BMW v. EMW: The Unresolved Conundrum Underlying Deceptive Similarity and Trademark Dilution

The use of trademarks, which began centuries ago, has grown over time to accommodate changes in the nature of commerce and the norms of marketing and advertising. The rapid growth in the economic worth of such symbols has nonetheless tempted the rivals to misuse them or adopt similar trademarks to deceive the consumers into buying the wrong product and reap the benefits over the goodwill of the other merchandise. Hence, the origins of trademark law are primarily found in the source indication function of goods and prevention of consumer confusion. Such confusion, which forms the quintessential element of any infringement case has also led to the adoption of the concept of ‘deceptively similar’ trademarks for protecting both, the consumers and competitors from dishonest practices. However, with the advent of the dilution doctrine, the symbolic marks have become a product in their own right. Unlike the traditional theory, here the consumer interests become secondary to another normative consideration, which is, extending more and more protection to famous trademarks. The dilution could thus occur on entirely non-related goods and in the absence of any legitimate confusion. But with only little consistency, the two paradigms of trademark protection been treated distinctly by the courts.

This blog, therefore, delves into the intricacies of the two analogous elements, namely, trademark similarity and trademark dilution, and attempts to resolve their irreconcilable nature through a recent judgement of the Delhi High Court.

The interplay of consumer confusion and trademark dilution

Section 29(1) of the Trade Marks Act (“Act”) provides for trademark infringement in respect of similar goods or services, and requires the demonstration of some element of likelihood in confusion between the marks. Section 29(4), however, is a palpable exception to the general scheme of the aforementioned provision. Section 29(4) serves to prevent the illicit use of a well-established mark in dissimilar markets, for here, the harm is not in relation to consumer confusion, but to the mark’s selling power. Hence, this remedy is limited to protect the distinctiveness of only those marks which have a reputation in India. In order to establish a comprehensive disassociation between the above-mentioned remedies, a precise determination of the appropriate dilution standards is necessary. The importance of this aspect cannot be overemphasized for a predictable and consistent judicial precedent to exist.

The BMW Case: A pandora’s box to Section 29?

This brings us to the recent judgement of BMW AG v. Om Balajee Automobile (India) Pvt. Ltd., where, once again, the conjunctive link underlying the two grey areas led to an elusive inference at the end. Keeping in mind the different principles for determining the deceptive factor and the degree of confusion between two look alike trademarks, the Delhi High Court in the present case had granted an interim injunction order against an Indian e-rickshaw manufacturer and eventually restrained them from continuing their business under the impugned mark ‘DMW’ or any other mark identical or deceptively similar to that of the German automobile major, Bayerische Motoren Werke AG’s ‘BMW’ (“Plaintiff”). Founded in 1916, the renowned German company is stated to be one of the most reputed car and motorcycle manufacturers in the world. Moreover, the plaintiff had registered its first BMW logo back in 1917, in Classes 12, 7, 8, 9, and 11.  It also qualifies as a well-known trademark under Article 6bis of the Paris Convention. The commercial ties of BMW AG in India began in 1987, when the automobiles bearing the BMW marks were first sold in the country. On the other hand, Om Balajee Automobile (“Defendant”) was in the manufacturing, marketing, and selling business of E-Rickshaws since 2013 under the trademark ‘Deshwar Motor Works’ (DMW).

Scrutinizing the view point

The bone of the contention was, that the Defendant’s use of the DMW mark was an infringement of the Plaintiff’s registered trademark under Section 29(1) of the Act. Recalling J. Parker’s observations in Pianotist Co.’s Application,[i] two marks ought to be judged both, by their looks and sound, and the kind of goods to which they are being applied, coupled with the surrounding circumstances. From a plain perusal of the two marks, it becomes quite evident that the essential features of the Plaintiff’s trademark have been adopted. The only difference being, concerning the first letter, B and D, but even then, the letters are both phonetically and visually similar. Although the Defendant’s mark bears a distinctive getup and color scheme, the added material is not sufficient to differentiate his goods from those of the plaintiff. Hence, by relying upon the Supreme Court’s view in Kaviraj Pandit Durga Dutt Sharma v. Navaratna Pharmaceutical Laboratories, the Court did right by holding the Defendant’s trademark to prima facie be a fraudulent adoption, which was likely to deceive and cause confusion among the consumers. Moreover,in Superon Schweisstechnik India Ltd. v. Modi Hitech India Ltd., the controversy regarding acronym trademarks was cleared when the Court decided to grant protection to the ones which were uniquely coined and were non-descriptive. Therefore, the notable combination of the English letters such as ‘BMW’ vests upon the Plaintiff an exclusive right to use such mark.

However, the Plaintiff’s plea on dilution of its famous mark, is superfluous in the author’s opinion. Since an element of confusion with respect to the two marks has already been established and their interest appears to be resolved under the conventional rubric of trademark infringement, a claim for dilution would nonetheless become redundant. The same could be justified by the Plaintiff on the basis of non-confusing use of a ‘well-known’ trademark in relation to dissimilar goods. But even if so, there exist different standards for differentiating infringement cases from that of dilution. There is an absolute absence of the presumption of infringement in Section 29(4) as opposed to the other clauses of the Section. Hence, in the present scenario, the court by ensuing the same remedy for both causes of action has failed to treat them as separate issues, thereby, misappropriating dilution count as a direct consequence of consumer confusion.

Moreover, for establishing a dilution claim, a higher degree of proof is required to satisfy the three major essentialities of Section 29(4). Apart from the test for similarity of marks and Plaintiff’s repute in India, one is also mandated to show that the use by the rival mark is mala-fide and the same has been detrimental to its distinctive character. Also, a more stringent test (than deceptive similarity), almost a near identification of the marks or the “closest similarity” criterion is to be fulfilled for proving the first requirement of dilution. But nowhere did the Delhi High Court attempt to mention it, let alone analyze the differences in the two standards. In fact, even the third element of the definition seems to have been overlooked, for no evidence was produced to demonstrate that the use of the mark by the Defendant has prejudicially impaired the Plaintiff’s business.

Mental association: The distinguishing factor

Dilution occurs either by way of blurring or tarnishment. A trademark is said to become blurred when the descriptive link between the mark of the prior user and its goods becomes associated with another dissimilar commodity. This whittles away the selling power of well-established marks for it diminishes their ability to evoke their original associations. Whereas, an action for infringement lies when the allegedly similar mark fails to identify the goods with a particular source and tricks the consumer into buying the wrong product. Hence, for differentiating the two claims, an answer to the following questions would be required: Firstly, whether a person encountering a DMW e-rickshaw is likely to be confused into thinking that the rickshaws were in fact manufactured by BMW? The answer is apparently, yes. Secondly, in case of dilution, whether a BMW product would automatically make the consumers think of the brand DMW just as quickly as they encounter the former’s luxurious cars, or would their response be slower because their mind has been impaired by the subconscious images of DMW design? The answer to this much difficult question lies in the concept of mental association.

For a mark’s commercial magnetism to decline, there ought to be some difficulty in disassociating the Plaintiff’s goods from that of others. But, if the nature of the Defendant’s good coupled with its class of buyers and trade channels is significantly different from that of the Plaintiff’s, and if the latter’s longstanding presence in India and other countries has accrued it significant goodwill and reputation with respect to automobiles, then how would the use of DMW’s mark mislead an average man of ordinary intelligence into believing that the Plaintiff’s brand is also associated with e-rickshaws? Further, there being significant difference between the costs of the two non-rival goods, it is highly unlikely that the consumers would substitute the products for each other. This is primarily because, trademarks in their original form are nothing but value added literary assets and hence, can be used in multiple contexts simultaneously, without depletion. Besides, even if a mental association between the senior user and junior user’s marks is construed, it is not sufficient to establish that an actual or potential harm has occurred to the Plaintiff’s business. No genuine proof for suggesting loss of revenues or any other form of evidence manifesting harm to the BMW mark had been showcased either.

Conclusion: What may finally lie ahead?

While the Court remains flabbergasted with the name and repute of well-known marks in their judicial decisions, thereby vesting a near-monopoly protection to them, the need to ascertain the true objective of trademark law becomes imminent. The law was never intended to confer absolute proprietary and moral rights in toto to such trademark owners and absolve them form their obligation to protect consumer interests and encourage investment in product quality. An indeterminate use of the dilution theory in the name of trademark infringement has only led to the impairment of free and fair competition in the market. It has further allowed the giant corporates to bully the new entrants and manipulate the business landscape, notwithstanding the need to show that there has been actual economic injury to them. This conundrum of over-lapping boundaries between similarity and dilution principle can be resolved only when the two actions are treated separately and when a pragmatic threshold for evaluating the dilution standard under Section 29(4)(c) is evolved. The production of solid evidence, either in the form of constructive consumer surveys or proof of revenue losses can perhaps demonstrate the actual detriment or unfair advantage to the prior user. However, in cases where a reasonable person does not associate the senior’s mark with a subsequent one, there ought to be no subsistence of the dilution claim in the first place.

[i] Pianotist Co.’s Application, [1906] 23 R.P.C. 774.

This article has been authored by Visalakshy Gupta, a student at Hidayatullah National Law University, Raipur.

Leave a Reply

Your email address will not be published. Required fields are marked *