1.Introduction
When a person constructs a home he will definitely build a door at the outset itself. The door protects the house for the rest of the year from intruders. Similarly, Intellectual property rights protect your Industrial property from the use of others. It stands as a door calling out to the world that it is owned by someone and none can use it without the owner’s permission. Intellectual Property is a property that arises from Human Intellect. It is a product of Human Creation. Intellectual property rights (IPR) refers to the legal rights given to the inventor or creator to protect his invention or creation for a certain period of time. These legal rights confer an exclusive right to the inventor/creator or his assignee to fully utilize his invention/creation for a given period of time1. Intellectual property comprises two distinct forms mainly Literary and Artistic Works and Industrial Property. Literary and artistic works are protected by copyright whereas Industrial properties are protected by Patents, Trademarks, Industrial Designs, Geographical Indications, etc. Among which trademarks play a poignant role in modern-day businesses. It is a symbol, logo, word, sound, color, design, or other device that are used to identify a business or a product in commerce. It adds goodwill and reputation to the firm and can be considered as an Intangible asset. It gives uniqueness to the brand from the competitors.
In this article, I would delve more into the hegemony of Territorial doctrine over Universality doctrine in Indian IPR jurisprudence with a special reference to the judgment of Supreme Court in Toyota Jidosha Kabushiki Kaisha Versus M/S Prius Auto Industries Ltd & Ors.2
2. What is Territorial Doctrine and Universality Doctrine
Territoriality Doctrine :-
The Territoriality principle stipulates that the intellectual property rights do not extend beyond the territory of the sovereign state which had granted the rights in the first place. It favors 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.3
Universality Doctrine:-
According to the Universality doctrine, once a trademark is recognized or registered in one country, it gains universal recognition. It favors 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 the United States of America, it would enjoy the same status with regards to its goods or services in India as well, or any other country for that matter.4
The Indian Courts have recognized both these doctrines through cases galore. Many a time lawyers had long-standing conflicts in courtrooms to accept both according to their case in hand. It was in M/s Kamal Trading Co. v. Gillette UK5 Limited the trans-border reputation of the trademark was first recognized. The Division Bench of Bombay high court held that goodwill and reputation could not be limited to a particular country and they didn’t depend only upon the availability of goods in a particular country. Then later in 1993 the Delhi High court in the case of Apple Computer Inc. v. Apple Leasing & Industries6 reiterated the same principle that “if the reputation of a trader, trading or carrying on business in another country, had traveled to a country where he carried on no business, this reputation having been acquired. On the basis of extensive advertisements and publicity, then another trader could be injuncted to protect the reputation of the trader who was not trading in the country.” In 2015 the Intellectual Property Appellate Board (IPAB) in Jones Investment Co Inc v. Intellectual property7 appellate board delivered a decision in favor of territoriality doctrine that a multinational company cannot claim infringement of trademark by a local Indian company purely based on international presence unless they can expressly establish that their presence extends to India or precedes that of the Indian company.
Apart from the decisions of Indian Courts, there were many foreign judgments favoring both these doctrines. In Anheuser-Busch Inc v Budejovicky Budvar NP8, a UK decision, it was held that the claimant was unable to establish goodwill based on imports of its beer into the UK for use and sale in US military and diplomatic establishments. It did not have customers amongst the general public in the UK for its products, and it did not, therefore, a matter that BUDWEISER had a significant reputation in the UK9 . But when the UK favored the doctrine of territoriality in Japan Universality doctrine was upheld in a benchmark decision. In C. W. Communications, Inc. v. K. K. Denchi Shinbunsha10, the Appellant holds a trademark “COMPUTERWORLD” in the U.S.A. for newspapers that are well known in the U.S.A. as well as Japan. The Respondent registered the same mark “COMPUTERWORLD” in its own name with the Japan Patent Office. The Appellant thereupon filed an application seeking invalidation of the registration of the mark of the Respondent which was rejected by the Japan Patent Office. On appeal, Tokyo High Court observed that a trademark widely recognized in a foreign country may also be deemed widely recognized in Japan through media publicity, notwithstanding the virtual absence of actual use of the trademark in the Japanese market and it was held that even though if a trademark is not being used and well-known in Japan, it can be protected if it is well-known abroad and accordingly passed an order to invalidate the Respondent’s mark.11
The statutory provisions of the Trademarks Act 1999 at least in a lighter sense tend to favor the doctrine of universality. Section 11 (9) of the act doesn’t mandate the registrar to consider Whether the trademark has been used in India, the trademark has been registered in India, the trademark is well known to the public at large India while determining a Well – Known trademark.12 Similarly Section 11(6) says that the registrar while taking into account whether a mark is a well-known mark shall consider the duration, extent, and geographical area of any promotion of the trademark, including advertising or publicity and presentation, at fairs or exhibition of the goods or services to which the trademark applies.13 This impliedly means that suppose if a mark has gained popularity through advertisements it has a possibility to attain Well -Known mark recognition.
So till 2015, there were multiple judgments as well statutory provisions upholding various doctrines but a couple of years back a two-judge bench of the Supreme Court held that territorial doctrine holds more weight over Universality doctrine. This judgment can be considered as a benchmark as it made an end to the ever-ending conflict at the same time set the extent of the transborder reputation of industrial property.
3. Critical Analysis of the Judgment in Toyota Jidusha Kabushiki Kaisha v. M/S Prius Automobile Ltd &Ors.
A)Backdrop of the Case:-
The appellant, in this case, is a popular automobile manufacturer (Toyota) incorporated under the laws prevailing in japan. The first respondent is a partnership firm(Prius Auto Industries) engaged in the manufacture of automobile spare parts of which the second and third respondents are partners. The partnership firm was constituted in 2001. Toyota claimed that Prius Auto Industries had borne the appellants registered trademarks ‘TOYOTA’, ‘TOYOTA INNOVA’, ‘TOYOTA DEVICE’, and the mark ‘Prius’ and filed a suit against the respondent on the ground that respondents are using its ‘well-known trademark’ without their consent taking an unfair advantage over reputation and goodwill. The learned trial court in the case decided in favor of Toyota upholding the old principle of Cross border reputation and prior user tag. The court placed reliance on the decisions of the Supreme Court such as S Syed Mohidheen v. P Sulochanabhai14, NR Dongre v. Whirlpool Corporation15 and Milmet oftho Industries & Ors v. Allergan Incorporated16. In the Syed Mohidheen case it was held that if the plaintiff could successfully prove that its case was covered by “Passing off”, the registered trademark of the defendants would not remain protected under the act. In the NR Dongre case, it was held that wide advertisement of a trademark without the existence of the goods in the local market can be considered as use of the trademark in the said local market. The court relied on the Milmet case(supra) in determining the test of prior use, wherein it was held that the real test of establishing prior use is to determine who is first in the market. The facts of the case show that the appellant had acquired registration of trademarks in different classes for its marks ‘TOYOTA’, ‘TOYOTA INNOVA’, ‘TOYOTA VENICE’ during the years 1989-200317 .Though in India Toyota had not obtained registration of mark ‘Prius’ but Prius has been launched as its first hybrid car in Japan in the year 1997 and in countries like the USA, Australia, etc. Toyota claimed the various news advertisements and news reports about Prius across the globe and stated it made “Prius” a well-known trademark under section 2(1) (zg) of the Trademarks Act 1999. Based on these facts and precedents, the trial court held Prius Auto Industries Ltd liable for passing off the toyota’s trademark and imposed damages of ten lakhs.
This decision of the trial court was only partly upheld by the Division Bench of Delhi High court in appeal. The division bench held that the trial court decision is acceptable only to the extent regarding the injunctions against the mark ‘TOYOTA’, ‘TOYOTA INNOVA’,’TOYOTA DEVICE’.The injunctions against the mark ‘Prius’ cannot be justified as there was no evidence by the appellant to prove that any section of the consuming public was misled by the use of trademark ‘Prius’ by the respondents. Secondly, the court placed strong reliance on Trans tire India Pvt Ltd v. Double Coin Holding Ltd & Anr18 wherein it was held that the Universality doctrine has not been accepted by courts. It is the territoriality doctrine that would hold the field. Therefore the Division bench partly upheld the decision of the trial court set aside the injunction against the Prius Auto Industries Ltd from using the mark Prius.
It is against this judgment that the case came before the Honourable Supreme Court.
B) Supreme Court Decision
As the Division bench of the High court has upheld the Injunction against the respondent for the use of marks ‘TOYOTA’, ‘TOYOTA INNOVA’, ‘TOYOTA DEVICE’ the scope of this case before the Supreme court is with regard to the mark ‘Prius’ and whether the use of said name or mark by the respondents amounts to passing off.
P Chithambaram the learned counsel for the appellant argued that recognition and reputation of a trademark are not contingent upon the actual sale of goods in India. Advertisement and promotion of the mark through different forms of media is sufficient to establish reputation and goodwill within a particular geographical area that is India. Learned counsel has further urged that the Division Bench of the High Court did not deal with the issue of the trademark ‘Prius’ being a “well-known mark”. The counsel additionally argued that the story put forward by the respondents surrounding the adoption of the word ‘Prius’ is on the face of it absurd and carries zero logic. Therefore these facts show that the conclusion derived by the Division bench of the High Court is incorrect.
In response to this, the Counsel for the respondent argued that the respondent should get the benefit of section 30 of the Trade Marks Act, 1999. As a manufacturer of spare parts firm the respondents are entitled to inform the consumer of the name of the specific vehicles for which particular parts are suitable. This is what was done here, nothing more. He further argued that the respondent had acquired the Trademark for Prius in 2002-03 whereas the plaintiff adopted this mark in India 2009. He additionally argued that the appellant failed to prove the positive spillover of reputation and goodwill of the appellant’s mark prior to April 2001. The delay and latches on the part of the appellant in tolerating the defendants using the trademark ‘Prius’ since April 2001 in spite of due knowledge have also been urged to contend that the claim of the appellant has been rightly rejected by the Division Bench of the High Court.
The question to be considered before the Supreme court was, Whether a trademark is to be governed by the territoriality principle or by universality doctrine?
Prof Cristopher Wadlow in his book “The Law of Passing-Off” has analysed the problem and its possible resolution. He analysed a possibility that an international company seeking to expand into new territory may find itself blocked by a small business already trading under the same name or style, perhaps on a minuscule scale and perhaps having been set up for the very same purpose anticipated of expansion blocking by the International company. But On the other hand, a rule of law dealing with this situation has to avoid the opposite scenario of bona fide domestic traders finding themselves open to litigation at the suit of unknown or barely known claimants from almost anywhere in the world.19 Therefore an emphasis on the Universality doctrine leads to a chance exploitation of domestic traders.
The court considered the judgment in Starbucks v.British Sky Broadcasting20 wherein it was observed that,mere reputation is not enough to prove goodwill.The claimant must show that it has a significant goodwill, in the form of customers, in the jurisdiction, but it is not necessary that the claimant actually has an establishment or office in this country. In order to establish goodwill, the claimant must have customers within the jurisdiction.
The decision in Starbucks v. British Sky Broadcasting (supra), by the Apex Court of UK is a refined and reiterated view of its earlier decision in Athletes’ Foot Marketing Associates Inc. vs. Cobra Sports Ltd 21. It was observed in that case 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.
The court stressed on Professor Wadlow’s view on the test to determine whether a foreign claimant would succeed in a passing-off action. It is to ascertain whether his business has a goodwill in a particular jurisdiction. This test is broader than the “obsolete” test of whether a claimant has a business/place of business in that jurisdiction22 . If there are customers for the claimant’s products in that jurisdiction, then the claimant stands in the same position as a domestic trader.
Therefore the court opined that since the academicians and judicial opinions are in favor of the Territoriality doctrine why can’t it be applied in this case.
Since court took a view that it is the goodwill of the claimant in a particular jurisdiction to be ascertained, the next questions are whether toyota had sufficient goodwill for prius in the jurisdiction or has there a spillover of its goodwill into India and which test has to adopted.With regard to the question of whether trinity identity test laid down in Reckitt and Colman Case or test of likelihood of confusion to be adopted,court observed that it is the likelihood of confusion would be a surer and better test of proving an action of passing off by the defendants since a 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 respondents and such other relevant facts. Whereas 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. Therefore the likelihood of confusion test would also be consistent with commercial and business morality which the law of passing off seeks to achieve.
The court then applied these findings to its decision and observed that, Indeed, the trademark ‘Prius’ had undoubtedly acquired a great deal of goodwill in several other jurisdictions in the world and that too much earlier to the use and registration of the same by the respondents in India. But if the territoriality principle is to govern the matter, and the court has already held it should, there must be adequate evidence to show that the appellant had acquired a substantial goodwill for its car under the brand name ‘Prius’ in the Indian market also. The car itself was introduced in the Indian market in the year 2009-2010. The advertisements in automobile magazines, international business magazines; availability of data in information-disseminating portals like Wikipedia and online Britannica dictionary, and the information on the internet, even if accepted, will not be a safe basis to hold the existence of the necessary goodwill and reputation of the product in the Indian market at the relevant point of time, particularly having regard to the limited online exposure at that point of time, in the year 2001. Coupled with the above, the evidence of the appellant witnesses themselves suggests 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 a lack of knowledge and information of the product amongst a significant section of the Indian population. All these lead the court 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 sufficient degree of goodwill, reputation, and the market or popularity in the Indian market so as to vest in the appellant the necessary attributes of the right of a prior user so as to successfully maintain an action of passing off against the registered owner. If the 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 appellant’s right in the action of passing off that it had brought against the defendants. Therefore the court dismissed the appeals by upholding the doctrine of territoriality over universality.
4. Conclusion
The Honourable Supreme Court through this case has set a benchmark regarding the two fundamental doctrines of trademarks. The judgment will settle the conflict on which has to be given more weight in the court of law. The judgment will act as a strong precedent to protect the innocent domestic traders who registered their trademark in their local jurisdiction from clutches of litigation by multinational corporations. The pertinent role played by the Division Bench of High Court deserves recognition and appreciation. The Division bench aptly relied on Trans Tyres India Pvt. Ltd vs. Double Coin Holdings Ltd & Anr. (supra) which observed that Universality Doctrine (which posits that a mark signifies the same source all over the world) has not been accepted by the courts. Thus this judgment set a principle that the territorial character of a trademark is above transborder reputation.
End Notes
1.Intellectual Property rights: An Overview and Implications at Pharmaceutical Industry, More available at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3217699/#:~:text=Intellectual%20property%20rights%20(IPR)%20refers,a%20given%20period%20of%20time. (Last Visited on July 03, 2021)
2. 2017 SCC OnLine SC 1500.
3.Universality territoriality doctrine references well-known trademarks, available at: https://www.mondaq.com/india/trademark/668364/universality-territoriality-doctrine-reference-well-known-trademarks (Last visited on July 03, 2021)
4.Id.
5.1988 (8) PTC 1 (BOM).
6. 1991 SCC OnLine Del 308.
7. 2014 SCC OnLine Mad 10344.
8. [1984] FSR 413.
9. Supreme court confirms territorial nature of goodwill in passing off, available at: https://www.kwm.com/en/knowledge/insights/supreme-court-confirms-territorial-nature-of-goodwill-in-passing-off-20150513 (Last visited on July 25, 2021).
10. [1430 HANREI JIHO 116].
11.Establishing trans-border reputation: protection of foreign trademarks, available at :https://www.google.com/amp/s/blog.ipleaders.in/establish-trans-border-reputation-foreign-brand-claiming-damages-passing-off-domestic-manufacturer/amp/
12.Trade Marks Act, 1999, § 11(9), No. 47, Acts of Parliament, 1999 (India).
13.Trade Marks Act, 1999, § 11(6), No. 47, Acts of Parliament, 1999 (India).
14. 2016 (2) SCC 683.
15. 1996 (5) SCC 714.
16. 2004 (12) SCC 624.
17.To sustain an action for trademark infringement, a global brand must prove its goodwill and reputation,available at:http://roundup.manupatra.in/asp/displayart.aspx?itemid=26545 (Last visited on July 20, 2021).
18. 2012 SCC OnLine Delhi 596.
19. 2017 SCC OnLine SC 1500.
20. 2015 UK SC 31
21. (1980) R.P.C. 343.
22. THE GOODWILL IN PASSING OFF ACTIONS: THE TOYOTA PRIUS STORY, available at: https://rudrajyotinathray.com/2017/12/21/the-goodwill-in-passing-off-actions-the-toyota-prius-story/
AUTHOR
M Hegin Han
5th Semester Student,
3 year LLB
Government Law College Kozhikode
