Trademark trolls file trademarks to extract money from lawsuits, which is threatening economies

[Puneet, 01/28/2023, IIPRD Blog, “Trademark Trolls – Tackling The Practice Of Frivolous Trademark Registration,” https://iiprd.wordpress.com/2023/01/28/trademark-trolls-tackling-the-practice-of-frivolous-trademark-registration/, accessed:07/11/2024, shl]

In the current era, intellectual property rights play a critical role in international trade. They are a must-have for entrepreneurs from all walks of life who want to avoid stumbling blocks and gain the benefits of their labours. “To protect the most basic manifestations of one’s creativity, trademarks with a global application are essential.” Because a pictorial representation of one’s innovation is required regardless of the previously mentioned concerns, trademarks have been made available to individuals of all classes and are not limited to a specific stream or business, it is important to protect a trademark. Nowadays, trademark trolls are being employed to take advantage of trademark rights in order to gain unauthorised profits.

Trademark Trolls is a legal term that refers to the practise of filing frivolous trademark registration applications with no intention of using them. It is a method of exploiting legitimate parties in order to extract money by filing lawsuits as a way of initiating settlement negotiations or obtaining licences from trademark holders. What’s more alarming is that there is no specific legislation or rule that renders “trademark trolling” illegal.

When it comes to trademark trolls, trademark troller can be classified into two categories.

Registrants using trademark as opportunity

Such individuals or entities do not actually use or intend to use the mark, but rather opportunistically attempt to register famous or recently introduced trademarks that are already registered by a different company in other countries in the hope that that company will use it in the troll’s country in the future. This method, which is based on first to file, is more widespread in China.

Registrants claiming without solid reasons to have used that mark

These are the individuals or entities that declares to have used a sure trademark without presenting evidence, after which threaten or report infringement complaints or competition in opposition to any organization or person that makes use of and/or registers that mark. This method, which is based on claimed prior use, is more widespread in common law jurisdictions and/or where trademark rights are largely based on usage rather than registration (e.g. the USA).

First to file and First to Use Jurisdictions usage in US, China and India

Countries with a “use requirement” are those where trademark registration is granted based on past commercial use of the mark. ‘File requirement’ nations, on the other hand, refer to countries where registration is granted merely by following proper process, i.e. applicants are not required to demonstrate use of their mark as a prerequisite to a successful application.

China is a first to file jurisdiction , which implies that the first entity to registering a trademark under Chinese Law becomes its legitimate owner, even if another business is currently using it. Its track record of trademark trolling, which includes the infamous case involving Apple Inc., who spent $60 million in 2012 to reclaim the right to use their famous iPad name in China, places it in the worst position.[1]

In India, the ‘first-to-use’ provision provides a natural level of safety. Indian trademark law enables owners to petition for registration based on ‘planned to be used.’ This helps to decrease trademark trolling in some circumstances. Trolls, on the other hand, have discovered a loophole in which trade mark applications are filed on a projected to be used basis. In this situation, if a trademark registration is filed but it is not used for a continuous period of five years, it is liable to revocation, giving trolls time to take advantage of their position. When applying for marks on a projected to be used basis with future use, the application that was submitted first is given precedence.

US is also first to use requirement jurisdiction[2]. Commercial use is not just a need for registration in the United States, but it also emphasises the applicability of other trademark-related concepts. To explain, courts bolster the stipulation by extra doctrines in addition to Section 45 of the Lanham Act[3], which requires ‘use by a person’ as a prior prerequisite.

Despite this policy, trademark trolling has been reported in both the United States, India and many other countries.

More than 600 applications to register marks related to COVID-19 have been lodged with the US Patent and Trademark Office[4]. The quantity of applications is increasing, with many of them appearing to be “opportunistic” trademark applications. One, for example, is attempting to register the trademark “COVID-19 VIRUS FREE GUARANTEED” for clothing and other consumer items. Another is attempting to register the trademark “COVIDFREE” for antibacterial products.

Indian courts have recently recognised these flaws and ruled in favour of legitimate users in a number of situations. Hennes and Mauritz v. HM megabrands Pvt. Ltd[5] was a case where H&M had filed a trademark infringement lawsuit against HM Megabrands. The Delhi High Court issued an interim injunction in this matter, finding that the plaintiffs will suffer injury and substantial economic loss if the injunction was not granted. This decision stresses that trademark trolling will not be tolerated by the courts, and that international trademarks are protected equally in the country.

Ways to tackle the Trademark troll menace

Trademark applications should be filed as soon as possible, not just in the countries where one does business, produces, or supplies commodities, but in all countries where future expansion is probable.

Transliterating one’s trademarks, including logos, into the local language.

Improving the registration procedure, especially in areas where the first-to-file strategy is used. Companies should perform vigilant searches and set up watch systems to discover trolls early on.

To prevent uncontrolled registrations, fees for filing trademark registrations should be revised on a regular basis, and suitable changes should be made as economic condition and time changes.

Companies or entities can keep track of the use of their own trademark in troll-friendly nations by archiving invoices, contact with distributors, and commercial papers.

Legislative changes in the realm of trademark law, as well as judicial backing, will aid in the fight against the problem. The courts have lately made it clear in their judgements that applications filed frivolously or with malice will not be considered.

To identify prospective trolls early on, set up watch services or do trademark searches. Updating the search and examining local media for references to the trademark on a regular basis will assist trademark owners in staying on top of local changes.

Conclusion

Trademark trolling is a threat to growth and expansion of legitimate trademark users. The adoption of the First to Use policy is preferable to the First to File approach in terms of preventing trademark trolling.. In todays globalised economic world growth of business is the utmost priority and trademark trolling being a hindrance to growth must be mitigated by countries using first to file policy by adopting First to use policy. It must be noted that First to use policy is also not fully shielded as evident from the fact that common law jurisdictions such as India and USA too faces many cases of trademark trolling ,there are some loopholes on which the Govt. and the trademark holders should work to prevent them from being a victim of this menace.