12/7/23, 11:37 AM Trademark Bullying: A Legal Means to Illegal Ends - Lexology

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Trademark Bullying: A Legal Means to Illegal Ends

Fox Mandal

India March 17 2021

The law of Trademark Protection was developed to grant exclusive proprietary right to Trademark owners, the monopoly of
the Trademark owners over their trademarks and safeguard the collective goodwill. In a nutshell, Trademark Protection
originated to restrain the sale of counterfeit products under an existing reputed brand name, but what happens when the same
owners who are protected go above and beyond their legal capacity to protect their mark? The exact term for such an act is
“Trademark bullying”.
Off late it has become a persistent problem with big companies, whereby they try to strong-arm small enterprises for business
gains. Proprietors having high stakes go out of their way to protect their marks, even though the target entities do not use
marks that are remotely similar to theirs. When a proprietor becomes an aggressive protector of his Trademark, lines
between actual infringement and absurd contestations blur. To understand whether the same is bullying or an actual trademark
infringement we will have to understand what constitutes bullying and the subtle difference between infringement and
trademark bullying.
Definition & Ingredients
Definition of Trademark Bullying
The United States Patent and Trademark Office (USPTO) has defined trademark bullying as “the act where the
trademark owner that uses its trademark rights to harass and intimidate another business beyond what the law
might be reasonably interpreted to allow.”[1]
The practice of a proprietor being overprotective of their mark and enforcing trademark rights beyond the required limit and
scope of trademark law is called Trademark Bullying.[2] For instance when a powerful company or a big MNC like Amazon
or Apple, that has immense funds, files a suit against local or smaller companies for infringement. Legal proceedings have a
humongous cost attached to them and cannot be afforded by everyone. A small company that does not have adequate
finances to fight a legal battle tends to budge under the influence of these powerful companies and give up on using their mark
along with the products and services used under the mark, which they are legally entitled to. However, these threats are more
than often groundless and baseless.
The course of action for entities that suspect infringement should be to verify whether the rival mark is actually similar to the
proprietors’ mark. The next step would be to understand the trade circle, the market area and the similarity in the goods and
services and further understand whether there is actual infringement or dilution. Similarly, one needs to determine whether
there is a likelihood of confusion that might arise when a man with average intelligence looks at the rival marks. After the
conclusion of the said due diligence, the proprietors would be in a position to understand whether they need to proceed with
a legal action.

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Who is a Trademark Bully and What Constitutes Trademark Bullying?

Various elements are to be considered before concluding whether it is a good faith trademark enforcement or bullying. A bully
is someone who crosses the outer limit of “likelihood of confusion” en route to its trademark enforcement by prosecuting
proprietors that are using an allegedly similar mark for non-competitive goods and services. In the case of deceptively similar
marks and competitive goods and services, any act of aggressive enforcement will fall within the ambit of good faith litigation,
and it holds true even if the mark is relatively weak but the market segment is competitive. Likewise, when owners of
dissimilar marks enforce their rights against marks in the use of non-competitive goods, it is trademark bullying. But what
happens when the owner of deceptively similar marks tries to enforce their rights against non-competitive goods and
services? The owners in such scenarios seek to rely on the related goods or complementary goods doctrine, which tries to
establish a link between two non-competitive goods. Since such links are difficult to establish, the enforcers usually rely on
unfounded claims of “famous and well-known trademark”.
Trademark Infringement Based on Unfounded Claims of “Famous Trademarks”
One can also be called a bully if it bases the case on unfounded claims of a “famous trademark” to allege dilution of its
trademarks. Unlike the United States, which not only requires proof of a mark being famous in the niche area but also being
well known to the general public, the Indian Trademarks law does not mandate the latter to establish a case of trademark
dilution. This leaves the window open for corporates to base their unsubstantiated and self-serving claims of a famous or
well-known trademark.
It is however understandable that a company that has acquired its reputation and goodwill towards its brand through
immense marketing, advertising and providing exceptional goods/ services would go an extra mile to protect its brand from
being used by any third party with a malafide intention to earn profits from the name of a well reputed brand.
In order to decipher whether there is an actual infringement, or the mark is being bullied, we need to understand if the
dominant mark is really being affected economically as well as if its reputation is being tarnished and if there is any confusion
caused by the use of the rival mark in the said market. If these are not affected and the dominant mark is trying to establish a
monopoly in the market, then it is considered Trademark Bullying.
Modus Operandi of Bullying and the Effect on Small Entities
Big companies have been observed to follow a similar pattern when they try to eradicate their competition out of the markets.
They send out a common cease and desist notice which contains threats in legal language alleging trademark infringement and
dilution. They also mention that they have been successful in prosecuting other enterprises using similar trademarks and then
initiate either opposition proceedings or rectification proceedings against the small enterprise.[3]
The effect on the small enterprises that do not have any economical or legal support is they sit for a settlement wherein they
are asked to withdraw their marks and the same is accepted by the small enterprises. The small enterprises tend to incur a
huge financial cost of rebranding, removal of products from the markets, and loss of reputation because of the suit.
Comparative Analysis of Judicial Approach to Trademark Bullying in India and the US
The Approach by US Courts
While in India the cases which surround the issue of trademark bullying are still fewer, the instances are much higher in the
United States. Here are a few cases that helped the courts of the United States to look at the situation of trademark bullying
from a different perspective.

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In Monster v. Vermonster, the manufacturer of a renowned energy drink “MONSTER”, Hansen Beverage Co., sent a cease-
and-desist notice to Rock Art Brewery for using “Vermonster” to market its brewed beer. Rock Act Brewery was a small
company that sold its beer in a few states in the United States of America. Hansen asserted a likelihood of confusion over the
term Vermonster for beer and Monster for an energy drink.
Even though the marks were completely dissimilar and unique in their own way, Rock Art was asked to comply with the
notice, however, the proprietors of Rock Art stood against the bullying and issued a public statement and started advertising
as well as marketing their product. They also took to social media which persuaded Hansen to back down and come to a
settlement.[4]
After this particular case the U.S. Commerce department in coordination with the USPTO came up with a report which
addressed the wrongful harassment of small entities by big companies.[5]
In Apple v. Prepear, Apple being a leading producer and seller of electronic products tried to manipulate a small entity -
Prepear, a recipe sharing application, into letting go of their mark. At the outset, the logo of Prepear and Apple are pretty
distinctive with Prepear having a drawing of a pear outlined in green against a white background and leaf facing downward
and the logo of Apple being a half-eaten apple with the leaf facing upward. Further, the goods and services provided were
also dissimilar.
Prepear took to social media to fight against the bullying and shared how Apple had managed to do the same with other
entities who has created a fruit logo. Prepear also stated that they had to let go of various employees because they could not
afford their pay alongside defending the costly suit.[6] Although this case has not been decided yet, it is clear that both the
logos are dissimilar, and the goods and service offered are also distinctive therefore there should be no cause of confusion for
any man with average intelligence. Nonetheless, the factors that are to be taken into consideration while deciding whether
there is a plausible infringement or bullying are fairly obvious.
Indian Jurisdiction
Indian legislators had forethought the possibility of such misuse and provided a viable resolution under section 142 of the
Trademark’s Act, 1999 which outlines the law against groundless legal threat.
The provision states that when a person through circulars, advertisement, or otherwise threatens another person with an
action or proceeding for infringement of a registered or alleged to be registered trademark, the aggrieved person may bring a
suit against such person and obtain a declaration to the extent that such threats are unjustified.
The available legal remedy for such threats is that an injunction may be issued in favour of the aggrieved party to restrain the
other person from the continuance of such threats and also to recover damages. This remedy is available for only those
whose trademarks are registered.
One of the first case that may be identified as bullying in India is Milmet Oftho Industries and Ors v. Allergan Inc
[(2004)12 SCC 624], wherein the Indian Pharmaceutical company Allergan sold a drug named ‘Ocuflux’. The Appellant, an
international pharmaceutical company sold a drug with a similar name in different countries and therefore sought a passing off
suit against Allergan. The Supreme Court held that “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”.

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Another notable case is Jones Investment Co v. Vishnupriya Hosiery Mills [2015-4-L.W.30], where the Appellant was an
American company which had been using the trademark ‘Jones New York’ internationally for manufacturing and producing
clothing, hosiery and footwear. The respondent on the other hand was a small textile firm based in Erode, a city in Tamil
Nadu. The Respondent had filed an application for their mark ‘Jones’ in relation to the textile products, which was opposed
by the Appellant and the Registrar of Trademark had dismissed the same which gave rise to an Appeal.
The Appellants contended that they had transborder reputation and that the respondents did not have enough sales of their
products and therefore, would not be able to compete with the Appellant. However, the IPAB took a similar stand which
was taken by the Supreme Court in the previous cited case and stated that “a multinational company cannot claim
infringement of trademark by a local Indian company purely based on international presence, unless they can
expressly establish that their presence extends to India or precedes that of the Indian company.”
In a similar case of Bata India Limited Vs Vitaflex Mauch GmbH (CS(OS) No. 1112/2006), wherein the plaintiff instituted
a case against the defendant for restraining them from making baseless groundless threats of legal proceeding. The main
question that the court had to deal with was whether the legal notice sent by the defendant amounted to a legal threat and if
the plaintiff was entitled to injunction and damages. The Delhi High Court held that the legal notice amounted to threat and the
same was unjustifiable, therefore, the defendants were ordered to restrain themselves from issuing any further baseless
threats.
The recent spat between BigBasket and DailyBasket is the latest example of prevalence of Trademark Bullying in India.
BigBasket slapped DailyBasket with a cease-and-desist notice directing DailyBasket to (1) Stop business operation 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 term “Basket” as a dominant feature of
the domain name or the trademark; and lastly, (4) Pay INR 2,00,000.00/- as legal fees. This would be a fit case of bad faith
enforcement, since the term “Basket” can be easily regarded as a term common to trade, and hence any proprietor in the
trade of consumer goods is free to use it.
Although India had already made a provision for such threats, the act does not clarify what amounts to groundless and
baseless threat. However, the above judgments decided by the Court and IPAB are clear on a few elements including
whether the marks are actually similar and cause confusion, whether the international companies have an intention to bring
their product into the country, first to use over first to file, etc. which have been taken into consideration when assuming if the
same is to be considered as bullying or infringement. The Indian judiciary has not second guessed in slamming MNC’s and
other powerful companies when it was clear that the local businesses were being wrongly and illegally affected by the
infructuous cease and desist notice being sent to them.
The Road Ahead
Every legal notice of cease-and-desist would not amount to trademark bullying. The dynamics of each case are different,
making the court re-think every scenario and look-out for the issue of trademark bullying or to check whether the plaintiff is
seeking an injunction to avoid the actual consequence of an infringement. The primary purpose of the provision under the
trademark act was to make sure that small entities and local businesses do not lose out on what they are legally entitled to
own. However, there are ways in which the issue could be further curbed i.e. by providing resources to small entities
including legal aid camps, creating awareness, law firms taking initiative and handling more pro bono cases etc. Small entities
off late have sought some respite by resorting to social media wherein their plight is understood by a community of like-
minded people who support through backlash at bigger companies which harms their reputation and goodwill gained over the

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years. While the laws in US on standard of proof for claims of trademark dilution shows a way to restrain trademark bullying
on superficial claims of famous and well-known trademarks, the laws in India are still not clear on how far a litigant may go
on such unfounded claims before being termed as a bully.

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