The primary objective of intellectual property (IP) law is to encourage creativity and innovation; the law must also maintain a fine balance such that the use of such creativity and innovation is not prevented outright, but also not abused. This is why IP and IP-related laws have requirements like demonstrating the working of patents in a jurisdiction, or preventing domain squatting, and so on.
In this context, a fundamental tenet of trademark protection for registered proprietors of trade marks is the 'use' of the trademark on goods and services for which the mark is registered. Registering a trademark without any 'use' or 'intent to use' impacts legitimate business owners who wish to honestly adopt the mark, and may result in registered proprietors using their registrations as tools to extort money from subsequent bona fide users. To avoid such misuse, most jurisdictions, including India, allow for cancellation of trademarks if they are not used.
'Trafficking' in trademarks
The misuse of a trademark by virtue of non-use was summarized by the Supreme Court in American Home Products Corporation v. Mac Laboratories Pvt. Ltd. and Ors AIR 1986 SC 137 (para 38), which said, that registering a trade mark "without any intention to use it in relation to any goods but merely to make money out of it by selling to others the right to use it would be trafficking in that trade mark." The Court said that 'trafficking' would involve "trading in or dealing with the trademark for [its] money's worth", and relied upon the meaning provided in a UK decision In Re American Greetings Corp's Application [1984] 1 All E.K.. 426, 433, by Lord Brightman, who said:
"...trafficking in a trade mark context conveys the notion dealing in a trade mark primarily as, commodity in its own right and not primarily for the purpose of identifying or promoting merchandise in which the proprietor of the mark is interested. If there is no real trade connection between the proprietor of the mark and the licensee or his goods, there is room for the conclusion that the grant of the licence is a trafficking in the mark. It is a question of fact and degree in every case whether a sufficient trade connection exists."
Non-use and cancellation of trademarks
Trademark laws take non-use seriously, with consequences as serious as cancellation. In American Home Products Corporation (supra) case (para 36), it was observed that "the object of [the provision on cancellation] is to prevent trafficking in trademarks." While a bona fide trademark owner can remedy non-use by demonstrating that there is indeed intent to use, an owner merely trafficking in a trademark is open to the risk of having their mark cancelled.
In India, cancellation of a trade mark for non-use is provided under Sec 47 of the Trade Marks Act, 1999 ("the Act"), which considers two scenarios:
- Under Section 47(1)(a): where the trademark was registered without any bona fide intention, and there was no bona fide use up to three months preceding filing the application for cancellation; and
- Under Section 47(1)(b): where there has been no bona fide use of the registered trademark for five years and three months before filing the application for cancellation.
Besides the duration of non-use, a key difference between the two scenarios under Section 47(1) is the requirement of a bona fide intention. As held in American Home Products Corporation (supra), if the requisite period of non-use under Section 47(1)(b) has elapsed, it is immaterial as to whether the registered proprietor had bona fide intention to use the mark or not. Contrast this with Section 47(1) (a), where both 'bona fide intention' and 'bona fide use' are necessary conditions. Whether there is intent to use or not depends on the facts and circumstances of each case.
Demonstrating 'bona fide intent'
The Act does not define 'intent to use', but courts in India have broadly construed 'intention to use' to mean not only tangible sources to demonstrate the sale of goods or rendering of services but also measures taken, such as publicity or advertisements. The Supreme Court in Hardie Trading v. Addison Paint and Chemicals 2003 (27) PTC 241 (SC) held that "use" may be other than physical and not limited to the physical use of the trademark in relation to goods or services.
However, registrations of well-known names risk cancellation if there has been an extended period of non-use. In M/s Pops Foods Products (p) Ltd. v. M/s Kellogg Co. [TRA/159/2004/TM/DEL], the Intellectual Property Appellate Board acknowledged that while a business cannot be started overnight, not presenting a single piece of evidence to support the use of the trademark (i.e., "POPS") for 22 years was sufficient to demonstrate lack of intent.
In Kabushiki Kaisha Toshiba v. Tosiba Appliances 2008 (37) PTC 394 (SC), the Supreme Court held that "the intention to use a trademark sought to be registered must be genuine and real." Thus, the possibility that a trademark registration might 'come in handy in the future' is not good enough to show bona fide intention.
Foreign jurisdictions have also expounded on bona fide intent in their own ways. In the US decision of MZ Berger & Co., Inc. v. Swatch AG, 787 F.3d 1368 (Fed. Cir. 2015), the court observed that simply filing an application was not in itself evidence to prove bona fide intent to use; and laid down additional parameters to determine intent. These include distinguishing between 'intent to reserve' from 'intent to use'; having prototypes for corresponding products; technological feasibility of products; relevant history of the proprietor with the product group in question; appropriate market research; and so on.
Defending a non-use cancellation action
As per Section 47(3) of the Act, the non-use of a trademark may be defended for being on account of certain special circumstances and not due to any default by the proprietor. For instance, in M J Exports Pvt. Ltd., Bombay, v. Sunkist Growers, Los Angeles, USA, 1991 PTC 81 (Reg) (Cal), the import policy of consumer goods, import control, and tariff duty of the Government of India made the commercial use of the mark impracticable, and the plea for cancellation of the mark on grounds of non-use was dismissed.
Conclusion
The provisions surrounding non-use and cancellation is a good example of how IP law is designed to favour those who act in good faith versus those who do not. The law and courts are clear that trademarks should not remain on the register without being used. Such registration, which the courts have termed 'trafficking', without demonstrable proof of use or intent to use, risks cancellation of the registration, thus returning the trademark to the public domain for potential registration by a bona fide user.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
