Article Review: The WIPO Joint Recommendation Protecting Well-Known Marks and the Forgotten Goodwill

Introduction

The well-known trademark doctrine allows protection of marks that have acquired a significant public recognition and reputation across a substantial section of the population. This  protection extends to all categories of goods and services, and not just for which it was initially registered, including in the countries apart from the original jurisdiction of protection. The Joint Recommendation of the World Intellectual Property Organisation (WIPO) provides that if the owner can prove that his trademark is well-known amongst the relevant consumers in a particular region of a Member State, the mark automatically assumes a well-known status throughout the country. The Recommendation lays down the uniform criteria for nations to determine whether a trademark is capable of being protected as a well-known mark in their respective territories. It is relevant as it provides a non-exhaustive list for the protection of well-known marks, which supplements the Paris Convention and the TRIPS. 

Maxim Grinberg, the author of the article under review, however, argues that the Joint Recommendation dilutes the goodwill principle and that the well-known status must be restricted to only those areas where the reputation exists, not the entire region. Grinberg, in his article, has preferred competition, freedom of entry into markets and he speculates how extensive protections may lead to de facto monopolies. His criticism of the recommendation lies in the principle that protection of rights without investment should be restricted, and a demonstrable “local presence” must be shown in terms of possible geographic or consumer recognition. He argues that “ the owner of a trademark should not be able to claim rights in any area of a foreign territory where no reputation of such trademark exists.”

Article summary

Grinberg divides his article into 3 sections: In part I, he traces the evolution of trademark protection from a “use approach” to a “goodwill approach”. He argues that under the law, trademark protection has been restricted, so that the producers do not unjustly benefit from trademark rights without first proving goodwill amongst all consumers. He lays down three criteria for establishing infringement:

1. Priority: It gives the prior user of the trademark “superior rights” over the subsequent user. It can be through actual use, or under the well-known mark doctrine, where the reputation has extended to the region where  infringement is being claimed.

   
   

2. Likelihood of Confusion: The marks must be so substantially identical or similar that average consumers with imperfect recollection are likely to get confused.

   
   

3. Geographical Limitations of Protection- The protection is confined to a defined region where the mark has “goodwill”. For the third criterion, Grinberg highlights different tests:

   
   

   a) The Tea Rose Doctrine- In Hanover Star Milling Co v. Metcalfe  (240 U.S. at 416), both parties were using the same mark without each other’s knowledge. The court held that the trademark law protects only the “trade” and not the “mark”; therefore, the protection is restricted only to those regions where the marks have become known and identifiable with the trader. Thus, it was held that there was no infringement.  

   
   

   b) Dawn Donuts Rule (Dawn Donuts Co v. Hart’s Food Stores, 267 F.2d 358 (2d Cir. 1959): even where the plaintiff has a federal registration, there would be no infringement unless he can show that there was a likelihood of his entry into the subsequent user’s territory. The court laid down that a registered owner cannot stop unauthorized use if there is no likelihood of public confusion and no intention of expanding to another geographical market. 

   
   

   c) Abandonment of Dawn Donuts Rule: Now, the courts are rejecting the Dawn Donut rule as the trademark’s reputation could spread even without its use, due to advancements in modern technology  such as TV and the Internet. For instance, in  Circuit City Stores, Inc. v. CarMax, Inc., (165 F.3d 1047, 1056 (6th Cir. 1999)) the court  observed that: “the Dawn Donut Rule was enunciated in 1959. Entering the new millennium, our society is far more mobile than it was four decades ago. For this reason, and given that recent technological innovations such as the Internet are increasingly deconstructing geographical barriers for marketing purposes, it appears to me that a re-examination of precedents would be timely to determine whether the Dawn Donut Rule has outlived its usefulness.” This case has also been cited as a footnote in his article.  

   
   

By setting the background in Part I, Grinberg analyses in Part II the protection of well-known trademarks in the USA and how the WIPO Joint Recommendation is overreaching. The Recommendation states that: “where a mark is determined to be a well-known mark in at least one relevant sector of the public in a Member State, the mark shall be considered by the Member State to be a well-known mark”. This, the author argues, extends the territoriality of protection of well-known marks beyond their established goodwill.

In the USA, Grinberg argues, the well-known mark doctrine has developed an exception to the general principle of establishing priority through use. For instance, in Maison Prunier v. Prunier's Restaurant & Cafi (288 N.Y.S. 529, 535-36 (1936)), the court observed that trademark protection could extend to all territories where the mark had become well-known, irrespective of its use. Here, the defendant was employing the plaintiff’s mark “Prunier” for its own restaurants intentionally and in bad faith to sell under the plaintiff’s brand . Similarly, in Grupo Gigante SA de CV v. Dalla & Co (119 F. Supp. 2d at 1097) the court rejected the requirement of use and held that priority could be established on reputation alone. This reputation could be carried to faraway areas through large-scale advertising.

In Part III, Grinberg strongly advocates for a US well-known mark doctrine approach where protection would be restricted to only those areas where the marks have acquired reputation. He rejects the WIPO Joint Recommendation for two reasons:

1. It prevents local entrepreneurs from using valuable trademarks, as it allows the trademark owner to “reap where he has not yet sown” and bars a local producer from entering the market under the trademark at lower costs.

   
   

2. It creates a lack of Requirement for Consumer Confusion- As the trademarks would be declared to be well-known for the entire region, including  for those consumers who may have never heard of the mark, there is a possibility of finding “likelihood of confusion” where none actually exists. As consumers are not confused as to the source, they are not misled as to the quality of the goods and services.

   
   

Therefore, Grinberg suggests that the Joint Recommendation should be amended to extend the protection of well-known marks only to those territories where the mark enjoys goodwill and not to the whole national boundaries of the Member state. 

Analysis of the Author’s Arguments

Before dealing with each argument separately, it is important to understand the context in which the article was written. The article dates back to 2005 where modern technology and communication channels were in their nascent stage. Therefore, it may have been that transfer of goodwill/reputation of a mark was restricted to particular regions. However, today, we live in a highly interconnected world with fast-speed internet, large-scale advertising and promotional campaigns and brands exploiting their commercial value across borders. Therefore, it is difficult to imagine that the goodwill of a particular brand may be restricted to particular regions within a country, and not the entire geographical expanse. Even in remote areas, individuals are exposed to social media and entertainment. For instance, when Feastables gained popularity, its reputation extended to a large section of relevant consumers in India, even before the chocolate was available for sale in the Indian market. Therefore, the artificial boundaries of different regions within a nation are disappearing with large-scale connectivity. 

What Grinberg is suggesting is a concept known as “honest concurrent use” where the Court may allow two enterprises to use a similar /identical trade mark. This may be allowed where the subsequent user has employed the mark in good faith or where he had obtained registration without knowledge of the prior use of the mark. Such honest concurrent use acts as an exception to claiming protection under the well-known doctrine. While deciding on the question of honest concurrent use, in Kores India Ltd v. M/s Khoday Eshwarsa and Sons (1984 SCC OnLine Bom 65), the court held that the following factors need to be considered: 

• The genuineness of the concurrent use.

• The extent of use- such as the duration, area, and quantum of trade.

• Whether there is a likelihood of confusion resulting from use of similar marks.

• Whether such instances of confusion have been recorded before.

•  Relative inconvenience that is likely to result to the parties concerned.

  
  

If protection of a well-known trademark is restricted to particular regions within the nation where the relevant section of consumers recognises the mark, it may lead to a situation where local producers in neighbouring regions are employing the mark without threat of an infringement suit. This may result in enhanced confusion, especially at the disadvantage of consumers who would not be able to differentiate between the original proprietor selling his own product and a local producer from a nearby region selling an identical/similar product under the same mark. For instance, in Dr. Reddy’s Laboratories Ltd vs. Reddy Pharmaceutical Ltd  ([2005]128 COMPCAS 42 (Delhi)), the court rejected the defendant’s claim for honest concurrent use of the mark “Reddy” in the pharmaceutical industry as it was indicative of the defendant’s fraudulent intentions to “encash upon the trade reputation and goodwill of the plaintiff”. As it was likely to cause confusion amongst the trade channels and the consumers, the defendant was held guilty for infringement.

Concluding Remarks

Maxim Grinberg has argued that WIPO’s Joint Recommendation undermines the US trademark policies as it overreachingly allows protection of well-known marks throughout a Member State’s boundaries even where the reputation may be restricted to a particular locality. However, with advances in communication technologies, the spread of goodwill and reputation has become more dynamic, with individuals in remote areas being sufficiently exposed to foreign brands. Restricting protection to only those regions where the mark is currently well known would go against the objectives of trademark law to avoid consumer confusion as to the source of a product as multiple producers, both local and foreign, may be allowed to sell under the same mark at the same time. Moreover, it may go against the private interest theory of IPR- to grant exclusivity to right holders over their own intellectual property.

Citation of article reviewed

Maxim Grinberg, The WIPO Joint Recommendation Protecting Well-Known Marks and the Forgotten Goodwill, 5 Chi. -Kent J. Intell. Prop. 1 (2005). Available at: https://scholarship.kentlaw.iit.edu/ckjip/vol5/iss1/1