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Brand owners will suffer from a decision issued by India’s Supreme Court in a case brought by Toyota, say Pravin Anand, Vaishali Mittal and Siddhant Chamola of Anand and Anand.
The case of Toyota Jidosha Kabushiki Kaisha v Prius Auto Industries & Ors has undergone a tumultuous journey since being filed in 2009, and was the first trademark case to be reviewed under a special leave petition at the Supreme Court of India.
This dispute dates to a civil suit filed by Toyota against Prius Auto Industries (PAI) in the Delhi High Court seeking relief for infringement of Toyota’s trademarks ‘Qualis’ and ‘Innova’ and for passing off the trademark ‘Prius’.
The single judge, in July 8, 2016, restrained PAI by a permanent injunction from violating Toyota’s rights in its trademarks ‘Toyota’, ‘Innova’ and ‘Prius’, while recognising ‘Prius’ as a well-known trademark. The judge further held that Toyota was the prior user of ‘Prius’ in other countries and by virtue of its extensive trans-border reputation, ‘Prius’ had acclaimed immense statutory and common-law rights to be granted well-known status in India.
"The Division Bench conveniently misinterpreted and wrongly applied the law of passing off under the Trademarks Act, 1999."
PAI filed an appeal in the appellate bench of the Delhi High Court seeking to overturn the single judge’s decision regarding the permanent injunction restraining the use of ‘Prius’, despite PAI’s being
the prior user and registered proprietor of the mark in India.
The Division Bench went on to set aside the single judge’s findings including the permanent injunction, inter alia stating that Toyota’s ‘Prius’ cannot be granted the relief of passing off. Among other things, the Division Bench primarily gave
its findings as follows:
l Toyota’s ‘Prius’ had not acquired enough reputation transcending boundaries back in 2001 when PAI adopted and registered ‘Prius’ in its trading name, owing to low internet/communication exposure among consumers;
l Requirement of actual confusion must be proved, unlike likelihood of confusion in a passing off case—this was a departure from the age-old principles underlying passing off jurisprudence;
l ‘Prius’ is of a public-juris nature, thereby not deserving any protection; and
l Adoption of the trademark ‘Prius’ by PAI was logically acceptable and bona fide in nature.
Toyota appealed to the Supreme Court, seeking relief from perceived legal errors recorded by the appellate bench. In its special leave petition to the Supreme Court, Toyota stitched together the essential pieces of the jigsaw judgment wherein the Division Bench conveniently misinterpreted and wrongly applied the law of passing off under the Trademarks Act, 1999.
To assist the court in reinstating the correct approach, Toyota primarily argued against the Division Bench’s incorrect approach on assessing the extensive trans-border reputation of Toyota’s Prius cars, the absence of any finding to well-known trademark status, dishonest adoption, among other things.
The Supreme Court made what was—in our opinion—an appalling conclusion on December 14, 2017. This judgment has major effects on various stakeholders including brand owners, multinational corporations and lawyers all over the country.
While affirming the orders of the Division Bench of the Delhi High Court, among other things, the court held the following:
l The territoriality principle takes precedence over the universality principle while drawing conclusion towards relatively low spillover reputation of Toyota’s ‘Prius’ trademark back in 2001 owing to low internet accessibility among the public;
l The test of passing off hinges on (a) reputation, (b) goodwill and (c) likelihood of confusion; and
l The court found that Toyota’s ‘Prius’ could not establish whether it had goodwill in a trademark, thereby disclaiming the existence of satisfying the (a) and (c) criteria.
Toyota succeeded in overturning the Appellate Bench’s findings with regard to the following:
l In order to assess whether goodwill spilled over into India, the court has to determine whether this ‘relevant section of the public dealing with the product’ knew of the trademark; and
l The test of the law of passing off does not require proving ‘actual confusion’ among consumers, as the prime requirement is to show that confusion is ‘likely’ to occur in the minds of the general public.
The Supreme Court erroneously assessed the existing judicial precedents while delivering this judgment. The Supreme Court found that:
l Toyota’s ‘Prius’ had not established any goodwill, determined by physical or ‘subtle’ presence among consumers in India during the adoption of the trademark by PAI in 2001;
l The dishonest adoption of ‘Prius’ by PAI in its trading name is wholly irrelevant; and
l There was inordinate delay by Toyota in bringing the case in 2009 while PAI kept on using the mark and was allowed to continue using the mark ‘Prius’.
Moreover, while assessing the ‘lack of goodwill’ in Toyota’s ‘Prius’ trademark, the court disregarded the following:
l Documentary evidence filed by Toyota highlighting the popularity accrued by Prius cars being the first environmentally-conscious engineered concept worldwide in the 1990s; and
l Testimony from the automobile industry. Despite cross-examining witnesses relevant to the class of trade, by discounting significant findings arising from the trial, the question surrounding the requirement of relying on a trial arises.
The Supreme Court has created uproar by delivering such remarkable findings. However, it is essential that we take away the crucial segments held by the court in paving a path for caution for brand owners, especially multinational conglomerates, concerning the essentials to prove while strengthening their case, such as the following:
l Prove domestic goodwill and reputation among Indian customers;
l Ensure that there is enough spillover including sales and purchases within the domestic territory; and
l Ensure that there arises little or no scope of a gap for bringing a civil suit against the infringing party upon learning of violation of your trademark rights.
It is essential that brand owners ensure that there is a higher threshold, including existence of physical sales, which needs to be met while suing a domestic party in this country.
Pravin Anand is the managing partner of Anand and Anand. He has been counsel in several IP cases. He has also spoken at various forums, including the International Association for the Protection of Intellectual Property. He can be contacted at: firstname.lastname@example.org
Vaishali Mittal is a partner at Anand and Anand, where she works in the litigation department of the firm. With over 14 years of experience, she is a contributor to several professional law journals on IP matters. She can be contacted at: email@example.com
Siddhant Chamola is a senior associate at Anand and Anand, where he specialises in trademarks, copyright and designs litigation. He is a member of the Delhi High Court Bar Association. He can be contacted at: firstname.lastname@example.org
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