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India: Changing Trends in Passing-Off

In India, whilst the Intellectual property owners continue to face the problems of counterfeiting and infringements of their brand names/trade marks, the emerging trend amongst misusers appears to be adopting famous/well known marks as a part of their trading style/corporate name. Obviously, the intention is to choose a name that is easy to recollect and gives the impression of being associated with a well-known company. More often than not, in order to claim honesty in adoption, the marks are adopted in relation to a different business as that of the IP holder. Also it is common among misusers to slightly twist the name or add a descriptive suffix/prefix to the well-known mark.

With the past IT boom, famous marks in the IT industry such as INTEL, PENTIUM, INFOSIS, DELL, and YAHOO have become victims in the hands of the copy cats. In such cases, as the marks are being misused in the form of trade names, strictly speaking, a case for trademark infringement is not made out. Therefore, the pressure is on brand owners to prove goodwill and reputation of their mark/corporate name to establish a case for confusion and deception in the course of trade.

The question that a number of IP holders are asking is why these companies are allowed to be registered in the first place.

In case of companies seeking registration with the Registrar of companies (ROC), although only such company names are approved that are not identical with companies already registered. However, the search system is not full proof. Therefore, a misuser can overcome the objection by adding a prefix or suffix or by adopting a similar name/mark as opposed to identical mark. Also, the Companies Act has no provision to protect trademarks. Thus, it is common for infringers to obtain clearance for a company name containing a well-known trademark.

Therefore, the misusers cleverly adopt famous trade names and get them approved from the Registrar. As a result, in a trade name dispute, the primary argument of the infringers is that they had sought prior approval from the Registrar of companies to use the name and the same was not found conflicting with any of the existing companies? names. Thus, an infringer is clearly able to take advantage of the fact that there is no provision to check if the desired company name is a registered mark or a well known trade mark and no clearance from the Trade Mark office is required.

The good news is that as per the provisions of new Trade Marks Act, 1999 and the corresponding amendments made to Section 20 of the Companies Act, 1956, a company name that is identical to a registered trade mark or a trade mark which is subject of an application for registration may not be registered. The Registrar of Trade Marks would be consulted for confirming this.

The amendments to the Companies Act and the new Trade Marks Act have also made provisions for the owners of registered trade marks who can now move an application to the Central government informing existence of a company name that is identical or similar to their registered marks. The Central Government, if satisfied on similarity of names may direct the company to change its name within a period of three months. The time limit for filing an objection by the IP holder has been fixed as 5 years from the date on which registration of the company first came into notice.

The amendments to the Companies Act are being welcomed by the trade mark owners who currently have no option but to initiate civil action for passing-off in case a third party copies their registered mark as trade name. With the above provisions coming into force, the trademark owners would be able to invoke administrative remedy under the Companies Act to have the infringing name removed from the Register. However, it would be interesting to see the extent and time frame with in which the Central government would be able to provide relief to the TM owners.

June 2003 - Rachna Bakhru, Rouse & Co. Intl.

By Rouse & Co., Intellectual Property Consultancy

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