Transborder Reputation and Passing off Action: Toyota Prius Case

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Source: supremecourtofindia.nic.in

In the leading case of N.R. Dongre v. Whirlpool Corporation,[1] while discussing the issue of trans border reputation, the Hon’ble Supreme Court of India held that ‘in today’s world it cannot be said that a product and the trade mark under which it is sold abroad, does not have a reputation or goodwill in countries where it is not available. The knowledge and awareness of it and its critical evaluation and appraisal travels beyond the confines of the geographical area in which it is old.’

The issue was brought to light again after almost 20 years when on December 15, 2017, when the Apex Court delivered its judgement in the case of Toyota Jidosha Kabushiki Kaisha v. M/S Prius Auto Industries Ltd. & Ors., explaining the growth of trans-border reputation from the time it was first highlighted till date.

Toyota Jidosha Kabushiki Kaisha (hereinafter referred to as ‘the Plaintiff’) is a globally known automobile manufacturer incorporated in Japan. Between 1997-2001, it has launched the world’s first commercial hybrid car called ‘Prius’ in Japan, U.K., U.S.A., Australia etc. They obtained trademark registrations for the word ‘Prius’ in Japan in 1990, and eventually in other jurisdictions globally thereafter. The details of global registrations of ‘Prius’ according to the TMR records are in the table below[2] -

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Toyota filed a case for permanent injunction against M/S Prius Auto Industries Ltd. & Ors. (hereinafter referred to as ‘the Defendants’) before the Single Bench of the Delhi High Court on the grounds that they were using their ‘trademark’ without their consent, leading to an unfair advantage of their reputation and goodwill of the Plaintiff. The Single Bench in an order dated December 22, 2009, agreeing to the ‘global reputation and prior use’ contention of the Plaintiff granted an ex-parte ad-interim injunction restraining the Defendants from using the Plaintiff’s registered trademarks and the mark ‘Prius’ in respect of auto accessories.

However, the Division Bench of the Delhi High Court held that the grant of injunction in favor of the Plaintiff insofar as the trademark ‘Prius’ is concerned was not justified. Accordingly, the aforesaid part of the order of the Learned Trial Judge was set aside. The application of ‘territoriality doctrine’ was also questioned, to which the Court held that the Territoriality Doctrine would hold the field and the Plaintiff should necessarily establish that its reputation had spilled over to Indian market prior to April, 2001, i.e., date of adoption of the mark by the Defendant.

This judgement of the Division Bench gave birth to the appeal in the Supreme Court of India. The appeal was confined to the correctness of the views of the Division Bench of the High Court with regard to the use of the name/mark ‘Prius’ and specifically whether by use of the said name/mark to market the automobile spare parts manufactured by the Defendants. The issues before the Court were two–fold -

  • Whether M/S Prius Auto Industries Ltd. & Ors are guilty of passing off their products under the trade mark Prius as those of the Plaintiff thereby injuring the reputation of the Plaintiff in the market?

  • In case of trademark passing off claim what should be taken into consideration: the territoriality principle or the universality doctrine?

The main contentions of Toyota Jidosha Kabushiki Kaisha was that to claim goodwill and reputation, advertisement and promotion of the mark through different forms of media in that geographical area is adequate. Herein, since 1997, the mark ‘Prius’ was widely publicized and advertised in leading newspapers and magazines with wide circulation all over the world. It further stated that ‘to establish goodwill and reputation it is not necessary that the mark should be recognized by every member of the public and it would be sufficient if persons associated with the industry/goods are aware of the mark. It was also argued that the question who has registered the ‘Prius’ trademark is irrelevant to the issue of passing off.

M/S Prius Auto Industries Ltd. defended itself by stating that it has adopted and used the mark from April, 2001 and also obtained two registration for the trademark Prius in the year 2002-2003. The details of registration of ‘Prius’ trademark by the Defendant according to the TMR are as under  [3] :

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Further, it was stated that Toyota adopted the mark in India in 2009. They also pleaded that Toyota did not advertise the mark at all prior to April 2001 in India. It was urged that the Territoriality Principle should be the primary focus for the present case and not the Universality Doctrine. They stated that, it is therefore necessary that the trademark is recognized and has a separate existence in each sovereign Country. Positive evidence of spillover of reputation and goodwill of the Plaintiff’s mark ‘Prius’ to the Indian market, prior to April, 2001, is absent, when the Defendants adopted and used the trademark Prius.

Interpreting the meaning of trans-border reputation, i.e. the global reputation of the brand when spilling into India, the judgement described that just acquiring goodwill globally would not be sufficient and it is important that the mark has earned goodwill in India at the relevant time i.e. before the date of adoption of the mark by the opposite party. The Apex Court agreed that the mark of Toyota ‘Prius’ has acquired goodwill and reputation globally much before Prius Auto Industries started to use (2001) and registered it in India (2002-2003). But, Toyota failed to give satisfactory evidence to show that it has acquired substantial goodwill for its car under the name ‘Prius’ in the Indian market prior to April, 2001, i.e. date of adoption of the mark by the Prius Auto Industries.

It opined ‘the courts must necessarily have to determine if there has been a spillover of the reputation and goodwill of the mark used by the claimant who has brought the passing off action. In the course of such determination it may be necessary to seek and ascertain the existence of not necessarily a real market but the presence of the claimant through its mark within a particular territorial jurisdiction in a more subtle form which can best be manifested by the following illustrations, though they arise from decisions of Courts which may not be final in that particular jurisdiction’.

Through the case the Court has elucidated its position with regard to trans-border reputation and passing off action. It held that -

  • To prove and establish an action of passing off, three ingredients are required to be proved i.e., goodwill, misrepresentation and damages.

  • A foreign claimant may succeed in a passing off action on proof that his business has a goodwill in a particular jurisdiction, which criterion is broader than the “obsolete” test of whether a claimant has a business/place of business in that jurisdiction. If there are customers for the claimant’s products in that jurisdiction, then the claimant stands in the same position as a domestic trader.

  • The Territoriality Doctrine would hold the field and the Plaintiff should necessarily establish that its reputation had spilled over to the Indian market prior to the date of adoption of the mark by the Defendant

  • Once a party has established the goodwill in the jurisdiction in which it claims that the opposite party is passing off its goods, in such a situation, likelihood of confusion would be a surer and better test of proving an action of passing off.

Thus, the benchmarks in the assessing standards for trans-border reputation, well-known mark and passing off claim has been set. In this case, on consideration of the material on record and pleading, the Court observed that Toyota failed to give satisfactory evidence to show that it has acquired substantial goodwill for its car under the name ‘Prius’ in the Indian market prior to April, 2001, i.e. date of adoption of the mark by the Prius Auto Industries. Thus, it is evident that the assessment of such a case would be based on the comprehensive analysis and examination of significant evidences to decide which party will have better rights on the issue related to trademark passing off/infringement, trans-border reputation, well-known mark.

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[1] 1996 PTC (16) 583 (SC)
[2] SOURCE: Official Website of Intellectual Property India
(https://ipindiaonline.gov.in/tmrpublicsearch/frmmain.aspx)
[3] Trademark Public Search
(https://ipindiaonline.gov.in/tmrpublicsearch/frmmain.aspx)

 

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