Nov 18, 20217 min read

All About Generic Marks & More (Part-2)

Cross-Border Generic Marks

A product associated with a reputation is perceived to be better than one that is unbranded. In rapidly-evolving global e-commerce systems, there is no physical boundary between countries. This increases the need for a brand reputation all the more. Businesses do not just cater to guaranteeing the origin of a good or a service but command goodwill through all the consumers they continually attract. An example of this is why consumers prefer McDonald’s over street vendors’ food even if the street food is tastier.

The era of globalisation has made Trademark Genericide a widespread occurrence. Despite all the effort and resources poured into brand promotion, advertisement and consumer awareness, trademarks find themselves victim to genericide, which ultimately turns fatal to the business. Famous trademarks’ owners find their marks protected in their jurisdictions but frequently find it difficult to enforce their rights in countries where their trademarks lay unregistered. This opens up an avenue for genericide to operate on an unrestricted basis. In addition to fighting against counterfeit products, they also have the additional burden of preventing the loss of their Trademark to the public domain.

For instance, Doc Martens, a brand that sells a heavy lace-up boot with a cushion of air in the sole. Global consumers associate an image of the boot with the name and not the Trademark. In addition to this, websites like AliExpress, Shein, and NastyGal regularly sell counterfeit goods that infringe the patents and the Trademarks of other brands and contribute to the threat of genericide of the Trademark. When these counterfeit goods from these companies are imported to, manufactured or sold in countries like Indonesia and China, I.P. enforcement is difficult, expensive and time-consuming.

In such cases, the fight against misuse of trademarks calls for the reliance of the brand’s goodwill or its “Trans-Border Reputation” to prove that infringement has occurred outside the jurisdiction of the business entity. While large, popular global brands may find it easy to enforce their Trans-Border Reputations in a foreign territory, it is usually a battle for smaller brands, regardless of whether they may be extremely popular in certain parts of the world.

The typical remedy for foreign trademark holders is to seek refuge in the common law action of passing-off and not a suit of infringement because it is more effective in jurisdictions of dispute where the Trademark has not yet been registered. An action of passing-off attempts to prevent a party from misrepresenting a particular good or service as that of the trademark holder’s when the party operates intending to benefit from the latter’s goodwill.

A critical requirement for the success of a passing-off action is for the trademark owner to create a reputation for his Trademark that influences consumers to associate the Trademark with the plaintiff’s goods or services as a source identifier. In older times, a foreign trademark owner could create a reputation only by displaying a trade connection with relevant Indian consumers who resided in India.

In recent years, however, have seen a surge in awareness of foreign brands amongst the Indian public, which has made establishing a reputation less difficult for foreign business. Coupled with the more liberal approach of Indian courts, these foreign entities can easily prove their Trans-Border Reputation in India and sustain a suit for passing-off based on evidence that advertisements of the Trademark have reached the Indian public.

The USA-Australia Uggs Dilemma - A Fascinating Study

In Australia, the term “ugg boots” refers to a general style of sheepskin shoe with the fleece turned in for warmth. It is a generic term and not a trademark – in Australia. In Australia, the phrase “ugg boots” conjures up images of a general type of sheepskin fully-covered footwear with the fleece inwards to provide warmth. It is a generic term in Australia’s jurisdiction because numerous companies manufacture and sell ugg boots in the country, Australian Leather Pty. Ltd. included. The primitive phrase “ugh” derived from surfer Shane Stedman’s quote in the 70s - “We called them Ughs because they were ugly.”

In the U.S.A., however, UGG is a registered trademark currently owned by Deckers Outdoor Corp. In 2016, Deckers found out that Australian Leather had imported 12 pairs of boots labelled “ugg boots” into the U.S.A. and then sued them for infringement. The defendant claimed that it could import its boots to the U.S.A. because the term is generic in Australia. However, the district court favoured the plaintiff in refusing to accept the argument. On appeal to the Federal Circuit, it was affirmed in a Rule 36 judgement without any opinion.

A Rule 36 judgement does not have an opinion when the panel decides that any one of the five conditions applies. A written opinion would thereby not have precedential value. The five conditions are listed below:

The decision or judgement of the trial court appealed from is based on reasoning that is clearly correct.
The evidence backing the jury’s verdict is adequate.
The record backs up the judgement on the pleadings.
The decision of an administrative agency is worthy of affirmation under the standard of review in the legislation permitting the petition for review.
A decision has been entered without an error of law.

Australian Leather has currently petitioned the United States Supreme Court, with particular attention to two issues.

1. Whether a generic term in Australia (English-speaking foreign country where the term originated) is ineligible for trademark protection in the U.S.A.

2. Whether the “primary significance to the relevant public” standard (to determine if a registered trademark has turned generic) applies to in a situation where a term’s origin was generic before registration, and how, if so.

Deckers vigilantly protects the UGG® name. Having filed over 250 patent and trademark infringement cases against individuals and large businesses such as Target and Forever 21, suing independent, Australian sheepskin boot makers who created the style and the name is not out of their reach. Uggs are generic in Australia; thus, the boots are legitimate in the country. However, when these are sold online and imported into the U.S., they are subjected to U.S.A. trademark and patent statutes.

It is easy to conclude that Deckers is being unnecessarily stringent; after all, they possess all I.P. related to the boots when, in fact, Australians created the boot. However, Deckers did create the associated brand. There is an enormous investment of time, energy and money into marketing and development of the boots, which is certainly worth protecting. The skill and tactic employed in investing in I.P. early on to enforce global protection against infringement is nothing short of ingenious.

Nevertheless, the case strikes a nerve for the Australians, who consider the boots a national fashion symbol. The case illustrates how global access to online markets could create clashes amongst local legislative bodies in different parts of the world.

Treatment of Cross-Border Generic Marks in India - What Does the Future Hold?

Owing to the influence of U.K. legislation, the protection of foreign marks in India is similar to the provisions of the U.K. Trade Marks Act of 1994, in compliance with the guidance of international conventions and treaties. This has been codified in the Trademarks Act, 1999, with special provisions for well-known marks. Until the latter’s introduction, foreign marks in India were not afforded any special protection as per Indian trademark law. The Trade and Merchandise Act, 1958, which was the sole statute before the 1999 Act, did not specify any protection for well-known foreign marks due to which they have to seek refuge of common law remedies of passing-off in Indian courts as a step in averting trademark genericide in addition to preventing infringement. While following the TRIPS Agreement, the 1999 Act has introduced well-known marks into Indian trademark law. The optional guidelines in WIPO’s Joint Recommendation are also incorporated in the statute.

This push for a liberal approach is a signatory of a shift in the Indian judicial mindset from a closed-off economy to a free global marketplace. From a view to protecting Indian companies even in instances of extreme infringement and passing-off while promulgating trademark genericide, the trend in recent times is a testimony of the changing attitude of courts as they offer better and fair judgements, extending proper protection to foreign trademarks.

The multi-jurisdictional nature of a well-known trademark necessitates a robust regime of I.P. protection, without which brands will be prone to dilution and could quickly lose their hard-earned goodwill. It is not realistic to register a trademark in every possible jurisdiction and eliminate the possibility of loopholes in every country, which leaves the mark prone to genericide and misappropriation. While this often leads brands to rely on passing-off actions to enforce their rights, it largely depends on the country’s judicial ideology, whether liberal or strict, in the enforcement of rights associated with the well-known Trademark. In India, a liberal approach, while viewed as revolutionary, is not a common occurrence as this approach is still in the process of being accepted. For a successful passing-off action, the foreign Trademark holder must possess adequate evidence of its repute amongst the Indian public.

Saying that a more liberal approach is still on its way in India does not mean that there has been little progress. India’s Trade Marks Act of 1999 is a significant step from the conventional view that domestic companies must be protected regardless of other contentions. However, to increase their chances of success in procuring an action for passing-off, claimants may indulge in popularising their trademarks as source identifiers and not as nouns or as verbs to mitigate and prepare for a similar situation to the USA-Australia Uggs Dilemma.

While the concept of Trans-Border Reputation of trademarks is not brand-new, cases of genericide in this respect have not garnered much attention in India. Perhaps the system is still cementing the new principles it has acquired from global exposure and influence that related legislation in foreign countries have contributed to Indian statutes. The USA-Australia Uggs Dilemma is an example of integrating several issues that arise with I.P. culminating in a single case. It is fascinating to unfold the intricacies of such cases, but it is unlikely that such a scenario is bound to arise in Indian courts. This is because India is relatively still in the preliminary stage of understanding the nuances of I.P. when one compares it with other jurisdictions’ I.P. regimes. However, the possibility of encountering more complex and intricate I.P. cases is certainly not off the table in the future, considering the extent and ease of information transfer in the 21st century.

References:

All About Generic Marks & More (Part-2)

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