Introduction

In the context of trademarks, it has often been debated, if a brand name is territorial with reputation restricted to the country where it is registered and used or the reputation can spill over into the territory outside of its use. The question becomes pertinent considering social media and digital applications have made it possible for reputation to travel without actual sale of goods.  This post analyses conflict between the Territoriality and Universality principles in the context of decision of the Supreme Court in Toyota Jidosha Kabushiki Kaisha vs. Prius Auto Industries Ltd. and Ors.

Facts of the Toyota vs. Prius case:

The Plaintiff (Toyota Jidosha Kabushiki Kaisha) sought an injunction against the Defendant for the use of the mark ‘PRIUS’ with respect to automobiles and automobile spare parts. The plaintiff was not a registered proprietor of this mark but the Defendant had registered the same in India in the year 2002. The contention of the Plaintiff was that they were prior user of the mark in the world and Defendants had wrongfully registered the same in India. The Defendant was thus passing off its goods.

Ruling of the court:

The court ruled in favour of the Defendants and was of the opinion that it was undoubted that the mark ‘PRIUS’ of the Plaintiff has registrations and reputation in various other jurisdictions but it cannot be said that such goodwill had made its way to the Indian territory. Even when the product was launched in India in 2009-2010, it had very limited sales and the general consumer was unaware of such product. More importantly, when the Defendants had adopted the mark there were no advertisements in magazines, newspapers which suggested the existence of this otherwise well known product.  The court stated that the news items relating to the launching of the product in ‘Japan’ isolated and singularly in the Economic Times (Issues dated 27^th March, 1997 and 15^th December, 1997) does not firmly establish the existence of goodwill and the reputation of the brand name in the Indian Market. Moreover in the year 2001, access to internet was still limited and so the Plaintiff’s claim that the mark was on display on website which was accessible in India proved to be futile. The court agreed that the product is such that only a limited segment of the population would be aware of it but evidence regarding the knowledge and information within the limited segment of the population is again scarce. Also, the Plaintiff’s unexplained delayed approach to the courts was deemed as unacceptable. Granting an injunction in the above circumstances would be unfair and accordingly the appeal was dismissed.

Are conflicting views really conflicting? 

In the past, precedence has been given to the Universality principle over the Territoriality principle. In NR Dongre v. Whirlpool, Whirlpool Corporation had brought a passing off action to restrain the appellants from manufacturing, selling, and advertising or in any way using the trade mark ‘Whirlpool’ in respect of their goods. The claim was based upon the fact that products under the mark were marketed and sold in various countries. In addition to this, Whirlpool had advertised its product in various international magazines which had circulation in India even though Whirlpool had made no initiative to specifically advertise in India. Such magazines had a circulation in higher and upper middle income strata of Indian Society and Washing Machine is an appliance which is used by middle and upper class of society. Thus, they heavily relied upon their reputation and fame which had spilled into the Indian market. The Supreme Court, on the basis of such trans-border reputation re-affirmed the decision of the High Court and dismissed the appeal of the Indian manufacturer.

Similarly, in Milmet Oftho Industries v. Allergen Inc., The court held that non-use of the mark in India by the foreign company would be irrelevant if they had entered the world market prior to the Indian company.

Other instances:

There are few other cases where the principle has been debated

1. Roca Sanitario S.A. v. Naresh Kumar Gupta before the Delhi High Court (2010 case), the Plaintiff ROCA sought for interim injunction against the Defendants for using the similar mark ROKA for identical goods i.e., ceramic products and sanitary wares in India alleging dishonesty in adoption of the marks. The Plaintiff in order to support their case contended that they had acquired international/trans-border/ extra territorial reputation and attained registrations across the globe including India. Therefore, the question before the court was that whether the said brand name was actually known to Indian consumer public either through advertisements or by any other means. In this regard, ROCA had placed on the record some copies of some magazines which were in Spanish or French. ROCA was also able to show limited sales in India, however, were considered insufficient in order to show strong presence of the mark ROCA in India. What probably court was looking for was – dealer network, price list, evidence of consumer confusion to establish consumer confusion or likelihood of confusion. On the other hand, the Defendant was able to show use of their mark since the year 1996 which was prior in time. For these reasons, the injunction could not be granted due to absence of sufficient presence in India of the mark ROCA.
2. In another instance in the year 2007 before the Mumbai High Court, the Plaintiff claimed to have been using the mark KORES for a period of 70 years. The Plaintiff had also obtained the registration of the mark KORES in Class 16. Further, the plaintiff, in about the year 2007, found out that the Defendants have started using the mark KORES in India for stationary products. On such basis, the Plaintiff alleged infringement of its mark by the Defendants. Further, the plaintiff contended that the Defendants have not used the mark in India prior to Plaintiff’s use.

     The case of the Defendant was that its parent company (second Defendant) was established in the year 1887. From the point of its formation, KORES became carbon paper distributor and has successfully expanded into Europe, Asia and Africa. In other words, the case of the Defendants was that the word mark KORES was first conceived of by the Second Defendant who alone has the right, title and ownership over the use of the mark in the international market. It was held that Defendant had not been able to show continuous user of the mark in India. Further, the Defendants were unable to show any trans-border/extra territorial reputation in India. Thus, due to the preceding use of the mark KORES by Plaintiff in India, injunction was granted against the Defendants.

Our comments

The court in Toyota v. Prius does not seem to have overruled the Universality principle but when in conflict with Territoriality, it seems that the latter would prevail. The crux of the decision was based upon the fact that when the Defendant had adopted the mark in India, the plaintiff was not known to the Indian consumer, even if awareness in a limited segment of the population is considered since the product of the plaintiff is not one which is affordable by all. This was further supplemented by the fact that the actual product arrived in India only in 2009 and had limited sales. Prior to the adoption of the mark by the Defendant in 2001, if the Plaintiff had done something to ensure that there is spillover of its international reputation to India, such as specifically advertise its mark in India to ensure awareness, then perhaps an injunction would have been granted against the Defendant since consumers would have had knowledge of the Plaintiff’s mark even though there was still no physical presence of that particular product in the market. If this is not shown, it cannot be contended that the defendant has dishonestly adopted the plaintiff’s mark.

However, in the Whirlpool case, international magazines which had circulation in India were termed to be sufficient to create awareness of the brand in India. Whirlpool had surely not intended to enter the Indian market solely through such magazines, which did not even specifically cater to India but still the courts found such evidence acceptable and opined in favour of Whirlpool Corporation. Actual sales made in India were not dwelled in much once the court was satisfied by the above.

It would thus be safe to say , the concept of spillover reputation is still intact but if relying on such factor, there must be substantive evidence to support that such reputation has indeed spilled over prior to the adoption of the alleged infringing mark. This cannot be claimed solely on the basis of international reputation that may have entered the domestic market on account of 1-2 publications in a national newspaper in India.

Added to this (in Prius case) there was the delay by Toyota in approaching the courts for seeking an injunction, there was an unexplained delay of at least 6-7 years before the remedy of the courts was sought which was taken into consideration. The basis for such consideration was that a manufacturer in the Indian territory who in good faith has been marketing his products under a particular trademark should not lose years of hard work because of such carelessness on part of the opposition in filing. After 2003, both marks have been advertised in the same magazines such as Autocar, Overdrive etc. and so it can be safely concluded that the Plaintiff was aware of the alleged infringing mark, yet he approached the court only in the year 2009 and such delay is therefore, unexplainable. Surprisingly, in the Whirlpool case a 14 year delay had been condoned by the courts.

Overall, the decision in this case tilts the balance in favour of Territoriality principle.