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14 November 2018
In India, the pendency of cases in various courts is huge and it often happens that, once an interim order is passed in favour of a litigant, that virtually sounds a death knell for the opposite party. Intellectual property disputes are no different to this time-consuming litigation process; however, the longevity of an interim order without any final decision is more detrimental in IP disputes, especially those involving trademarks, as the field is quite dynamic in nature and, in a given case, one may lose interest in the final outcome of the suit if the interim-order sustains for too long. In a slew of decisions, the Supreme Court of India has identified this concern of parties litigating for their intellectual property and has passed certain judgments which not only crystallized the existing trademark jurisprudence in India but also factored in the relevance of ‘leading evidence,’ ‘material on record’ and expeditious disposal of disputes inter alia pertaining to trademark registration, infringement and passing off.
Toyota Jidosha Kabushiki Kaisha v. M/S Prius Auto Industries Ltd. & Ors. (Civil Appeal Nos. 5375-5377 of 2017, decided on December 14, 2017)
Facts and Rival Submissions: In the instant case, Toyota Jidosha Kabushiki Kaisha, the petitioner, instituted a suit before the High Court of Delhi, seeking a decree of permanent injunction for infringement of trademark, passing off and for damages against M/S Prius Auto Industries Ltd. & Ors, the defendants/respondents, in order to protect the petitioner’s trademarks ‘Toyota, ‘Toyota Innova, ‘Toyota Device’ and the mark ‘Prius,’ of which the petitioner claimed to be a prior user. The petitioner claimed an enviable goodwill and reputation as one of the foremost automobile manufacturers in the world. However, until 2009, the petitioner had not obtained registration of the Prius mark in the Indian jurisdiction. Despite the fact that the petitioner had no registrations of the mark until 2009, the petitioner claimed that various advertisements and news reports about Prius automobiles and publications in car magazines in India and across the globe has made Prius a wellknown trademark within the meaning of the expression under Section 2(1)(zg) of the Trade Marks Act, 1999.
On the contrary, respondents not only had registered the Prius mark way back in 2002-2003 for all types of auto parts and accessories, but they had also been using the said trademark in carrying out their trade in such auto parts and accessories. According to the respondents, since they were in the business of manufacturing spare parts of automobiles, they were entitled to indicate the cars for which the spare parts have been manufactured by displaying the same name on the packaging of the products. The use of the words Toyota, Toyota Innova and Toyota Device, etc., were, therefore, for the purpose of honest use in an industrial matter and thus protected under Section 30 of the Trade Marks Act, 1999. Furthermore, as far as the Prius mark is concerned, according to the respondents, they had obtained registration of the mark in 2002 and had been continuously using the same since 2001. They had been regularly supplying auto accessories to various automobile giants like Hyundai Motors and General Motors.
Lastly, according to the respondents, the Prius mark had not been registered in favour of the petitioner for any of its products, nor had any Prius automobile been sold in India so as to enable the petitioner to claim goodwill in respect of such cars in the Indian market. As the product itself was not in existence in the Indian market, according to the respondents, it was impossible for people in India to identify and recognize or associate the respondent’s registered trademark ‘Prius” with any of the products of the petitioner.
Decisions by Courts Below Which led the Case to the Supreme Court: The Single Judge of the High Court found the respondents guilty of trademark infringement and passing off on account of the fact that the petitioner was the first user thereof, having marketed its hybrid car all over the globe under the name Prius at least from the year 1997. Punitive damages of Rs1 million (US$14,000) were also awarded in favour of the petitioner.
On appeal, the Division Bench of the High Court observed that it was necessary for the petitioner to establish that its reputation had spilled over to Indian market prior to April 2001, i.e., prior to the use and registration of the mark by the respondents. The aforesaid issue was decided by the Division Bench of the High Court against the petitioner on the ground that not only the publicity and advertisement surrounding the launching of the product by the petitioner in the international market was scanty, internet penetration in India at that point of time (prior to April 2001) was also limited and, therefore, it could not have been construed that prior to April 2001 the petitioner had established its goodwill and reputation in the Indian market, which respondents had taken or could have possibly taken advantage of. The Division Bench of the High Court further observed that test of possibility/likelihood of confusion would be valid at the stage of quia timet actions and not at the stage of final adjudication of the suit, particularly when the respondents had used the impugned mark for a long period as in the instant case. The test, therefore, was to be the one of actual confusion.
No evidence was provided by the petitioner to show that any section of the ‘consuming public’ was misled by the use of the Prius mark by the respondents. The last nail in the coffin for the petitioner was the laches and delay on its part, in waiting to institute the suit until 2009. Thus, in the backdrop of the aforementioned reasoning, the Division Bench of the High Court held that the injunction order granted against the respondents against the Prius trademark was unjustified, and it set aside the order of injunction passed by the Single Judge of the High Court in relation to the trademark.
Supreme Court Judgment and Reasoning: In modern day trade, globalization has brought in multichannel modes of sale of goods in the market, and therefore it is the territoriality doctrine (a trademark being recognized as having a separate existence in each sovereign country) which would hold the field. Prior use of the trademark in one jurisdiction would not ipso facto entitle its owner or user to claim exclusive rights to the mark in another dominion.
At the outset, the Supreme Court of India noticed two principles, namely: i) “that the action for passing off which is premised on the rights of prior user generating a goodwill shall be unaffected by any registration provided under the Act,”; and ii) that when using the trinity test wherein to prove and establish an action of passing off, three ingredients are required to be proved by the petitioner, i.e., his goodwill, misrepresentation and damages.
The court further referred to Kerly’s Law of Trade Marks and Trade Names to get insight into the jurisprudence and interpretation appended to various provisions of the U.K. Trade Marks Act, 1994 which, incidentally are analogous to Indian Trade Marks Act, 1999. The court then proceeded to refer to a judgment from the U.K. Supreme Court in Starbucks v. British Sky Broadcasting (2015 UK SC 31), wherein Lord Neuberger observed as follows:
“As to what amounts to a sufficient business to amount to goodwill, it seems clear that mere reputation is not enough... 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, as opposed to people in the jurisdiction who happen to be customers elsewhere. Thus, where the claimant’s business is carried on abroad, it is not enough for a claimant to show that there are people in this jurisdiction who happen to be its customers when they are abroad. However, it could be enough if the claimant could show that there were people in this jurisdiction who, by booking with, or purchasing from, an entity in this country, obtained the right to receive the claimant’s service abroad. And, in such a case, the entity need not be a part or branch of the claimant: it can be someone acting for or on behalf of the claimant...”
The Supreme Court of India also took note of the fact that in Starbucks v. British Sky Broadcasting, the U.K. Supreme Court had really refined and reiterated an earlier view put forth in in Athletes’ Foot Marketing Associates Inc. v. Cobra Sports Ltd. [(1980) R.P.C. 343] to the following effect:
“…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. This will normally shortly be expressed by stating that he does not carry on any trade in that particular country...but the inwardness of it will be that he has no customers in that country…”
Finally, the court crystallized the law as being in favour of the territoriality principle. For the correct application of the principle, the court opined that courts in India must necessarily have to determine if there has been a spill over of the reputation and goodwill of the mark used by the claimant who has brought the passing off action. In the course of such determination, it may be necessary to seek and ascertain the existence of not necessarily a real market but the presence of the claimant through its mark within a particular territorial jurisdiction in a more subtle form. The Supreme Court finally concluded that the petitioner failed to establish his goodwill or reputation in India or the Indian market in relation to the mark and, coupled with the fact that there was considerable inordinate unexplained delay, the decision passed by the Division Bench of the High Court did not warrant any interference.
The above-mentioned decision was a ground-breaking decision on many counts, the most significant of them being a clear message to the international business world that the Indian courts had, yet again, thrown their weight behind the territoriality principle.
Royal Orchid Hotels Ltd. v. Kamat Hotels India Ltd. and Ors. (Special Leave (C) No .6131 of 2015, decided on December 14, 2017)
Royal Orchid Hotels Limited, the petitioner, got registration of its trademark ‘Royal Orchid’ and ‘Royal Orchid Hotels’ in Class 16 sometime in the year 2005. Kamat Hotels India Ltd, the respondent, after challenging the registration of the said mark in Class 16, at different appellate stages, finally lost the legal battle with the dismissal of a special leave petition by the Supreme Court vide an order dated September 1, 2014. Subsequently, the petitioner applied for registration of the same marks, this time in Class 42. The petitioner failed before the High Court and therefore petitioned the Supreme Court to direct the deputy registrar to register the trademark.
Supreme Court Order and Reasoning: The Supreme Court of India noted that the Deputy Registrar of Trademarks concluded that the petitioner was not the first user of the Royal Orchid logo/mark as claimed and, in fact, the Orchid mark/logo was being used by the respondent from an anterior date. The court opined that an analysis of the impugned High Court judgment showcased that the conclusion recorded in the impugned order of the High Court was based on a detailed consideration of the materials brought on record by both the parties. The conclusion that the petitioner had not demonstrated that it was the first user of the logo/mark and that it is the respondent who is the first user was arrived at on such consideration.
In conclusion, the Supreme Court opined that conclusions reached by the High Court cannot be said to be, in anyway, unreasonable and/or unacceptable. Rather, the Supreme Court held that the view recorded by the High Court was a perfectly possible and justified view of the matter and the conclusion(s) reached can reasonably flow from a balanced consideration of the evidence and materials on record. Thus, the registration of the mark was rightly refused to the Petitioner.
M/S Az Tech (India) & Anr. v. M/S Intex Technologies (India) Ltd. & Anr. (Speical Leave Petition (C) No. 18892 of 2017, decided on August 16, 2017)
The Supreme Court of India for the first time factored in the plight of litigants battling for their intellectual property on account of the long-drawn process of disposal of, inter alia, suits of infringement and passing off. In the instant case, the court noted that interim orders in IPR matters govern the parties for a long duration of time and disposal of the main suit is a far cry. This is a disturbing trend which the court needed to address in the first instance. The Supreme Court in the instant case requested the judges of the High Courts to work out ways and means for effective disposal of the IPR matters before them.
Intellectual property is the new asset or property which has to be protected from the vices of long drawn litigation processes. Intellectual property has trans-border presence and therefore a global jurisprudence on IPR is the need of the present times in order to ensure uniformity in the realm of disposal of IPR disputes at a global level. The Indian judiciary has been pragmatic and proactive in ensuring expeditious disposal of IPR cases coupled with the fact that jurisprudence applied, as far as legally possible given the existence of domestic law, is in sync. with the globally accepted legal principles.
