INTRODUCTION

With the increase in commercial growth over the years, trademark law and the need to protect trademarks has increased. The significance attached to them has increased market practices that jeopardize the valid usage of trademarks. The market has seen an increase in bad faith use of registered and reputed marks to deceive the public. With this increased interest in protection, the number of disputes surrounding trademarks and their usage has increased over the years. Disputes surrounding trademarks are unique, the reputation of brands is central, they require flexibility and quick results which litigation fails to offer in most cases.2 This paper will focus making a case for resolution of trademark disputes through mediation. First, the process of mediation, what it entails and its current statutory framework is explored, followed by an analysis of the existing trademark regime in India. Then the paper seeks to analyze the why mediation is uniquely suited to resolve issues attached with trademark litigation. The analysis is then supported by specific cases in India and the United States of America that have successfully been resolved through out of court mediated settlement agreements. As a concluding remark, the paper delves into the reasons as to why mediation despite its obvious advantages remains unexplored in resolving trademark disputes.

WHAT IS MEDIATION?

With increasing globalization, the world has seen a rise in the number of cross border transactions, contracts and treaties out of which a variety of disputes arise. With such developments, the openness to resolve disputes through alternative dispute resolution mechanisms has increased. The most well-known methods of alternative dispute resolution are arbitration, mediation and negotiation. Arbitration is one such adjudicative process where a mutually agreed upon third party neutral serves as a judge to render a binding decision. Its growth and preference over litigation is due to the fact that disputes in arbitration are resolved through a private process which is less formal, confidential, speedier, cost effective and adheres to the principles of due process. It stands upon the pillar of finality where arbitral awards can only be reverse in exceptional circumstances. In negotiation, the parties resolve their disputes amongst themselves, it provides the most control and power over the settlement and outcome of the process. In contrast Mediation provides a middle ground, it is a nonadversarial, non-adjudicatory form of dispute resolution where parties to a dispute mutually settle their differences with the help of a neutral third party. Through this they are still able to retain the same amount of control over the process and outcome with the supervision of a neutral third party who can facilitate the process by encouraging openness and communication between the parties. It is a voluntary, individualized problem solving mechanism that focuses on the specific interests of the parties. It is efficient in cost and speed, it stands upon the pillar of party autonomy, confidentiality and it facilitates win-win outcomes.3 4 In the process of mediation, the mediator facilitates a change in perspective of the parties from a positional bargaining to an interest based negotiation that identifies and satisfies the interests of both parties. The shift in focus from a position to the motivations helps parties explore and invent new options and solutions that would aid in mutual gain. the process of mediation is confidential and impartial in nature. At present, mediation in India is facilitated by three statutory acts, the Arbitration and Conciliation Act5 , the Legal Services Authorities Act6 and the Code of Civil Procedure7 . The Code of Civil Procedure has a provision of court referred mediation.8 The Trademarks Registry of Delhi in 2016 initiated mediation and conciliation of trademark disputes in an attempt to reduce their burden and dispose cases in a speedy manner.9 The 2018 amendment to the Commercial Courts Act has included a compulsory pre-litigation mediation provision and commercial disputes contain within its ambit intellectual property disputes relating to trademarks. 10 Mediation has also been incorporated into industrial disputes, Companies Act11, Motor Vehicles Act12 and the NCLT13 to name a few. The most recent development being the Mediation Bill which is yet to see the light of the day. When the Bill is passed, it will provide a holistic unform statutory framework for all mediations, its practices, standards and procedures. The Bill has a compulsory pre litigation mediation provision in all civil and commercial cases.14 Trademark disputes as mentioned above are mostly civil disputes, they will be subject to compulsory mediation.
1 “’Persuade Your Neighbors to Compromise’” (The New York TimesJuly 12, 1991) accessed November 5, 2022
2 Kevin M. Lemley, ‘I’ll Make Him an Offer He Can’t Refuse: A Proposed Model for Alternative Dispute Resolution in Intellectual Property Disputes’ (2004) 37 Akron L Rev 287
 

TMR Delhi: Notice on mediation/conciliation for pending opposition/rectifications

WHAT DOES THE LAW SAY ABOUT TRADEMARKS?

Amongst the most popular types of intellectual properties are copyright, trademark and patents. While patents protect a novel, nonobvious invention capable of industrial application and copyright protects authorship of original works fixed in a tangible medium, trademarks protect marks that act as indicators of goods and services and their sources and origins. Trademark protection is in India is granted through the Trademarks Act 199915. Composite marks that are graphically represented like logos and other non-conventional marks like sound colour scent and taste can be protected as trademarks. Trademarks are indicators of quality to consumers, the indicate that a particular good or service belongs to their respective manufacture by establishing a connection between them. The trademark act specifies certain criteria that a trademark has to satisfy in order to be registered but once granted16, it is trademarked for a period of ten years and can be renewed indefinitely17. A grant of a trademark registration provides a bundle of rights including those of exclusive use, assignment, licensing, correction and alteration. From these bundle of rights granted upon registration, the owner of a trademark derives his right to seek relief and to sue for infringement. Additionally, a trademark registration acts as a prima facie evidence in a court of law in such an event.18 Relief is provided to an owner if an infringement is caused through deceptive similarity, passing off, blurring, tarnishment, disparagement, dilution or comparative advertisement. In the opposite spectrum of the right to sue for infringement of registered trademark is the defenses of parody, honest concurrent or good faith use, common use, exhaustion of right, invalid registration acquiescence and prior use.19 The trademark regime in India provides civil, criminal and administrative remedies. The relief provided in civil cases are governed by the act itself and the Code of Civil Procedure. The court can provide permanent, interlocutory and temporary injunctions, search and seizure Anton pillar and John doe orders and provide remedies through payment of damages, delivery up and destruction of infringing trademarks or account of profits at the option of the aggrieved party. Under criminal remedies, search seizure, imprisonment and/or penalty are provided by the court.20 However, the pendency of cases before courts has risen to upto 47 million cases with cases taking an average of three to ten years to be disposed.21 22 In addition to this litigation has always been a highly adjudicatory process that is hostile, unpredictable, rigid, time consuming and expensive. The process alienates the person from his grievance in through various cumbersome and highly technical statutory limitations and procedures in every aspect, taking any semblance of control away from them.

WHY IS MEDIATION BEST SUITED FOR TRADEMARK DISPUTES?

With increasing consumerism and commercialization where brands and their identities form the crux of the market, trademarks are extremely important. Trademark law provides a unique and nuanced protection, brands and their marketing is of essence and therefore trademarks are litigated upon heavily in every jurisdiction across the world. Trademarks help build and establish a consumer base and a reputation in the market, therefore any kind of infringement in trademarks is seen as a threat to the reputation of the company.24 With the advent of globalization and the Madrid Protocol in 1989, the process of protecting trademarks internationally across various nations has been eased for companies.25 Additionally, under the current TRIPS framework, the standard of international practices of most favoured nation and national treatment prescribes a strict regime of non-discrimination in international trade. The countries are not allowed to grant businesses special favour, all goods and services that have entered the market of a country, locally produced or imported should be treated equally. Therefore, trademarks are essential in international commerce, they have a crossjurisdictional value and their protection is of essence.26 Time, expense, reputation and confidentiality. Time is of essence in trademarks, a delay can severely damage the reputation of an infringed trademark or allow the infringing trademark to build a reputation in the ever changing fast paced marketplace. However, as stated above, since trademark infringement suits are mostly civil disputes, in the traditional litigation route is highly time consuming. Trademark litigation may take years before it is disposed and relief is granted especially due to repeated appeals of verdicts given by trademarks comptrollers and lower courts. In N.R. Dongre and Ors v Whirlpool Corpn, the opposition to registration of „Whirlpool? was first heard in 1986 and it was only in 1996 that a final binding decision was given by the Supreme Court.27 Additionally, in Cadila Health Care v Cadila Pharmaceuticals, registration was granted in 1996 and a dispute arising out of it was decided in 2001.28 Similarly, in the United States, due to multiple appeals, a verdict for a dispute between Sands, Taylor and Wood Co and Quaker Oats regarding Gatorade?s use of the trademarked term „thirst-aid? was given eleven years after the initial filing before court.29 Such extended periods of court procedures are bound to be expensive when attorney fee, court fee and others are included. Although definitive data regarding he cost of trademark litigation in India is unavailable, the American Intellectual Property Law Association reported that it costs an average of $400,000 to $2,400,000 depending on the trademark and its company.30 Companies use trademarks for consumer recognition and the existence of a counterfeit or deceptively similar brand can cause damage to the value of a trademark which can result in financial losses and setbacks. Such losses will further be exemplified by the litigation due to its highly procedural time consuming process.. Reputation is intrinsic to the marketing of brands, in addition to the damage to reputation due to the existence of a similar, deceptive mark that can waiver the consumer trust, the public nature of court proceedings is detrimental. With all these problems associate with trademark litigation can be resolved by adopting mediation as a form of alternative dispute resolution mechanism. Since mediation is a party oriented mechanism, the time taken by the process is controlled by the parties. It is quicker, less expensive and is highly confidential and private. It can resolve all the above mentioned problems that arise out of trademark litigation.

Autonomy, flexibility and creative solutions

In addition to the abovementioned problems, trademark litigation is highly technical and rigid, the parties lose all control over the process, outcome, duration and procedure. The courts are bound by strict statutory processes and principles thereby making it inflexible. Disputes arising out of trademarks a flexible approach that can focus on the interests of the parties. The outcome and decision of a case filed before the court is also highly uncertain. Amritdhara Pharmacy v Satyadeo Gupta was a case of deceptive similarity that can likely cause confusion in the consumers likelihood of confusion in which the Supreme Court held that the terms „Amritdhara? and „Lakshmandhara? are deceptively similar.33 However, in a similar case between Hoffmann- La Roche v Geoffrey Manners, „Protovit? and „Dropovit? were held to be not deceptively similar.34 The outcome of a case despite the existence of numerous precedents is on a case-to-case basis, in addition to being lengthy and expensive it is ultimately restrictive and highly uncertain. Such uncertainty is eliminated by the autonomy and flexibility offered by mediation. Since a right to sue for infringement arises out of an authorised registration, mediations can also be particularly helpful in situations where a trademark is unregistered.35 Additionally, as discussed above, trademarks have a cross border international nature in certain situations, and mediation can offer a level of flexibility that litigation cannot. In mediations, the process is not controlled or regulated through statutory provisions or judicial precedents. It offers a voluntary mechanism that awards maximum power and control over the process and outcome. It is built upon the ideals of party autonomy; it offers a single neutral procedure that facilitates communication between parties in order to understand each other?s interests for maximum satisfaction of outcome. Additionally, the parties can choose their mediator and since trademarks is a technical field that is an intersection of businesses, marketing and law, a mediator with specific expertise can be chosen. Through an interest based incentive they can arrive at creative solutions in an amicable and respectful manner. By an active participatory collaborative effort in creation of inventive solutions, companies can potentially create new business relationships.36 Starbucks was able to resolve a dispute with Ethiopia out of which they formed a new, successful business relationship.37 It is evident that mediation offers a unique chance for parties to look beyond their initial point of contention.

Deal mediations and preserving relationships

Trademark mediation does not necessarily have to be with relation to resolution of dispute, they can also be particularly useful in formulating licensing, distribution, joint venture or assignment deals to name a few. This is especially gaining increased importance due to the globalized nature of trademark deals. With the presence of a mediator with expertise, parties will be able to negotiate their needs and interests and establish a long standing relationship. In addition to this, trademark disputes can also often arise out of license, franchise or assignment contracts, between parties that have an existing business relationship. In such situations, the highly adversarial and belligerent nature of litigation can cause damage to previously existing relationships. Litigation, in contrast to mediation is based on a win-lose model, the outcome of it would favour one party over the other which can lead to resentment. When there exists a previous relationship between parties, preserving it would be the priority. Adversarial adjudicatory processes like litigation or even arbitration could jeopardize such a relationship. Mediation can offer a flexible process where previous agreements can be amended to meet newer needs, requirements and interests of all parties in an amicable manner. A perfect precedent of such an amendment can be seen in the Apple v Apple case discussed later in this article. Mediation can help create newer, better and stronger relationships between parties.
5 Trademarks Act 1999, s 27
36 Ibid (3)
37 “The Coffee War: Ethiopia and the Starbucks Story” (WIPO )
https://www.wipo.int/ipadvantage/en/details.jsp?id=2621

INSTANCES OF TRADEMARK DISPUTE RESOLUTION

India has seen a rise in court referred mediations for settlement of trademark disputes. In Nikhil Chawla v Coke Studio, after receiving a cease a desist order from coke studio for usage of term cook studio, the plaintiff filed a suit of declaration of non-infringement before the Delhi high court. This issue was referred to mediation by the court and through it, the parties successfully arrived at an amicable and mutually beneficial settlement. Here, the plaintiff agreed to withdraw trademark application for „cook studio? and change his mark to „cook pro 6? in exchange for absolute non-interference from coke studio in any manner regarding usage of „cook pro 6.39 Similarly, the Delhi High Court has in many cases like Calvin Klein v Ektarfa Garments and Ors 40, Giani Foods v Keshav Aggarwal and Ors41 and Tata Sons v Bharat Bhushan Udinaya42 to name a few has referred trademark infringement cases to SAMADHAN where the parties were able to reach a settlement agreement. Since mediations are confidential in nature, their contents of these cases are unavailable as public documents. Recently, Nestle?s Maggi has filed an infringement suit against Wai Wai for infringement due to deceptive similarity of yellow packaging, a new substantial shift from their initial green and yellow packaging. This case was referred to mediation by the Delhi High Court.43 Most recently in September 2022, the Delhi High Court referred a trademark infringement dispute between Chaayos and Chaipos to mediation. The court noted that similarity in phonetic and ocular marks does not constitute deceptive similarity when their logos are different. She referred the parties to mediation to amicably resolve the issue at hand. As a result of mediation by October 2022, the two parties reached a settlement and Chaipos agreed to withdraw registration application for Chaipos and changed its mark to ChaiApps whose usage Chaayos cannot interfere with.44 In the United States too, trademark infringement mediations have had longstanding success, in multiple disputes starting in the 1980s between Beatles Apple Corp and Apple Computers have led to amicable out of court mediated settlement agreements. In the first dispute, parties agreed to allow both parties to use the mark “Apple” on the condition that neither party would enter into the others area of business. Later, with the advent of iTunes and iPods, the previously agreed upon settlement agreement was breached by apple computers. They opted to mediate and a settlement amount of 26.5 million was paid to Apple Corp and the Beatles catalog was made available on Apple?s music hardware.45 Another instance is a dispute arising out of infringement between Blue Sphere and Taylor Swift, the two were able to reach a highly confidential mediated settlement. Here Blue Sphere owned the trademark to Lucky 13 that was infringed when Taylor Swift sold merchandise with the same mark. Many other such disputes which have been settled through mediation in the United States.46 Several cases before the WIPO mediation center have also been successfully mediated upon however all the information regarding such settlements is highly confidential, even the names of such parties to a dispute have not been disclosed.

CONCLUSION

Despite its many obvious advantages, mediation as a process can only succeed if both the parties are open and honest in their communications with each other. Since a settlement can only be reached with the full and valid consent of both parties, they cannot be forced to enter into an agreement, the final authority vests with themselves. Their willingness to mediate upon a dispute and reach a settlement in an amicable manner that is mutually beneficial is essential to the success of a mediation. Parties that are hostile, positional, unwilling to back down and look past the initial dispute to explore options and arrive at solutions cannot successfully mediate their issues. Mediation is entirely party-driven it cannot be flexible if the parties are unwilling to be flexible and enter the process with a highly competitive mindset. The key steps during a negotiation process are the identification of positions, interests, and commonalities, exploring creative, mutually agreeable options and alternatives through objective criteria and effective communication and openness. Rigidity of parties will not facilitate a smooth process. Despite its limitations, trademark disputes are especially suited for mediation.48 When the Mediation Bill is passed, the compulsory pre-litigation mediation for all civil disputes arising out of trademark infringement will be subject to mediation. This has high potential for a number of issues and disputes to be resolved through mediation and cause a positive shift in outlook and perspective towards mediation as an alternative dispute resolution mechanism.
1. Thapliyal N, “Chaayos v. CHAIOPS: Delhi High Court Refers Trademark Infringement Dispute to Mediation” (Live Law September 9, 2022) accessed November 5, 2022
2. Pfanner E, “Apple vs. Apple in Dispute over Trademark” (The New York Times March 29, 2006) accessed November 5, 2022
3. Kreps D, “Taylor Swift Settles Lucky 13 Legal Battle” (Rolling Stone June 25, 2018) accessed November 5, 2022
4. “WIPO Caseload Summary” (WIPO)
https://www.wipo.int/amc/en/center/caseload.html