The trademark law firmly establishes that a trademark owner reserves the exclusive right to use the trademark and enforce the same. However, there are instances when economically stronger entities or large corporations aggressively secure their intellectual property against, mostly, smaller entities without any justifiable grounds. Through this, the former aims to monopolize the market and kick out any remotely similar business operating under the mark. This is often perceived as a means of brand building and a way to assert and secure their position and goodwill in the market to avoid losing customers or market share to the smaller entities. Such groundless threats are commonly achieved by sending cease and desist letters or legal notices threatening the recipient with legal proceedings.

Lately, this has been called out as ‘trademark bullying’ and recently, BigBasket and DailyBasket were involved in a tussle over the word ‘Basket’. It began with ‘BigBasket’ a prominent online grocery store sending a cease and desist letter to DailyBasket, a young startup targeting residents in Coimbatore (more detailed post can be found here). However, BigBasket’s threats and allegations are arguably groundless and the recourse against the same would be through Section 142 of the Trade Marks Act, 1999 (hereinafter referred to as ‘the Act’).

Section 142 of the Act categorizes threats as circulars, advertisements or other similar means served on the other party. Additionally, through the said section, the aggrieved party can obtain an injunction against the party issuing groundless threats and prevent the continuance of such threats. Further, the aggrieved party may recover damages (if any) or obtain a declaration to the effect that the threats are unjustifiable. An ‘unjustified threat’ is when the threatening party lacks grounds to make out a legitimate case of infringement and under the guise of enforcing their rights, they overstep and assert their dominance by resorting to trademark bullying. A widely discussed example was when Apple Inc., opposed the registration of a logo of pear by Prepear for being similar to its Apple logo. It is pertinent to note that Prepear was in fact a platform for food bloggers to upload recipes, meal plans and shopping lists which is wholly different to Apple’s services. However, as a result of their out of court negotiations, Prepear ended up altering their logo and arguably, the same could be attributed to Apple’s economic strength.

A reading of the statute indicates that this provision focuses on registered trademarks and the related infringement. However, in the case of Dolphin Laboratories Pvt. Ltd. V. Kaptab Pharmaceuticals, the Calcutta High Court detailed that the provisions of the trade marks statute are applicable to passing off actions as well, but there still exists ambiguity with respect to the applicability of this section for passing off actions. Moreover, the provisions of Section 142 are not applicable if the registered user of the mark had exercised their due diligence under Section 52(1) and are instituting proceedings to rightfully secure their rights in the mark, against the registered proprietor.

Further, such recourse is not limited to the Trade Marks Act, provisions similar to Section 142 are present in Acts governing other intellectual property rights in India. Section 106 of the Patents Act, 1970 and Section 60 of the Copyright Act, 1957 provide similar remedies against groundless and unjustified threats. With respect to the Designs Act, 2000, Section 23 states that provisions of Patents Act, 1970 with respect to remedies for groundless threats of legal proceedings by a patentee, shall apply in the case of registered designs.

Therefore, it is pertinent to note that these threats, whether justified or unjustified, must be exercised with due diligence and on proper grounds as this would severely impact the smaller entities leading to loss of repute and revenue. Moreover, these small entities might choose to avoid expensive and long drawn infringement proceedings and would rather cave to the demands of the party issuing unjustified threats. However, as established, a recourse under Section 142 is always available to those on the receiving end of the trademark bullying and the parties issuing such threats must ensure they possess just grounds as there exists a real risk of monetary liability if the threats are baseless and unjustified.

This article has been authored by Subhikssha K.