TRADEMARK BULLYING

Introduction:
The purpose of intellectual property protection is to optimize the difference between the value of
developed and used intellectual property and the social cost of its production, which includes the
cost of operating the system.1 Trademark, one of the forms of intellectual property, is defined
under the Indian Law as “a mark capable of being represented graphically and which is capable
of distinguishing the goods or services of one person from those of others and may include shape
of goods, their packaging and combination of colours”2 To put it another way, a trademark is a
word, symbol, or other signifier that is used to differentiate a product or service produced by one
company from products or services produced by other companies.3
The law of trademark protection was created to provide trademark owners with exclusive rights,
a monopoly on their trademarks, and to protect the public's goodwill. “In a nutshell, Trademark
Security was established to avoid the selling of counterfeit goods under a well-known brand
name, but what happens when the mark's owners go beyond and beyond their legal authority to
protect their mark? The expression for this type of behaviour is trademark bullying.4”
Factual Economic Background
According to the 2013 American Intellectual Property Law Association ("AIPLA") Economic
Survey Report, the average cost of trademark infringement litigation is as follows: When the
amount in dispute is less than $1 million, the trial costs are $375,000; when the amount in
controversy is $1-10 million, the trial costs are $794,000; when the amount in controversy is
$10-25 million, the trial costs are $1.4 million; and when the amount in controversy reaches $25
million, the trial costs are $2 million. Recognizing the immense value that trademarks bring to
the U.S. economy, diligent and meritorious trademark compliance is essential to preventing
others from illegally trading off a mark owner's existing credibility.

What is Trademark Bullying?

The United States Patent and Trademark Office (“USPTO”) recently characterized Trademark
Bullying or Trademark Trolling as the vexatious activity of a “trademark owner who uses its
trademark rights to threaten and intimidate another business beyond what the law could
reasonably be perceived to allow”5 in a Report to Congress on trademark litigation tactics.
Several creative mark owners have embraced and changed the sue-to-settle paradigm and
implemented it in the trademark sense, mirroring the tactics used by patent assertion entities and
copyright bullies. In short, trademark trolls—large and small businesses—aggressively claim
1
Besen, Stanley M., and Leo J. Raskind. "An Introduction to the Law and Economics of Intellectual Property." The Journal
of Economic Perspectives 5, no. 1 (1991): 3-27.
2
S. 2(zb), The Trademarks Act, 1999
3
William M. Landes and Richard A. Posner. “Trademark Law: An Economic Perspective.” The Journal of Law and
Economics 30, no. 2(1987): 265
4
Archana Bhageerathi, ‘Tradeamrk Bullying: A Legal means to illegal ends’(lexology, 17 March 2021)
<https://www.lexology.com/library/detail.aspx?g=72ae12b4-4b83-4ec4-a0d2-96d9aa534be5>
5
Trademark Litigation Tactics and Federal Government Services to Protect Trademarks and Prevent Counterfeiting,
April 2011.
rights outside the Lanham Act's scope of trademark protection by issuing threatening cease-and-
desist letters.
It has recently become a recurring problem with large corporations, who continue to bully small
businesses for financial gain. Even if the target organizations do not use marks that are even
slightly similar to theirs, proprietors with high stakes go out of their way to protect their marks.
When a trademark owner becomes a zealous defender of his trademark, the distinction between
genuine infringement and ridiculous contestations blurs.6

What is the difference between “trademark infringement” and “trademark

bullying”?
“To determine whether the same is trademark bullying or real trademark infringement, we must
first comprehend what constitutes bullying and the subtle distinction between trademark
infringement and trademark bullying.” It’s important to note that the distinction between
trademark bullying and proper compliance practices isn't always clear. Trademark infringement
is defined as “a use of a mark, by an unauthorized or an authorized person or a person who is not
the registered proprietor, which is identical or deceptively similar to the trademark in relation to
the goods or services in respect of which the trademark is registered. In simple words, it is
defined as the violation of exclusive rights that are attached to a registered trademark without the
permission of the registered owner or licensees.”7
Trademark bullying is the practice of a proprietor being too protective of their mark and
imposing trademark rights beyond the required limit and scope of trademark law. 8 “For example,
when a powerful company or a large multinational corporation (MNC) such as Amazon or
Apple, which has vast financial resources, files a lawsuit against a local or smaller company for
infringement. Legal trials have a hefty price tag attached to them that not everyone can afford. A
small business that lacks the financial resources to fight a legal battle is vulnerable to
succumbing to the pressures of these large corporations and foregoing the use of their trademark,
as well as the goods and services associated with it, to which they are legally entitled.” These
attacks, on the other hand, are often unfounded and unfounded.9

Determination of a bully
Before deciding whether it is in good faith trademark compliance or intimidation, many factors
must be considered. A bully is someone who goes beyond the “likelihood of confusion” in search
of trademark enforcement by suing owners of non-competitive products and services who use an
ostensibly similar label. Any act of aggressive compliance in the case of deceptively similar
marks and competitive products and services would fall within the scope of good faith litigation,
6
Archana Bhageerathi, ‘Tradeamrk Bullying: A Legal means to illegal ends’(lexology, 17 March 2021)
<https://www.lexology.com/library/detail.aspx?g=72ae12b4-4b83-4ec4-a0d2-96d9aa534be5>
7
S. 29, The Trademarks Act, 1999
8
Introduction to Trademark law & practice - The basic concepts
<https://www.wipo.int/edocs/pubdocs/en/wipo_pub_653.pdf >
9
Archana Bhageerathi, ‘Tradeamrk Bullying: A Legal means to illegal ends’(lexology, 17 March 2021)
<https://www.lexology.com/library/detail.aspx?g=72ae12b4-4b83-4ec4-a0d2-96d9aa534be5>
and this is true even if the mark is relatively poor but the business segment is competitive.
“Similarly, trademark bullying occurs when owners of dissimilar marks assert their rights against
marks through the use of non-competitive products. What happens, though, when the owner of
deceptively identical marks wants to impose his or her rights against non-competitive goods and
services? In such cases, the owners try to create a connection between two non-competitive
goods using the related goods or complementary goods doctrine.” Due to the difficulty of
establishing such relations, enforcers often depend on unfounded claims of "popular and well-
known trademark.10"

How does Trademark Bullying take place?

When issuing a questionable cease-and-desist letter, these bold businesses often misinterpret the
Trademarks Act by failing to perform a thorough objective assessment of the third party's mark
in relation to their specified products and services. Unreasonable interpretations can also include
exaggerating the owner's mark's strength, exaggerating the mark's scope of defense, or
misrepresenting the probability of customer misunderstanding in the marketplace. 11
Furthermore, analyzing the content of conventional demand letters reveals that the sender often
tries to persuade the recipient to stop using his or her own trademark or face imminent legal
action. Others are released in the hopes of obtaining licensing fees, quick settlements, or co-
existence arrangements from the suspected infringer. Bullies' litigious behavior also leads to the
filing of infringement lawsuits against alleged violators in an effort to financially exhaust and
discourage the trademark holder from using their registered trademark in commerce. The threat
of legal action, on the other hand, is usually enough to compel a person or a small business to
comply.12
Trademark bullying is prevalent in India, as shown by the recent dispute between BigBasket and
DailyBasket. “BigBasket served DailyBasket with a cease-and-desist notice, instructing the
company to: (1) cease business operations under the trademark Daily Basket and the domain
name dailybasket.com, and transfer the same to Big Basket; (2) discontinue the mobile
application; (3) discontinue use of similar domain or trademark with the word Basket as a
dominant feature of the domain name or trademark; and (4) discontinue use of similar domain or
trademark with the word Basket as a dominant feature.” Since the phrase basket is readily treated
as a trading expression, every proprietor in the consumer products industry is entitled to use it,
this would be a direct case of poor faith legislation.13

10
S. 2(1)(zg), The Trademarks Act, 1999
11
Roxana Sullivan and Luke Curran, ‘Trademark Bullying: Defending your brand or vexatious business technique?’
(Ipwatchdog, July 2015) < https://www.ipwatchdog.com/2015/07/16/trademark-bullying-defending-your-brand-or-
vexatious-business-tactics/id=59155/ >
12
Archana Bhageerathi, ‘Tradeamrk Bullying: A Legal means to illegal ends’(lexology, 17 March 2021)
<https://www.lexology.com/library/detail.aspx?g=72ae12b4-4b83-4ec4-a0d2-96d9aa534be5>
13
Alnoor Peermohamed, ‘BigBasket slaps notice on daily basket for using basket in its name’ Economic Times
(February 2021)
Approach by Indian Judiciary against Trademark Bullying
The risk of such misappropriation had been anticipated by Indian lawmakers, who offered a
feasible remedy under section 14214, “which specifies the law against bogus legal threats. The
provision states that if an individual threatens another person with an action or proceeding for
infringement of a registered or alleged to be registered trademark by circulars, advertising, or
other means, the aggrieved person may file a lawsuit against that person and obtain a declaration
to the degree that such threats are unjustified. 15 An injunction may be given in the aggrieved
party's favour to prohibit the other person from making more threats and to recover damages.”
Only those whose trademarks have been licensed are eligible for this remedy.16
Milmet Oftho Industries and Ors v. Allergan Inc.17
Allergan, an Indian pharmaceutical business, marketed a drug called 'Ocuflux.' The Defendant, a
multinational pharmaceutical corporation, pursued a passing off case against Allergan because it
marketed a drug with a similar name in various countries. According to the Supreme Court, “ if
multinational companies do not have any intention of coming to India or introducing their
products in India, they should not be allowed to throttle Indian Companies if the Indian
Company has been genuinely using their mark in India and developed the product and was the
first in the market.”
Jones Investment Co v. Vishnupriya Hosiery Mills18
The Defendant was an American organization that had been manufacturing and producing
garments, hosiery, and accessories under the trademark ‘Jones New York' on a global scale. “On
the other hand, the respondent was a small textile company located in Erode, Tamil Nadu. The
Respondent lodged an application for their trademark Jones in relation to clothing goods, which
was objected to by the Appellant, and the Registrar of Trademarks rejected the application,
resulting in an appeal. The Appellants claimed that they had a trans-border reputation and that
the respondents didn't sell enough of their goods to be able to compete with the Appellant. The
Intellectual Property Appellate Board (IPAB), on the other hand, took the same position as the
Supreme Court in the previous cited case, stating that a foreign corporation cannot assert
trademark infringement by a local Indian company solely based on international presence, unless
they can specifically prove that their presence extends to India or precedes that of the Indian
company.”
Bata India Limited Vs Vitaflex Mauch GmbH 19
The plaintiff filed a complaint against the defendant to prohibit them from making irrational
threats of legal action. The key issue before the court was whether the defendant's legal notice
constituted a legal danger, and whether the plaintiff was entitled to an injunction and damages.

14
S 142, the Trademarks Act, 1999
15
Archana Bhageerathi, ‘Tradeamrk Bullying: A Legal means to illegal ends’(lexology, 17 March 2021)
<https://www.lexology.com/library/detail.aspx?g=72ae12b4-4b83-4ec4-a0d2-96d9aa534be5>
16
Rebecca Giblin, 'Evaluating Graduated Response' (2014) 37 Colum JL & Arts 147
17
(2004)12 SCC 624
18
2015-4-L.W.30
19
CS(OS) No. 1112/2006
The defendants were ordered to refrain from making any more baseless threats by the Delhi High
Court, which held that the legal notice amounted to a threat that was unjustifiable.
Despite the fact that India already had a provision in place for such attacks, the act does not
specify what constitutes a groundless or unfounded danger. “However, the above court and IPAB
judgments are clear on a few elements, such as whether the marks are actually similar and cause
confusion, whether international companies have an intention to bring their product into the
country, first to use over first to file, and so on, which have been taken into account when
determining whether the same is to be considered bullying or infringe. When it was clear that the
infructuous cease and desist notice being sent to local businesses was affecting them incorrectly
and unlawfully,” the Indian judiciary did not hesitate to slam MNCs and other influential
companies.20

How can this problem be tackled?

All three of the levers i.e. “vague legal boundaries, non-transparent enforcement system, and
doctrine that reward aggression can lead to overreaching can be adjusted in the sense of
trademarks. To begin with, courts may minimize trademark law's notice failures by clarifying
trademark rights' boundaries. This could be accomplished using a variety of techniques, either
individually or in combination. By distinguishing between direct and contributory infringement
claims, a strict trademark use doctrine, for example, would add doctrinal clarification.
Furthermore, by discouraging litigation over attenuated chances of misunderstanding over
affiliation, a materiality provision would deter legal claims for harmless infringement. Most
promising, courts could give trademark law's defenses more rigour and consistency, carving out
categories of protected usage that are safe from trademark holders' reach. Any improvement in
doctrinal clarification would not only aid in the resolution of individual cases, but it would also
allow "best practices" programmes and other initiatives that would empower targets to determine
the legitimacy of cease-and-desist letters and other legal threats.21”
The doctrines that essentially allow trademark holders to erect fences around their marks as
broadly as possible should be reconsidered by the courts. These doctrines are intuitive and
unavoidable to some extent. It makes sense, for example, to give only minimal protection to
marks in a "crowded area," since none of the marks are likely to have significant source
identifying value for consumers. However, the converse is not always true that particularly
strong marks are particularly susceptible to misunderstanding or dilution, necessitating an extra-
wide range of defense. It's possible that the most powerful marks are the least susceptible to
dilution or misunderstanding, since customers would remember them regardless of whether other
parties use similar words.22 Given the apparent negative impact of the "strong marks" preference
on trademark enforcement, it is worth at least debating if it serves a valid purpose. 23
20
Archana Bhageerathi, ‘Tradeamrk Bullying: A Legal means to illegal ends’(lexology, 17 March 2021)
<https://www.lexology.com/library/detail.aspx?g=72ae12b4-4b83-4ec4-a0d2-96d9aa534be5>
21
Stacey Dogan, 'Bullying and Opportunism in Trademark and Right-of-Publicity Law' (2016) 96 BU L Rev 1293
22
Barton Beebe, A Defense of the New Federal Trademark Antidilution Law, 16 Fordham Intell. Prop. Media &
Ent. Lj. 1143, 1149-50 (2006)
23
Archana Bhageerathi, ‘Tradeamrk Bullying: A Legal means to illegal ends’(lexology, 17 March 2021)
<https://www.lexology.com/library/detail.aspx?g=72ae12b4-4b83-4ec4-a0d2-96d9aa534be5>
One recent development may have a huge effect on trademark compliance incentives. Following
the decision in eBay Inc. v. MercExchange, LLC 24, some courts have started to relax the
presumption of irreparable damage in trademark cases, requiring trademark holders to show a
real threat of injury instead. If this pattern persists, the anticipated reward from filing trademark
lawsuits will dwindle, as courts will conclude that minor misunderstandings seldom cause
significant damage. If trademark owners are refused injunctive relief in these cases, they may
have less power to control third-party uses of their marks that can cause customers to think of
them but do not hurt them. Indeed, in a world where powerful trademarks had more and better
business, we would all be better off.

Conclusion
Any cease-and-desist letter will not be considered trademark bullying. Every case has its own set
of circumstances, forcing the court to reconsider any situation and keep an eye out for trademark
intimidation or “whether the plaintiff is seeking an injunction to prevent the real consequences of
an infringement. The main goal of the trademark act amendment was to ensure that small entities
and local businesses did not lose access to what they were legally entitled to. However, there are
ways to further reduce the issue, such as providing services to small organizations such as legal
aid camps, raising awareness, and law firms taking the initiative and handling more pro bono
cases, among other things. Small businesses have recently found solace in social media, where
their plight is recognised by a group of like-minded individuals who support” them in the face of
opposition from larger corporations, which hurts their credibility and goodwill created over time.
While the laws in the United States on the burden of proof for trademark dilution claims show a
way to limit trademark bullying based on flimsy claims of popular and well-known trademarks,
the laws in India are still unclear on how far a litigant can go on such baseless claims before
being labelled a bully.25
The problem of trademark bullying is complicated, but not insurmountable. We do not generally
expect such a high degree of assertive policing and initiation of legal proceedings for owners to
protect their rights as we do for trademarks, but this area of the law remains an outlier. Changes
in how judicial penalties and processes like humiliation are implemented may reduce some of the
problems associated with bullying, but they are likely to leave major gaps. Although this would
require concentrated attention and financial resources, public interest groups may broaden their
outreach and offer more legal support to bullying victims. This article introduces a new
framework for resolving the conflict between allowing trademark owners to police their marks
while also preventing them from bullying rivals and suppressing speech. Although incremental
revisions to the law should help to explain the distinction between appropriate and inappropriate
compliance, it may also be time to consider new procedural protections. Before being
implemented, the plan outlined here would undoubtedly require extensive additional analysis,
including a systematic analytical review of the financial costs and benefits. My intention was to
progress the discussion by suggesting another tool in our toolbox for fixing a device that needed
more than just tinkering.26
24
547 U.S. 399 (2005)
25
Irina D Manta, 'Bearing down on Trademark Bullies' (2012) 22 Fordham Intell Prop Media & Ent LJ 853
26
Id.