EFFECT OF PRIUS JUDGMENT ON TRANS BORDER REPUTATION OF TRADEMARKS

A Brief Background

A trademark is accorded reputation through its prolonged use and goodwill it holds in the market where it operates. A trademark is believed to have a reputation when the general public recognizes the product by its specific mark. The reputation of a well-known trademark knows no boundaries and therefore, foreign trademarks with a reputation were accorded protection within the Indian jurisdiction. The trans-border reputation protection follows the principle of universality. The principle of universality states that once the reputation of a trademark transcends the physical boundaries of the country in which it was registered and gains popularity in other countries as well, then such trademarks are to be protected in those jurisdictions also. Thus, the trademark owner is entitled to protection under passing off if it is able to prove that the reputation of its trademark spilled over to geographical borders by way of promotions, advertisements and media communication. 

The concept of trans-border reputation had its origin in the Indian legal system through the case of NR Dongre vs Whirlpool corporation in 1996. In this case, the Supreme Court held that protection to a trademark can be given on grounds of trans-border reputation even when only the knowledge of the product is disseminated through media and advertisements without any actual presence or use of the product in the Indian market.

The Course Changing Judgement

In India, this principle of universality was followed up until 2017 when the famous Prius case judgment (Toyota Jidosha Kabushiki Kaisha vs M/s Prius Auto Industries Ltd & Ors.) came up which changed the course of universality principle to determine trans-border reputation. 

FACTS OF THE CASE

Before delving into the decision of the Supreme Court, the facts of the case, in brief, are that Toyota Jidosha Kabushiki Kaisha which was the plaintiff in the present case is a global automobile manufacturing company headquartered in Japan. During the late nineties, it launched a hybrid model car with the name ‘Prius’ which got trademark registrations in various countries. The defendants, M/s Prius Auto Industries Ltd. Used to manufacture spare parts and accessories for cars in India since 2001 and got the trademark ‘Prius’ registered in 2002. When Plaintiff discovered this fact, they filed a suit of infringement before the Delhi High Court which granted an ad-interim injunction in favour of Plaintiff, restraining the defendants from using the mark.

THE APPEAL TO THE APEX COURT

Aggrieved by the decision of the single bench, the Defendants filed an appeal before the Division Bench of the Delhi High court which reversed the previous order and applying the principle of territoriality, held that the Plaintiff has to show that the reputation of its mark had found its way into the Indian territory prior to the registration of defendant’s mark. This led Plaintiff to file an appeal before the Supreme Court challenging the High Court’s decision. Relying on the international precedents, the Court took the view that the widespread reputation of a foreign mark across the world is not enough to establish that the said mark has also acquired substantial goodwill in the Indian territory. Upholding the Divisional Bench order in light of territoriality doctrine, the SC also observed that there should be enough evidence to show that the reputation of the trademark has spilled over into the Indian territory.

OBSERVATION & DECISION OF THE COURT

Considering the evidence on record, the SC ruled that the advertisements in various magazines and information available through internet websites cannot be appreciated for establishing the reputation and the goodwill of Plaintiff’s mark within India since the use of the internet was not prevalent during the early 2000s for the public to be aware of the launch of Plaintiff’s car. Establishing a precedent for all upcoming cases of trans-border reputation, the Court opined that the physical presence of the product in the market is not necessary rather knowledge of the product through its registered trademark to the relevant set of the public is enough. Thus, the Court concluded that the High Court’s Division Bench was justified in setting aside the injunction order of the Single Bench.

Although the Prius judgment is a complete turnaround from the previous cases of trans border reputation, it is pertinent to note that one of the deciding factors of the case was lack of dissemination of the information to a certain set of the relevant public since the use of the internet was not prominent at the time when the cause of action arose. However, while appreciating the evidence for spilling over of the trademark’s reputation in cases of today’s time, the judgment cannot be followed blindly since with the use of the internet in every walk of life, hardly anything remains unknown from the public’s eyes. Still, importance is to be given to the impact of the advertisements and the degree of reputation it has created.

THE PRECEDENCE OF PRIUS

In 2020, a case on trans-border reputation has been decided by the Delhi High Court that followed the precedence of territoriality principle laid down in the Prius judgment. The case was that of Keller Williams Realty, Inc. vs Dingle Buildcons Pvt. Ltd. & Ors. In this case, Keller Williams Realty was the Plaintiff based in Texas who was one of the largest residential real estate brokers around the world operating under the registered trademark ‘KW’. The defendants were builders operating in India since 2006 using the formative trademark ‘KW’. The Plaintiff filed a trademark infringement suit seeking a permanent injunction against the defendant’s use of the mark ‘KW’. Placing its reliance on the Prius judgment, the Delhi High Court held that the Plaintiff was unable to provide sufficient evidence to show that its trademark KW had acquired a reputation in India and failed to establish the spilling over of its reputation in India even though it was registered in 2012 i.e., prior to the registration of defendant’s mark.

The court had further observed that the mark KW was not confusing as it was being used for dissimilar services and only as a suffix by the defendants. In addition, Plaintiff mark being the letters of English Alphabet can’t be accorded monopoly and further, there was delay on part of the plaintiff as well since they had the knowledge of defendant’s use of mark which was evident from their reply to the defendant’s examination report.

Although there were discrepancies in the defendant’s stand with regard to the explanation given for use of the said mark, no weightage was accorded to it and the HC following the territoriality principle held that there was no prima facie case of trademark infringement or passing off.

Conclusion

The key takeaways from the Prius judgment are that: –

• Not just tangible properties like land, buildings, vehicles etc. have to follow the laws of territorial bounds but intangible assets like trademarks also can be protected within the territorial boundaries of a country it is registered in unless there are some exceptional circumstances.
• The new regime of trademark reputation is characterised by the principle of territoriality which has taken over the principle of universality that was followed in India for a long time.
• While considering the issue of trans-border reputation, the deciding factor shall be the evidence placed on record in the form of advertisements and media promotions and the reach of that product to the concerned masses and not the public in general.

The Prius judgement can also be seen as a shield to the indigenous entrepreneurs and businesses provided by the Supreme Court against foreign marks. These marks registered and used in foreign countries posed a competition and threat to the indigenous marks despite having no business or reputation in the Indian market but by virtue of their reputation across the globe.

From the case of Dingle Buildcons, it can be seen that binding precedence has been laid down by the SC for cases related to trans-border reputation and the same is being given a rational application to the cases of its kind and the principle of territoriality has overtaken the universality principle in such cases.