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RESOLVING THE BATTLE BETWEEN TERRITORIALITY & UNIVERSALITY OF TRADEMARKS

In light of the Toyota Jidosha Kabushiki Kaisha v. M/S Prius Auto Industries Limited decision


INTRODUCTION

The Indian Trade Mark Law bestows considerable protection upon "well-known" trademarks. Well known trademarks have been defined under Section 2(1)(zg) of The Trade Marks Act, 1999, as a mark which is associated with a particular range of goods or services, by the public and if such mark is used on some other goods or services, it raises a presumption that there is a connection between the two.

The concept of trans-border reputation and goodwill of a corporation was recognized by the Hon'ble Supreme Court of India, back in 1996, in the case of N.R. Dongre & Ors. v. Whirlpool Corporation & Anr.[i] With time, the views of the Courts regarding trans-border reputation have evolved. This article aims at explaining the concept of the universality and territoriality doctrine, and identifying the doctrine that shall be preferred over the other with reference to well-known trademarks, and the same is explained in light of the recent landmark decision taken in Toyota Jidosha Kabushiki Kaisha v. M/S Prius Auto Industries Limited.

TERRITORIALITY DOCTRINE

The Territoriality principle stipulates that intellectual property rights do not extend beyond the territory of the sovereign state which had granted the rights in the first place. It favours the notion that the reputation of a product or service is limited to the territory of the country in which that trademark was granted the status of a well-known trademark and recognises the trademark as having a separate existence in each sovereign country.

UNIVERSALITY PRINCIPLE

The Universality doctrine posits that once a trademark is recognized or registered in one country, it gains universal recognition. It favours trans-border reputation and is an exception to the territoriality doctrine. This means that if a trademark enjoys the status of a well-known trademark in one country, it would enjoy the same status with regards to its goods or services in any other country as well. Simply put, it says that a trademark signifies the same source all over the world.

FACTS OF THE CASE

The plaintiff, Toyota is a manufacturer of cars and was involved in the production of a hybrid car namely ‘Prius’. The respondent is a spare part supplier that trades with automobile parts and accessories. The plaintiff filed a suit claiming that Prius Auto Industries bore the Plaintiff's registered marks of ‘Toyota’, ‘Toyota Innova’, ‘Toyota Device’ and ‘Prius’. The plaintiff approached the Trade Mark Registry for the cancellation of the registered mark of the defendants and also filed the suit on the ground that the defendant was using their ‘well-known mark’ without their consent, leading to an unfair advantage of reputation and goodwill of the plaintiff.

The practice of ‘global reputation and prior user’ was upheld by the Trial court and the judgment was given in favour of the Plaintiff, thereby restraining the respondent from using the said trademarks and imposing punitive damages of rupees ten lakhs.

However, the Division Bench of the High Court of Delhi, on appeal held that the decision of Trial Court was acceptable as far as injunctions against the mark ‘Toyota’, ‘Toyota Innova' and ‘Toyota Device’ was concerned, as these three marks were registered as per the trademark law. The part of the Trial Court judgement that was corresponding to ‘Prius’ was, however, set aside.

The issue revolves around the mark ‘Prius’. This was the mark under which plaintiff's first commercial hybrid car was launched in Japan as well as in other countries since 1997. However, the plaintiff did not get the Trade Mark ‘Prius’ registered in India and its Prius car was introduced in India only in the year 2009. This is much later than the year when the respondent got their Trade Mark 'PRIUS' registered in India, which was 2002.

The present appeal was filed by the Plaintiff before the Hon'ble Supreme Court to deal with the question of 'whether the defendant is liable for passing off due to the use of ‘Prius’.

ISSUES FOR DETERMINATION

The major issue was whether the plaintiff, a global player can claim a trademark even when it was not registered by him but had been using it since before? This essentially came down to a tussle between the two theories of trademark law, and which needed to be prioritised over the other. The final adjudication was to be on the point as to whether a trademark would be protected on the territorial basis or the global basis.

ARGUMENTS OF THE APPELLANT (Universality Principle)

The Appellants contended that they had been using the trademark since 1997. They argued that their trademarks had acquired immense reputation and goodwill due to intense advertisement of the product worldwide, through print media and internet that was available in India. They placed reliance on N.R. Dongre v. Whirlpool Corporation[ii], where it was held that “wide advertisement of trademark without the existence of the goods in local market can be considered as use of the trademark in the local market”. Also, the real test of determining the prior user is to establish that ‘who is the first in the market.’

Thus, the mark PRIUS was a well-known mark under section 2 (1) (zg) r/w Section 11(6) & 11(9) of the Act as the mark PRIUS had acquired a great deal of goodwill in several other jurisdictions around the world much prior to Prius Auto's use and registration in India.

ARGUMENTS OF THE RESPONDENT (Territoriality Doctrine)

The respondents countered by arguing that most of the courts have globally accepted ‘the territorial doctrine over the universality principle’, so as to establish the goodwill and reputation in a particular jurisdiction. In order to follow the territoriality doctrine, one has to show adequate evidence that he has acquired substantial goodwill in India for its mark. They relied on the decision taken in Starbucks v. British Sky Broadcasting[iii], where the Court had observed that:- "No trader can complain of passing off as against him in any territory... in which he has no customers, nobody who is in trade relation with him."

Therefore, prior use of the trademark in one jurisdiction would not ipso facto entitle its owner or user to claim exclusive rights to the said trademark in another jurisdiction.

JUDGEMENT

The Supreme Court gave the ruling in favour of the respondents. The seven-year clash between Toyota and Prius automobile company came to an end when the Supreme Court concluded that trademark rights are territorial and not global. Thus, one has to prove that one has acquired its reputation and goodwill in a territory, through actual evidence.

It was held that the plaintiff had shown enough proof that it had established enough reputation for the mark Prius in India. They held that the principle of territoriality should govern the matter and as such the plaintiff's brand name 'Prius' had not acquired substantial goodwill in India.

It held that the “likelihood of confusion” would be a better test of proving a passing off action, which can only be established from evidentiary documents, which the Appellants failed to provide.

In furtherance of this, the Supreme Court also relied on the Trinity Test, as laid down in the case of Reckitt & Colman Products Ltd. v Borden Inc.[iv] according to which-The goods or services have acquired goodwill or reputation in the marketplace that distinguishes such goods or services from competitors;

· The defendant misrepresents his goods or services, either intentionally or unintentionally, so that the public may have the impression that the offered goods or services are those of the claimant; and

· The claimant may suffer damages because of the misrepresentation.

ANALYSIS

This decision of the Hon'ble Supreme Court sets a new benchmark for testing of evidence to claim trans-border reputation in India. Now, it is necessary that the trademark is recognized and has a separate existence in each sovereign country. The legal position which stands now in India on trans-border reputation is that although, the concept is recognized in India and the presence of actual business establishment is not a requirement for establishing trans-border reputation. The presence of reputation can be through the internet, advertisement or through any means which provides the citizens of a country with sufficient knowledge regarding a particular brand and its products.

The reputation of a trademark indicates the knowledge and awareness of such a trademark among the local population and is the means by which a trademark is recognized. With globalization, products and services are widely available around the world, irrespective of their place of origin. Additionally, the knowledge about the products reaches other countries long before the actual availability of the product through various modern mass communication technologies like TV, internet, newspapers, magazines, cinemas, etc. And thus, the reputation of a trademark is not limited to the country of its origin, but surpasses the geographical frontiers and is spread all across the world.

Prior to the introduction of the New Economic Policy in 1991, foreign brand owners or corporations were incapable of doing business in India. But post-1991, the Indian courts adopted an approach that aimed at developing a level playing field for foreign corporations. By virtue of this, giant corporations ended up exploiting the small domestic traders and started wiping them out of business. The apex court of India having ruled in the favour of the territoriality doctrine in this case provides protection to the domestic traders and entrepreneurs against international or foreign corporate entities.

CONCLUSION

The Hon'ble Supreme Court of India has reiterated the much-needed revision of the foundational basis of Trade Mark law. Given the undue expansion of IP rights due to modern-day trade and globalization, the territoriality Doctrine would hold the field. Prior use of the trademark in one jurisdiction should not ipso facto entitle its owner or user to claim exclusive rights to the said mark in another dominion.

The prioritisation of the territoriality doctrine would provide protection to the domestic traders and entrepreneurs against international or foreign corporate entities. It is therefore in accordance with the principle of equity, justice, and good conscience.

This decision not only redefines trans-border reputation but also shows that IP jurisprudence manifests in sync with the business environment, and the changing economic landscape of India. Thus, the time has come to look into the territorial character of the Trade Mark over the rights of prior user and trans-border reputation.

[i] N.R. Dongre & Ors. v. Whirlpool Corporation & Anr, (1996) PTC 415 (Del). [ii] Ibid. [iii] Starbucks v. British Sky Broadcasting, [2015] UKSC 31. [iv] Reckitt & Colman Products Ltd. v Borden Inc, [1990] 1 WLR 491.


This article has been written by Tanya KY. Tanya is a third year law student at GNLU, Gandhinagar.