Imagine a US-based coffeehouse chain renowned for its artisanal brews, ready to expand its business to India. Just as plans are set in motion, the company hits a roadblock—its trademark is already registered by a third party in India. This party may have registered the mark to leverage the coffeehouse’s established goodwill and reputation, hoping to ride on its success. Alternatively, they may have no intention of using the mark, instead aiming to block the coffeehouse’s entry into the market or demand a significant compensation for settlement. Now, the coffeehouse faces difficult choices—fighting the third-party registration of trademark through a rectification/ cancellation petition in the Trade Marks Office, pursuing a lengthy and costly legal battle, negotiating a settlement, or even rebranding in India. What was once an exciting expansion plan now risks turning into a financial and operational predicament, putting the business in jeopardy.
Even tech giants such as Apple have faced significant trademark challenges in China over the mark “iPad”. A Chinese company, Proview Technology, claimed ownership of the “iPad” trademark within the country. After a prolonged legal battle, Apple agreed to pay $60 million to settle the dispute and secure the rights to the name in China.[i] A considerably recent instance of such a situation in India is that of Sony. In 2020, Sony encountered a trademark squatting issue in India concerning its PlayStation 5 (PS5) console. An individual had pre-emptively filed for the “PS5” trademark in India before Sony’s application. The squatter eventually withdrew the application after Sony opposed it. However, this situation posed delays for the product’s launch in the Indian market.[ii]
Understanding Trademark Squatting
The World Intellectual Property Organization defines Trademark Squatting as “the registration or use of a generally well-known foreign trademark that is not registered in the country or is invalid as a result of non-use.[iii] In several countries across the world, Well-Known Brands have encountered significant challenges in registering their trademark due to prior registrations and/or usage of the brand in respect of similar or different goods or services.[iv] In simple terms, trademark squatting describes a situation in which a company or an individual registers a trademark of another company who has invested in brand recognition and built substantial goodwill in the product, service, or trading name, but has not registered a trademark.[v] The individual or entity in this case, registers a trademark similar to a well-known brand’s name, either with a view to ride upon its established reputation and goodwill, or alternatively and more often with no intention of genuine use, and merely leverage on settlements. This practice is especially prevalent in “first-to-file” jurisdictions, where priority is given to the first entity to register a trademark, regardless of prior use. This can severely hinder a brand’s expansion into new markets.
The consequences of trademark squatting can be dire for businesses:
- Financial strain from legal battles or settlements.
- Reputational damage if squatters exploit the brand name for subpar products or services.
- Operational delays caused by litigation or rebranding in relevant jurisdictions.
The Indian Stance:
India follows the first-to-use principle in trademark law. Under this system, the rights to a trademark are primarily established through its actual use in commerce rather than just registration. The system aims to protect businesses that have built goodwill and reputation through consistent and bona fide use of their trademarks. However, proving prior use requires substantial evidence, such as invoices, advertisements, and other documentation demonstrating the mark’s continuous and significant use in connection with goods or services. This principle provides a safeguard against trademark squatters, as it allows legitimate users to assert their rights even if a squatter has pre-emptively registered the mark.
If a well-known trademark can establish its cross-border reputation in the country through supporting documentation, courts may intervene to restrain the squatter and potentially award damages to the trademark owner. However, in the absence of such cross-border recognition, it becomes challenging for the proprietor to assert his rights over the trademark. In such cases, the owner might be compelled to negotiate with the squatter to purchase the trademark or engage in protracted legal proceedings.
In the case of N.R. Dongre and Ors. v. Whirlpool Corporation and Ors.[vi], the Supreme Court of India recognized the principle of trans-border reputation. Whirlpool Corporation had initially registered the trademark “Whirlpool” in 1956, but its registration lapsed in 1977 due to non-renewal. In 1986, Mr. N.R. Dongre applied for the same mark, which was opposed by Whirlpool Corporation in 1989. The opposition was dismissed by the Registrar, citing lack of use and reputation in India.
Whirlpool Corporation appealed to the Delhi High Court, presenting evidence of its trans-border reputation. The Single Bench ruled in Whirlpool’s favour, recognizing its prior use and trans-border reputation in India. Mr. Dongre appealed, but the Division Bench upheld the decision, noting that he could not explain how he adopted the “Whirlpool” mark.
In the global scenario, a Chinese company, Xintong Tiandi Technology, was permitted to use the “IPHONE” name for products like handbags and phone cases, as it had registered the trademark for these categories before Apple. The higher court ruled that Apple could not prove it was a well-known brand in China before Xintong Tiandi filed its trademark application in 2007.[vii]
The Case of Honda
To understand the impact of trademark squatting, consider the case of Honda Motors, one of the world’s largest automobile manufacturers. In 1991, Honda discovered that M/s. Steel India had applied for the “HONDA” trademark in India for pressure cookers. Despite Honda’s longstanding use of the trademark globally, the squatter attempted to capitalize on the goodwill associated with the HONDA name. Honda filed an opposition to the registration, and the Registrar initially ruled in favour of Honda, rejecting the application.
However, in 1999, Honda was surprised to see that the same squatter had filed another application to register the “HONDA” mark in Class 21, which encompasses goods like household items, including kitchen appliances. This prompted Honda to take further action, sending a cease-and-desist notice. When this was ignored, Honda initiated a legal suit, claiming that the squatter’s use of the mark could tarnish its reputation and mislead consumers into believing that the products were associated with the globally recognized automobile brand. The court ruled in Honda’s favour, recognizing that the use of the HONDA mark for kitchen appliances could cause consumer confusion and harm the reputation of the brand. This case is a clear example of how trademark squatting can harm a global brand’s reputation and cause a significant burden on its resources.
Dunkin’ Donuts: A Case of Domain Name Squatting
Trademark squatting is not limited to physical goods; it extends to online assets as well. Dunkin’ Donuts, an American multinational coffee and doughnut chain, faced domain name squatting before even entering India. A local entity registered domain names such as “dunkin.menu”, which were closely related to Dunkin’ Donuts’ trademarks. Dunkin’ Donuts filed a complaint under the Uniform Domain-Name Dispute-Resolution Policy (UDRP), which resolved the dispute in the brand’s favor. The panel determined that the respondent had no legitimate interest in the domain names and ordered their transfer to Dunkin’ Donuts.[viii] This case highlights how even trademarks, such as domain names, can be subject to squatting and the importance of monitoring such intellectual property early in the expansion process.
Burger King: A Battle of Prior Use
Recently, in a 13-year legal battle, a Pune-based restaurant, Burger King, prevailed in a trademark infringement case filed by the global chain Burger King Corporation in 2011. The Pune court ruled in favour of the local restaurant, citing its prior use of the name since 1992, well before the global chain’s entry into India in 2014, and the absence of evidence of customer confusion or brand damage. The global chain’s appeal led to the Bombay High Court staying the Pune court’s order, pending further hearings. The District Court in this case noted that Burger King was indeed unable to support its key claims of cross-border reputation, goodwill and infringement. [ix]
That said, trademark owners must thus gather evidence showing that the squatter has no legitimate claim to the trademark and that the registration was made with the intent to deceive or sell the rights for a profit. This process can be both costly and time-consuming, requiring businesses to be vigilant and proactive in protecting their intellectual property.
Effective Strategies
Trademark protection is therefore, crucial for safeguarding your brand. While proactive registration is important, businesses must strike a balance to avoid unnecessary costs. Here’s how to do it effectively:
- Prioritize Key Markets: Focus on countries where you have operations, customers, or plans for expansion, rather than filing in every jurisdiction. This ensures that trademark filings are strategically aligned with actual business activity.
- Leverage the Madrid Protocol: The Madrid Protocol allows businesses to register their trademarks in multiple countries with a single application. This helps streamline the process of international trademark protection by registration across multiple countries and expand coverage incrementally as your business grows.
- Monitor Instead of Filing Everywhere: Use watch services to keep an eye on filings in target markets, allowing you to oppose infringing marks without registering defensively everywhere. This allows you to detect squatters early and file oppositions before a squatter’s registration is granted, preventing potential conflicts from escalating.
- Register Strategically: Protect the main trademarks and key variations only that are directly relevant to your business, skipping speculative or low-priority filings when filing in different countries. Filing indiscriminately across every jurisdiction can lead to wasted resources and inefficiencies.
- Collaborate Locally: Partner with local legal experts to navigate country-specific risks and regulations. Local counsel can provide valuable insights into local practices and help businesses avoid pitfalls related to trademark registration.
- Enforce Rights Proactively: Focus on enforcing your rights effectively through oppositions or rectification/ cancellation petitions etc., instead of pre-emptive over-registration or filing of trade mark applications.
Conclusion
Trademark squatting poses a significant threat to businesses entering new markets, as squatters register well-known brands’ marks without genuine intent to use them. This practice can delay market entry, tarnish a brand’s image, and lead to costly legal battles. The few instances discussed highlight the financial, operational, and reputational challenges that arise when squatters exploit the goodwill and reputation of established brands for personal gain. Proactive trademark protection strategies as mentioned above can reduce the risk associated with trademark squatting.
Ultimately, trademark squatting underscores the importance of strategic, timely brand protection efforts. By staying vigilant and taking pre-emptive actions, businesses can safeguard their trademarks, avoid unnecessary conflicts, and ensure brand success in new markets. Foreign brands must also recognize that adducing evidence of spillover reputation is of paramount significance to the protection of the brand name in different jurisdictions.
By Minnu Bridgit Sebastian
The content on this blog is for informational purposes only and does not constitute legal advice. Images generated by AI.
[i] ‘Apple pays $60 million to settle China iPad trademark dispute’, REUTERS, (July 2, 2012),
[ii]‘Sony’s PS5 trademark dispute in India resolved’, THE HINDU BUSINESSLINE, https://www.thehindubusinessline.com/info-tech/sonys-ps5-trademark-dispute-in-india-resolved/article32963847.ece#:~:text=Sony’s%20trademark%20dispute%20in%20India,with%20a%20man%20from%20Delhi.
[iii] World Intellectual Property Organization, WIPO Intellectual Property Handbook 90 (WIPO Publication, 2nd Ed. 2004).
[iv] ‘Trademark Squatting: A menace in the era of Globalization’s, Rahul Kumar Choudhary and Rachit Agrawal, https://docs.manupatra.in/newsline/articles/Upload/21f3c713-e3b0-460e-97b4-de6c4901ad4f.pdf
[v] Ai C. and E. C. Norton (2003): ‘Interaction Terms in lLogit and Probit Models,’ Economics Letters, Vol. 80, pp. 123-129.
[vi] N.R. Dongre and Ors. v. Whirlpool Corporation and Ors., Civil Appeal No. 10703 of 1996
[vii]‘Apple loses trademark fight over ‘iPhone’ name in China’, BBC, (4 May 2016), https://www.bbc.com/news/business-36200481.
[viii] DD IP Holder LLC v Manpreet Badhwar, https://www.adrforum.com/domaindecisions/1562029.htm.
[ix] ‘India’s Burger King battle: a cautionary tale for global brands’, (Sep 5, 2024),
https://trademarklawyermagazine.com/indias-burger-king-battle-a-cautionary-tale-for-global-brands/
