30 January, 2018
SC Reexamines Standard of Proof for Trans-border Reputation
The SC in an appeal5 filed by Toyota Jidosha Kabushiki Kaisha (‘Toyota’ or ‘Appellant’), reexamined the standard of proof required to establish trans-border reputation of a trademark and clarified the contours of such spillover reputation.
Toyota, released its now renowned hybrid vehicle, under the brand ‘Prius’ in the year 1997 in Japan. Subsequently, Prius was launched in several other countries, including India in the year 2010. After Prius’ foray into the Indian market, Toyota filed a suit6 for passing off before the High Court of Delhi (‘Delhi HC’) against the respondent, Prius Auto Industries Limited, a partnership firm engaged in the manufacture of automobile spare parts, who had commenced the use of the mark ‘Prius’ in India at least since the year 2001.
At the outset, it may be noted that by an order dated December 22, 2009, the Single Judge of the Delhi HC granted an interim injunction in favor of Toyota, which was subsequently appealed and vacated. Thereafter, the suit underwent a full-fledged trial and the Single Judge once again found in favor of Toyota and passed a decree of permanent injunction restraining the respondent.
However, the respondent mounted a further challenge7 against this decree of the Single Judge before the Division Bench of the Delhi HC, resulting in the decree being overturned, inter alia, on the ground that Toyota was unable to establish trans-border reputation in India. Toyota, being aggrieved by the judgment of the Division Bench dated December 23, 2016,8 appealed the decision before the SC.
Toyota argued that the publication of advertisements and news reports about ‘Prius’, including for instance, in prominent car magazines in India and across the globe, established that the ‘Prius’ brand had acquired goodwill across the world. The respondents, on the other hand, argued that they had adopted the brand ‘Prius’ in the year 2001 and subsequently obtained statutory protection and exclusivity over the use of the mark ‘Prius’ in the year 2002, being nine years prior to the launch of Toyota’s vehicle under the identical name in the year 2010 in India.
In this context, the SC by its judgment dated December 14, 20179 held that a mere assertion of reputation acquired worldwide or that of trans border reputation in India is insufficient and must be established through cogent evidence. Such evidence was further held to be insufficient in the case of the Appellant as they merely demonstrated the sporadic mentioning of the mark in the context of the launch of the vehicle in Japan. The Court emphasized that it must be proved that the subject trademark has acquired goodwill ‘within the territory’ in which the passing-off action is instituted. The Court, having regard to the relatively low internet penetration in India in the year 2001, further held that the magazine and news articles adduced by the Appellant, do not prove that the said mark had acquired any reputation in India. In view of this, the Court found that the Appellant had failed to establish its goodwill and reputation in the Indian market prior to April, 2001.
This decision of the Court seriously undermines the ‘first-in-the-world-market’ principle which has been followed by several Courts as well as the Intellectual Property Appellate Board, as the Court clearly found that prior adoption of the mark in one jurisdiction does not ipso facto guarantee that the goodwill acquired therein could be used to establish priority in India. Consequently, foreign companies must now rethink their brand protection strategies, especially if they harbor ambitions to foray into the Indian market, in order to prevent their reputed brands from being usurped by local Indian traders.
SC Rules on Procedural Aspects of Filing Rectification Proceedings in a Pending Trademark Infringement Suit
P.M. Diesels (original plaintiff and the respondent herein) is the registered proprietor of three trade marks, the common feature of all of which are the words “Field Marshal”. The original plaintiff / respondent filed an infringement suit against Patel Field Marshal Agencies (the defendant and the appellant herein) for the use of the trademark “Marshal”, before the Delhi HC. In the infringement suit, the defendant contested the validity of the registration of the plaintiff ’s trade marks “Field Marshal” and claimed that the same were liable to be rectified.
During the pendency of the infringement suit, the defendant initiated rectification proceedings before the High Court of Gujarat (‘Gujarat HC’) for removal of the plaintiff ’s trademarks. Both the Single Judge and the Division Bench of the Gujarat HC dismissed the defendant’s rectification applications. The defendant then challenged these orders before the SC in this case of Patel Filed Marshal Agencies v. P.M. Diesels Ltd.10
The issue before the SC was whether recourse to the remedy of rectification would still be available before the statutory authority when the issue of validity of registration of a trade mark had already been raised in an infringement suit before a civil court.
SC held that the Registrar / High Court under the Trade Marks Act, 1958 and the Intellectual Property Appellate Board under the Trade Marks act, 1999 (and not the civil Court) are the prescribed statutory authorities empowered under the respective legislations to adjudicate on issues connected with the validity of registration. SC further held that in the event a trademark infringement suit is already pending before the civil court and the issue of invalidity of a trademark is raised in such a proceeding, the exercise of the jurisdiction in a rectification proceeding
by the concerned statutory authority is contingent upon a finding of the civil court as regards the prima facie tenability of the plea of invalidity of the trademark. Also, once the civil court reaches a prima facie finding of the tenability of the plea of invalidity, the concerned party interested in initiating a rectification proceeding, has to file the same within the statutorily prescribed time period of three months. If the party fails to do that, the right to initiate a rectification proceeding will be deemed to be abandoned.
5 Civil Appeal Nos. 5375-5377 of 2017.
6 CS (OS) 2490 of 2009.
7 FAO (OS) 248/2010.
8 (2017) 236 DLT 343 (DB).
9 2017 SCC OnLine SC 1500.
10 Patel Filed Marshal Agencies
For further information, please contact:
Zia Mody, Partner, AZB & Partners
zia.mody@azbpartners.com
