Concept of Trademark Dilution

A trademark becomes a producer's identity. When such an identity becomes global and
universally recognised, it is referred to as a brand and falls under the category of well-known
marks. When a well-known or famous mark is infringed, it causes dilution of that mark.
When a well-known mark is infringed upon, it loses its exclusivity. This erodes the mark and
exhausts its stand-alone quality as well as its ability to be clearly recognised from a crowd of
trademarks present in the global market. It is not necessary to prove the presence of confusion
or deception, or that the mark should be used on competing goods, in order to bring a cause
of action for dilution. 1
When it comes to the famous mark, dilution frequently becomes a
barrier for consumers to have a single association in mind. We can say that this type of
infringement easily destroys the reputation, fame, and goodwill that the owner of a well-
known Mark has built in the global market through constant investment of capital,
manpower, and time.

The article, The Rational Basis of Trademark Protection by Frank I. Schechter who is
recognized as the father of dilution theory, he while evolving the theory expressed that
dilution can be explained as “the gradual whittling away or diffusion of the individuality and
grasp upon the minds of the public at large of the trademark by associating it with goods of
non-competing nature.

The perception of consumer confusion as criteria of proving dilution has been opposed by
Sarah Lux in her article Evaluating Trade Mark Dilution from the perspective of the
Consumer2 . As explained by her, any kind of damage. caused to any reputed mark even in
the lack of confusion on the part of the consumer will be acknowledged as dilution of the said
mark.

Another perspective of dilution has been well established by T.G. Agitha in her article
Trademark dilution- the Indian Approach3 that apart from absence of confusion in order to
ascertain dilution it is necessary to prove that the similar mark has been used on dissimilar
goods. She further contends that dilution like any other Trademark infringement should get
equal protection and be treated at par with other infringements.

1
Courtland L. Reichman, ‘State and Federal Trademark Dilution’, Franchise Law Journal p. 111, volume.17:4,
1998, pp. 132-137.
2
Sarah Lux, ‘Evaluating Trade Mark Dilution from the Perspective of the Consumer’, University of New South
3
T.G. Agitha, ‘Trademark Dilution - The Indian Approach’, Journal of Indian Law Institute, p. 339 volume
50:1, 2008, p. 340.
 Dilution has been categorized into two components by the author Courtland L Reichman in
his article State and Federal Trademark Dilution 4. He explains dilution as a phenomenon
which without creating dilemma in the minds of the consumer regarding the source weakens
the capability of the original mark to stand distinct in respect of source.

Dilution in US

By the year 1920, there was a major shift in the then existing trademark law and also
detection of a gap in the protection of trademark under the law in the U.S. It was first after
the “Eastman Company Kodak Case”5 . In this case Kodak Cycle Company was successfully
prohibited from using the mark ‘KODAK’ on their cycles on the basis of the suit filed by
Eastman Company who were manufacturers of Kodak cameras. The Court highlighted the
importance and distinctive nature of the KODAK mark and how it should be protected to
maintain its uniqueness. But in declaring such judgment the Court phrased it in a manner so
as to remain consistent with the direct competition principle in respect to goods

The judgment in Eastman Company became a precedent to be followed by the American

In another similar instance “Wall V. Rolls-Royce.” 7 The Third Circuit Court of Appeals
regulated that infringement principle was not only restricted to similar or competing goods.
Here the mark ROLLS ROYCE was used on radio tubes. The court in order to justify
infringement widened the scope of reason and clubbed radio tubes and automobiles as
directly contending commodities on the basis of the fact electricity was an important element
in case of automobiles and aeroplanes and one could assume that the company have extended
its range of product to new electric using radio tubes. This was an attempt of the Court in
applying traditional infringement principle to unconventional problems which made the
element ‘fame’ a basis of dilution.

4
David S. Welkowitz, ‘Trademark Dilution: Federal, State and International Law’, Bloomberg BNA, Second
edition ISBN-13: 978-1617461033, December 28, 2012.
5
Eastman Photographic Materials Co Ltd v John Griffith S Cycle Corporation Ltd and Kodak Cycle Co Ltd
6
Vogue Co. v. Thompson-Hudson Co., 1924, 6th Circuit, 300 F. 509, p. 509.
7
Wall v. Rolls-Royce of America, Inc., 1925, 3rd Circuit 4 F.2d 333, p. 335
Dilution in India

It was in the case of ‘Daimler Benz Aktiegesellschaft v. Hybo Hindustan’ 8that for the first
time the defendant was prohibited from using the plaintiffs’ mark but the concept of
likelihood of confusion or deception was not drawn in the case.

In the given case the use of the mark BENZ was not allowed by the defendant on
undergarment. Even though the doctrine of dilution was applied yet the word dilution was not
used anywhere by the Hon’ble Judge throughout the judgment except towards the end where
he stated: “In my view, the defendant cannot dilute that by user of the name “Benz” with
respect to a product like under-wears.”

the court made the decision while keeping in mind the exceptional position that the brand
Benz has acquired and how unfair it would be to allow some third party to use it on his
commodities.

In the aforementioned cases, the courts failed to investigate the theoretical distinctions
between encroachment, passing off, and trademark dilution. Based on the cases, it is clear
that prior to the Trademarks Act of 1999, Indian courts used the customary law cure of
passing off to achieve findings of infringement as an action of unfair competition. Our courts
developed the dilution principle after considering the widely perceived benchmarks about the
need to protect famous marks whose abuse in connection with different or non-competing
products or services could "dilute" their allure.

Indian Scenario After Trademarks Act, 1999

Sections 29(4) of the Trademarks Act, 1999 was introduced with a view to initiate and
present the idea of trademark dilution in India with regards to the norms required to ascertain
weakening of trademarks, regarding disparate items. In any case, regardless of the presence
of clear statutory rules, the judiciary keeps on rendering choices under defective
comprehension of the idea of trademark weakening.

Abdul Jalil v. Hamdard National Foundation 9 In this case, the defendant used the plaintiff's
well-known mark 'HAMDARD' on Basmati rice, prompting the plaintiff, who was the owner
of the mark and used it in relation to Unani medicines, to file an infringement suit.

8
Daimler Benz v. Hybo Hindustan, Delhi High Court, India, 1994 A.I.R. 239, p. 239.
9
Hamdard National Foundation v. Abdul Jalil, High Court of Delhi,India,IA 7385/2004 IN CS(OS) 1240/2004
Here again the court decided the case on faulty understanding and stated that what summed
up to trademark infringement in relation to non-competition goods was "likelihood of
deception". It is self-evident that section 29(4) does not require proof of deceptive
resemblance. The reliance was incorrectly based on the definition of "deceptive similarity"
provided in section 2(1)(h).

Comparative Analysis of the Laws Of Dilution of India and USA

Dilution was recognised and implemented much later in India than in the United States. Even
though the laws governing dilution in both India and the United States aim to prevent the
weakening of the singularity of a strong mark that has established its goodwill and reputation
among a significant number of consumers, making it unique and distinct, there are few
differences between the provisions of both. The following differences can be found when
reviewing the anti-dilution provisions.

Famous and Mark with Reputation

The principle of dilution is applicable to any mark only when the mark is either famous or
well-known or has a global reputation. A well-known mark is one which is usually known to
a sizable section of the public with respect to such goods and services. A famous mark is one
which is applied to such commodities or services which have been sold internationally and is
usually recognized as an indicator of a certain level of quality assurance. Famous marks are
repeatedly considered as a specific kind of well-known mark and that they usually are
regarded as marks of advanced reputation and therefore relish a widened angle of protection.

Dilution legislation in the United States only protects famous marks from dilution. To be
protected under the anti-dilution statute, a mark must meet the criteria of being famous.
However, when it comes to India, it has been observed that most of the time, drawing a
distinction between famous and well-known marks has not been done successfully by Indian
courts, and generally, the level or standard applied in case of well-known marks has been the
level or standard applied. The statutory provision clearly states that for a mark to be protected
under the Antidilution provisions in India, it must have a reputation in India.

Standard of Harm

In the USA it was established that for a claim of dilution the owner of the famous mark need
not show actual dilution anymore. It was stated that “possibility of dilution” would hereafter
be enough and sufficient to claim an act of dilution and the need to show real monetary
damage was no longer the basic requirement. In India, the standard of injury has not clearly
been given in the provisions. It is simply specified that the application of the junior mark is
such that it is unfavourable to the singularity of the original mark or in some or other
damaging the status and name built by such brand globally over a period of time.

Defenses and Fair Use

Under the Trademark Dilution Revision Act of 200610, explicit provisions have been included
with respect to the fair use principle thereby providing defences for some acts from the action
of dilution. The Indian Trademarks Act does not include any of these exceptions or defences.
There are provisions in the current Trademarks Act 1999 that expressly state that any
marketing or promotion of a "registered trademark" is a violation "if such advertising is
detrimental to its distinctive character, 11or is against the reputation of the trademark." 12

However, prior to the 1999 Act, marks that were not considered infringing were exempt from
infringement action. The inclusion of this provision is ambiguous and defeats the purpose of
dilution protection.

Although the concept of dilution is not explicitly mentioned in Indian or international law,
the statutory requirement in Indian or international law does not require the mark to be
publicly recognised. Furthermore, the reputation requirement is not as stringent as that
specified in US laws. This is clear from an examination of the sections of the Indian
Trademark Act55 and the TRIPS provisions that specify the criteria that must be met for a
mark to be recognised as a well-known mark. Both of these acts necessitate recognition and
the presence of goodwill among the relevant group of people in society.

Conclusion

An analysis of the principle of dilution and the existing laws provides that undoubtedly that
the accurate receiver of the protection under anti-dilution statute can only be such marks
which are either famous, well-known or has a certain level of reputation among the
consumer. Dilution cannot be equated with traditional infringement keeping in mind the
intensity of investment made by the proprietor from monetary as well as time consuming
aspect to make sure such mark crosses the niche fame criteria and becomes a brand renowned
10
Trademark Dilution Revision Act of 2006
11
The Trademark Act, 1999, India, s. 29(8)(b).
12
The Trademark Act, 1999, India, s. 29(8)(c).
globally in assuring certain standard of quality to its purchaser. As a result such marks can
easily be the target and the reputation or the status earned by such marks is often attempted to
be used by unauthorized parties. Dilution was recognised and implemented much later in
India than in the United States. Even though the laws governing dilution in both India and the
United States aim to prevent the weakening of the singularity of a strong mark that has
established its goodwill and reputation among a significant number of consumers, making it
unique and distinct, there are few differences between the provisions of both.