Supreme Court of India in Prius trade mark battle declare that evidence of reputation spillover must be explosive

Reputation.  Something that trade mark owners and Taylor Swift spend their days contemplating.  For both, reputation - be it good or bad - can cross borders, but once it does its treatment is dependent on that jurisdiction.  Ashutosh Kumar (Associate Partner at Singh & Singh LLP) reports on the recent "Prius" decision of the Supreme Court of India on the territoriality of trade mark reputation:

The "Prius" logo

"The spillover must be explosive one."  This is the message from the Indian judiciary for those trade mark owners who are or would be claiming trans-border reputation for their marks in India. On December 14th, the Supreme Court of India dismissed Toyota’s appeal against the Delhi High Court’s judgment denying Toyota’s claim that it has acquired trans-border reputation in India, in respect of its mark ‘Prius’. The Supreme Court, after considering the jurisprudence in the U.K and Australia on trans-border reputation, came to the conclusion that the issue of trans-border reputation would be governed, in India, by the territoriality principle and not by the principle of universality. 

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 existence or non-existence of trans-border reputation is a question of fact.  Evidence to support the contention must be explosive or ground breaking. 

Background of the case

In 2009, Toyota filed a suit for trade mark infringement and passing off before the Delhi High Court against an Indian company who was engaged in the business of manufacturing and selling auto-parts and car accessories. In this suit, Toyota’s claim was twofold. It claimed infringement of its registered marks ‘Toyota’, ‘Innova’ and its logo and claimed passing off in respect of its mark ‘Prius’ (for which Toyota does not benefit from registration in India).  Toyota filed its trade mark application for ‘Prius’ only in 2009 and it is still pending. Toyota contended that the defendant was selling its products i.e spare parts/ accessories under these marks. The defendant pleaded nominative use defence in respect of Toyota’s registered marks i.e. ‘Toyota’, ‘Innova’ and its logo.  The defendant said that it is using these marks/logos for the purpose of identifying that its product can be used in Toyota’s cars. In respect of the mark ‘Prius’, the defendant denied any act of passing off. It claimed that it is a prior user of the said mark in India i.e. since the year 2001 and has obtained registration for the same. Toyota, as it has no registration for said mark nor had it sold its Prius car in India by that time, claimed trans-border reputation in respect of its mark ‘Prius’ to support its case of passing off.
Initially, an ex-parte interim injunction was granted by the Delhi High Court in December 2009. Later on the interim injunction was vacated by the Delhi High Court in March 2010.   

Toyota appealed the order vacating the injunction before the Division Bench of the Delhi High Court. The Division Bench in August 2010 imposed an interim arrangement on the parties thereby restraining the defendant from using marks ‘Toyota’ and ‘Innova’ except for the purpose of identifying that its products can be used in Toyota’s cars. Use of the logo was completely prohibited. However, the defendant was allowed use of the mark ‘Prius’ subject to providing their half yearly accounts for products sold under the mark ‘Prius’. Thereafter, the matter was remanded back to the Single Judge for the purpose of trial and final disposal. Post-trial, the Single Judge ruled in favour of Toyota on all accounts and held that the defendant had infringed Toyota’s registered marks/logos i.e. ‘Toyota’, ‘Innova’ and its logo. However, the defendant was allowed to use the marks Toyota’ and ‘Innova’, in a normative sense. The Single Judge also held that the defendant was guilty of passing off in respect of the mark ‘Prius’. Therefore, ultimately as a final relief, the earlier interim arrangement of the Division Bench culminated into the final decree which was passed by the Single Judge barring one change. The defendant was also restrained from using the mark ‘Prius’.  

The basis for holding in favour of Toyota on account of passing off was the Single Judge’s finding that Toyota had acquired trans-border reputation in respect of its mark ‘Prius’. The defendant appealed the Single Judge’s final judgment before the Division Bench of the Delhi Hyigh Court. On appeal, the major issue was whether or not Toyota had acquired any trans-border reputation in respect its mark ‘Prius’ as claimed by Toyota.  The defendant contended that the single judge erred in appreciating the evidence (mainly consisting of newspapers and magazines’ clippings), provided by Toyota to establish its trans-border reputation. In particular, the defendant's argument was that because its adoption of the mark ‘Prius’ was in April 2001, Toyota ought to have provided evidence to show that by April 2001 it had garnered goodwill in India, in respect of its mark ‘Prius’. As per the defendant's arguments, the majority of newspaper and magazine publications, except for four documents, which were produced by Toyota pertained to the period post 2001 and should not have been considered for  the issue of trans-border reputation. Further, out of the four documents produced by Toyota pertaining to the 2001, one was a book published in Japan. No evidence showing circulation of that book in India was provided.  The second document was an in-house publication of Toyota without any proof of wide circulation of that document in India. Apart from these two documents, the other two documents were articles published in the Economic Times on 27 March 1997 and on 15 November 1997 discussing the launch of the Prius car by Toyota. The defendant argued that the articles were not sufficient to establish the trans-border reputation in favour of Toyota for ‘Prius’ as the articles could not have been considered as a ground breaking news in India. All these contentions, as raised by the defendant, were accepted by the Division Bench. 

In December 2016, the Division Bench allowed the defendant’s appeal and reversed the judgment of the Single Judge by holding that the Single Judge erred in considering all post 2001 publications/materials for determining trans-border reputation and that the pre-2001 materials/publications were not that explosive in nature such that could have established trans-border reputation in favour of Toyota for the mark ‘Prius’. This judgment of the Division Bench of the Delhi High Court was challenged by Toyota before the Supreme Court of India.

 The Supreme Court's decision

Again, before the Supreme Court the main contentious issue was as to whether or not Toyota has a trans-border reputation in respect of its mark ‘Prius’. The Supreme Court held that trade mark protection in India is governed by the territoriality principle. Accordingly, the Supreme Court refused to interfere with the judgment of the Division Bench of the Delhi High Court. The Supreme Court also 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”. 

Therefore, as of today the law on the issue of trans-border reputations in India is to show that the spillover was an explosive one. What would satisfy this threshold of explosive spillover? This, only time will tell. Further, the Supreme Court’s reliance on the judgment given by UK Supreme Court in the case of Starbucks vs. British Sky Broadcasting, would also give rise to an argument, in future cases, that in order to claim trans-border reputation in India, evidence showing existence of actual customer must be adduced before court."