DILUTION BY BRAND PARODY

Carlos Enrique Castillo G.

As a member of the commission drafting the Law on Trademarks and Other Distinctive Signs, I promoted the introduction of the figure of dilution, which had already been regulated in the United States trademark law for some years. Thus, it was stated in article 26 literal f) of our Law, under chapter IV, of the rights, obligations and limitations related to registration, the rights conferred by the registration or registration of a trademark, as follows: The registration of a trademark confers on its owner the right to act against any third party who, without his or her consent, performs any of the following acts, highlighted in literal f): publicly use a sign identical or similar to the trademark, even for non-commercial purposes, when this could cause a dilution of the distinctive force or commercial or advertising value of the trademark, or an unfair use of its prestige.

However, it was not until after the issuance of said Law, that, taking up several criteria, in an article I shared the concept of Trademark Dilution, from which I return some extracts.

In the light of Comparative Law, let us see then, what is meant by DILUTION. In the United States of America, through The Federal Trademark Dilution Act of 1995, it is established that dilution is the act of reducing the ability of famous trademarks to identify and distinguish goods or services, regardless of the presence or absence of competition between the famous brand owner  and third parties,  or that may cause confusion (similarity), error or deception, disappointment or disenchantment.

If we make a comparative reference, between the American concept and the  application contemplated in our legislation, we find that the American legislation refers only  to famous brands, while, in our environment, it applies to all types or classes of brands; and not only to the fact of subtracting distinctiveness, but to a weakening of the distinctive capacity of a brand. On the other hand, it applies in El Salvador to identical or similar brands, and not only to brands used in commerce, but also applies to their advertising activity, and even includes the unfair use of the prestige of a brand. The latter does not necessarily refer to the category of well-known trademarks, since prestige is not necessarily associated with such quality or category of distinctive signs; since a brand may very well enjoy prestige, but it may not yet cover a stratum of the population that warrants the sign to be considered well-known and much less famous.

Dilution, considered as the weakening that erases and undermines the capacity for distinction that a trademark sign has enjoyed in commerce, causes the dispersion, fragmentation or disappearance of that distinctive capacity, until  lose it, the original brand; since a similar (or the same) brand appears on different products, in different markets, in different distribution and marketing channels, even covering products of different quality, generally of lower quality.

Now, there are several manifestations or forms of dilution, among them brand parody, burlesque imitation.

Parody has a special treatment as a derivative work, in the study of Copyright; However, its treatment differs in terms of Trademark Law, which deals with distinctive signs that serve to identify products or services in the market. In the first, parody is protected for its humorous creativity, and on the contrary in Trademark Law, it is proscribed due to the impact on the exclusive right (with the capacity to exclude) of trademarks.

As I mentioned before when citing article 26 of the Trademark Law, the registration of a trademark confers on its owner precisely an exclusive right to use and enjoy the benefits that its trademark brings, by distinguishing products or services marketed by it, and as a consequence, its registration also incorporates the right to exclude third parties from using the protected trademark. The above implies that no person can use a registered trademark without express authorization from its legitimate owner. Any unauthorized use of a registered trademark constitutes an infringement of the exclusive right of property, recognized and protected by the State, which would entail various consequences for the offender, both at administrative and judicial level (civil/commercial or criminal), except the exceptions provided in Art. 27 of the same Trademark Law, which refers to acts of good faith or honest uses, such as indicating on the product covered by the registered trademark, the name or address of the distributor merchant, for example , or those of their commercial establishments; or indicate or provide information about the characteristics of the products or services that  distributes; and in Art. 28, through the figure of the exhaustion of the right, which prevents the owner of the registered trademark from claiming the use of the same, by a third party, in relation to legitimately marked products that have been introduced into commerce, in the country, by said owner, by the licensee or by another person with the consent of the owner or economically linked to him, provided that these products and the containers or packaging that were in immediate contact with them had not suffered any modification, alteration or deterioration.

Based on the shared notions, it is now time to delve into the issue of dilution through trademark parody.  That is, that unauthorized public use of a registered trademark, whether through an identical or similar sign, but in a mocking manner, even for non-commercial purposes, when this could cause a dilution of the distinctive force or commercial or advertising value of the trademark. brand, or an unfair use of its prestige. Additionally, I will refer to the significance of such activity in the field of Unfair Competition.

Regarding the unauthorized public use of a registered trademark, there is not much to say, since it is obvious that in itself, this constitutes an abuse, an unfair act (contrary to honest uses in commercial matters). As long as such unauthorized use is materialized through an identical or similar sign but in a mocking manner, even for non-commercial purposes.

I must begin by indicating that trademark identity refers to the coincidence between both distinctive signs, that is, between the registered trademark and the one that appears in use by a third person, without authorization from the legitimate owner, but that is done in a mocking manner, for example, to identify products of different origin, to protect products of different quality, generally low quality. This is where the burlesque aspect lies, that a well-positioned brand, for that matter, is applied to identify products of low quality, or of a different nature than what the consumer expects, or is accustomed to. This also entails discredit for the registered trademark, and of course incorporates an unfair use of its prestige. For example:

On the other hand, similarity in trademark matters is referred to as indicated in Art. 9 of the Trademark Law (Inadmissible Trademarks due to Third Party Rights).  to the clear prohibition of use and registration, as a trademark or as an element thereof, of a sign when this affects any right of a third party, in the following cases: b) If the sign due to similarity graphic, phonetic, olfactory or ideological with other trademarks and other distinctive signs already registered or in the process of registration in favor of a third party (legitimate owner) from a previous date, for goods or services related to products or services protected by a registered trademark or in the process of registration, give probability of confusion.

From the above it can be deduced that such similarity could cause confusion in the market. In such a way that the similarity causes a risk of association in the consumer (due to evocation or similarity), since the mocking similarity preserves the main features of the parodied brand, color, size, arrangement of elements, etc., therefore, This will probably induce (the consumer) or cause confusion when exercising their right of selection. Now, when referring to the case of trademark parody, unauthorized use must be through a burlesque act that maliciously imitates, ridicules or deforms aspects that characterize the registered trademark, thus taking advantage of the good faith of the trademarks. people who make up the clientele of the product covered by the parodied brand (the original brand).

I must emphasize that the Law (Art. 26) provides that such unauthorized use may occur even for non-commercial purposes, that is, it may materialize even for activities outside the trade of goods and services. I have seen cases of parody of brands, to use them as a WhatsApp profile photo, which is included in the aforementioned rule, as well as the use of trademark parody in street graffiti that does not correspond to any commercial or commercial activity of products or services. .

Lastly, such unauthorized use through trademark parody activity is subject to the condition that it could cause a dilution of the distinctive strength or commercial or advertising value of the trademark, or an unfair use of its prestige.

As we appreciate, these are not consolidated acts in themselves, but rather the potential that these may cause in the market, in front of consumers, thus, the possibility of affecting the ability to identify/distinguish goods or services must be analyzed, of diminishing or diminishing the identifying function of brands, and their immediate impact on commerce (market), since with the appearance of a burlesque imitation, consumers' right to selection is distracted, their consumption intention is disoriented, thus Sales of the products or services covered by the registered trademark (the original) will decrease and will be negatively affected, impacting the results expected by the legitimate owner.

By not receiving the same projected income, which is affected by burlesque imitations, the registered trademark will no longer be advertised because by doing so, the burlesque imitation or copy would also be indirectly promoted, affecting the economic and advertising value of the registered trademark; And of course, the one who will benefit will be the imitator, who has introduced the parody, or burlesque sign.

Brand value is reflected in the acceptance that a product (covered by the registered trademark) has acquired in the market, and which gives a competitive advantage over its competitors. But we must not lose sight of the fact that the market value of brands not only brings benefits to their owners, but also represents a valuable parameter for exercising the right of consumer selection, because original brands constitute a guarantee that It brings a series of benefits to them. An original brand incorporates a series of advantages related to quality, safety, satisfaction, trust, selection by brand saves time when exercising the right of selection, etc.

In conclusion, this abuse of using another's trademark, under the guise of parody, is clearly an act of unfair competition, and in effect, this dilutes the distinctive capacity of a trademark.

BY:

CARLOS CASTILLO

ccastillo@romeropineda.com