesser restraints over the infringers. This comes to be the first challenge hereby discussed as infringement is the base for the existence of Trademark Law. The development towards awarding of damages for trademark infringement or for Passing Off, came through by the judgment of the Delhi High Court in Hero Honda Motors Ltd. v. Shree Assuramji Scooters

[125 (2005) DLT 504]. In this case the High Court made a differentiation between Compensatory Damages and Punitive Damages. The Court in its judgement classified “Damages” into three heads:

  1. Compensatory Damages
  2. Punitive Damages
  3. Damage due to loss in goodwill and reputation.

Thereafter this precedent all the courts in the nation have learned the art of awarding damages of these three natures in need for in any case.

Challenge No. 2

The remedy for “Passing Off” stands to be the next challenge for the industry. The Common law principle was adopted due to British history of the nation. Formulating the guidelines for determining passing off and preventing copying of Well-Known Trademarks has become a major challenge. This is specially a problem in the Fast Moving Consumable Goods sector.

As India is a large country and World’s second largest market in terms of population, copying Well-Known marks is a very big phenomena here. The precedent of awarding Damages as evolved by the Delhi High Court is an effective remedy to this problem but not sufficient. Certain other measure need to be taken by the Registry Offices.  The Registries should keep a regular check on the Trademark Register for similar marks. No infringement matter should be taken leniently even thought the infringer had established a long use of the trademark. For Example – if a well known mark has been copied by a person and the copied mark is in use in any part of India for 4 years say, it should not be given any leeway. The other reason why Passing Off remedies have become a challenge is the absence of any written legislation for the principles governing this Common Law Remedy. One such problem posing aspect to it is ‘Trans-Border Reputation’ of a mark.

The absence of any decisive definition of “goodwill” and “reputation” in the Statute forms the basis for the challenge posed in understanding the concept. Courts in India fail to distinguish between these two terminologies and use the terms interchangeably. It should be kept in mind that ‘goodwill’ is a species of property that is restricted to the local jurisdiction, while an action of Passing Off is based on ‘reputation’ which transgresses boundaries. The Indian courts completely ignore the concept of ‘residuary reputation’. The situation was so even in the Whirlpool Case, which is the first precedent for trans-border reputation.

The ‘residual reputation’ is a phenomenon wherein a Trademark owner can cash the reputation of his Trademark which is out of the market because of closing down of the Company. This is when the proprietor ceases to use the Trademark even then while filing infringement of a well-known mark. He can rely on his Trademarks past use.

Challenge No. 3

There exists a doubt on the Territorial Jurisdiction of the legal forum in cases of composite cases. Composite cases are those where the trademark owner files both passing off and infringement action together for his registered trademark.

In reference to this also exists a dilemma in construction of the term ‘carrying on business’. The courts have failed to give the correct meaning to the term for carrying out the purpose intended by the provision. What should be the requirements for proving that a proprietor carries out his business in that place? For example – a trademark owner filing a composite case, if has a lot of branches in whole of India….where will he file his case as there is no requirement of ‘principle place of business’ for a passing off remedy.

Challenge No. 4

There is a vast market of middle level products where the trademark owners barely get the marks registered. This practice germinates the seeds of infringement and passing off. This challenge has to be tackled by acknowledging the trademark owners of the benefits of Registration. It is difficult to prove Passing Off as actual deception is to be proved instead of mere likelihood of trademark in infringement. Also the procedural benefits of registration are as follows:

  •  A criminal action initiated by a registration certificate by the Trademark proprietor makes it easy for the police.
  • The courts regard infringement action on a stronger footing than an action for mere passing off.
  • Registration of a trademark gives the Trademark owner a jurisdictional option to sue in the city in which he carries his business irrespective of the fact where the infringers place of business.

Challenge No. 5

The newest challenge faced by the Trademark regime is the Internet Issues. Internet issues in India deal with misuse of trademark as domain names. Cyber squatting is a major problem in this field. Along with this, the issue of sale of counterfeiting, fakes and replicas of well-known brands by the online auction and shopping sites have created a dual problem. The existing legislation seems to be inadequate for such problems. Virtual world has provided for a better disguise for such dealings in fake goods.

The courts have come across such cases many a time, mainly the courts in the metropolitan cities. Thus the courts ground on two issue:

  •  The fake addresses provided by the Defendants (i.e. the domain name infringer) and thereafter on service of notices, he never turns up.
  • The websites operation can be stopped but no punitive action can be taken against the infringer, as he won’t respond to the service of notices.

The development of the Trademark Jurisprudence in India is on an expressway, through the well defined landmark decisions of the Indian courts. Modernization of Intellectual property offices and updation of the existing regime under the 10th Five Year Plan has helped in the Trademark application and registration system.