As a general rule, the ownership of a trademark vests in the person who puts the mark on the product. Thus where a manufacturer puts a mark on a product it manufactures, the presumption of proprietorship of the trademark is in its favour.
A distributor or importer of the product cannot claim ownership or goodwill in that trademark. Mere use of the expression “imported by” or “marketed by” in advertisements created by the importer or distributor cannot displace the presumption that the ownership and goodwill of the brand vests in the manufacturer of the product.
Relevant considerations in this regard would be:
(i) who invented the trademark;
(ii) who first affixed it to the product;
(iii) who maintains the quality of the product;
(iv) with whom does the relevant public identify the goods;
(v) to whom does the relevant public look for warranty and redressal of complaints; and
(vi) who possesses the goodwill associated with the product.
The presumption that ownership of a trademark vests in the manufacturer may, however, be rebutted by an importer or distributor who orders the manufacture of the goods, controls the production of the goods, affixes the trademark to the goods for the first time before selling the product, or uses its own packaging or labelling so as to convey a connection between it and the brand.
What is essential in this regard is that the customer should come to identify the product and the trademark affixed to it with the distributor or importer to the extent that upon seeing the product, the customer should mentally associate it with that particular distributor or importer.
In the customer’s shoes
But while considering the claim of a distributor or importer, there is a need to evaluate the acquisition of domestic goodwill in the trademark by a foreign manufacturer in addition to the goodwill already enjoyed by it on foreign shores.
If the importer or distributor is able to establish that the customer has come to identify the trademark with it rather than with the manufacturer, the distributor or importer may be able to claim ownership of the trademark in the domestic market.
The most important test in this regard is whether customer identifies the trademark with the manufacturer or with the importer or distributor.
The legal presumption is that the ownership of the trademark vests in the manufacturer who puts the mark on the product, and the onus to displace this legal presumption is on the importer or distributor.
This test was recently applied to a trademark ownership dispute between a Chinese company dealing in tyres, Double Coin Holdings, and an importer, Trans Tyres (India), which imported tyres from the Chinese company.
Double Coin Holdings applied for an interim injunction against Trans Tyres, which had registered the trademark Double Coin in India. The dispute therefore centred on who owned the intellectual property rights in the mark in India.
After evaluating the facts and circumstances of the case, the court thought it fit to point out that public awareness of the identity of the actual source of the goods is not, in fact, required.
The material point is the recollection of the customer in connecting a product to a particular source upon seeing that product. The relevant consideration would therefore be to discover what that public recollection is. Is it of the manufacturer, or is it of the importer or distributor?
If the product makes no reference to the foreign manufacturer, and the importer or distributor is selling the product in his own packaging as well as managing the advertising and promotion, then upon seeing the product, a customer may in all likelihood identify the importer or distributor as the source of the goods. If, however, a manufacturer is responsible for the packaging and affixing the brand name on the product, and no extra packaging is added by the importer or distributor, it would be difficult to say that the customer is likely to identify the importer or distributor as the source of the goods, even if the advertising and promotional expenditure is incurred by the distributor or importer alone. So, whether the foreign origin of the product is concealed becomes an important factor to be taken into
Manufacturer controls quality
Goodwill in a brand is not created merely by promotion and advertising. The primary reason for a trademark acquiring goodwill in the market is the quality of the product which is sold under that name.
If a product is of inferior quality, no amount of advertising or promotion can build the brand under which the product is sold. Brand-building and promotion supplements the efforts of the manufacturer, which is primarily responsible for the quality of the product.
Following the dictum that in disputes between a manufacturer and a distributor or importer with respect to proprietorship of a trademark, the decision would depend on the facts of each case, but that as a general rule, the brand belongs to the manufacturer, the court held that in this case, the customer, upon coming across a tyre or tube being sold under the name of Double Coin, would be likely to connect the product to its Chinese manufacturer.
If Trans Tyres was allowed to get tyres or tubes manufactured from another source and sell them under the brand name Double Coin, that would be likely to confuse the customer. It may also deceive because the customer may buy the product believing it is purchasing a Chinese tyre of a superior quality manufactured by Double Coin Holdings.
The court held that only those products manufactured by Double Coin Holdings of China should be sold under the name Double Coin.
Manisha Singh Nair is a partner at Lex Orbis, an intellectual property practice law firm headquartered in New Delhi
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