The Strange World of Trademark Squatting: Lessons for Brand Owners 

The core of this problem lies in the fact that trademark rights are limited to the jurisdiction in which they are registered. This means a trademark protected in one country may not be protected in another (unless it is used in commerce in that country as well). Trademark ownership is determined differently across jurisdictions:

• First-to-file system: In this framework, rights are granted to the first party to file an application. Jurisdictions such as China and the European Union follow this approach.

• First-to-use system: Here, priority is given to the party that can demonstrate prior and continuous use of the mark in commerce. Countries like the United States, Singapore and India have adopted this system.

The  Indian Trade Marks Act, 1999, formally recognizes the concept of well-known trademarks, granting them extensive protection even beyond the specific goods or services for which they are used. A well-known mark is one that has gained recognition among a substantial segment of the public or certain goods or services that if the same mark is used for other goods or services, people would assume they are connected to the original brand or business. While determining such status, the Registrar considers factors like the degree of knowledge and recognition of the mark, duration, extent and geographical scope of its use and promotion, any registrations or applications reflecting its use, and records of enforcement or judicial recognition.

Once recognized, such a trademark is protected against identical or similar marks, and applications made in bad faith can be opposed, ensuring the rightful owner preserves its distinctiveness and reputation across markets.

While trademark squatting involves the misuse of marks registered with the local or national trademark registry, cybersquatting represents another form of IP infringement where a squatter registers or uses a Domain name identical or similar to a renowned brand in the online space. In essence, both aims to wrongfully leverage the goodwill of a recognized brand, whether for profit-making or to create obstacles for competitors.

Judicial Responses and Safeguards in India

While India does not have a dedicated statutory provision that explicitly addresses trademark squatting and cyber-squatting, courts have relied on Section 11(10)(ii) which addresses bad faith filings, and Section 57 which allows for the cancellation of wrongly registered marks to curb such practices.

In BPI Sports LLC v. Saurabh Gulati & Anr.(2023 SCC OnLine Del 2424), the Delhi High Court ruled against an importer who had preemptively registered the “BPI SPORTS” mark in India. Though the original challenge under sections 11(1), (2), and (3) of the Trade Marks Act was unsuccessful, the court suo moto invoked Section 11(10)(ii). It found the respondent’s actions to be in  bad faith and ordered the removal of the mark, establishing that trademark squatting, while not explicitly mentioned in the Act, is a form of bad-faith conduct intended to block legitimate registration and exploit brand reputation.

In Goodai Global Inc. v. Shahnawaz Siddiqui & Anr. (C.O. (COMM.IPD-TM) 81/2024), the Delhi High Court dealt with trademark squatting involving the Korean beauty brand Beauty of Joseon. which had an established global presence. The court’s decision hinged on Section 57 of the Trade Marks Act, 1999, which allows an aggrieved party to seek the cancellation or correction of a wrongly registered trademark. By filing a rectification petition under this section, the legitimate brand owner was able to challenge a squatter’s preemptive registration. The court, noting the respondent’s bad faith and lack of genuine intent to use the mark, held that such conduct was a clear case for cancellation under this provision.

In Forme Communications v. Dilip Kumar Agarwal(MANU/DE/2612/2014), before the Delhi High Court, the Plaintiff, a global mobile phone company using the mark “Forme” since 2009, had registered its trademarks in India and abroad and submitted evidence of imports, sales, and promotions in the Indian market. The Defendant, however, had pre-emptively registered the identical mark “Forme” in India on a “proposed to be used” basis but never used it commercially, and was also found to have applied for other well-known marks, indicating bad faith. The court granted a permanent injunction and awarded damages against the squatter, affirming that prior use and goodwill outweigh mere registration.