Thailand Law Journal 2014 Spring Issue 1 Volume 17

II. Rationale for Protection against Trademark Dilution

Dilution is the new form of trademark infringement. Not every state agrees that well-known marks deserve additional protection against dilution. Moreover, there is no explicit obligation under international convention to accept it. Hence, the anti-dilution provisions are found only in some countries. Some countries recognize it only as a theory while some consider it as something new. There are two sides to every coin. Protection against diluting behaviors also has pros and cons. In order to fulfill the goal of this article in introducing the trademark dilution, arguments for and against protection against dilution will be discussed in three aspects: legal, economic and social.

Legal aspects

In relation to legal aspects, there are some arguments against anti-dilution law. Laws in most countries guarantee freedom of speech, so every product can be criticized or made as an object of parody.²⁸ These activities, however, could harm a mark's reputation by their very nature. Therefore, free speech could be affected because of fear of tarnishment. For the sake of maintaining the freedom of speech and humour in human beings; parody; therefore, it is necessary to draw a clear line: which behaviors are actionable under anti-dilution law and which are not. This is one of the important factors that should be concerned for the interpretation of anti-dilution law or the introduction of anti-dilution law into new jurisdictions.

Another point to consider is dilution is potentially broad in its scope and no longer focuses on consumer protection. Therefore, there is a fear that property rights will be granted to trademark proprietors.²⁹ Unlike confusion-based infringement, there is a risk in changing anti-dilution law as a creation of fair competition into an anti-competitive weapon by applying the law without limitations. Accordingly, the balance between free and fair trade need to be struck in order to solve this problem.³⁰

Importantly, the courts should know how to apply anti-dilution law to avoid reluctance in application or misinterpretation. The US experienced this kind of this situation during the application of the FTDA. Thus, the solution is to stop history repeating itself and find the right balance between granting protection of well-known marks form dilution and free trade.

In addition, the fact that in some countries marks that have acquired distinctiveness through use also enjoy protection against dilution. Therefore, both inherently distinctive marks, for example Kodak and Mazda, and marks that have acquired the secondary meaning through use could enjoy the equal protection. The nature of these marks is comprised of descriptive words, so granting protection could enable senior mark owners to monopolise language, particularly on important words, regardless of the types of goods or services or the presence or absence of confusion. On one hand, common words should be free to be used. No one should be able to monopolise the general words is one of the arguments against dilution. On the other hand, the wide disparity between the parties' products sometimes bars consumer association and dilution will not occur. This could be a way to lessen the fear of words monopoly.

Some people claim that protection against dilution is unnecessary since famous marks are generally immune to blurring resulting from their robust fame that is imprinted on the minds of consumers that hardly changes. If the marks are really famous and well known, this could be a shield for famous marks from being diluted³¹ However, it could be argue that famous marks will not be guaranteed that they will not suffered from dilution by tarnishment. Because of diluting behaviors can be categorised as dilution by blurring and dilution by tarnishment.

Blurring, in theory, seems reasonable, but it is actually hard to prove. Furthermore, the imperfect blurring test in the EU and the US raises questions on whether it is appropriate to prohibit injury that no test to date could truly show the impairment of a distinctive character of famous marks.³²

Economic aspect

In contrast to the arguments against dilution in the aforementioned legal aspect discussion, there are many justifications for protection against dilution. Initially, good trademarks generate selling power and create goodwill; therefore, businesses invest large budgets in advertising.³³ Trademarks can be used as an advertising tool to convey information as well as persuasion. This makes trademarks become an intangible valuable asset, so laws should provide greater protection beyond confusion-based infringement. Dilution can harm a trademark's value, so this recognition of economic value could probably be one of the significant justifications of anti-dilution law.

Another point to consider is that anti-dilution law not only benefits trademark owners, but also consumers. The searching costs of consumers may be reduced if one trademark identifies only one specific product.³⁴ Moreover, consumers' purchase expectations and perceived values of intangible products, which are prestigious, luxurious and exclusive, and acquired from owning name-brand goods, could be weakened if there is a dilution by tarnishment. For instance, a person who buys a Hermes bag will not be pleased if the word 'Hermes' is associated with inferior and inexpensive goods, because the feeling of being prestigious will be lessened.

Counterfeits are a kind of tarnishment that can harm the reputation of the original brand. In this area, dilution overlaps with other forms of infringement.³⁵ On one hand, there is a view that dilution may not be necessary because famous marks have already been granted protection through infringement.³⁶ On the other hand, it is arguable that different provisions have different objectives, so it should not be regarded as granting double-protection.³⁷

Moreover, dilution could impede the ability of the well-known marks' owners in expanding their business into the same markets as the junior users by using the same trademark. The owner of the earlier mark should have the superior right in using the mark in other product lines, irrespective of entering into that market after the junior user; this also includes the licensing revenue that will be received if the trademark is licensed.³⁸

'Does dilution grant trademark right in gross?' For this problem, Ilanah defends that, anti-dilution laws in the EU and the US do not intend to grant trademark right in gross, since they share similar goals in providing protection only in the scope of the specific legislation. There is no guarantee that owners of famous marks can always win dilution cases against all later uses, but rather that all requirements have to be satisfied. Moreover, a relatively low enforcement rate of dilution compared to infringements in the US³⁹ might imply that those courts have the discretion to control the interpretation of anti-dilution law and are not willing to grant trademark right in gross.

Social aspect

Dilution can be considered as reaping without sowing, which is unethical. On one hand, misappropriation can reduce the incentive to build a prestigious image of a brand. On the other hand, there is nothing wrong with free riding without causing harm to trademark owners. Therefore, the solution is to ensure that advantages gained must not be unfair, like a condition in the EU. Additionally, diluting actions can be avoided, especially by inventing new fanciful words or signs to be used as a new trademarks without copying earlier marks. Adding this type of wording also enriches languages without taking unfair advantage on other traders.⁴⁰ The use of similar trademarks to the well-known marks might imply that there may be an intention to take unfair advantage on other well-known marks' reputation since there are uncountable ideas to design a good trademark. Unless, the similarity between marks is such a coincidence of the same idea. If this coincidence occurs, good faith is required to be proved.

Protection against trademark dilution is unsettled controversy. After considering both pros and cons of trademark dilution. It seems to me that the advantages of anti-dilution law outweigh the disadvantages, because most of the downsides can be resolved by making a clear scope of diluting behaviors, exclusions and setting suitable requirements. This can lessen the possible harm to free speech and free competition. The criticism of an overly broad scope of dilution could be limited by imposing conditions on actionable claims, such as high fame standards, associations or defences. Protection against dilution would bring about more fair trade to owners of injured marks and incentives to investing in their marks would remain.

oreover, broader protection on trademarks could attract more foreign investors, because there is a more of a guarantee on their investment, and this would be great to the economy. Foreign investment could bring about development through technology transfers and higher competitiveness in businesses, which lead to more productivity and lower prices. Additionally, the recognition of the importance of intellectual property has been increased globally, not even Thailand. It can be seen from the amendment of the Trademark Act in 2000 to be consistent with new forms of infringements on the Internet, such as cyber-squatting and plans to become a member of the Madrid Protocol. New forms of trademark injuries are caused by the creation of technology and the change of trademark function. And a plan of the new trademark amendment to include the sound marks and scent marks into Thailand. This presents the dynamic of trademark law that need to be developed to suit the changes in business and society. Hence, it is not surprise that the situation akin to trademark dilution occurred between Starbucks and Starbung.