TaxTMI 
TaxTMI 
2017 (12) TMI 1886
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.... High Court seeking a decree of permanent injunction for infringement of trade mark, passing off and for damages against the Respondents (hereinafter referred to as 'the Defendants') in order to protect the Plaintiff's trade marks 'TOYOTA', 'TOYOTA INNOVA', 'TOYOTA DEVICE' and the mark 'Prius' of which the Plaintiff claimed to be a prior user. 3. In the plaint filed, it was averred by the Plaintiff that it is a renowned carmaker having its presence in many countries across the world. The Plaintiff claimed an enviable goodwill and reputation as one of the foremost automobile manufacturers in the world. According to the Plaintiff it had acquired registration in India in different classes for its trade marks 'TOYOTA', 'TOYOTA INNOVA' and 'TOYOTA DEVICE' during the years 1989-2003. It was specifically averred by the Plaintiff that the goods manufactured and sold by the Defendants bore the Plaintiff's registered trade marks thereby clearly constituting infringement of the said registered marks. Furthermore, according to the Plaintiff, it had launched the world's first commercial hybrid car called 'Prius....
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.... auto parts manufactured by them are/were packed for the purpose of item identification and nothing more. According to the Defendants, since they were in the business of manufacturing spare parts of automobiles, they are/were entitled to indicate the cars for which the spare parts have been manufactured by displaying the same name on the packaging of the products. The use of the words 'TOYOTA', 'TOYOTA INNOVA' and 'TOYOTA DEVICE' etc. were, therefore, for the purpose of honest use in an industrial matter and thus protected Under Section 30 of the Act. 5. Insofar as the mark 'Prius' is concerned, according to the Defendants, they had obtained registration of the said mark in the year 2002 and have been continuously using the same since the year 2001. They have been regularly supplying auto accessories to various automobile giants like Hyundai Motors, General Motors. The Defendants claimed that, over a period of time, they have built up a considerable market reputation. According to the Defendants, the mark 'Prius" had not been registered in favour of the Plaintiff for any of its products; nor had any Prius Car sold been in India so as to enable t....
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....any further appeal. Consequently, the said order governed the parties during the pendency of the suit. Allegations of the breach of the order were, however, brought before the Court by the Plaintiff. 8. At the conclusion of the trial, the learned trial Judge by judgment dated 08.07.2016 held that the impugned acts of the Defendants constituted infringement of the trade marks 'TOYOTA', 'TOYOTA INNOVA' and 'TOYOTA DEVICE' registered in favour of the Plaintiff. The learned Judge also held that such acts of the Defendants amounted to passing off of the Defendants' goods under the trade name 'Prius', which, though registered in favour of the Defendants in the year 2002-2003, the Plaintiff was the first user thereof having marketed its hybrid car all over the globe under the name 'Prius' at least from the year 1997. Consequently, the learned trial Judge restrained the Defendants from using the Plaintiff's trade marks ('TOYOTA', 'TOYOTA INNOVA' and 'TOYOTA DEVICE' marks) except in accordance with the terms of the conditional injunction order passed by the Division Bench dated 10.08.2010. So far as the mark 'Prius....
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....s those of the Plaintiff thereby injuring the reputation of the Plaintiff in the market. 12. The learned trial Judge in taking the view that the Plaintiff was entitled to an injunction against the use of the trade mark 'Prius' by the Defendants, took into account, inter alia, the global sales of Prius Cars (ranging upto over a million sales globally); the exponential hike in the sales of cars (300 units in 1997 to 285600 units in 2008); and that the Plaintiff's trade mark 'Prius' which had acquired an excellent global goodwill had already spilled over to India much before the direct sales of the car in India in the year 2010. The fact that the Plaintiff's web sites have been visited by many Indians seeking information about Prius cars was held by the learned trial Judge to be evidence of the fact that people in India were aware of the car and its popularity. The exhibitions of the car held in India and other countries; various advertisements published in different automobile magazines and cover stories published in international magazines and journals were taken into account by the learned trial Judge to hold that the car in question had a stellar reputatio....
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....'s organization and that there is a nexus between the two. Accordingly, the learned trial Judge came to the conclusion that the adoption of the mark 'Prius' by the Defendants, though they were the registered proprietor thereof, was misleading, as the Plaintiff was the true and first user of the trade mark all over the world and the reputation of the mark and the goodwill of the Plaintiff on that basis had permeated to the Indian Market well before the use of the mark by the Defendants in 2001 and its registration thereafter in 2002-2003. The trial Judge further held that the Defendants had adopted the mark 'Prius' with the sole intention of enjoying the benefits from the use of the said mark. The explanation given as to why and how the Defendants had adopted the name 'Prius' was found to be wholly untenable by the learned Single Judge. Accordingly, the finding that the Defendants were guilty of passing off their goods under the mark, of which the Plaintiff was the first user, was arrived at. Consequently, permanent injunction restraining the use of the mark 'Prius' by the Defendants in order to prevent passing off the Defendants' goods as the....
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....arket, which the Defendants had taken advantage of. The Division Bench of the High Court further held that the test of possibility/likelihood of confusion would be valid at the stage of quia timet actions and not at the stage of final adjudication of the suit, particularly when the Defendants had used the impugned mark for a long period as in the instant case. The test, therefore, would be one of actual confusion. No evidence was led by the Plaintiff to show that any Section of the consuming public was misled by the use of the trade mark 'Prius' by the Defendants. 15. Laches and delay on the part of the Plaintiff in instituting the suit in the year 2009 was also held against the Plaintiff to reverse the decree passed by the learned trial Judge. In this regard, the Division Bench held that the Plaintiff was aware of the Defendants' mark at least from April, 2003. Publications in Pioneer magazines (like Autocar, Overdrive) contained Defendants' advertisements under the name 'Prius' and in fact both the parties have been advertising their products in the same magazines. In fact, the Plaintiff, at no relevant point of time, had applied for registration of the t....
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.... 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 triple identity test laid down in Reckitt and Colman Ltd. (supra) would govern the instant adjudication. 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. 18. Shri Chidambaram has additionally urged that the story put forward by the Defendants surrounding the adoption of the word 'Prius' is on the face of it absurd. The possibility of conjuring a word in the Hindi language and then looking for it in the English dictionary and finally selecting a Latin word is too far fetched for acceptance as a bona f....
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....d 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. In this regard reference is made to the several passages in the book "The Law of Passing-Off" by Prof. Christopher Wadlow to urge that the test whether a foreign claimant (in this case, the Plaintiff; Toyota) may succeed in a passing off action is whether his business has a goodwill in India; that even the most internationally renowned business owns not one goodwill, but a bundle of many different ones. The nature of goodwill as a legal property with no physical existence means that when a business is carried on in more than one country, there must be separate goodwill in each. It is submitted on the strength of the decision of the Federal Court of Australia in ConAgra v. McCain Foods (1992) 23 IPR 193 that in the last resort the test is whether the owner of the goods has established a 'sufficient reputation' with respect to his goods within the particular country in order to acquire a sufficient level of consumer knowledge of the product and attraction for it to pr....
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.... may be a mark capable of registration. Again, it is no defence to passing off that the Defendant's mark is registered. The Act offers advantages to those who register their trade marks, but imposes no penalty upon those who do not. It is equally no bar to an action for passing off that the false representation relied upon is an imitation of a trade mark that is incapable of registration. A passing off action can even lie against a registered proprietor of the mark sued upon. The fact that a claimant is using a mark registered by another party (or even the Defendant) does not of itself prevent goodwill being generated by the use of the mark, or prevent such a claimant from relying on such goodwill in an action against the registered proprietor. Such unregistered marks are frequently referred to as 'common law trade marks'. (Underlining is ours) 23. Whether a trade mark is to be governed by the territoriality principle or by universality doctrine? Prof. Cristopher Wadlow in his book "The Law of Passing-Off 5th Edn., Sweet & Maxwell" has analysed the problem and its possible resolution in the following words: in the worst case, an international company seeking to exp....
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....relation with him. This will normally shortly be expressed by stating that he does not carry on any trade in that particular country...but the inwardness of it will be that he has no customers in that country... 26. A passing reference to a similar view of the Federal Court of Australia in Taco Bell v. Taco Co. of Australia 1981 60 FLR 60 may also be made. 27. Prof. Cristopher Wadlow's view on the subject appears to be that the test of whether a foreign claimant may succeed in a passing-off action is whether 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. 28. The overwhelming judicial and academic opinion all over the globe, therefore, seems to be in favour of the territoriality principle. We do not see why the same should not apply to this Country. 29. To give effect to the territoriality principle, the courts must necessarily have to determine if there has been a spill over of the reputation a....
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....imet actions and actual confusion will have to be proved when the suit or claim is being adjudicated finally as by then a considerable period of time following the initiation of the action of passing off might have elapsed. 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....
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....d 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 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. In any event the core of the controversy between the parties is really one of appreciation of the evidence of the parties; an exe....