Future Prospects of Well-Known Mark’s Anti-Dilution From an International Perspective

Author: Liu Lu (刘璐) ; Source:chinalawinfo.com

Introduction

Why is a brand so important to a company? It is said that the brands COCA-COLA, MICROSOFT, and IBM together have been estimated to be worth over US$180 billion as intellectual property assets. [1] No wonder the brand is arguably regarded as one of a company's greatest assets. Trademarks and brands are intimately linked. Trademarks are "signs" which distinguish goods and services of one producer from other similar producers. They act as a marketing tool and strategic focus used in a wide range of company activities. There is a general perception by consumers that branded goods are of higher quality than non-branded. In this manner, trademarks, particularly well-known marks or famous marks, play a double-edged sword role. On one hand, they allow producers to reap comparatively more benefits from producing better quality produce or providing more satisfying services; On the other hand, consumers purchase well-known mark products or pursuit high quality services in the expectation of enjoying satisfactory experiences with those products or services.
Currently, in such a smaller but more intensely networked world, brand manufacturers are no longer confined to local markets. They function in an integrated global marketplace. Brand producers find themselves providing goods and services in bigger and bigger markets created by free trade pacts and the creation of single markets throughout the world. [2] The appropriate protection of well-known marks has become an essentially important issue in the trading relations between nations. There is a growing concern that how those multinational corporations can effectively protect their trademarks both at home and abroad. In this regard, tensions may probably arise between developed countries and developing countries. Because developed countries are likely to advocate higher standard of well-known mark's protection, i.e.well-known mark's anti-dilution criteria. They seek predictable and stable legal environment to develop business and maintain their well-known marks such intangible assets. Whereas developing countries, normally have relatively lower criteria for well-known mark's protection, for the reason that well-known mark's protection potentially relates to a country's economy, policy and other multifaceted factors.
In the light of the importance of protecting well-known marks, the focus of this article is to predict the future prospects of international well-known mark's protection in terms of anti-dilution. The first section is on the analysis of well-known mark's anti-dilution protection under international treaties; It is followed by comparative studies in well-known mark'santi-dilution in the typical country-the U.S., as well as EU and China in the second section; In the third section, as a summary, I would predict that in view of future prospects of well-known mark's protection internationally, dilution standard is the significant future direction for well-known mark's protection. In this regard, it is important to build up more unified international standards. However, I would submit that harmonization is the preferable alternative and solution to realize well-known mark's anti-dilution protection at the international level. And lastly I will try to seek the appropriate approach to reach such a harmonization.

Current Anti-Dilution of Well-Known Marks under International Treaties

(A) Well-Known Mark's Definition
There has been no articulate definition for "well-known mark" or "famous mark" under international treaties. A well-known mark is sometimes called a famous mark. Although some claim that the latter has a higher degree of reputation than the former and deserves broader protection, there is no clear difference between them. What is clear is the higher the degree of reputation, the broader its scope of protection. The courts are generally more willing to assume the injury to a highly reputable mark. [3] According to Art 6bis of the Paris Convention, it is called a ‘well-known mark' which is known to a substantial segment of the relevant public in the sense of being associated with the particular goods or services. [4]
However, a series of factors are considered in the 1999 Paris Union and WIPO Joint Recommendation on Well-Known Marks, to determine whether a mark is well-known. They are: the degree of knowledge or recognition of the mark in the relevant sectors of the public; the duration, extent and geographical area of any use of the mark; the duration ,extent and geographical area of any promotion of the market including any advertising or publicity and the presentation at fairs or the exhibition of the goods to which the marks apply; the duration and geographical area of any registrations or applications to the extent that they reflect use; the record of successful enforcement of rights in the mark, in particular the extent to which it was recognized as well-known by the competent authorities; and the value associated with the mark. [5]
TRIPS also sets a series of standard criteria for determining whether a trademark is well-known, considering the following principal factors: (a) the knowledge of the trademark in the relevant sector of the public, as a result of the use of the mark, and (b) the knowledge acquired by other means, including the promotion of the trademark. [6]

(B) The Special Protection of Well-Known Marks
At the level of international treaties, well-known marks are given additional special protection compared with other non-well known marks. Pertaining to Article 6bis of the Paris Convention, [7] it addresses the cases where well-known marks are not registered in a given country, but protection is still available on the condition that the marks are well-known marks. In other words, the owners of "well-known marks" that are widely known in the marketplace but not registered, are provided a measure of protection against later registrations of the same trademark by others.
Moreover, TRIPS has made more progress than the Paris Convention through the expansion of protection to include well-known service marks, stipulating "Article 6bis of the Paris Convention (1967) shall apply, mutatis mutandis, to services." More importantly, Article 16-3 of TRIPS addresses: "Article 6bis of the Paris Convention (1967) shall apply, mutatis mutandis, to goods or services which are not similar to those in respect of which a trademark is registered, provided that use of that trademark in relation to those goods or services would indicate a connection between those goods or services and the owner of the registered trademark and provided that the interests of the owner of the registered trademark are likely to be damaged by such use." This provision provides a much broader legal protection for registered well-known marks in terms of the protection scope extended to dissimilar goods or services. However, in order to qualify for the extended protection of Article 16(3), the well-known mark must be registered. As a matter of fact, Article 16(3) provides potential grounds for anti-dilution protection for well-known marks. It can be interpreted as follows: the trademark dilution occurs, when the use of the registered mark on dissimilar goods or services has an association between the goods or services, and the interests of the trademark owner are likely to be damaged because of the use. Lastly, to some extent, it also reflects an exception to the "principle of specialty" that hampers the extension of protection to non-competing goods and services in some countries.
Furthermore, the 1999 Paris Union and the WIPO Joint Recommendation on Well-Known Marks confirmed that a mark is deemed to be in conflict with a well-known mark if it ‘constitutes a reproduction, an imitation, a translation, or a transliteration of the well-known mark', ‘irrespective of the goods and/or services for which a mark is used.' [8]

(C) Absence of Anti-Dilution's Protection
Though well-known marks are endowed with some additional special protection under international treaties, generally, both the Paris Convention and TRIPS have not explicitly defined the process for verification of a well-known mark and set up criteria for anti-dilution's protection. The nearest that international law comes to a dilution provision is in the ‘soft law' of the Joint Recommendation. This only suggests that countries should grant protection against dilution. It provides no guidance as to how countries should test for this. Both the U.S. and the EU have at least attempted to provide dilution protection, which should definitely meet the Recommendation. Even though neither jurisdiction's test is perfect, the Recommendation provides no standard against which such legislation may be tested. [9]

Comparative Studies in Well-Known Mark's Anti-Dilution Protection

(A) USA's Position
The United States is in the leading position with regard to well-known mark's anti-dilution protection. The basic law is the Trademark Act of 1946 (the Lanham Act). Its intent was to prohibit trademark infringement, and to protect consumers from being confused into thinking they were buying a well-known branded product, however in fact they were purchasing the inferior. The Lanham Act was amended by Congress as the 1996 Federal Trademark Dilution Act (FTDA). The goal of the FTDA is to enable businesses to protect the companies' investment in branding their products. Under the FTDA, actual dilution criteria for well-known mark's protection was applied. Unlike the traditional cause of action under trademark law, dilution theory protects not the consumer but rather the value of the trademark to the trademark holder. [10] Thus, the addition of dilution theory to the federal trademark law arena was a legislative act of particular moment to trademark holders. [11] Under the FTDA, not only is competition between the plaintiff and the defendant not required, [12] but the legislative history of the Act specifically contemplated the situation in which the products involved are unrelated and non-competing but nonetheless dilution occurs. [13] Significantly, the U.S. Congress passed the Trademark Dilution Revision Act in 2006, replacing the actual dilution standard with a likelihood of dilution standard. This new Trademark Dilution Act Revision is a landmark law which steps forward to a higher level of trademark legal protection in the United States.
Then what is trademark "dilution" under the U.S. laws? The FTDA defines the term "dilution" as "the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of (1) competition between the owner of the famous mark and other parties, or (2) likelihood of confusion, mistake, or deception." [14] "Blurring" and "tarnishment" are two traditional forms of dilution. "Blurring" typically refers to the "whittling away" of distinctiveness caused by the unauthorized use of a mark on dissimilar products; while "tarnishment" involves an unauthorized use of a mark which links it to products that are of poor quality or which is portrayed in an unwholesome or unsavory context that is likely to reflect adversely upon the owner's product. [15]
"Blurring" occurs when a well-known mark is used in connection with the goods or services of another. [16] Although buyers are not confused "as to source, sponsorship, affiliation or connection," [17] the fear is that over time they will cease to associate the mark exclusively with the senior user's goods or services, [18] thus eroding the ability of the mark to "evoke among prospective purchasers a positive response that is associated exclusively with the goods or services of the trademark owner." [19] While "tarnishment" occurs when a junior user uses the senior user's mark or a similar mark in a manner that could hurt the reputation of the senior user's mark, i.e., it is the use of a trademark in a manner "totally dissonant with the image projected by the mark." [20] Tarnishment typically involves the use of a famous or distinctive mark on products of shoddy quality, [21] or the use of the mark in an unwholesome or unsavory context. [22] However, the FTDA also provides several defenses against a claim of trademark dilution. [23]
The application of the blurring doctrine, compared to tarnishment, is more sophisticated to identify under the state law or federal law, because it rests on a multi-factor test that is not relevant under the language of the FTDA. For instance, it is hard to define the element of "mental association". There can be no diminishment of the senior mark if the potential customer does not at least "subtly or subliminally" think of the senior mark when viewing the junior mark. [24] There has been a view expressed by some courts that the element of "confusion" should be introduced into blurring analysis. I would submit that this is unnecessary and blurring analysis should be conducted without the term "confusion" considered. Because there are a clear difference between blurring and confusion. The former focuses on a diminishment of the mark's function as a unique identifier of goods or services; while the latter focuses on a mistaken belief that the junior user is in some manner connected with the senior user's goods or services. [25]
"Actual dilution" principle requires the mark owner assumes the burden of showing the dilution has already occurred, rather than dilution that may occur in the future. Bearing this in mind, the Supreme Court in essence made it more difficult for the plaintiffs to win their claims, because in this situation plaintiffs face a much higher hurdle of demonstrating actual dilution. Briefly speaking, much of the difficulty in judging well-known mark infringement cases surrounds the muddled analyses of actual dilution. The Victoria's Secret case is the classic example in this regard. In response to the uncertainty caused by actual dilution standard , and to clarify other issues under the FTDA, the 2006 Revision Act introduces a stronger fame standard that earlier marks need to meet before they qualify for dilution standard protection, and restates new definitions of blurring and tarnishment. Besides, it also modifies the defenses to dilution. Most importantly, for the first time it introduces a likelihood of dilution standard. To some extent, it decreases the barrier to prove the actual dilution of well-known marks.
In a word, the U.S. trademark legislation of anti-dilution is a complicated process, covering many thorny questions to resolve. Even today, whether the "likelihood of dilution" standard in judging well-known mark infringement is an appropriate way to protect well-known marks still remains unknown. Would it be an excessive protectionism of well-known marks and discriminating other business competitors' just rights? Because existing small businesses and potential future businesses will be severely limited when choosing how to market their products under this new Revision Act. Another concern is that it is still in the absence of precisely articulating how likely it must be before the dilution takes place to trigger federal protection in the future.

(B) European Union's Position
Generally speaking, the European Union (EU) has been steadily building up jurisprudence in trademark dilution protection area. Taking the dilution laws of the United States as a benchmark, EU would be well advised to pay attention to the problems experienced in the U.S. to eliminate avoidable trouble in the context of establishing or adopting new anti-dilution laws.
Under the EU's legislation, a mark must be shown to have a reputation before it qualifies for EU dilution protection. What is important here is not whether the earlier mark has a good or bad reputation. Instead, it is the degree to which the mark is known by the public that matters. According to the European Court of Justice (ECJ)'s reading, the concept like "recognition" or "reputation", is a neutral term.
The ECJ has taken the same approach as the U.S. towards the distinctiveness of the earlier mark, finding that the strongerthe earlier mark's distinctive character and reputation, the easier it will be to accept that detriment has been caused to it. [26] It is reasonably understandable, because the owners of these strong marks most probably have more to lose once being infringed, therefore there may have been a feeling that more reputable marks are more worthy of protection. Article 5(2) of the EU Trademark Directive enables an owner of a trademark with "a reputation" to prevent anyone from using identical or similar marks in a manner that "takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark." [27] The mark with weaker inherent distinctive character will be lesslikely to benefit from protection.
In comparison with the debate over the actual dilution requirement in the Unites States, the debate in the EU has attracted lower level of attention. Consequently, there also has been little consideration of the role of multifactor tests under such a requirement. The ECJ has neither expressly ruled on whether anti-dilution plaintiffs must prove actual dilution, as opposed to likely dilution, detriment or unfair advantage in either infringement cases or registration challenges, nor commented on whether multifactor tests could play a role in establishing unfair advantage or detriment. The only guidance in relation to how to show "actual detriment" comes from the Advocate General in General Motors: ".... The taking of unfair advantage or the suffering of detriment must be properly substantiated, that is to say, properly established to the satisfaction of the national court: the national court must be satisfied by evidence of actual detriment, or of unfair advantage. The precise method of adducing such proof should in my view be a matter for national rules of evidence and procedure, as in the case of establishing likelihood of confusion." [28]
Furthermore, the term ‘blurring' is not used in the EU statutory regime. Instead, the term "detriment to distinctive character" within the EU laws, is identical to "impairment to the distinctiveness of the famous mark" in terms of conception. In addition, "blurring" in both the U.S. and EU laws has the similar meaning, refering to activities that the later user attacks the distinctiveness of the earlier mark. And both jurisdictions agree that this harm is caused by the means of an association between the two marks. Thus in the test for blurring this factor is expected to be addressed to both judgements.
In general, regarding to well-known mark's anti-dilution, the U.S. dilution laws focus on narrower anti-dilution concepts, whereas the an-dilution laws in EU emphasize "detriment", "unfair advantage" as the key elements in protection of well-known marks, with an analysis from an unfair competition perspective. EU laws currently merely accept actual dilution theory.

(C) China's Position
With China's accession to WTO and in the step towards compliance with international agreements, China strengthened their protection for well-known marks by promulgating three new regulations: the Rules for Recognition and Protection for Well-Known Trademarks, [29] the Implementation Policy for the Madrid International Registration, [30] and the Measures Regarding Registration and Administration of Collective Marks and Certification Marks. [31]
Generally, China's current laws and regulations with regard to trademark protection are in accordance with international treaties. Under the Paris Convention, the definition of what constitutes a well-known mark is left to the "competent authority" of the nation to offer due protection. While there has not been a clear definition of what constitutes a well-known mark in China's laws, pertaining to Art 14 of the PRC Trademark Law, a series of factors should be taken into consideration in determining well-known marks. China is a first-to-file nation which generally does not protect unregistered marks, but once a trademark is determined as a well-known mark, a greater scope of protection is afforded under Art 13 of the PRC Trademark Law. This is in line with the well-known marks doctrine, providing that a mark will be protected in a nation, even if it is not actually used or registered in that nation, as long as the mark is well-known in that nation.
However, there still leaves much to be desired in China's well-known mark's protection. As a developing country, China's well-known mark protection legislation inclines to merely protect consumers' interest. Hence, the theory foundation behind the well-known mark's protection lies in prevention of confusion. The objective of this protection is limited to maintain market order. [32] Moreover, the lack of a specific definition of a well-known mark has caused serious problems, including self-awarded well-known trademarks, well-known trademark trading, and counterfeit trademarks. The lack of certainty has also led many foreign companies to be hesitant to apply for formal well-known status.

The Way Forward

Gradual recognition of the "power of the brand" in commercial industry strengthens the importance of dilution criteria in well-known mark's protection. More often than not, well-known marks are owned by transnational companies in the expanding fields of international commerce. Well-known mark owners do business in diverse corners of the world, understandably, they have reasonable expectations of enjoying wider and similar standards of well-known mark's protection in most countries. In this regard, it is important to develop a relatively unified international standard of well-known mark protection, so that manufacturers and producers of new products can participate in the global marketplace without fearing uncertain protection of their valuable well-known marks in different legal jurisdictions. Furthermore, what should not be lost sight of by each country is that, appropriate protection for well-known marks could serve as a vehicle for attracting foreign investment to its country. Well-structured trademark law represents positive initial steps in the establishment of better conditions for investment and business.
Well-known mark's dilution criteria have attracted increasing attention in the international environment, however, they still remain in their earliest stages of development. International treaties on well-known mark's anti-dilution protection are yet insufficient. To establish international unified standards of well-known mark's protection against dilution, many challenges still lie ahead. Firstly, national laws in this area are in flux, the objective of trademark dilution law in one country may change over time. Take the United States such a leading country for anti-dilution as an example, the 1946 Lanham Act of the U.S. intends to protect consumers' interests, while the 1995 Federal Trademark Dilution Act shifts to favor the trademark holders' interests. What is more obvious is the 2006 Revision Act, which facilitates the effective protection of trademark holders' rights. One potential reason for this change perhaps results from the difficulty to prove the complicated "dilution" element. Secondly, considering the disparity of economic development between developed and developing countries, it is reasonable for developing countries to regulate less rigidly in the context of anti-dilution, because they have only reached the level of protecting consumers' interests rather than favoring multinational companies' interests. Thirdly, the difference of each country' attitude and position in the context of well-known mark's anti-dilution is a barrier for building up unified international standards. Different standpoints towards trademark dilution phenomenon not only exist between developed and developing countries, but also among developed countries, like the U.S. and EU members. It seems that a widening gap in anti-dilution laws between the US and EU has been forming. On the one hand, the U.S. provides a much broader arena for well-known mark's anti-dilution protection; On the other hand, EU tends to maintain the "actual dilution" standard to protect well-known marks.
While international unification of law in anti-dilution area is significantly needed, it is difficult to achieve such a goal in a short period of time. In an era of increasing globalization, in consideration of international trade collaborations, it is essential to reach workable resolutions to national differences in treating well-known mark's protection, as the world business community strives towards seamless and efficient international interactions. The increasing globalization of business brings with it a greater need for harmonization of trademark law and policy. Also it is unambiguously true that harmonization is the preferable alternative and solution to deal with conflicts of interests among countries. The European Directive is an example which achieves simplicity by harmonizing statutory anti-dilution law among the European nations. Though there inevitably are some variations in interpretations of the Directive among EU nations, with more ECJ decisions rendered, those variations will hopefully be reduced.
Harmonization implies a deliberate and negotiated process aiming at producing a legislative act. Compared with unification of international anti-dilution laws, in my view, harmonization in statutory anti-dilution laws by means of negotiation and coordination among countries would be more realistic and accessible. There are two main reasons. Firstly, on the basis of the common recognition that the more famous the trademark is, the better protection should be offered, developed and developing countries, to some extent, are possible to reach consensus in the establishment of anti-dilution criteria under international treaties. Secondly, being aware of the fact that nowadays multinational companies are gaining incremental popularity in many countries. They are playing a significant role in national economy, perceived as an engine to spur the economic growth. On the other hand, the voice calling for anti-dilution of trademarks from multinational companies is increasingly rising. In this regard, countries are likely to coordinate national anti-dilution laws with other countries' anti-dilution laws to protect multinational companies' well-known marks internationally.
If one wished convergence, for example, of the precise means of assessing a likelihood of confusion, that does not, and for the foreseeable future will not, exist at the global level. Global harmonization of trademark law cannot move far beyond general commitments, such as to protect against a likelihood of confusion. [33] Hence, for the present, to seek a harmonized way to resolve the problem is a better choice.
I would argue that the approach to international harmonized anti-dilution is an interactive process. On the one hand, international treaties are fundamentally aimed at securing commitment from nations to very basic standards of IP protection, and to make that protection available on a national treatment basis. [34] ] Therefore, international anti-dilution legislation should allow flexibility and leeway for member countries to regulate at their will within certain scope. On the other hand, national anti-dilution legislation should base on not only its domestic interests, but also take into account the interests of other members.

Notes:
[1]Frederick Mostert, "International Recognition and Protection of Famous and Well-known Marks," Intellectual Property and Information Wealth (P. Yu ed. Praeger, 2007), p266.
[2] Ibid, p265.
[3] Yahong Li, International and Comparative Intellectual Property: Law, Policy and Practice (Bilingual Edition, LexisNexis, 2005) p51.
[4] Ibid.
[5] Ibid.
[6] See Agreement on Trade Related Aspects of Intellectual Property Rights, at pt. II, sec. II, art. 16(2).
[7] See Paris Convention for the Protection of Industrial Property, available at: http://www.wipo.int/treaties/en/ip/paris/trtdocs_wo020.html#TopOfPage
[8] Supra note 3, p56.
[9] Ilanah Simon, "The Actual Dilution Requirement In The United States, United Kingdom And European Union: A Comparative Analysis", (2006), 12 B.U. J. SCI. & TECH. L. 271.
[10] See Viacom Inc. v. Ingram Enters., Inc., 141 F.3d 886, 890 n.7 (8th Cir. 1998)
[11] Lynda J. Oswald, " ‘Tarnishment' And ‘Blurring' Under The Federal Trademark Dilution Act of 1995", (1999), 36 Am. Bus. L.J. 255.
[12] See 15 U.S.C. 1127 (Supp. II 1996).
[13] See H.R. Rep. No. 104-374, at 8.
[14] Federal Trademark Dilution Act of 1946, 15 U.S.C. § 1125. Section 43 (1995).
[15] See http://www.ladas.com/BULLETINS/1996/FederalDilution.html
[16] See 3 McCarthy, McCarthy on Trademarks and Unfair Competition 3.2 (4th ed. 1997).
24:68 (rel. 4, Dec. 1997).
[17] Ibid, at 24-116.
[18] Ibid.
[19] See Hormel Foods Co. v. Jim Henson Prods., 73 F.3d 497, 506 (2d Cir. 1996).
[20] Supra note 17.
[21] Supra note 11.
[22] Restatement (Third) of the Law on Unfair Competition 25 cmt. f (1995).
[23] Supra note 11.
[24] Ibid.
[25] Supra note 22.
[26] Supra note 9.
[27] Council Directive 89/104/EEC of Dec. 21, 1988, art. 5(2).
[28] Case C-375/97, General Motors Corp. v. Yplon, S.A., [1999] E.C.R. I-5421, [1999] E.T.M.R. 122, P 43
[29] Provisions on the Determination and Protection of Well-Known Marks, Apr. 17, 2003 (P.R.C.), available at http://sbj.saic.gov.cn/english/show.asp?id=57&bm=flfg
[30] Measures for the Implementation of International Registration under Madrid Agreement, Apr. 17, 2003 (P.R.C.), available at http://sbj.saic.gov.cn/english/show.asp?id=63&bm=flfg
[31] Measures Regarding Registration and Administration of Collective Trademarks and Certification Trademarks, Apr. 17, 2003 (P.R.C.), available at http://sbj.saic.gov.cn/english/show.asp?id=60&bm=flfg.
[32] Jessica C. Wong, "The Challenges Multinational Corporations Face in Protecting their Well-Known Trademarks in China", (2006), 31 Brooklyn J. Int'l L. 937.
[33] Graeme B. Dinwoodie, "Some Remarks On The Limits Of Harmonization", (2006), 5 J. Marshall Rev. Intell. Prop. L. 596.
[34]] Ibid.