2017 (12) TMI 1886 - SC - Indian Laws

TOYOTA loses trademark appeal as lack of domestic goodwill defeats passing off claim for Prius mark

SC dismissed appeal in trademark infringement case involving automotive marks. Plaintiff claimed prior user rights for TOYOTA marks and Prius, seeking ... Challenge to order of injunction granted - seeking a decree of permanent injunction for infringement of trade mark, passing off and for damages against the Respondents - protection of Plaintiff's trade marks 'TOYOTA', 'TOYOTA INNOVA', 'TOYOTA DEVICE' and the mark 'Prius' of which the Plaintiff claimed to be a prior user - Territoriality principle vs. Universality doctrine in trademark law - Infringement of registered trademarks - HELD THAT:- The finding that the trade mark 'Prius' did not have transborder reputation permeating into India is, therefore, incorrect. He has also urged that the test of passing off always rest upon a likelihood of confusion irrespective of the stage at which the matter may be considered. The fact that the trade mark 'Prius' was registered in favour of the Defendants was irrelevant insofar as the Plaintiff's claim for passing off is concerned - The use by the Defendants of the multiple trade marks of the Plaintiff ('TOYOTA', 'TOYOTA INNOVA' and 'TOYOTA DEVICE MARKS'); the conditional injunction Order dated 10.08.2000; the violation thereof; all have been urged by Shri Chidambaram to contend that the aforesaid facts are strong evidence of dishonest intention on the part of the Defendants to defraud the Plaintiff to derive undue benefit from the goodwill and reputation of the trade mark of which the Plaintiff is the first user. Territoriality principle - Universality doctrine in trademark law - HELD THAT:- To give effect to the territoriality principle, the courts must necessarily have to determine if there has been a spill over 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. Once the claimant who has brought the action of passing off establishes his goodwill in the jurisdiction in which he claims that the Defendants are trying to pass off their goods under the brand name of the claimant's goods, the burden of establishing actual confusion as distinguished from possibility thereof ought not to be fastened on the claimant. The possibility or likelihood of confusion is capable of being demonstrated with reference to the particulars of the mark or marks, as may be, and the circumstances surrounding the manner of sale/marketing of the goods by the Defendants and such other relevant facts. Proof of actual confusion, on the other hand, would require the claimant to bring before the Court evidence which may not be easily forthcoming and directly available to the claimant. In a given situation, there may be no complaints made to the claimant that goods marketed by the Defendants under the impugned mark had been inadvertently purchased as that of the Plaintiff/claimant. The onus of bringing such proof, as an invariable requirement, would be to cast on the claimant an onerous burden which may not be justified. Commercial and business morality which is the foundation of the law of passing off should not be allowed to be defeated by imposing such a requirement. In such a situation, likelihood of confusion would be a surer and better test of proving an action of passing off by the Defendants. The evidence of the Plaintiff's 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. All these should lead 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. In any event the core of the controversy between the parties is really one of appreciation of the evidence of the parties; an exercise that this Court would not undoubtedly repeat unless the view taken by the previous forum is wholly and palpably unacceptable which does not appear to be so in the present premises. If goodwill or reputation in the particular jurisdiction (in India) is not established by the Plaintiff, no other issue really would need any further examination to determine the extent of the Plaintiff's right in the action of passing off that it had brought against the Defendants in the Delhi High Court. Consequently, even if we are to disagree with the view of the Division Bench of the High Court in accepting the Defendant's version of the origin of the mark 'Prius', the eventual conclusion of the Division Bench will, nonetheless, have to be sustained. It is deemed proper to affirm the order(s) of the Appellate Bench of the High Court and dismiss the appeals filed by the Appellant/Plaintiff - appeal dismissed. Issues Involved:1. Infringement of registered trademarks ('TOYOTA', 'TOYOTA INNOVA', 'TOYOTA DEVICE')2. Passing off of the unregistered trademark 'Prius'3. Territoriality principle vs. Universality doctrine in trademark law4. Goodwill and reputation of the trademark 'Prius' in the Indian market5. Delay and laches in filing the suitDetailed Analysis:1. Infringement of Registered Trademarks ('TOYOTA', 'TOYOTA INNOVA', 'TOYOTA DEVICE')The Plaintiff, an automobile manufacturer, claimed that the Defendants infringed on its registered trademarks 'TOYOTA', 'TOYOTA INNOVA', and 'TOYOTA DEVICE'. The Defendants argued that their use of these trademarks was for item identification purposes, protected under Section 30 of the Trade Marks Act, 1999. The learned trial Judge initially granted an ex-parte ad-interim injunction, which was later modified by the Division Bench. The Division Bench allowed the Defendants to use the trademarks with specific conditions, such as changing the font and ensuring the words were used solely for item identification.2. Passing Off of the Unregistered Trademark 'Prius'The Plaintiff claimed that the Defendants were passing off their goods using the unregistered trademark 'Prius', which the Plaintiff had used globally since 1997. The Defendants had registered the 'Prius' mark in India in 2002-2003 and argued that the Plaintiff had no goodwill in India before the car's launch in 2009. The trial Judge ruled in favor of the Plaintiff, stating that the global goodwill of 'Prius' had spilled over to India. However, the Division Bench reversed this decision, stating that the Plaintiff had not established sufficient goodwill in India before April 2001.3. Territoriality Principle vs. Universality Doctrine in Trademark LawThe Division Bench of the High Court emphasized the Territoriality Principle, which posits that a trademark's reputation must be established within each jurisdiction separately. The court rejected the Universality Doctrine, which suggests that a trademark signifies the same source globally. The Division Bench held that the Plaintiff failed to prove that the 'Prius' mark had acquired substantial goodwill in the Indian market before the Defendants' use in 2001.4. Goodwill and Reputation of the Trademark 'Prius' in the Indian MarketThe Division Bench found that the Plaintiff did not provide sufficient evidence to show that the 'Prius' trademark had significant goodwill and reputation in India before April 2001. The limited internet penetration and scanty advertisements in India during that period were insufficient to establish the necessary goodwill. The court also noted that the Plaintiff's witnesses indicated limited sales and advertisements of 'Prius' in India before 2001.5. Delay and Laches in Filing the SuitThe Division Bench also considered the delay and laches on the Plaintiff's part in filing the suit in 2009. The Plaintiff was aware of the Defendants' use of the 'Prius' mark since 2003 but did not take timely action. This delay was held against the Plaintiff, as it allowed the Defendants to continue using the mark without challenge for several years.Conclusion:The Supreme Court affirmed the Division Bench's decision, emphasizing the Territoriality Principle and the necessity for the Plaintiff to establish goodwill within the Indian market. The court found that the Plaintiff failed to prove substantial goodwill for 'Prius' in India before April 2001 and noted the unexplained delay in filing the suit. Consequently, the appeals filed by the Plaintiff were dismissed, and the Defendants were not restrained from using the 'Prius' mark.