Thailand Law Journal 2014 Spring Issue 1 Volume 17

The Introduction of Trademark Dilution: The Review of Dilution Concept in ASEAN

This article was previously published in Sukhothai Thammathiarat Law Journal Vol.27 No.1 on June 2011^*

By Sathita Wimonkunarak¹

Abstract

Dilution is a new concept of trademark protection, which shift from the role of consumer protection to the trademark itself as a valuable asset. Therefore, the rationales, nature and objective of trademark dilution are different from the traditional confusion-based infringement, such as passing off. 'The gradual whittling away or dispersion of the identity and hold upon the public mind of the mark or name by its use upon non-competing goods^'2 is the harm caused by dilution by blurring offered by Schechter.However, dilution does not enjoy the worldwide acceptance since its nature is still debatable whether protection against dilution will grant property right to the trademark proprietors. Together with it seems to be no binding obligation for states to provide protection against dilution under international framework. Therefore, it depends on states whether to grant this new kind of protection or not. Even in ASEAN region, there are varied beliefs upon trademark dilution. The more liberalised country; Singapore, has a specific provision under the Trade Marks Act to prevent trademarks from being diluted. In contrast, dilution is only recognized among scholars in Thailand and Malaysia as a concept of trademark infringement. In spite of there are some cases related to trademark dilution; Starbucks v Starbung and McCurry v McDonald's, that attract high attention from the public and medias, neither dilution has been incorporated in the laws nor in the judgments of both countries.

Introduction

'The more distinctive the mark, the more effective is its selling power is.^'3 This idea is the rationale behind the creation of new form of injury to the well-known trademark called 'Dilution'. In the modern era, trademarks are not only used as the source identifiers but also the advertising functions to generate goodwill. Dilution may not get tangled up in the application of traditional confusion-based infringement as a result of the differences in nature and objectives. Schechter is the first person who requested additional protection for trademark dilution. Because of the distinctiveness or reputation of well-known trademarks can be eroded through the later uses of identical or similar marks to the earlier marks upon unrelated products or services, and can happen without consumer confusion or competition between the owner of a senior mark and that of a junior one. Until now, his theory seems to receive a growing acceptance. Many countries provide protection against dilution, for example, the United States, the European Union, Canada and Japan.

Recently, there has been a heated controversial issue regarding the dispute between the giant international company; Starbucks, and a small coffee vendor in Bangkok; Damrong Maslae. Starbucks alleged the use of 'Starbung' logo is curiously similar to the well-known Starbucks trademark. Unfortunately, the concept of dilution has never specifically been mentioned in any Thai laws or court decisions; therefore, Starbucks has to rely on the application of Thai existing laws. If this kind of case occurs in the United States or the European Union, it is likely to be the issue of trademark dilution. According to the fact that it is hard to believe that the use of Starbung trademark in the small coffee road shop will cause public confusion between the source Starbucks, big global coffee shop brand from the US, and Starbung, a tiny street coffee cart. The reason behind my belief are the prices, the sizes and concepts of their coffee shops are totally different. These could be the undeniable significant factors to make Starbucks and Starbung distinguishable in the eyes of the public.

However, the objective of this paper is not about discussing on the details of this dispute. Rather it aims to introduce the concept of trademark dilution, which is quite new in Thailand. What is trademark dilution? What is the damage of trademark dilution? What is the rationale /or protection of well-known mark against dilution? Is there any recognition of dilution under Thai law? And in order to follow the ASEAN trend, this paper will also explore whether dilution is recognised in other ASEAN countries or not. Nevertheless, exploring trademark dilution in every single ASEAN member state is not feasible in one article. Thus, Thai Malaysia and Singapore are chosen jurisdictions to study here in this paper.

I. The Background and Theoretical Concept of Dilution

Dilution was introduced by Schechter's article in 1927. In general, the main functions of trademarks are: source identification, product differentiation and quality guarantee. However, Schechter indicated the role of a modern trademark had been changed from a source identifier to a tool to 'identify products as satisfactory and thereby to stimulate further purchases by the consuming public'.⁴ In other words, a trademark sells goods, and it is not merely a symbol of goodwill, but rather a tool to create it.⁵ Therefore, the advertising function of a trademark was recognized in its value. Moreover, trademarks also perform an investment function, which deserve protection 'even where there is no abuse arising from misappropriation either about origin or quality.^'6 Good trademarks, especially for specific goods, have the ability to leave an indelible impression in the minds of the public, thus becoming an important factor in creating or maintaining customers.⁷ Schechter further explains that, the stronger and more unique the mark is, the more commercial magnetism it has. As a result, his idea aims at protecting inherently distinctive trademarks, which are coined, fanciful and arbitrary marks.⁸ Two examples of these kinds of trademarks are Kodak and Mazda. Not every trademark possesses equal selling power; therefore, 'the more distinctive the mark, the more effective is its selling power is.⁹ Hence, the uniqueness and singularity of marks that are capable of generating selling power are valuable and must be preserved.¹⁰

Schechter reveals an important injury of dilution; that is the capability of a trademark to associate with a particular product of a particular trader is lessening.¹¹ This situation is now known as dilution by blurring. He describes this rational basis to propose a new form of protection against dilution additionally to the traditional trademark infringement.¹²

Dilution is a new form of injury that extends the protection of trademark, in order to make it crystal clear, the differences between dilution and traditional trademark infringement basing on confusion will be pointed out. There are three distinctions between confusion-based infringement and trademark dilution.¹³ First, a requirement of consumer confusion is necessary for other forms of infringement, but not for dilution, as it can occur without consumer confusion, because it does not aim to protect consumers, but rather trademarks from being diluted causing erosion of distinctiveness (blurring)¹⁴ or degrading their positive images (tarnishment)¹⁵. Second, an owner of a senior mark can bring proceedings against a junior user on the use upon identical, similar or dissimilar goods. Thus, the types of junior use are not limited to identical or similar goods like those in traditional trademark infringement. Third, the protection against dilution is reserved only for senior marks that achieve a standard of fame.¹⁶ The goal of anti-dilution law in the view of Schechter is protecting the advertising function of trademarks rather than source origin function or distinguishing function.¹⁷

The dilution concept proposed by Schechter was firstly recognised in the US in 1995 when the Federal Trademark Dilution Act (FTDA) was passed. The FTDA was imperfect and vague, and caused inappropriate application, especially in Victoria's Secret¹⁸, that imposed an actual dilution standard. In response to these problems, the Trademark Dilution Revision Act (TDRA) was enacted particularly to eliminate the requirement of actual dilution and provided protection against later uses that are likely to cause dilution instead.¹⁹ The TDRA has introduced a lot of clarification and improvement, in that marks that acquire distinctiveness through use also qualify for protection.²⁰ Therefore, under this act the protection is provided both for famous marks that are inherently distinctive and marks that gain the secondary meaning and become distinctive through use. Niche fame is rejected and a higher fame standard is imposed.²¹ Furthermore, the official acknowledgement of tarnishment and the clarification of dilution by blurring and tarnishment are provided through new definitions.²² Moreover, a new and more suitable test for blurring has been introduced²³ and there is expansion in the scope of exclusion.²⁴

Moving on to the history of dilution under the European Union, Articles 4(4) (a) and 5(2) of the Directive 89/104 (the Directive) are anti-dilution provisions, even though the word 'dilution' is not found in their language.²⁵ The anti-dilution provisions in the Directive mirror those of Regulation 40/94 (the Regulation) for community trademarks. As a part of the European Union, the EU Member States are bound to implement the Directive into their national laws in order to harmonize the trademark law.²⁶ While there are mandatory and optional provisions found in the Directive, anti-dilution provisions are optional; however, every member has implemented them, at least to the extent as stated in Article 5(2) to be in line with its domestic laws.²⁷