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Beware of trademark dilution

In this instalment, we canvass the origins and essence of the doctrine of trademark dilution.

Opinion by Richard Pasipanodya

Historical context
The doctrine of trademark dilution first gained recognition in the United States.

Frank I Schechter’s 1927 seminary paper titled The Rationale Basis of Trademark of Protection propounded that apart from its traditional functions of identifying and distinguishing the source or origins of the goods or services on the marketplace, the modern trademark had assumed a fourth function — that of advertising. He argued that the creation and retention of custom is the very essence why a trademark proprietor would seek to preserve its uniqueness and individuality.

Legislative reponses
Despite the long history and Schechter’s ground-breaking assertion, it took the USA until 1996 to legislate a federal law on trademark dilution — nearly 60 years later.

Only 25 states had gradually so enacted before Article 6bis of the Paris Convention for the Protection of Industrial Property (Paris Convention) (1886) as amplified by Article 16 of the TRIPS Agreement.

However, they had not so explicitly and crisply captured the concept. Thanks to the robust legislative innovation of the US, many other jurisdictions enacted more explicitly-pronounced provisions on delusive infringement. We are among these countries of course, in pursuance to our TRIPS obligations and desire for global harmony.

Rationale basis for protection
Foremost, the rationale basis for protection against dilution is that paramount in the proprietor’s mind is the preservation of the trademark distinctiveness, advertising value and selling power.

As Schechter rightly expounds, the owner or proprietor of the marks spends a great deal of investment in money and promotion to ensure that the marks build repute and goodwill to their enterprise.

In the circumstances, they would want to preserve the identity and uniqueness of the marks in promoting their goods and services on the marketplace. For, there are always unscrupulous marauding market predators who are intent on promoting their own goods or services by the unauthorised use of well-known marks at the expense of the owner or proprietor. The more unique the mark is, the more it is prone to be pounced on by lurking predators.

Meanwhile the growth of the proprietor’s business would depend on the growth of the importance and subtle meaning of their mark. This arises from the mark’s visibility, potency, selling power, advertising prowess and commercial magnetism on the minds of the targeted  market. This is the negative exposure faced by such famous or well-known marks as Nike, Sony, Adidas, Samsung, Philips, Puma, Rolex, Caterpillar, etc.

Thus the dilution provisions focus attention on recognising the crucial functional role of unique or well-known marks in selling, advertising, promoting and creating repute and goodwill in their proprietor’s products.

Dilution provisions
Dilution provisions are normally found under infringement provision in most jurisdictions’ statutes. To some extent they are also found under the subject matter of registration.

Whatever the case may be, the essence is that they are invoked where the following requirements are satisfied by the complainant where:
There is unauthorised commercial exploitation or use of similar or identical products, whether in competition or not. Schechter’s classical example of “if you allow Rolls Royce restaurants, Rolls Royce ponds and  Rolls Royce candy, in 10 years you will not have the Rolls Royce mark any more”;

The trademark ought to be registered in terms of the territorial jurisdiction. This requirement, however, pauses a bit of a hiccup as the TRIPS Agreement does not oblige well-known marks to be registered as a pre-requisite to protection;

The use of the offending trademark would likely be to take unfair advantage of the distinctive character of the registered trademark. Envisaged here is the classical riding on the coattails of others or reaping where one did not sow by passing of one’s products as those of the proprietary trademark owner;

Alternatively, the use of the trademark is such that it would likely be detrimental to the distinctive character of the registered mark. Envisaged by this requirement is derogatory or offensive use, which goes to the root of the repute and goodwill of the proprietor’s products;

There need not be any confusion or deception caused by such use. Clearly, these provisions serve to preserve the trademark proprietor’s right to their goodwill and repute. We submit that though plausible, these provisions are a blanket phenomenon which the proprietary owner would enjoy if the courts fail to take due caution. They bestow on the proprietor an unlimited monopolistic right which, if not properly checked, would be detrimental to consumers, especially in terms of price.

Two species of dilution
Dilution may either be by blurring or tarnishing. Dilution by blurring occurs where the offending mark is used on either non-competing or competing products. By so doing, the distinctiveness of the market it eroded, hence its selling power watered down.

Schechter appropriately captions this as whittling down of the selling power or advertising value of the mark to lure new customers or retain existing ones. The classic example is that of Rolls Royce stated above.

The watering down comes about from the fact that many persons are using that mark to sell their products, thus weakening the original mark’s ability to distinguish its producers. The generic use of the mark also makes it lose its distinguishing character as was the case with the marks Elevator, Aspirin and Cellphone.

On the other hand, dilution by tarnishment occurs through the derogatory, offensive or objectionable use of the mark. The proprietor’s mark is thereby tarnished from the negative thoughts invoked in the minds of the consuming public.

In the landmark case of  Laugh It Off Promotions CC vs South African Breweries International, the former’s Black Label mark was parodied as connoting that black people were promiscuous.

Pasipanodya is an IP consultant who writes in his own capacity.

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