Trademark Squatting: Protecting Your Brand Against Bad-Faith Registrations

Author: Sayali Yashwant Loke, KES’ Shri Jayantilal H. Patel Law College, Mumbai.

Introduction

The trademark squatting enterprise under intellectual property rights has surfaced as a major concern for brand owners, especially in a fast globalizing market like India. Trademark squatting relates to situations in which individuals or entities might register names of popular or well-known brands, trademarks, and even internet domain names intending to earn from it, very often without the perusal or the free prior consent of the trademark owner. This phenomenon poses a dilemma on two fronts: it violates the trade rights of the user and also casts a dim light on fair competition, thus compelling the once-owners to sue endlessly to regain their trademarks.

Understanding the Trademark Squatting

In essence, a trademark squatter is an individual or business who is attempting to register a mark that is very close, if not identical, to one that is established in the market with the hope that one day the real owner would want to enter the market and be forced to negotiate for the rights to the trademark with them. The other distinguishing feature of trademark squatting lies in India, where the first-to-file system operates, and legal title in a mark vests in the first applicant, irrespective of prior use or intention. With this system, actual brand owners have had to litigate against opportunists who would step in after huge investments were made in brand marketing, thus leading to many little cases. In many such situations, trademark squatters tend to gain by taking advantage of the awareness gap that prevails among brand owners, most specifically among small businesses and start-ups. Lack of cognizance can have dire consequences, whereby these brands either have to negotiate a very unreasonable price to regain their rights or go through a lengthy prosecution process that first drains their resources and finally demoralizes them.

Legal Framework in India

Indian laws governing trademarks are essentially defined within the Trade Marks Act of 1999, which provides for the registration and protection of trademarks. Trademark squatting can be combated by brand owners with many remedies under Indian law. A registered trademark owner under the Trade Marks Act may sue for trademark infringement if a squatter uses a similar mark in bad faith. In addition, they could file for the squatter's cancellation, provided the trademark owner can show prior good faith use or can prove that the squatter had no bona fide intentions to use the registered wake. Such persons can also plead "passing off" under the common law to stop unfair competition through misrepresentation which creates confusion in the minds of consumers.

Recent case studies: Jio Hotstar and the PS5

The dispute relating to the Jio Hotstar domain and the PS5 trademark have made very recent examples of trademark squatting in action. In the case of the Jio Hotstar domain, an anonymous developer registered the domain name "JioHotstar.com" as soon as news broke about a possible merger of Reliance Jio with Disney+ Hotstar. Such registration was meant to profiteer by selling the domain to Reliance Industries. True, the person who registered the domain states that it was an investment toward his studies, but this statement does not negate the notion that bad faith could very well underlie such registration.

Another example is in the PS5 case, where an individual named Hitesh Aswani filed for “PS5” trademark rights before Sony could register its own mark in India. It is alleged that Aswani filed an application based on some fictitious speculation about the launch of the product in the market, given that PS5 had not yet been launched in India. Nevertheless, this had serious implications for Sony, as the application caused an inordinate delay in the launch of the console. In fact, both of these situations keep companies on their toes concerning trademarks and domain names. They indicate that companies must take proactive steps to register trademarks but also must take a more strategic approach toward brand protection in a fluid market environment.

Trademark Squatting Protection Strategies

Prevention is always better than cure achieved with trademark squatting. Some of the strategies that trademark owners really need to consider are:

Early Trademark Registration – Process and thorough examination of the registration for trademarks, including relevant keywords and variants, to prevent squatting.
Market Surveillance – Continue to monitor the trademark applications and registered trademarks in main markets to facilitate early detection of possible infringements.
Exploring IP Treaties: Broad trademark protection across borders guaranteed by the likes of the Madrid Protocol are put to use.
Fast Prosecution – In instances of suspected squatting, IP professionals are immediately engaged to prevent unauthorized claims and protect rights.

Conclusion

There is no denying that trademark squatting presents a significant problem for owners of brands in India, demonstrating an urgent need for proactive legal strategies to stave off IPRs in conceiving such squatting. Trademark owners can constantly contain the risks resulting from trademark squatting, thus upholding their corporate image and fair competition in the marketplace by understanding the economic model-the lawmakers, the awareness structure of customers towards trademark rights, and a proactive frontal attitude to confront them. It is a very complex environment, wherein cooperation should be encouraged among competitors, lawyers, and regulators to forge a framework that actively operates in favor of protecting trademarks from opportunism.