Introduction
Trademark law protects consumers from confusion and safeguards the investment businesses make in establishing their reputations. Yet, in practice, it can become a strategic weapon when a powerful rights holder uses the threat – or reality – of legal action to pressure smaller competitors into submission. This phenomenon, often termed trademark bullying, has become increasingly visible in the United States and India. Large enterprises deploy cease-and-desist letters, injunction applications, and infringement suits not solely to protect genuine goodwill but to impose crippling legal costs and deter market entry. As a result, the very purpose of trademark protection – to promote fair competition and consumer certainty – can be undermined by dominant players seeking to stifle entrepreneurial challengers.
Goliath vs. David: Three Tales of Trademark Coercion
A striking U.S. example is the Momofuku LLC case, where Momofuku, the celebrated restaurant and gourmet-product brand, objected to Homiah’s “Sambal Chili Crunch,” alleging that consumers would confuse it with Momofuku’s minimalist “Chilli Crunch.” Homiah’s version featured a colourful floral paper label and a distinct recipe. Yet, Momofuku demanded that the smaller company cease production, threatening litigation that would cost more than Homiah’s annual revenue. Critics observed that the notice appeared designed less to remedy consumer confusion and more to leverage financial pressure.
The decision in Subway India Pvt. Ltd. v. Infinity Foodstuff Pvt. Ltd. showcased a similar dynamic in India. Subway, the global sandwich chain, sued a smaller business trading as “Suberb,” alleging infringement of its well-known “Subway” mark. Applying the anti-dissection rule, which forbids cherry-picking similar elements, and the publici juris doctrine, which bars monopolization of standard terms, the court found no likelihood of confusion. Yet even after Infinity Foods changed its name, logo, and shop signage, Subway persisted for months, saddling the bakery with substantial legal fees. This drawn-out enforcement signalled using trademark law to exert economic dominance rather than protect consumers.
Similarly, in the BigBasket Pvt. Ltd. case, BigBasket, India’s leading online grocer, served a cease-and-desist letter on Daily Basket, demanding it abandon its name, shut down its app, and surrender “Basket” containing domains. Although the two entities operated in slightly different segments and offered diverse product lines, BigBasket’s notice threatened domain seizures and customer advisories, labelling Daily Basket a “fake.” Facing the prospect of protracted litigation, Daily Basket ultimately agreed to mediation at a heavy cost. These cases illustrate how the threat of trademark suits—regardless of underlying merit—can coerce smaller players to capitulate.
Limitations of Section 142 of the Trade Marks Act
Section 142 of the Trade Marks Act, 1999 is India’s sole statutory provision aimed at abusive trademark claims. It deems it unlawful to make or continue threats of infringement or passing off that are “malicious” or designed “to restrain” another person from using or registering a mark. While Section 142 allows the threatened party to seek a declaration of non-infringement, an injunction against further threats and damages, its practical utility has proven minimal. First, the requirement to prove that threats were unjustified and made with malicious intent sets a prohibitively high evidentiary bar. Big enterprises simply assert good faith, and courts seldom probe corporate motives in depth. Second, under Section 142, there is little deterrence, as courts rarely impose penalties for such unsubstantiated threats. This makes it easy for large companies to intimidate with little cost. Third, as a reactive mechanism, the provision offers no early intervention screening to prevent financial harm before it occurs. Even when courts recognize groundless threats, awards of costs and damages are typically modest, leaving rights holders to view Section 142 as a nominal deterrent.
Market and Consumer Impact
Unchecked trademark bullying has devastating consequences. A start-up or small business can result in an automatic rebranding-redesigning a logo, repackaging, and overhauling marketing, costing lakhs of rupees for just one cease and desist letter. Most fledgling ventures simply do not want to get into a rodent race on these terms and exit or avoid exhaustive product lines rather than prolonged definitions, thereby stifling innovation and market diversity. Consumers ultimately pay the price, too: fewer market entrants mean fewer alternatives and probably higher prices. From a macroeconomic perspective, the judiciary’s backlog deepens as they expend time on frivolous cases lacking any substantial confusion and deplete their resources on unsolicited disputes. Consequently, when enforcement becomes a mechanism for economic coercion, fair competition via trademark law stands compromised.
Comparative International Practices
Though major jurisdictions can be very instructive at times, in the United States, the Lanham Act has no express anti-bullying provision. However, the U.S. Patent and Trademark Office, in its 2021 guidelines, instructed examiners to reject “bad-faith filings” made for purely defensive purposes. In the European Union, Article 51 of the EU Trade Mark Regulation empowers courts to invalidate marks obtained in bad faith, and many member states apply the use-and-proof requirements to hinder speculative registrations. In a similar vein, China has implemented proof-of-use and accelerated cancellation procedures to reduce the stock of unused registrations effectively in response to rampant trademark squatting. Such international experience has accredited that preventive administrative control measures, clear legal standards, and effective sanctions could curb bullying more than ex-post judicial remedies alone.
Proposed Reforms
A multi-faceted reform encompassing administrative, judicial, and legislative measures is essential to realign trademark protection with its consumer-centred objectives. To achieve that, India should allow the Trade Marks Registry to conduct prima facie reviews of cease-and-desist notices. Alternatively, drawing on U.S. scholar Irina Manta’s proposal, rights holders could be required to log all cease-and-desist letters with the Registry, which would automatically flag notices that lack credible evidence for confusion.
This, in turn, would assist smaller parties by providing them with leverage in court and discourage rights holders from issuing speculative threats. Moreover, examiners should mandate proof of good faith use when large entities file defensive or multiplex applications across unrelated classes to ensure that such registrations are not unjustifiably used to oppose budding marks solely based on market dominance.
From a judicial perspective, consideration regarding bullying should be integrated into regular infringement proceedings. In an interlocutory injunction hearing, the judges must assess not only the likelihood of confusion but must also establish a balance of convenience while keeping in mind the claimant’s market power and litigious history. Factors indicative of gross abuse of enforcement may be further articulated in Practice Directions that the courts will issue, such as repeated frivolous lawsuits or excessive demands for licensing. Most importantly, there should be a strong cost-shifting regime that allows complete recovery of costs where claims are found to be vexatious or frivolous to deter groundless litigation.
Legislatively, an amendment to the Trade Marks Act could codify the concept of “trademark bullying” or “abusive enforcement,” akin to anti-SLAPP laws in other jurisdictions. A new civil market abuse provision might impose administrative fines, injunctive relief, or even mark revocation on companies proven to misuse trademark rights to stifle competition. Further, statutory language must clearly define bad faith intent so that the burden of proving good faith could lie on large applicants who have to affirm genuine use, with false certifications triggering administrative penalties.
Finally, greater transparency is paramount. Establishing a publicly accessible registry of all cease-and-desist letters and Section 142 proceedings, including their grounds and outcomes, would enable policymakers, industry actors, and civil society to evaluate corporate conduct. Targeted annual reports from the Registry and judiciary on bullying statistics will provide the leverage for data-driven reforms and reputational accountability. In the long run, making frivolous-threat and sanction-related open data available would prevent excessive enforcement actions, thus restoring the trademark law’s essential core objective – helping the consumer with certainty and protecting bona fide entrants in the market.
Conclusion
Trademark law must balance protecting the goodwill and investments of brand owners and preserving the competitive environment that fosters innovation. India’s existing laws, anchored in Section 142 of the Trade Marks Act, have become overly restrictive and reactive to check the bullying tactics of financially dominant rights holders. By strengthening the screening powers of the Trade Marks Registry, clarifying statutory definitions, empowering courts to impose adverse cost orders, codifying market-abuse provisions, and increasing transparency, India can secure itself against trademark enforcement as a sword to silence competition. With these reforms, India can firmly reestablish its commitment to a trademark system that protects rightful brand interests and ensures freedom for entrepreneurs, fair competition, and the public domain.
Authored by: Mr. Vansh Tayal
Vansh Tayal is a penultimate-year law student at Symbiosis Law School, Pune, ranked in the top 10% of his batch, focusing on Intellectual Property Law. He has interned with leading IP firms such as Anand & Anand, K&S Partners, and Intepat IP, gaining practical experience in trademark oppositions, copyright enforcement, and cross-jurisdictional IP research. Vansh has authored and presented papers on emerging IP issues, including fair use, global exhaustion, and AI-generated works, with forthcoming publications in reputed platforms such as the Kluwer Copyright Blog. He also holds multiple certifications from WIPO and MNLU pertaining to IP laws.
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