WHEN BUSINESS NAMES CONFUSES CUSTOMER

The naming of business is the most important decision for any new organization, as it sets the stepping stone for all future endeavours and possible growth. The business name is one that helps create a good impression, potentiality, helps the customers in determining the associated products and origin of the organization. A business name tells so much the organization; with this one can comprehend the industry of goods and services, description of goods, origin of the product, and its reputation in the market, etc.

CHARACTERISTICS OF A GOOD ‘BUSINESS NAME’

• A good business name should be unique, easy to pronounce, easy to remember, simple and catchy. Stronger the mark, greater will be the protection.

• It must have a distinctive character, where the customers can identify the products and the origin of the business with which the product is associated.
• The Business name creates the first impression on the customers, and the customers are likely to memorize the name by realizing its quality and services.
• Four types of marks which are available for business names are generic, descriptive, suggestive, and arbitrary marks, respectively from weakest to strongest type. Therefore, it is important to keep in mind the Trademark law while selecting a business name.
• Arbitrary marks are considered to be the strongest as it suggests that, the name of the mark and the business activities associated with the mark should represent completely different attributes. For instance, Apple Inc. where the name is completely disconnected from the products.[1]
• The business name is the foremost identifier of your business organization and that is how your brand name is built.
• The business name will influence the influx of new customers and well-known business names tend to attract customers. This is how the customers will recognize and remember the new business names.
• The business names must avoid usage of forbidden words which might show any association with politics, any religion, derogatory remarks, any relation with National, Central, Union or Federal government of the country, names of national leaders, etc.
• After selecting a good business name one must register the mark with Trademark Act, 1999 to receive protection from possible infringement. Although a business name need not mandatorily be trademarked, it renders legal proof of protection to the business name.

THREATS TO REGISTERED TRADEMARK

A highly recognized trademark often gets infringed when the local manufacturers and retailers chose to reproduce counterfeited products into the market in the disguise of the original brand. It is a very common practice in the local market to reproduce similar products in order to gain the advantage of well-known trademarks.

The practice is heavily in existence because the local manufacturers or business entities do not want to spend a heavy budget on advertisements and hence they take advantage of the already existing brand. This leads to confusion amongst the customers. Loyal customers are well aware of the brand value and pricing strategies but ignorant customers tend to shift towards the local business. This confusion can sometimes lead to heavy losses in revenue and tarnish the image of the company.

When the business name avails registered trademark, it obtains protection from the government, legally. And any sort of infringement will lead to penalties and moreover passing of PERMANENT INJUNCTION against the infringing parties.

Permanent Injunction is a type of legal remedy whereupon satisfaction of the case, the judicial authority grants protection to the original trademark and refrains others from reproducing similar goods in the market. Duplication of those products will lead to trademark prosecution for Deceptive Similarity under the Trademark Act, 1999.

CONCEPT OF DECEPTIVE SIMILARITY

The similarity of Business names, marks, symbols, or slogans often confuses the customer and hence the issue of DECEPTIVE SIMILARITY comes into the picture. The deceptive similarity is a situation where a similar business name confuses the customer of the original brand where it so resembles the original product that the customers are most likely to get confused and deceived by the duplicate business name.[2] This results in blurring the image of the original business and causing huge capital loss. Therefore, it is important to protect the business name in the form of a Trademark or service mark.

In the case of Deceptive Similarity, the name of a similar business will be judged word-to-word.[3] It will also be judged on visual and phonetic similarity. It is a ground for refusal of registration under the Trademark Act, 1999.

LEGAL PROTECTION AGAINST SIMILAR BUSINESS NAMES

1. MEASURE THE DAMAGE

• When you come across a business name which is similar to your trademarked business, the first step would be to understand the estimated service and sales of a similar business.
• The geographical limit of a similar business should be determined to understand the probable damage caused to the original business. Once the loss has been calculated by the business, the next step would be to file a legal suit against the infringing party.[4]
• The trademark is granted for certain jurisdictional limit and beyond that, it is not protected. For instance, a business name which has received trademark registration only in India cannot be granted protection outside its boundaries. To receive protection in multiple places one needs to file an application in all the selected countries.
• This is because a trademark is filed within a local limit of a particular country or state and hence it must receive protection within its boundaries for possible infringement of its original brand.
• It needs to be answered whether the similar business operates in the sector or industry as the trademarked business. This factor will analyze the proportion of customers who are likely to get confused by the introduction of a similar business.  
• When the business with a similar name operates outside the geographical limit of the registered trademark then the consumers will be less likely to get confused.

2. UNDERSTAND THE LEGALITIES UNDER TRADEMARK LAW

• The similar business name will cause huge damage to the registered trademark and therefore it needs protection under the Trademark Act, 1999.[5]
• When an infringement case is brought against the infringing parties, the plaintiff needs to provide evidence of its trademark registration, manufacturing, and services provided within a geographical limitation and the sales featuring the revenue earned by the business. This proves the case of the Plaintiff in establishing goodwill.

3. TAKE LEGAL ACTIONS

• While initiating legal action against a similar business, one needs to keep in mind the grounds for the claim.
• In the trademark prosecution, it will be taken into consideration as to which business name was first introduced into the market. Because a trademark is granted on a first-come-first-serve basis.
• It is always advisable to conduct a trademark search through the Trademark Journal before registering a trademark to avoid the possibility of similarity in the business names/trade names.
• While determining the case of deceptive similarity in similar business names, the court will apply the liberal rule of interpretation and go beyond the literal meanings.
• If the similar business/defendant provides a document where it can use the argument of ‘first use’ then the registered trademark might need to go through lengthy and costly negotiation.

BY: SOUMYA SONI