In todays' consumerist day and age, the brand value of a company is key to its profits. It takes years to set up a unique brand that appeals to consumers and becomes a leader in its sector of the economy. Various factors such as intensive research and development, smart marketing and, publicity contribute to building a brand's reputation and make it sought-after. A higher value of the brand also allows the company to charge more for its products.
The counterfeiting conundrum
However, today's markets are also rife with counterfeit products that rip off the characteristics, designs and logos of high-end brands and sell them at extremely cheap rates. Most of these products come from China and Hong Kong. India is the 6th biggest origin destination for these products. According to a report published by the Organisation for Economic Cooperation and Development in April 2016, the estimated value of cross border trade in fakes is close to $461 billion a year or about 2.5% of global imports.This is harmful for the original brand's revenue, reputation and relationship with consumers. Sometimes, even designer brands can copy local brands without any permission such as the dispute between Christian Dior and People Tree, an Indian brand. But, brands can protect themselves by seeking protection of Intellectual Property ("IP") Rights. They can enforce the trademarks and copyrights associated with the products to make the infringers compensate for their wrongdoing.
Louboutin: The Red trademark battle
The latest landmark trademark case was fought between famous designer shoe brand Louboutin and vanHaren, a Dutch company. The case was with respect to Louboutin's demand that its signature red soles (Pantone 18-1663TP) be protected from all copycats. It involved European trademark law, specifically Article 3 of Directive 2008/95 and whether a trademark that consists of a colour applied to a shoe consists exclusively of a shape and thus cannot be protected as a registered mark or whether it was a position mark. A position mark is basically the specific way in which the mark is placed on the product.
The European Court of Justice finally ruled in favour of Louboutin. The ECJ stated that, "In that regard, it must be noted that, while it is true that the shape of the product or of a part of the product plays a role in creating an outline for the colour, it cannot, however, be held that a sign consists of that shape in the case where the registration of the mark did not seek to protect that shape but sought solely to protect the application of a colour to a specific part of that product.....the mark at issue does not relate to a specific shape of sole for high-heeled shoes since the description of that mark explicitly states that the contour of the shoe does not form part of the mark and is intended purely to show the positioning of the red colour covered by the registration."
This ruling shows that Courts are refusing to let counterfeit products continue to thrive. Additionally, the affected brands are willing to take legal action or settle out-of-court (as done recently between People Tree and Christian Dior). But for this, it is necessary that companies are aware of the value of their brand and the importance of managing a strong IP portfolio to strengthen protection.
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