In recent times, many online businesses have witnessed a rise in the cases of trademark infringements, and Dream11 and Snapdeal are a few of the many victims. India’s largest online grocery store, BigBasket, is the latest entrant to this list, however, with a twist. In February 2021, BigBasket sent a ‘cease and desist’ notice to an online/offline grocery store start-up Daily Basket for allegedly infringing its trademark by using the word ‘basket’. But Daily Basket retorted by accusing BigBasket of ‘Corporate Bullying’ and contended that BigBasket can’t claim protection over a word as generic as ‘basket’. Against this backdrop, this article seeks to analyse the trademark dispute between BigBasket and Daily Basket from the lens of an economic perspective.
BigBasket v Daily Basket
In the ‘cease and desist’ notice sent to Daily Basket for the alleged “infringement-cum-passing off” of BigBasket’s trademark, BigBasket has claimed that the mere use of a “name containing “basket” in word or logo form” by any e-commerce business would make the relevant class of consumers and traders believe that such business has links with BigBasket. Further, the domain used by Daily Basket is deceptively and/or confusingly similar to BigBasket’s trademark and it might cause irreparable damage to BigBasket’s brand.
In response, Daily Basket created a website titled “bbisabully.com” and accused BigBasket of ‘Corporate Bullying’. It contested that other than the word ‘basket’, there’s nothing common between the logos of BigBasket and Daily Basket. Moreover, the website mentioned that no one has a monopoly over the word ‘basket’ and that in 2005, long before BigBasket started its operations, Nature’s Basket became the first grocery store to use the word ‘basket’.
Traditionally, a trademark has been understood as a symbol of graphical representation which possesses some sort of distinctiveness. While the primary function of a trademark as per the orthodox understanding is “to identify the origin/ownership of the article to which it is affixed,” the modern view is that a trademark is not only a visible medium of identifying goodwill but also an effective tool of creating it. Thus emerged an economic and consumer-centric basis for trademark protection as it creates a unique, credible and valued image of a brand in the consumer’s mind, thereby reducing the consumer search-costs.
However, unfair trade practices that involve using ‘deceptively similar’ trademarks to gain undue profits are widely prevalent. According to Section 2(h) of the Trade Marks Act, 1999, a trademark is deceptively similar if it so nearly resembles another trademark that it would cause deception or confusion. In Cadbury v Neeraj Food Products, the Court opined that the true test of a deceptive trademark is to check whether the consumers would be misled by the similar mark. In K.R. Chinna v Sri Ambal & Co., it was held that both the ocular and phonetic comparison of two trademarks must be taken into consideration because an ocular comparison in isolation might be insufficient.
In Dyechem v Cadbury, the Court opined that a trademark is to be considered as a whole and the test should be “whether the totality of the impression given both orally and visually is such that it is likely to cause mistake, deception or confusion.” In the instant case, the plaintiff-appellant had a business of chips under the mark ‘PIKNIK’ and they filed a suit against the defendant-respondent for running a business of chocolates under the mark ‘PICNIC’. However, the Court ruled in favour of the defendant-respondent as the trademark was not deceptively similar when considered as a whole.
In the BigBasket case, a comparison between the marks of BigBasket and Daily Basket, when considered as a whole, suggests that the only similarity between the two is the word ‘basket’, which itself is very descriptive. Both the trademarks are different phonetically and an ocular comparison suggests that there’s nothing common in terms of colour, font and size as well.
The Economic Perspective & Trademark Bullying
The foremost economic justification for extending protection to trademarks is that they reduce consumer search-costs and give the producers an incentive to supply high-quality goods. Deceptive trademarks make it difficult to identify the original products and since the consumption of counterfeit-products gives lesser value to the consumer than expected, it creates a negative externality. Consequently, owing to the high search-costs, consumers avoid the particular trademark and the producer gets a reduced incentive to supply quality goods. Thus, unlike copyrights and patents, the economic rationale of trademarks is not associated with “innovation, temporary monopoly, or constrained dissemination,” and therefore, trademarks can be protected until abandoned.
Trademarks can be classified as private goods in economic parlance. A ‘private good’ is both excludable and rivalrous in consumption, wherein excludability of a good means that a person can be prohibited from using it whereas a good is rivalrous in consumption if one person’s use reduces another’s capacity to use. Once a mark is recognised as a trademark, others are excluded from using it and since a brand’s reputation can be assessed only in relation to another brand, the use of a trademark by a brand is thus rivalrous in consumption.
Over the years, BigBasket has built itself a stellar reputation and its revenue has sky-rocketed. Considering the nature of trademarks as ‘private goods’ and their underlying economic rationale, BigBasket’s efforts in protecting its trademark are understandable. However, there’s a thin line of difference between trademark protection and trademark bullying. If generic product names are protected by trademark law, then the same law meant for encouraging competition would end up creating a monopoly.
The US Patent and Trademark Office has defined a trademark bully as someone “that uses its trademark rights to harass and intimidate another business beyond what the law might be reasonably interpreted to allow.” A trademark bully often pressurises and intimidates its opponents through ‘cease and desist’ letters by demanding that they stop using a mark that the bully believes resembles their own and threatens to sue if such demands aren’t fulfilled.
In the present case, BigBasket has asked Daily Basket inter alia to stop using the domain name “dailybasket.com” and to stop its operations with immediate effect. Interestingly, BigBasket is known for opposing brands for using the word ‘basket’ in the past as well. However, such steps taken by BigBasket can reduce legitimate competition in the market. The obvious downside of trademark bullying is that it causes an increase in the cost of products and a decrease in the diversity of choices available to consumers. Thus, the direct effect of trademark bullying is antithetical to the economic and consumer-centric basis of trademark law.
The public shaming of BigBasket by Daily Basket through the website ‘bbisabully.com’ is a common tactic used by brands against trademark bullies. Tactics like trademark bullying by big brands are costly for the society as a whole as they diminish both competition and the consumers’ right to choose. Although the trademark protection extended to a generic word such as ‘basket’ is a subject-matter of different debate, a prima facie comparison between the two marks suggests that there are significant differences. If the matter reaches the court, then the court needs to perform an elaborate comparison by considering the trademark as a whole.
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Image Credits: Provided by the Author.
ABOUT THE AUTHOR
Kashish Khandelwal is a third-year law student at National Law University Delhi. He has a keen interest in the field of Intellectual Property Law, Corporate Law and Constitutional Law.