TRANSBORDER REPUTATION AND PASSING OFF ACTION IN INDIA

Transborder Reputation And Passing Off Action in India in view of  Toyota Jidosha Kabushiki Kaisha v. M/S Prius Auto Industries Ltd. & Ors (Toyota Prius Case) 2018 (1) SCC 1.

In the leading case of N.R. Dongre v. Whirlpool Corporation. 1996 PTC (16) 583 (SC)  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.’ N.R. Dongre supra, marked a turning point when the Supreme Court ruled that mere advertisement of a trademark, without physical presence of goods in the Indian market, was sufficient to establish local use and goodwill. Thereafter, in 2004, the “first in the world market” doctrine was upheld. In Milmet OfthoIndustries & Ors. v. Allergan Inc. (2004 (28) PTC 585 (SC), relying on transborder reputation, a mark adopted and used in the international market prior to adoption and use of an identical mark in India by a third party was protected, even though the foreign mark had never been used in India.

In Toyota case, the Hon’ble Supreme Court ruled against Toyota, holding that “advertisements in automobile magazines, exhibitions of the car held in India and other countries, hits on claimant’s website … seeking information of Prius car … and the information on the internet” were not a sufficient basis for establishing reputation in India.

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.

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.

The Division Bench of the Delhi High Court held that the grant of injunction in favour 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 by the Hon’ble Division Bench of Delhi High court. 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.

The Division Bench  order was appealed in Hon’ble Supreme Court of India.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.

M/S Prius Auto Industries Ltd (the Defendant in the case),  defended itself by saying interalia that it has adopted and used the mark from April, 2001 and also got registered the trademark Prius in the year 2002-2003. Also, it was also contended that Toyota adopted the mark in India in 2009 much after the date when the Defendant’s presence was known in the Indian market. It was also pleaded that Toyota never advertised  mark  “Prius” prior to April 2001 in India and therefore, 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 spill over 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.

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.

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.

Therefore, on consideration of the material on record and pleading of the parties, the Hon’ble Supreme 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, the Supreme Court observed that under the “territoriality” doctrine governing the principles of passing off, a trademark has a separate “existence” in each country and to establish such existence in India, a foreign entity must produce positive evidence of a mark’s reputation having “spilled over” into India.

Disclaimer: This article is written merely for informational purposes and it should not be taken as a legal advice. The readers are advised to consult competent professionals before acting on the basis of any information provided here.