[This post has been authored by Rohit Pradhan and Srishti Sneha, students of Symbiosis Law School, Hyderabad.]

 

Introduction

The term ‘well-known trademark’ is defined under Section 2(1)(zg) of the Trade Marks Act, 1999 (the “Act“). It states that a well-known mark is one that is known by a considerable portion of the population which uses such goods or receives such service. When the use of such mark leads the users of such product or service to believe that there is a connection between the good and services and the person that used the mark, it can be considered well-known. Considering their nature, the scope of protection of a well-known trademark is usually greater than the protection afforded to any other trademark, depending on its reach in the market. The rationale behind the increased protection of a well-known trademark is to protect both the owner of such a mark in case it is not registered and to protect the consumers from accidentally using another product than the one they intended to.

One such popular well-known mark is the PS mark. The PS mark is associated with the PlayStation, a brand-name for the gaming console developed by Sony Interactive Entertainment. Recently, the company attempted to file for trademark registration for their next-generation gaming console, the PlayStation 5 (PS5), in India. However, there already existed an application for the same trademark. The author in this article will attempt to elaborate upon the veracity of the existing application, all the while discussing relevant laws regarding trademark squatting and the protections afforded against them. The author will then scrutinise the judicial trends regarding the concept in question, and go on to predict the potential outcome of the dispute at hand.

The PS5 Conflict: An Overview

PlayStation 5 is the brand-name for the next-generation gaming console that Sony Interactive Entertainment planned to launch this winter. It is the latest addition to Sony’s first gaming console, the ‘Original PlayStation,’ that was launched in 1994. Since then, many versions of PlayStation have been introduced to the market. For the past seven years, the predecessor console which is the PS4, has established itself as one of the most prominent gaming consoles in the market. Furthermore, Sony itself has revealed that it has sold 110 million units of PS4 in the last seven years, elucidating upon its popularity in the market quite vividly.

The next version of this console was due to be released in India this winter. Consequently, the company filed for trademark registration on February 6, 2020. Much to their astonishment, an applicant named ‘Hitesh Aswani’, had already made the application for the brand name PS5 on October 29, 2019. Sony received an objection from the Registry on March 14, 2020, citing Section 11(1) of the Trademark Act, 1999 that lays down the grounds for non-registration of trademarks. Subsequent to this, Sony opposed the application on April 16 2020. Interestingly, while the former application was filed under Class 28, under the Fourth Schedule of the Trade Marks Rules, 2002 which talks of games and playthings, Sony filed the application for the protection under Class 9, 28 and 41 which talk about scientific electric data processing equipment amongst others; games and playthings; and education, entertainment, sporting activities etc. respectively. At the current moment, both the applications by Aswani and Sony for the use of the PS5 name stand “Opposed”, suggesting that the Indian Government’s respective regulatory body is deliberating upon the issue.

The author will now deliberate upon the implications of the application by Aswani in the regime of Intellectual Property Rights.

Trademark Squatting: Explained

Trademark Squatting or Trademark Piracy has been defined as the use or registration of a well-known foreign mark which has not been registered in that country or is invalid due to non-use. Usually, the owners of the trademark end up making huge payments to other individuals or companies to stop them from using such a mark. For instance, in China, Apple ended up paying 60 million dollars to the local owner of the mark “iPad”. The present case with Aswani claiming the PS5 trademark in India before Sony did it falls under this category.

An important aspect that must be kept in mind is that there are two kinds of systems where a trademark can be obtained, namely, “first to file” and “first to use”. In the former system, the individual or business that first files for the protection of mark shall be granted the protection, whereas in the latter the individual or business that first uses the mark shall be granted protection for use of such mark. China follows, first to file system whereas, India follows the first to use system.

For instance, in the Indian case of, Toyoto Jidosha Kabushiki Kaisha. Vs. M/S Prius Auto Industries Ltd. And Ors., the plaintiff had launched its brand “Prius” in 1997 followed by the defendant registering the mark “Prius” in 2002. The plaintiff here had filed a trademark application in 2009, much later than the defendant. The Supreme Court here had upheld the “territorial doctrine over universality principle” wherein if the company has acquired substantial goodwill in India for its mark, protection could be extended to foreign trademark owners.

In the present case, while it may be argued that the PS5 mark has not been registered in India yet, however, its predecessors, PS3 and PS4 had been and were quite popular in the gaming community. Hence, it can be said that Sony’s PlayStation Series has customers in the country, thus providing a substantial reason for its registration on the first to use basis.

Taking into consideration the fact that in India, a trademark is granted on the first to use basis, it is highly unlikely that there will be a pay-out to Aswani, as was given in the Apple case in China.

Even though there are various Conventions that aim to protect the “well-known trademarks” like the Paris Convention, the TRIPS Agreement, the Madrid Protocol, the WIPO Joint Recommendation Concerning Well Known Marks, they have not proved enough to counter the problem and thus, India in its Trademarks Act 1999 has provided for the protection in various methods. The author will now delve into these briefly.

Safeguards Against Trademark Squatting

The Trademark Act 1999,  under Section 11, provides the grounds for the refusal of registration of the trademark. The author will now emphasise upon the relevant grounds that provide for safeguards against instances of Trademark Squatting:

Section 11(1)(b)

Section 11(1)(b) provides for the refusal of trademark registration if the mark is similar to an earlier trademark, and its range of goods or services, and if the new mark creates a possibility of the public being confused and associating the new mark with the older one.

Sony’s previous gaming consoles, namely, the PS3 and PS4, have been registered as trademarks under Class 28 as specified before. When a person files for a trademark, he/she has to look over numerous Classes as each class represents a particular good or service. In the present case, it is Class 28 which pertains to good used for gaming and playing.

The trademark application filed by Aswani for the brand name PS5 was also filed under Class 28. The identity of the brand in terms of the mark and the services are quite similar to the previously registered trademarks; namely PS3 and PS4, which could lead to the likelihood of an association with the earlier trademarks. Therefore, Section 11(1)(b) would be applicable in the present case.

Section 11(2)(a)

Section 11(2)(a) states that a trademark will not get registered if it is identical or similar to an earlier trademark, subject to the fact that the earlier mark is a well-known trademark in India. Further, if a later mark is used without any due cause, it would end up taking unfair advantage of the distinctive character or repute of the previously registered trademark.

As stated before, PlayStation (PS) is a well-known global trademark and is very popular in India. PS5 is identical to previously registered trademark PS3, PS4 and well-known global trademark PS. As a consequence of its popularity, if Aswani gets trademark registration of PS5, he could take unfair advantage of the high reputation of the earlier trademark PS, associated with Sony’s PlayStation. Thus, Section 11(2)(1) becomes applicable in the present case.

Section 11(6)

According to Section 11(6), there are certain relevant factors that must be considered before determining the well-known mark namely,

1. Knowledge about such mark in relevant sections
2. Duration, extent and geographical area in which the trademark is used
3. Duration, extent and geographical area in which the trademark is promoted
4. Registration or application for registration of the trademark to the extent they reflect the use or recognition of the trademark
5. The record of successful enforcement of the rights in that trademark including the record stating that the trademark has been recognised as well known by any court or Registrar.

Sony’s PlayStation has been in the market for 26 years and is commonly abbreviated as ‘PS’. While ‘PS5’ per se has not been used, its predecessors have been in in the market for a long time. Moreover, the previous devices such as PS3 and PS4 have been advertised and promoted by Sony which would lead anyone from the “relevant section” (as defined under Section 11(7)) to believe that PS5 is a part of Sony.

Section 11(7)

According to Section 11(7), while determining whether the trademark is known or recognized by the relevant section of the public, the following factors must be taken into account, namely,

1. The number of actual or potential consumers of such goods or services
2. The persons involved in the channel of distribution of goods or services
3. The business circles that deal with goods or services to which the mark applies

The Play Station Series by Sony is popular in both national, as well as the international gaming communities. Considering the fact that the PS Series is well known in certain sections of the society, in India as well as other jurisdictions like the United Kingdom, and that the previous devices such as PS4, PS3 etc, are registered in India, it can be said that the general public will associate PS5 with Sony and as a part of the Play Station Series.

These Sections are a reflection of the “Trans-border Reputation” principle that India follows. This principle states that the reputation of a good should benefit its owner, even in a foreign land, where the goods are not being sold.

Judicial precedents

The Delhi High Court, in the Sanofi India case, referred to the Supreme Court’s rationale in the Navaratna Pharmaceutical case, wherein it had held that ‘if the essential features of the registered trademark have been adopted by the later person; an action for the infringement can be brought up against him.’ Consequently, it gives Sony the locus standi to contest its rights over the brand, as the letters ‘PS’ could be considered as an essential feature. Sony’s PlayStation has been in the market for 26 years, which is famously abbreviated as ‘PS’. Even the logo incorporates the two alphabets and thus, ‘PS’ forms an essential feature which prima-facie seems to have been imitated in the case of PS5.

Furthermore, in Daimler Benz v. Hybo Hindustan before the Delhi High Court, the plaintiff had filed a case against the defendant seeking an injunction for the usage of the plaintiff’s logo as well as the word “Benz”. The court here acknowledged the reputation of the plaintiff’s logo, as a well-known mark on the grounds of its international reputation, as well as goodwill generated and granted the plea of injunction. In the present case as well, Sony’s PlayStation is a popular gaming console and has generated goodwill both nationally, as well as internationally. Therefore, even using the word “PS” may result in the public associating “PS5” with Sony.

Additionally, in Rolex Sa v. Alex Jewellery Pvt. Ltd., a suit was filed against the defendants for selling jewellery using the trade name “Rolex” which was associated with the plaintiff. The Delhi High Court held that the trademark of the plaintiff was a well-known and that the portion of the public that used watches under the tradename “Rolex,” may associate the defendant’s jewellery with that of the plaintiff. This may end up creating confusion among the public. Therefore, an injunction was granted by the court against the use of the trade name “Rolex” by the defendants.

In the present case, the grant of such trademark to any party other than Sony may cause confusion among the public since the PlayStation series is associated with Sony.

Conclusion

The possible outcome of such opposition could be the rejection of the former application filed by Hitesh Aswani. From a quick study of the history of trademark squatting, it is evident that there are multiple flaws in the claim made by the applicant. The judicial precedents simultaneously establish the protection that is extended to well-known brands. It is clear that if the essential features of the brand name are copied, then an infringement suit can be filed, which in the present case is reinforcing the locus standi of the Sony company.

Thus, taking into consideration judicial precedents and relevant statutory provisions, the authors are of the opinion that, in the present case Sony will be able to claim the trademark PS5. It will be interesting to observe the course that the court takes and the implications that it would have on the discourse of trademark squatting.

[26 Oct 2020] Update: Hitesh Aswani has withdrawn his application for the trademark (as is seen in the image below), allowing Sony Interactive Entertainment to launch the PlayStation 5 in India soon.