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Time for Considering Territoriality Principle over Universality Principle
Courts are gradually shifting their focus to territorial nature of Trade Marks. The same was also quite evident in the Exide case, that has been discussed in the previous blog (here). However, no conclusion was drawn in the case due to ‘out of court settlement’. But, the Supreme Court of India in the instant Toyota case has left a landmark precedent of recent times and re-explained the character of Trademark law.
The case goes back to 2009, where Toyota, which is a car manufacturer, claimed that Prius Auto Industries that trades with auto parts and accessories, bore the Plaintiff’s registered ‘Toyota’, ‘Toyota Innova’, ‘Toyota Device’ and ‘Prius’ Trade Marks. The plaintiff approached the Trade Mark Registry for cancellation of registered mark of the defendants, and also filed the suit on the ground that the defendant was using their ‘well known mark’ without their consent, leading to an unfair advantage of their reputation and goodwill of the plaintiff. However, following the decade old practice, ‘global reputation and prior user was upheld’ by the Trial court and gave the judgment stating the Defendant liable for passing off of the Trade marks of the Plaintiff, thereby restraining them from using the said trade marks and imposing punitive damages of rupees ten lacks.
However, the Division Bench of the High Court of Delhi gave a very balanced view and held that the decision of Trial Court was acceptable as far as injunctions against the mark Toyota, Toyota Innova’ and ‘Toyota Device’ is concerned. Injunction against the use of Prius by the Defendant was not justified, as the Plaintiff has to give evidence for showing that there existed a cause of likelihood/actual confusion in the Indian market. Thus, this part of the judgement of the Trial Court was set aside. Therefore, the current case is an appeal filed by the Plaintiff before the Hon’ble Supreme Court which dealt with the question that ‘whether the defendant is liable of passing off due to the use of ‘PRIUS.’
The factual matrix lie in issue that revolves around the mark ‘Prius’. This was the Mark under which the Plaintiff’s first commercial hybrid car was launched in Japan as well as in other countries since 1997. However, the Plaintiff did not get the Trade Mark “Prius” registered in India and its Prius car was introduced in India only in the year 2009, much later than the year when the Defendant got there Trade Mark ‘PRIUS’ registered in India in 2002.
The importance of the case pertains to the tussle between the two theories of Trade Mark Law. However, the true meaning of Trans-border reputation can very well be observed through this case.
Universality Principle on behalf of Appellant
The Appellantsmain argument was that their Trade Marks had acquired immense reputation and goodwill due to intense advertisement of the product worldwide through print media and internet that were even available in India. Reliance was even made on NR Dongre vs Whirlpool Corporation, where it was held that “wide advertisement of trade mark without existence if the goods in local market can well be considered as use of the Trade Mark in the local market”. Also the real test to determine the prior user is to establish that ‘who is the first in the market.’
Thus, the mark PRIUS was a well-known mark under section 2 (1) (zg) r/w Section 11(6) & 11(9) of the Act as the mark PRIUS had acquired a great deal of goodwill in several other jurisdictions in the world much prior to Prius Auto’s use and registration in India.
Territoriality Doctrine on behalf of Respondent
The Hon’ble Court was convinced with the averments made by the Respondents that most of the courts globally has accepted ‘territorial doctrine over universality principle’, so as to establish the goodwill and reputation in a particular jurisdiction. Therefore, in order to follow the Territoriality Doctrine, one has to show adequate evidence that he has acquired the a substantial goodwill in India for its mark, relying on Starbucks v. British Sky Broadcasting, where the Court observed 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.”
Therefore, prior use of the trade mark in one jurisdiction would not ipso facto entitle its owner or user to claim exclusive rights to the said trade mark in other jurisdiction as observed by Division Bench of Delhi Court.
Thus, the Supreme Court held that “likelihood of confusion” would be a better test of proving a passing off action, which can only be established from evidentiary documents, which the Appellants failed to provide. In furtherance of this, the Supreme Court also insisted on the Trinity Test as laid down by Reckitt & Colman Products Ltd. v Borden Inc :
- The goods or services have acquired goodwill or reputation in the marketplace that distinguishes such goods or services from competitors;
- The defendant misrepresents his goods or services, either intentionally or unintentionally, so that the public may have the impression that the offered goods or services are those of the claimant; and
- The claimant may suffer damages because of the misrepresentation.
These seven years of clash between the Toyota and Prius automobile company came to an end and the Supreme Court concluded that trademark rights are territorial and not global, thus one has to prove that one has acquired its reputation and goodwill in a territory, only through actual evidence, thereby rejected the trade mark case brought by Toyoto jidosha kabushiki kaisha.
The Hon’ble Supreme Court has reiterated the much-needed revision of foundational basis of Trade Mark law, which has also very well described and explained the two most important Doctrine of the Trade Mark law that helps in determining the right owners – Universality Principle and Territoriality Doctrine. Also, Division Bench of High Court has played a very significant role in highlighting the groundbreaking principle and it was very consistent with its view towards the territorial aspect of the Trade Mark law. (which can be seen Exide case). Moreover, the Court Aptly relied on Trans Tyres India Pvt. Ltd vs. Double Coin Holdings Ltd & Anr., 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. Modern day trade; globalization have brought in multi-channel modes of sale in the market and therefore it is the territoriality Doctrine (trade mark being recognized as having a separate existence in each sovereign country) would hold the field.
Thus, it is time to also look into the territorial character of the Trade Mark above the rights of prior user and Trans-border reputation.
 1996 (2) ARBLR 488 SC
  1 WLR 491