Image: H&M

Scattered throughout shopping malls in India are low-cost, trend-specific garments and accessories courtesy of H&M. The Swedish fast fashion giant opened its first brick-and-mortar outpost there in 2015, and in just three years, it has expanded to upwards of 30 stores and has doubled down on the market, introducing an India-specific e-commerce site and app to enable “customers to have easy access to fashion and quality at the best price in a sustainable way at the click of a button.”

But before H&M started looking to Indian consumers as a hotbed for growth – nearly 70 years after it opened its first outpost in Sweden and moved to dominate the market, including in the U.S., where it maintains 546 stores, in Germany, with its 461 H&M shops, and in China, which currently has a whopping 514 stores – a similarly-named brand opened up shop and began to spread throughout the country.

That brand is called HM Megabrands and following its debut 2011, it has been offering up “remarkable high street fashion products” for men and women both online and by way of brick-and-mortar stores.

Given the marked similarities in terms of their names, the consumers they serve, and the products they offer, H&M wasted little time in taking HM Megabrands to court. It filed a trademark infringement suit against its Mumbai-based rival in June 2016, alleging that it was not only using a similar trademark but was also using the mark in a “manner similar to that of [H&M], including the color combination of red and white, [which is] identical to that of H&M.”

 H&M's logo (left) & HM Megabrands' logo (right) H&M’s logo (left) & HM Megabrands’ logo (right)

H&M argued that while it had only opened its first store in India in 2015, it has been manufacturing garments and accessories bearing its trademark “in India for the purpose of export since 1972” and according to the Indian Trade Marks Act of 1999, “use of trademarks [for products that are] exported outside India constitutes use of a trademark in India.”

Moreover, H&M – the world’s largest apparel retailer after Zara’s parent company, Inditex – asserted that even if its products were not available for sale in India until 2015, the general public was “very well aware of the reputation and goodwill” of the H&M trademark thanks to global media and its extensive global advertising.

As a result, H&M asked the court to prohibit HM Megabrands from using the HM mark or any similar iterations immediately and permanently.

Despite pushback from HM Megabrands – which told the court that it chose the name HM because those are the initials of its owner, Hasim Merchant, and argued that by making a claim in the color red in connection with its trademark, H&M is “unnecessarily asserting monopoly over the color” – the court handed H&M a preliminary win. According to a May 2018 decision from Justice Rajiv Sahai Endlaw of the Delhi High Court, HM Megabrands must cease all “direct or indirect” use of the HM mark for the duration of the litigation, and depending on the outcome of the case, potentially, on a permanent basis thereafter.

Judge Endlaw noted that H&M may not have a long-standing retail presence in India, but pointed to the “opening up of the Indian economy in 1991, the increased travels of Indians outside the country, and the increased interaction of Indians with foreigners” as serving to “change the dynamics of reputation and goodwill,” and trademarks as a whole. “For a mark/brand to have a reputation or goodwill in India, setting up a shop in India or sale in India is no longer a necessity.”

With this in mind, Judge Endlaw held that the average consumer is “likely to associate the goods of [HM Megabrands] with those of [H&M],” even if it is well established that H&M was going business in India for “over two decades before [HM Megabrands] came into the market.”

He further stated that “the suffix ‘Megabrands’” does little to distinguish the two retailers, and instead, serves to “reinforce the impression in the mind of the consumer that the business of [HM] is the business of [H&M],” especially since H&M “was a megabrand on the date when [HM Megabrands] first commenced business.”

Jaipur-based intellectual property attorney, Tushar Bhargava, says the court’s decision “is a welcome measure taken against trademark trolling [or trademark or cybersquatting], which can be seen in the significant rise in registration and use of marks of well-known foreign brands by Indian nationals in order to reap profits from their goodwill.” Such a ruling “is important, as it brings confidence to international brand owners.”

* The case is H&M Hennes and Mauritz AB and Ors. vs. HM Megabrands Pvt. Ltd. and Ors., IA No. 7259/2016 (under Order XXXIX Rules 1 & 2 CPC) in CS(Comm.) No. 707/2016.