Trade marks: concept, functions, theory and the Trade Marks Act, 1999

1. The definition

Section 2(1)(zb) of the Trade Marks Act, 1999 defines a trade mark as a mark capable of being represented graphically and capable of distinguishing the goods or services of one person from those of others, and says it may include the shape of goods, their packaging and combination of colours. A mark (section 2(1)(m)) includes a device, brand, heading, label, ticket, name, signature, word, letter, numeral, shape of goods, packaging or combination of colours, or any combination of them.

The definition has three elements: a sign, graphical representation, and capacity to distinguish. The list in section 2(1)(m) is inclusive, which is why sound marks and some non-conventional marks have been registered. The same core appears in Article 15(1) of TRIPS, which defines a protectable sign as one capable of distinguishing the goods or services of one undertaking from those of other undertakings, and lets members require visual perceptibility.

2. Functions of a trade mark

1. Origin function. The mark tells the consumer that goods come from a single, even if anonymous, source. This is the classic function and the basis of confusion-based infringement.
2. Quality or guarantee function. The mark tells the consumer that goods bearing it will be of consistent quality. Certification marks rest entirely on this function.
3. Advertising and investment functions. The mark carries the image built by advertising, and the owner invests in it to attract and retain custom. The CJEU in L’Oréal v. Bellure (2009) recognised these functions, along with the communication function, as protected against free-riding by use of an identical sign.

3. Why protect trade marks? The theory

(a) Search costs and the economics of information

William Landes and Richard Posner argued that marks reduce consumers’ search costs: a consumer who liked a product can find it again by its mark without testing every alternative. The owner then has an incentive to maintain quality, because a consumer disappointed once avoids the mark in future. On this view, protection should extend only so far as needed to prevent confusion; anything more restricts competition.

(b) Consumer protection and unfair competition

Passing off began as an action against deceit of the public, and the trade mark statute has a public element: section 9(2)(a) refuses marks that would deceive. The interest protected is both the trader’s goodwill and the consumer’s interest in not being misled.

(c) Property in the mark and the dilution theory

Frank Schechter’s article “The Rational Basis of Trademark Protection” (Harvard Law Review, 1927) argued that the real injury from use of a famous mark on unrelated goods is the gradual whittling away of its uniqueness, even without confusion. This is the root of dilution law, which Indian law adopted in section 29(4). Critics say it turns a consumer-protection device into a property right in a word, at the cost of free speech and competition.

4. History and salient features of the 1999 Act

Before 1940. India had no trade mark statute. Protection came through passing off (and section 54 of the Specific Relief Act, 1877 on injunctions), the criminal provisions of the Indian Penal Code on false trade marks, and the Indian Merchandise Marks Act, 1889. Ownership was often asserted by registering a declaration under the Registration Act.

1940 and 1958. The Trade Marks Act, 1940 introduced registration on the English model. The Trade and Merchandise Marks Act, 1958 consolidated the law, with a register in Parts A and B, a seven-year term, and a registered user system.

The Trade Marks Act, 1999, in force from 15 September 2003, was passed to meet TRIPS and to modernise the law. Its salient features are:

1. Service marks: registration of marks for services, not only goods.
2. Wider definition: shape of goods, packaging and combination of colours expressly included.
3. Single register: Parts A and B abolished.
4. Multi-class applications (section 18(2)).
5. Term of ten years, renewable for ten years at a time (section 25), instead of seven.
6. Well-known marks: definition in section 2(1)(zg) and criteria in section 11(6) to (10), implementing Article 6bis of Paris and Article 16(2) and (3) of TRIPS.
7. Collective marks (sections 61 to 68), alongside certification marks.
8. Wider infringement (section 29): similar as well as identical goods, dilution of marks with a reputation, and use in advertising; and a defined list of limitations (section 30), including comparative advertising in accordance with honest practices and exhaustion.
9. Permitted use (section 2(1)(r)): use by an unregistered licensee under a written agreement now counts as use by the proprietor, so the registered user system (sections 48 to 55) became optional, and assignment without goodwill was made easier.
10. Enhanced penalties for falsification and for applying false marks (sections 102 to 104).
11. An appellate tribunal, the IPAB, which was abolished in 2021, so appeals and rectification now go to the High Courts.

Later changes. The Trade Marks (Amendment) Act, 2010 inserted Chapter IVA (sections 36A to 36G) to implement the Madrid Protocol, which India joined in 2013. The Trade Marks Rules, 2017 reduced the number of forms, encouraged e-filing, allowed sound marks to be filed as audio files, and introduced a procedure for applying to the Registrar to have a mark declared well-known (rule 124). The Tribunals Reforms Act, 2021 transferred the IPAB’s work to the High Courts.

5. Trade marks and other rights

A logo may be protected as an artistic work and a trade mark at once; a shape may be a design and later a mark, though section 9(3) limits shape marks.

6. Kinds of trade marks

The syllabus asks for the “different kinds of trademarks”. The Act recognises these categories:

• Trade marks for goods, the original category.
• Service marks. The 1999 Act extended the definition of trade mark to services, defined in section 2(1)(z) as service of any description made available to potential users, including banking, communication, education, financing, insurance, transport, construction, lodging, entertainment and the conveying of news. Classes 35 to 45 of the Nice Classification cover services. Before 2003 a hotel or bank could protect its name only by passing off.
• Conventional and non-conventional marks. Words, devices, logos, letters and numerals are conventional. Shapes, packaging, colour combinations, sounds, and trade dress are non-conventional; see the note on distinctiveness, which also explains the graphical representation requirement.
• Collective marks (s.2(1)(g), ss.61–68): marks of an association that distinguish the goods or services of its members.
• Certification marks (s.2(1)(e), ss.69–78): marks that certify origin, material, mode of manufacture, quality or accuracy, used by persons other than the proprietor, who may not trade in the goods himself.
• Well-known marks (s.2(1)(zg)): marks known to the substantial segment of the public using the goods or services, protected across classes; see the note on well-known marks.
• Associated marks (s.16): identical or similar marks of one proprietor for similar goods, registered as associated and assignable only together.
• Series marks (s.15(3)): marks resembling each other in material particulars and differing only in non-distinctive matter, registered as a series in one registration.

The distinction between inherent and acquired distinctiveness cuts across these kinds: a coined word is inherently distinctive, while a descriptive word or a colour may be registered only on proof that use has made it distinctive (s.9(1) proviso).

How this is examined

For the short note on salient features, list the features in section 4 with brief comment and add the 2010 amendment, the 2017 Rules and the 2021 change of forum. For an essay on the concept or functions of trade marks, use sections 1 to 3, with the theory debate as the critical part.