What is Trademark Squatting?
According to the World Intellectual Property Organization (WIPO), trademark squatting is essentially the act of registering or using a well-known foreign trademark that either isn't registered in a particular country or has become invalid due to non-use.
In more straightforward terms, trademark squatters are individuals or entities that cleverly register and use someone else's trademarks with one clear objective: to later sell them for a profit. Here's how it typically unfolds: a trademark squatter files a trademark registration for a well-known brand, then patiently waits for the legitimate owner of that brand to enter the local market.
Their ultimate goal is to convince the genuine trademark owner to purchase the trademark registration from them. The profit they seek from this transaction is usually much higher than the initial cost they incurred when submitting the false trademark application. It's a bit like someone setting up a stall at a market, selling goods they don't actually own, and then asking the real owner to buy their own stuff back.
Dealing with a trademark squatter can be a complex, expensive, and time-consuming ordeal, as it often involves legal battles to cancel these registrations that were made in bad faith. So, it's not only a financial challenge but also a legal puzzle for the rightful owners of the trademarks.
Doctrine of Territoriality
The ‘Doctrine of Territoriality’, accords protection to a trademark within the territory of the state where it has been registered or used. In simpler words, it means that a trademark shall be protected against any unauthorised use by any person within the country where it has been registered, used, or is known to the public.
Imagine the world of trademarks as a giant puzzle, where each piece represents a brand's identity and value. Now, let's focus on a specific rule in this trademark puzzle called the "Doctrine of Territoriality." It's like a superhero cloak that shields a trademark within the borders of the country where it's officially registered or actively used.
In simpler terms, if a company registers its logo or brand name in, say, the United States, that trademark is protected against any sneaky imitators or copycats operating within the United States. It's like having an invisible force field that keeps your trademark safe from harm's way within your own turf.
However, here's where the plot thickens: Sometimes, troublemakers from far-off lands try to steal a brand's essence. They register the trademark in their own countries, even if the brand isn't well-known there. This is trademark "squatting." Picture a villain sneaking into another superhero's lair and claiming it as their own.
What's even more intriguing is that many famous brands have fallen victim to this trademark squatting outside their home base. So, even though they're superheroes in one country, they become vulnerable in others. It's like Superman suddenly losing his powers when he crosses a certain border.
As a result, companies have to become strategic masterminds, rethinking their game plans and coming up with new tactics to protect their trademarks globally. It's like a thrilling episode where our heroes must adapt to new challenges and villains to keep their symbols safe and their brands alive.
Examples of Trademark Squatting globally
Apple's Pricey 'IPAD' Clash in China: Imagine Apple, the tech giant known for its sleek gadgets, facing off with a Chinese company over the name 'IPAD.' It's like a high-stakes showdown in the world of tech. This Chinese company, Shenzen Proview Technology, had slyly registered 'IPAD' as their own trademark in China back in 2012. Apple had to dig deep into its pockets and fork over a jaw-dropping $60 million to settle this epic dispute. Think of it as a blockbuster battle for the rights to a name.
Starbucks vs. the Russian Starbucks Imposter: Picture Starbucks, the globally loved coffeehouse, trying to conquer Russia. But there's a twist - a Russian national had cheekily registered 'Starbucks' as their trademark in Russia. Starbucks had to unleash the legal warriors, and the ensuing courtroom drama delayed their grand entrance into the Russian coffee scene. It's like a suspenseful plot where the underdog tries to outsmart the coffee giant.
Sony's PS5 Drama in India: Sony, the gaming legend, was all set to unleash its much-anticipated Playstation 5 (PS5) in India. But hold on, there's a catch! A crafty trademark squatter had filed an application for 'PS5,' covering the exact same types of goods that Sony's previous registration for 'PS4' included. Sony had to call in the legal cavalry and oppose this move. Eventually, the squatter waved the white flag and withdrew their application. It's like a thrilling gaming quest where Sony had to navigate trademark challenges before releasing their latest gaming masterpiece.
First to Use Vs First to File
The “first to file” system grants rights to the person who first filed a trade mark application, even if another party can show prior use of the trade mark.
The “first to use” system recognises an unregistered brand being used as a trade mark and confers some rights on the owner.
India stand on trademark squatting?
Ownership of a trademark in India is determined on a first-to-use basis. Unlike the law on patents or designs, the trademark law mandates the first-to-use rule over the first-to-file rule. However a recent judgement has highlighted India's stand on 'bad faith registrations'.
Case Summary: BPI Sports LLC v Saurabh Gulati and Another
Background:
BPI Sports LLC is a company from the United States that makes dietary and nutritional supplements. They've been using the trademark 'BPI SPORTS' since 2009.
They started selling their products in India in 2019 through importers, including a person named Saurabh Gulati.
Problem:
When BPI Sports LLC decided to officially register their 'BPI SPORTS' trademark in India, they found out that Saurabh Gulati had already registered it in his name. This caused a dispute.
Legal Challenge:
BPI Sports LLC took the matter to the Delhi High Court in India. They argued that Gulati's registration of their trademark violated certain sections of India's trademark law (the Trade Marks Act, 1999).
The Court's Decision:
BPI Sports LLC referred to Gulati as a 'trademark squatter,' but the court noted that trademark squatting isn't specifically mentioned in the law.
The court didn't agree with BPI Sports LLC's initial legal arguments.
Instead, the court used a different section of the law (Section 11(10)(ii)) to rule in favor of BPI Sports LLC. This section considers the "bad faith" of the trademark applicant.
What is Bad Faith?
The court determined that trademark squatting is an example of "bad faith." It means someone is trying to unfairly benefit from a trademark they shouldn't own.
In this case, Gulati imported BPI Sports LLC's products and then registered their trademark in his own name to take advantage of their reputation.
The Outcome:
Even though BPI Sports LLC's initial legal arguments didn't work, the court used the "bad faith" provision to remove Gulati's registration of their trademark.
They did this by saying that Gulati's trademark registration was "wrongly remaining on the register" because it was done in bad faith.
Conclusion:
The Delhi High Court's decision shows how trademark owners can protect their rights against trademark squatters.
It also highlights India's efforts to strengthen intellectual property protections and align with international standards. This case sets a precedent for future trademark disputes involving bad faith registrations.
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(Disclaimer: The views expressed in this article are strictly personal opinions of the author and do not necessarily reflect the views or opinions of the company or organization they may be associated with. This article is intended for informational purposes only and should not be construed as legal or professional advice. Readers are encouraged to seek professional guidance or consult relevant experts for specific legal or professional matters.)
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