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In This Paper The Issue Of Trademark Dilution

In this paper, I will address the issue of trademark dilution, especially in the European Union but also referring to the approach of the United States, which is slightly different.

Nowadays, there is no absolute prevention of dilution, since in order to establish whether there is one, an evident change in the economic behaviour of the average customer in regards to the products belonging to the earlier trademark shall be noted. This causes an issue because, in most of the cases, dilution will only be established after serious repercussions on the “original” trademark.

Before discussing the main issue, I will define what a trademark is, following which I will start analyzing the various components leading to the open question of why trademark dilution should or should not be prevented, especially referring to the reasoning of the court of what can be considered the latest landmark case in this field: Intel Corp. v. CPM UK Limited. I will not focus on a specific national legislation, simply because at a European Union level, trademark and generally international property law are harmonized through the so-called “Harmonization Directive”. To conclude, I will compare the approach regarding trademark dilution of the European Union to the one of the United States.

First of all, a trademark is something (for example a name, a symbol) using to distinguish a product from another of the same kind, that points at the origin of that product, and that exclusively the owner can use. A clear example of a trademark is the symbol that we imagine simply thinking about a product, sometimes we could also refer to a type of good calling it with the name of the brand itself, as Hoover for vacuum cleaner, or Sellotape for a transparent adhesive tape.

The history of trademarks is extraordinarily rich and starts as early as people started producing objects, for example, pottery. In fact, a symbol was often carved into the object in order to distinguish it from the one of a different craftsman.

In the Middle Ages, people who used marks originally belonging to others without permission started to be punished as “infringers”: this is when trademark infringement- as we know it – began to exist.

Nowadays, trademark law includes different categories of infringement, but for the purpose of this paper, I will especially focus on trademark dilution.

The first occasion in which the dilution theory was admitted, was in the German case of ODOL, which was a brand of liquid mouthwash. The company wanted to bring an action against another company that also used the same brand name, but for another type of product. The court admitted the claim, saying that the use of the same name was against public morality, since when someone heard the brand name, it was associated with high quality. Therefore, this case is of such an importance because it admitted a claim against a product that was not aiming at competition, as the two categories of merchandise were totally different.

Another element that will be considered will be the fame of a company. In fact, the pre-requirement for bringing a dilution claim is that it needs to affect a well-known brand, and that is the reason why some criteria have to be checked to examine whether the company can be classified in such a category.

Definition of a trademark

Even if trademarks existed also in the ancient world, they started to have an increasingly important role in industrialization. This can be explained by the rise of competition between manufacturers and traders, which were striving to make the most profit out of the sale of similar goods. In fact, between two goods of the same nature, there could be some significant differences regarding their characteristics or prices. It is for the customer to decide which good is better to buy in his/her opinion, and in order to be able to distinguish between several products, the customer should be able to identify the source of his/ her preferred good for future reference. This is exactly where trademarks are important in the daily life of an average customer.

Specifically, a trademark is any sign or symbol that individualizes the good of a company and distinguishes it from the goods of other competitors. This sign could consist of words, designs, packaging, slogans or even (depending on the country) a particular sound or a particular smell.

The basic requirements to fulfill to register a sign as a trademark are two: it should be able to distinguish the goods of one enterprise from those of another one, and it should not be deceptive (it should not be against morality, public order and it should not be misleading to the customer).

Violation of a trademark

When registering a trademark, an enterprise acquires the right to its protection- which means that the registered trademark cannot be used by other companies or in general by other sources (there is also the option of protection based on use of a trademark and not on the registration of it, even if this approach is quickly fading, because more and more countries require the publication of a new trademark in a national register).

A violation to this is called “trademark infringement”, which occurs if an identical or similar sign is used to identify identical or similar goods.

When dealing with well- known marks, however, the relevant violation is called “trademark dilution”. In fact, renown marks enjoy special protection: the Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks, which was adopted in 1999 by the WIPO General Assembly and the Assembly of the Paris Union is of importance in such situations, as it provides guidance in order to determine if a mark can be considered to be well-known, and explains the scope of their protection.

Dilution takes place when the use of another mark diminishes the ability of the famous mark to be associated by the public with its particular source. Therefore, the second mark has a misleading effect to the public, which “switches” the two marks in its minds. This could happen when a consumer is in a shop, and seeing a similar sign, symbol, or shape to the mark he/ she usually buys, and not perfectly remembering the product of the well- known mark, he/she could buy the product being convinced it is actually the product of the mark he normally used to buy.

In such a situation, the consumer is in a vulnerable position, and on a bigger scale, it could lead to an economic damage to the famous mark.

In fact, in order to affirm there has been dilution, the famous mark needs to prove that there has been a major change in the economic behaviour of a customer. If this can be proved, it means that the damage was widely consistent. The main reason for dilution and for the special protection that famous marks enjoy, is that they need protection against the desire of other marks to reach a fame close to the former ones.

The concept of trademark dilution was also required in order to protect marks against confusion with a mark used for goods of different nature. This is important to underline, since even when the reputation of a well- known mark is affected by a mark used for non-competing goods, the famous mark is still protected. This was confirmed since the very beginning of dilution, in the first case (1924, Germany) when the owner of the ODOL company which produced mouthwash successfully brought a claim against an identical trademark for steel products, therefore two non-competing products.

Dilution in the European Union and in the United States

Focussing mainly on the approach of the European Union and to some extent to the one of the United States, it is of great importance to bring to the reader’s attention that these two approaches are slightly different, as in the United States the concept of dilution is divided into dilution by blurring and dilution by tarnishment. The former occurs when there is an “association arising from the similarity between the mark or trade name and a famous mark that impairs the distinctiveness of the mark”, while the latter refers to the “association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark”. This division affects the approach that will be used to confront dilution. However, in the European Union, such a distinction is not officially established, and only the general concept of dilution exists.

The second relevant difference between the two approaches is that while in the United States it is required for the mark to be well-known, the view of the European Union also comprises known marks with a reputation, without them having to be well- known. In fact, Article 5(2) of Directive 2008/95/EC (also called the trademark directive) only requires that a mark “has a reputation in the Member State”- broadening this type of trademark protection. Case law has then established that the mark needs to be known by a significant part of the public, and specified 5 criteria to examine when deciding whether a mark could fall under this category.

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After having considered the approach of the United States regarding trademark dilution, and after having analysed the latest EU landmark case Intel Corporation Inc. v CPM United Kingdom Ltd, we can see that the way of solving a dilution issue is substantially different and instead of coming closer (as many fields of law are), it is taking two distinct paths.

In fact, the U.S no longer requires actual dilution after the change made in the 2006 Act: nowadays, likelihood of it is considered to be enough. On the other hand, in the Intel Corp case, the EU approach moved towards a contrasting route: apart from clarifying article 4(4) of the Trademarks Directive, it also added an extra requirement: the economic change in an average customer’s behaviour has to be proven by the known mark. This means that while the US decided to actually put more emphasis on the prevention side of trademark dilution, trying to safeguard both enterprises as well as consumers, the EU made dilution even harder to prove and practically impossible to prevent.

However, it is true that in the Intel Corp judgment the EU clarified the criteria needed for dilution step by step, making the process much clearer and requiring specific elements, that in the US approach still remain undefined, leaving a broad margin for interpretation and taking into account the facts of each case.

Surely, trademark law remains subject to several changes in the few next years- in both continents.

In my opinion, none of the two approaches can be said to be “more successful”, but what is true is that considering the situation of our world now, we cannot afford to have such different approaches. It is not to be forgotten that we are taking into account known marks, and most of these are marketed both in the United States and in the European Union. Having two ways of dealing with a dilution dispute would mean legal uncertainty, since in one area an enterprise would be awarded damages and in another (in the same situation) it would probably not until an economic change can be proven.

One of the most important remarks that can be made is that unfortunately, the EU does not protect its consumers as much as the US do. In fact, if a consumer links the mark of the famous enterprise to the one of another, it means that consumer confusion is considerable.

Unfortunately, consumers are a weak party in such a situation and this is detrimental to them. A person in a hurry at the supermarket will not pay too much attention to the difference between two bottles of what seems Coca-Cola, and probably not see that there is not written Coca Cola but only “Cola”, for example.

Especially because of this, I think that EU’s approach would be much more beneficial to the “average” consumer if it took a more preventive method, similar to what the US provides.

Probably, the best solution would be to “merge” the two attitudes.

Trademark dilution is and remains one of the most confusing and uncertain fields of Intellectual Property Law, but this is also why it will probably face several changes in the next few years.