India: Supreme Court Limits Trans-Border Reputation Doctrine: Toyota Denied Passing Off Claim in “Pr

As per the principle of trans-border reputation, an international brand can claim passing off if it is able to prove that it enjoys trans-border reputation and goodwill even though it’s goods/service are not available in that market or within that territorial jurisdiction. This principle has evolved over the years in relation to Indian trade mark law.

In the case of N. R. Dongre vs. Whirlpool Corporation 1996 (16) PTC 583, the Supreme Court recognised that Whirlpool Corporation enjoyed trans-border reputation in India and granted an injunction in its favour because it was held that refusal to grant an injunction could cause irreparable damage to their reputation. Further, the Supreme Court fully acknowledged this concept by stating that ‘the mere fact that the respondents have not been using the mark in India would be irrelevant if they were first in the world market’ in the landmark case of Milmet Oftho Industries & Ors. vs. Allergen Inc. 2004 (28) PTC 585 SC. Since then, the idea has been ever evolving and many international brands have been able to rely on the principle to claim their rights in relation to passing off infringements taking place in India, even if they do not have an Indian presence per say.

However, to successfully claim trans-border reputation, a plaintiff must be able to prove that it does indeed have reputation and goodwill within India. This is an essential ingredient in such cases and the Supreme Court recently, in its judgement in the case of Toyoto Jidosha Kabushiki Kaisha Vs. M/S Prius Auto Industries Ltd.& Ors. (Civil Appeal Nos 5375-5377 of 2017), rightly pointed out so.

The Plaintiff in this case, Toyota, the automobile manufacturing giant, claimed infringement of their trade marks “TOYOTA” and “INNOVA” and passing off of their mark “PRIUS” since the first two had been registered in India but the third one had not been. It was not difficult for the lower courts to find in favour of the Plaintiff in respect of the two marks “TOYOTA” and “INNOVA”, however, the Plaintiff was not able to make such a strong case in favour of its third mark “PRIUS”.

The Defendant claimed that it had been using the mark “PRIUS” since 2002 and that the Plaintiff had no trade mark registration in relation to “PRIUS”. On the other hand, the Plaintiff claimed that it was the prior user of the said mark because it had been using it since 1997, after the inception of the hybrid car and its name in Japan. Therefore, the Plaintiff alleged that the Defendant had dishonestly adopted the said mark in India.

Taking a surprisingly different stance to the usual trans-border reputation line of cases, the divisional bench of the Supreme Court, comprising of Hon’ble Mr. Justice Ranjan Gogoi and Hon’ble Mr. Justice Navin Sinha, held that the plaintiff was unable to provide sufficient evidence to prove that “PRIUS” did indeed have a ‘reputation’ in India to make out a case in its favour. It was held that just because “PRIUS” is well-known outside India, does not simply mean that it is also well-known in India. Therefore, trans-border reputation needs to be proved and established, with “adequate evidence”, it cannot simply be asserted. A plaintiff needs to show that that it enjoys “substantial goodwill” in the market to be successful. The court stated that;

“Indeed, the trade mark Prius had undoubtedly acquired a great deal of goodwill in several other jurisdictions in the world and that too much earlier to the use and registration of the same by the defendants in India. But if the territoriality principle is to govern the matter, and we have already held it should, there must be adequate evidence to show that the plaintiff had acquired a substantial goodwill for its car under the brand name Prius in the Indian market also.”

Therefore, the court decided to apply the territoriality principle in the case in hand. According to the territoriality principle, the brand should have some goodwill and reputation in the domestic market to succeed with a claim.

Relying upon this principle, the court also examined the argument and evidence provided by the Plaintiff and stated that:

“The car itself was introduced in the Indian market in the year 2009-2010. The advertisements in automobile magazines, international business magazines; availability of data in information-disseminating portals like Wikipedia and online Britannica dictionary and the information on the internet, even if accepted, will not be a safe basis to hold the existence of the necessary goodwill and reputation of the product in the Indian market at the relevant point of time, particularly having regard to the limited online exposure at that point of time, i.e., in the year 2001. The news items relating to the launching of the product in Japan isolatedly and singularly in the Economic Times (Issues dated 27.03.1997 and 15.12.1997) also do not firmly establish the acquisition and existence of goodwill and reputation of the brand name in the Indian market. Coupled with the above, the evidence of the plaintiffs witnesses themselves would be suggestive of a very limited sale of the product in the Indian market and virtually the absence of any advertisement of the product in India prior to April, 2001. This, in turn, would show either lack of goodwill in the domestic market or lack of knowledge and information of the product amongst a significant section of the Indian population. While it may be correct that the population to whom such knowledge or information of the product should be available would be the section of the public dealing with the product as distinguished from the general population, even proof of such knowledge and information within the limited segment of the population is not prominent.”

Therefore, the court held that,

“All these should lead to us to eventually agree with the conclusion of the Division Bench of the High Court that the brand name of the car Prius had not acquired the degree of goodwill, reputation and the market or popularity in the Indian market so as to vest in the plaintiff the necessary attributes of the right of a prior user so as to successfully maintain an action of passing off even against the registered owner.”

It seems that court has tried to provide some clarity in this area of the law however, it should be noted that there is still some level of ambiguity here because terms such as “adequate evidence” and “substantial goodwill” are vague. Although it can be argued that they have been deliberately left vague so that the Plaintiff can establish goodwill and reputation by providing any and all evidence that they think fit. It still however remains unclear as to what would amount to “adequate evidence” and “substantial goodwill”. In the landmark case of N.R. Dongre v. Whirpool Corporation, the Supreme Court held that extensive advertising in magazines which were circulated in India proved that the Respondent had a reputation in the Indian market. Therefore, it can be understood that extensive advertising in magazines which were being circulated in India could amount to “adequate evidence” to establish “substantial goodwill”.

In the present case however, the fact that the internet was not in use as much in 2001 as it is today meant that there was “limited online exposure” at the time. There was not as much technological advancement as there is now and thus the mark/name “PRIUS” was also not so known in the Indian market since there were not so many ways to learn about it. The court also noted that news issues in the Economic Times in Japan in 1997 were also not enough to prove that people in India could learn about the mark. It was thus held that “PRIUS” had not acquired the level of goodwill and reputation in the Indian market to be popular enough and the evidence provided was insufficient to establish the level of goodwill required.

Therefore, this judgement indicates that the Supreme Court’s intention was to limit trans-border reputation claims and frivolous expansion of the trans-border principle beyond its limits. The aim here seems to be to restrict any undue protection given to trade marks. The judgement seems to serve as a warning to Plaintiffs that they should not overreach when trying to assert their rights and that they must provide proper evidence when it comes to claiming trans-border reputation of international brands that don’t have an actual presence in the Indian market.

When it comes to the evidence required for a successful passing off claim, apart from misrepresentation and damage, the Plaintiff needs to prove that it had goodwill. This in the context of trans-border reputation still means that some “local goodwill” needs to be demonstrated which means that there should at least be some customers in the local jurisdictions. In this aspect, the apex court relied on the territoriality principle instead and took into consideration the UK Supreme Court’s judgment in the case of Starbucks vs British Sky Broadcasting 2015 UK SC 31 where it was held that to establish local goodwill, there should be some local customers within that jurisdiction.

Another point worth noting that comes out from this judgement is that the court upheld the “likelihood of confusion” test over “actual confusion”. It was held that proving “actual confusion” would set the bar too high and would become very difficult to prove. Regarding this point therefore, the Apex court sided with the Plaintiff and upheld the decision of the Delhi High Court.

Moreover, the court did not engage in the Plaintiff’s argument that the adoption of the mark “PRIUS” was mala fide and dishonest with intention to ride upon the goodwill of the Plaintiff. This argument became irrelevant since the Plaintiff itself was not able to establish goodwill and reputation in the first place. The Plaintiff could not prove that it had prior rights in “Prius”, therefore merely alleging that the Defendant’s adoption was dishonest was not enough.

In conclusion, it can be observed that the Supreme Court chose not to follow the Whirlpool and Milmenth Oftho line of cases and it seems like this was a conscious decision in order to draw a line to the stretched doctrine of trans-border reputation. The validity of the doctrine is not in question, it is just that in order to properly claim trans-border reputation, the Plaintiff must be able to prove with enough evidence that they actually enjoy reputation and goodwill in India and simply stating that the mark is well known in other countries or that there was prior use in another country would not be enough.

The judgement overall seems to be refreshing and also seems to bring some clarity in this area of the law by suggesting that the test for proving trans-border reputation should be that the Plaintiff had “substantial goodwill” in the region and in order to prove “substantial goodwill”, there needs to be “adequate evidence”. Otherwise, trademark rights are limited to their territory and are thus not global per say. This only seems fair.

References: -

N. R. Dongre vs. Whirlpool Corporation 1996 (16) PTC 583
Milmet Oftho Industries & Ors. vs. Allergen Inc. 2004 (28) PTC 585 SC
Toyoto Jidosha Kabushiki Kaisha vs. M/S Prius Auto Industries Ltd.& Ors. (Civil Appeal Nos 5375-5377 of 2017) available at; http://supremecourt.gov.in/supremecourt/2017/9646/9646_2017_Judgement_14-Dec-2017.pdf
Starbucks vs British Sky Broadcasting 2015 UK SC 31
https://spicyip.com/2017/12/breaking-news-passing-off-by-prius-reputation-must-be-proved-rules-indian-supreme-court.html
https://auto.ndtv.com/news/toyota-loses-prius-trademark-in-india-heres-why-1789616
http://www.mondaq.com/india/x/656200/Trademark/No+Relief+For+Toyota+From+Supreme+Court+In+The+Prius+Matter+Decision+May+Have+Implications+On+The+Provisions+Of+WellKnown+Mark
http://www.livelaw.in/toyoto-prius-trademark-case-global-brand-must-establish-goodwill-india-sustain-action-trademark-infringement-sc/