Starbucks Corporation, the world-famous coffee chain was once offered the opportunity to buy the rights to its own iconic trade mark for $600,000/- in Russia. The mark had been registered by a Russian entity when Starbucks had not entered into the Russian market. This is the reality of trademark squatting. Companies with immense goodwill often have to face trademark squatters whenever they enter a new market. Waiting to capitalize on your business’s success, trademark squatters register a trademark so that you feel compelled to purchase it from them.
In order to give an insight on how trademark owners can tackle squatting of their trademark and can initiate action against these squatters, this article discusses a recent judgment of the Hon’ble Delhi High Court in BPI Sports LLC v Saurabh Gulati and Another which outlined the reliefs that a trademark owner can obtain against trademark squatters under the Trade Marks Act, 1999 (“the Act”).
Brief Facts:
BPI Sports LLC i.e. the Petitioner is a dietary and nutritional supplements company incorporated in the United States of America and has been using the trademark ‘BPI SPORTS’ (“the Mark”) for its goods since 2009. The Petitioner began utilizing its trademark in India only from 2019 onwards when its goods were imported into India by persons such as the Respondent No. 1.
When the Petitioner decided to register the Mark in India, it came to learn that the Respondent No. 1 had already registered it. Aggrieved the Petitioner filed a petition under Section 572 of the Act before the Hon’ble Delhi High Court seeking the removal of the Respondent No. 1’s registration of the Mark from the register.
Challenge under Section 11 of the Act:
Though the Petitioner referred to the Respondent No. 1 as a ‘trademark squatter’, before the Hon’ble Delhi High Court it only contended that the Mark registered by the Respondent No. 1 fell foul of Section 11(1), (2) and (3)3 of the Act. The reason may be clear as the Court itself observed that “trade mark squatting as an individual phenomenon does not find especial mention in the Trade Marks Act”. Based on the facts of the case and after highlighting the applicable principles, the Court negatived the Petitioner’s challenge under Section 11 of the Act as no case was made under sub-sections (1), (2) and (3) of Section 115.
Invocation of Section 11(10)(ii) of the Act:
Having negatived the stands specifically taken by the Petitioner, the Court in its own wisdom invoked Section 11(10)(ii) of the Act finding that the Petitioner was entitled to relief thereunder7. Section 11(10)(ii) requires the Registrar to take into consideration the bad faith of the applicant of a trade mark. Though the provision itself is limited and does not state that the existence of bad faith would disentitle the applicant from registration, the Court interpreting the provisions purposively held that its intent is obviously to disentitle registration of mark, the request for registration of which is tainted by bad faith.
Discussing various definitions of what would constitute ‘bad faith’, the Court held that trademark squatting would certainly amount to ‘bad faith’ within the meaning of Section 11(10)(ii) of the Act. Next, the Court applied the above to the conduct of the Respondent No. 1 observing that it had indulged in the ‘textbook definition of trade mark squatting’. In particular the Court took notice of the fact that Respondent No. 1 was the importer of Petitioner’s goods and later registered the Mark in its own favour, this was clearly to capitalize on the Petitioner’s reputation with respect to the mark.
Relief under Section 57(2) of the Act:
With the above findings, the Court held that though the Petitioner was not entitled to relief on the grounds pleaded, as the facts made out that Respondent No. 1 had adopted the Mark in bad faith, the Mark ought to be removed from the register of trade marks invoking Section 11(10)(ii) of the Act. The Court was able to do so by reasoning that as the facts which emerged in the petition were not before the Registrar of Trade Marks, the case would fall within the scope of marks which are “wrongly remaining on the register” within the meaning of Section 57(2) of the Act.
Conclusion:
The Hon’ble Delhi High Court’s above judgment is a testament to the commitment of the Indian judiciary towards adopting a purposive approach to keep up with the times. This judgment sets a precedent clearly outlining the manner in which a genuine trademark owner can protect its rights against trademark squatters while also mapping the provisions under which it can do so.
If you have any questions about the issues addressed in this memorandum, or if you would like a copy of any of the materials mentioned in it, please do not hesitate to reach out to:
Pooja Tidke
Email: pooja.tidke@parinamlaw.com
Phone: 022-42410007
Monisha Mane
Email: monisha.mane@parinamlaw.com
Phone: 022-42410013
Pranav Nair
Email: pranav.nair@parinamlaw.com
Phone: 022-42410022
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