Written by: Kunal Peelwan
Introduction
When we buy any good or service, we often see some kinds of shapes, logos, or marks on it, and many renowned brands are recognised by those marks and logos by the buyers, like Apple’s iconic half-bitten apple, Nike’s the “Swoosh” logo or Tata’s simple yet bold TATA emblem.
Section 126 of The Trade Marks Act, 1999 says that when any kind of mark is applied to any goods or services for sale or contract for sale, the seller provides an implied warranty that the sold goods or services or those in the contract for sale have a valid mark and not deceitfully applied, also details provided by the seller about the goods are true unless opposed explicitly by the seller in writing also signed by him and even then buyer knowingly buys the said goods or services.
It is a crucial provision in Trademark law, as it maintains trust in the marketplace and also protects consumers from deceptive practices. It also strengthens the integrity of the Trademark, which is important for brand identity and consumer confidence.
Implied Warranties in Trade
An implied warranty means a guarantee that automatically arises after the sale of goods and services or after the contract for sale, without any written or spoken warranties being explicitly stated. It makes sure that the goods or services consumers purchase are ready to use for their intended purpose and meet a certain level of quality expected by the buyer.
For example, if Mr. X buy a vanilla-flavoured ice cream from Mr. Y, but it turns out to be chocolate-flavoured, the implied warranty for the use of a particular purpose is breached.
Similarly, in the case of Tata Motors Ltd. (S) v. Antonio Paulo Vaz and Another (S)[1], AIR- 2021 SC 75, Antonio Paulo Vaz purchased a car in 2011, however, he was sold a 2009 model instead of a new 2011 model and after his grievances are remained unresolved, he filed a complaint, and the District Forum granted him a refund with interest, which was upheld by higher forums. The court allowed the appeal, directing that the deposited amounts, with accrued interest, be refunded to Vaz.
Implied warranties serve as legal protection for consumers, which ensures that the buyers get what they pay for and meet the basic standard of quality and usability, even if not explicitly stated by the buyer in any agreement or contract.
Protecting Consumers Against Misleading Practices
Section 126 of The Trade Marks Act, 1999 ensures that trademarks are genuine and not deceitfully applied. Over time, when some brands gain some popularity, their brand logo and mark also become well-known and people start to recognize them by the mark and logo of the brand, and while buying any goods or availing some services by recognizing the mark, the buyers expect that the product belongs to that brand. Some sellers deceitfully apply another brand’s mark to gain the buyer’s trust towards that product. However, if the seller informs about to the buyer and he still agrees to buy the goods or services, then this section doesn’t apply to the situation, but if the buyer is unaware of the fact that the mark is deceitfully applied, then this section applies as protection for the consumers against misleading practices.
This section also safeguards from false trade descriptions. When a product is falsely marketed with a false trade description, then Section 126 of The Trade Marks Act, 1999 provides legal protection to the consumers, as every consumer has the right to make informed decision based on an accurate product or service description.
Key elements of Section 126 of The Trade Marks Act, 1999
- Authenticity Assurance: Sellers provide an implied warranty to the buyer after a good or service is sold that the trademark and Trade description are genuine.
- Protection against false description: Restrain sellers from marketing fraudulent or misleading claims about their goods and services.
- Seller’s obligation: Seller must disclose if the trademark or trade description is deceitfully applied and not genuine.
- Consumer safeguard: Ensures transparency for the protection of consumer rights.
- Market Integrity: Strengthen the trust and reliability in trademarks for bona fide trade.
Real-Life Example of Brand Misstep
- Fennia vs. Philips (2022)[2]
When a producer manufactures a product, and after its use, serious harm is faced by the user, then liability lies with the producer, but you can only recognize the producer through the mark. But what if there is more than one mark on the product? Because someone put their trademark on your manufactured product. This is a very famous case, Fennia vs. Philips (2022), 85/374/EEC, that arose before the European Court of Justice (ECJ) in which a trademark caused huge liability to a brand. Let’s understand the case in the following points mentioned below:
- Facts in brief: The fire that broke out, leading to property damage, was caused by the coffee machine purchased by the buyer, which was also branded with the Philips trademark. The machine, in fact, was made by Saeco, a subsidiary of Koninklijke Philips NV and sold under the Philips and Saeco trademarks. Fennia, an insurance company, provided the affected customer with compensation then they, in turn, sued Koninklijke Philips NV under the EU Product Liability Directive.
- Legal issues: The main point of this case was whether or not Koninklijke Philips NV could be treated as a “Producer” under Article 3(1) of the EU Product Liability Directive only because they were not directly involved in the manufacturing of the product.
- Court’s ruling: The Court of Justice of the European Union (CJEU) upheld in its judgment that a trademark owner could be held responsible for the accident in the position of a “producer” if his name, trademark, or distinguishing feature was applied to the product. As the court ensured, there is no need that the trademark owner to participate in the manufacturing process to be held liable.
- Significance: This case helps in expanding the scope of liability for trademark proprietors, as by emphasises their responsibility for products bearing their branding (trademark or trade description). It highlighted the importance of ensuring product safety and accountability in the market supply chain.
The Role of Section 126 in Consumer Rights
- Section 126 of The Trade Marks Act, 1999 empowers consumers through legal frameworks, it restrains manufacturers and sellers from using deceitful marks or trade descriptions.
- It ensures that the trademark is genuine and provides an implied warranty for that, unless explicitly stated by the seller and the buyer still chooses to purchase the deceitful product.
- Section 126 of The Trade Marks Act, 1999 strengthens the trust of the consumers in the brands as it makes the seller accountable for the quality and authenticity of the marked goods and because of that, consumers can feel more confident before buying any product of a brand.
Steps to take when encountering misleading brands
- First of all, if the consumers are encountering misleading brands, then firstly, the consumer needs to gather all the relevant evidence, such as receipts, advertisements, or product packaging of the brand with the misleading mark or trade description to support their claims.
- Then they can reach out to the brands for further clarification or resolution related to the matter.
- If the matter remains unresolved, then they can file a complaint in the District, State, or National Consumer Dispute Redressal Commission, depending on the value of the claim for the damages caused by facing such a scenario.
- Based on the cases, Consumers can also consult a legal expert to know their options based on their individual situations and to ensure that their rights are protected.
- Additionally, they can raise awareness about being misled by the same brand through social media or reviews.
Conclusion
In today’s world, many businesses apply their brand mark to their goods and services to sell and promote them, and use that mark to promote their business in the market. Over time, these businesses become renowned and earn goodwill associated with their mark, for example, McDonald’s Golden Arches – M, Amazon’s Smile Arrow Logo, Louis Vuitton’s LV Monogram, Starbucks’s Twin-tailed Siren, etc. and that’s why many times, many sellers deceitfully apply those marks on the products to grab consumer attention and gain customer’s trust on the product and consumers expect the same level of quality from that product because of the goodwill linked to the mark, as a consequence of that consumers often fall victim to fraud, while the sellers typically avoid the accountability.
Section 126 of The Trade Marks Act, 1999, plays a crucial role in ensuring that consumers are not deceived and trademarks are not misused. It places responsibility on brands and consumers to act in good faith and protect consumers against the fraudulent misuse of the mark so that sellers and brands cannot deny liability. This section mainly focuses on the implied warranty on the sales of goods or contract of sale bearing a trademark or trade description. Here, implied warranty means a legal assumption that the seller owns the trademark or has legal rights to use it; if not, then the seller should explicitly inform about this to the buyer otherwise, he can be held liable for doing an act against the law.
Unfortunately, most consumers are unaware of this legal protection provided by Section 126 of The Trade Marks Act, 1999, and this unawareness results in fraud on a large scale in the market. There is a strong need to spread awareness about these rights. Educating Consumers can help them build more trust in brands and make informed decisions before buying anything in the market. When the consumers become more aware of their rights, it pushes brands and sellers more to act in good faith and transparently.
[1] AIR- 2021 SC 75
[2] 85/374/EEC