The improper use of trademark symbols in overseas markets can cause headaches for in-house lawyers writes Shreekanth Katti

The marketing, commercial and business development departments of companies work hard to create brand names in order to make their products and service offerings more distinguishable and appealing, thereby enhancing sales. These brand names are sometimes picked by businesses without realising that they may require registration to prevent them from being used by others, and also to ensure that the company itself does not infringe a similar mark that is already registered.

Situations can arise that require the use of a brand name, or the mark, without waiting for the mark to be registered in all the countries where the company has a business presence, or while an application for registration is still pending. In such situations, the symbols “TM” and “®” are used to denote the status of the mark.

When the TM symbol is used, it denotes that the application for the registration of the mark has been filed, or the right on the mark is claimed but it is not registered yet. When “®” is used, it is to denote that the mark has already been registered, and there is a claim of ownership and legal rights over it.

As far as the Indian legal framework on trademarks is concerned, the Trademarks Act, 1999, does not provide a comprehensive coverage for the use of the symbols TM and ®, but only makes a presumption in the context of a falsely representing mark as registered, where it provides that the use of “registered” or any other expression, symbol or sign referring to registration, is deemed that the mark has been registered in India under the Trademarks Act, 1999. It is pertinent to note that the Trademarks Act, 1999, does not limit to usage of only ® to denote the status of registration, but allows any other expression, symbol or sign for the said purpose.

Staking a claim

As mentioned, using such symbols is generally seen as a statement of claim by the proprietor in relation to a particular mark, and also intends to notify the rest of the world that the proprietor has certain rights on the mark, and any adverse use may entitle them to take appropriate action. It appears that usage of these symbols and recognition of the same is not universally accepted or recognised across countries, and hence there seems to be a lot of confusion surrounding it.

However, one can say that while the use of these symbols may not be mandated by the provisions of law, when used, it has certain benefits. In the US, it was held that when the mark ® is used, there is a presumption of constructive notice being given to others on the registration of mark, and there is no requirement to prove the actual knowledge of such registration. Use of the ® mark in the US also becomes significant in getting monetary damages awarded in infringement cases.

While the enforcement aspects of using the symbols TM and ® are one part of the story, there are also technical, business and practical challenges arising out of such usage, and the usage of such symbols is not as straightforward as it appears. From a business point of view, the marketing team of a company will assert that usage of symbols like TM and ® is significant, because when marketing activity happens across borders, the usage of these symbols attaches seriousness to the business, and players in the new market consider them seriously.

However, due to business exigencies, and also given the fact that registration of a mark takes considerable time, it is possible that a company may not be able to file the application in all the countries to which it has entered. There may also be a situation where the company might have registered the mark in a few jurisdictions, filed for registration in other jurisdictions, and is yet to file in a few others. Wherever it has filed or registered, the company intends to use either TM or ® for the business reasons mentioned earlier.

Beyond borders

The mark or brand is used in various ways, including on the company’s products, packaging or literature, signage etc. As a principle, a trademark must be used in the country of its registration. In other words, material containing a trademark cannot be used in countries other than the country of its registration.

However, at times, the distribution of publicity material cannot be practically controlled in terms of geography. For instance, if promotional material has a symbol TM or ® based on either pending registration, or is registered in a single jurisdiction, for example India, then it is difficult to restrict the distribution of the promotional material only to India, and in a global business scenario it tends to be distributed in other countries as well. This may lead to misrepresentation vis-à-vis the symbol used in the mark, and in certain jurisdictions this may be even be treated as misleading and punishable under the law.

Various jurisdictional legislation provides penal consequences for such improper, misrepresented or misleading information. The US Patent and Trademark Office’s (USPTO) trademark manual of examining procedure provides that an improper use of the federal registration symbol ® that is deliberate and intends to deceive or mislead the public or the USPTO is fraud.

Under the Indian Trademarks Act, 1999, falsely representing a trademark as registered is punishable by imprisonment for up to three years and/or a fine. In the UK, it is an offence to falsely represent that a mark is registered, or to make a false representation as to the goods or services for which a trademark is registered, knowing that the representation is false.

Similarly, countries like Japan, South Korea, Russia and Egypt provide for imprisonment in case of such improper use. Therefore, when promotional material with either TM or ® is used based on its status in a single jurisdiction, one may face difficulties when such material is used in another jurisdiction, which may have serious consequences against the misrepresentation.

It may be argued that only an intentional misrepresentation is meant to be punished, as this is criminal in nature. In fact, the Trademarks Act, 1999, does provide that section 107, which punishes falsifying a trademark as registered, will not be invoked if a statement or representation can be made that the mark is registered, without implying that it is registered in India.

As per the USPTO’s above-mentioned trademark manual, only improper use that is deliberate and intended to deceive is considered as fraud. The Trademark Trial and Appeal Board of the US held, in North Atlantic Operating Co, Inc et al v DRL Enterprises Inc, that the “applicant knowingly and wilfully used the ® symbol in connection with the term … in an attempt to deceive or mislead consumers or others in the trade into believing that the mark was registered.

Proving your innocence

However, whether such an act is intentional or not has to be proved with the necessary evidence or documents and, as such, the company cannot avoid going through the hardship of appearing before the relevant authority and proving that the act was unintentional. A lot can happen while a company is trying to prove its innocence, including but not limited to causing reputational loss and an adverse business impact.

It is prudent to be careful in not distributing material containing these symbols in a country where the status is not appropriate, as the practical scenarios tend to speak otherwise and such distribution generally cannot be controlled.

One solution to overcome this inadvertent act could be to use the ® or TM symbol with an asterisk – “*” – and provide a footnote against it giving notice of countries in which the mark stands registered or applied (or the right is claimed). By doing so, the company may avoid being alleged of misrepresentation in using the symbol. However, using one more symbols of the asterisk may further create confusion, and it cannot be ruled out that people might not refer to the small print information provided in the footnote.

Another solution could be to use country-specific symbols to denote the registration. While this seems to be a logical solution to avoid misrepresentation, a robust system to disseminate such country-specific symbols needs to be put in place. However, in both of these solutions, the main reason behind using such symbols, i.e., to create an impression in the new market that the company would like to do serious business, is defeated.

The author’s view is that using and dealing with the usage of symbols TM or ® is complicated. It may pose several practical difficulties in handling the material containing trademarks based on registration in one single or a few jurisdictions. It may also pose legal issues and lead to misrepresentation, resulting in criminal consequences and going through unwarranted processes. Therefore, companies need to be abundantly careful and exercise all sorts of due diligence before resorting to use of these symbols.

Shreekanth Katti is the associate general manager of legal at Syngene International. Harry Jose, general manager – commercial at Syngene also provided input for this article.