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Breaking: Toyota loses ‘Prius’ trademark battle in Supreme Court to Prius Auto [Read Judgment]

The Supreme Court of India has upheld Delhi High Court’s Division Bench judgment in the matter of Toyota Jidosha Kabushiki Kaisha v Prius Auto Industries Ltd & Ors., letting Prius Auto (Respondents) to use the well known mark “Prius”.

Going to the facts of the case, it was the case of the Toyota Jidosha Kabushiki Kaisha  (“Appellant(s)”) that through various advertisements and news reports about ‘Prius’ and publications in car magazines in India and across the globe has made ‘Prius’ a well known trade mark within the meaning of the said expression under Section 2(1)(zg) of the Trade Marks Act and thereby its use by the Respondents was a clear infringement of their trademark.

It is to be noted that the Trial court earlier had granted a permanent injunction restraining the Respondents from using the well known although unregistered trade mark ‘Prius’ so as to prevent passing off the appellant’s goods as that of the respondent’s, which was rejected by the Division Bench of the Delhi High Court. Relying on one of its own judgments in the case of Trans Tyres India Pvt. Ltd. vs. Double Coin Holdings Ltd. & Anr., the Division Bench of the High Court took the view that the “Universality Doctrine” has not been accepted by courts. It is the “Territoriality Doctrine” that would hold in this case.

In the present appeal, P. Chidambram, who appeared on behalf of the Appellants, argued that recognition and reputation of a trade mark is not dependant on the actual sale of goods in India bearing the mark in question. Advertisement and promotion of the mark through different forms of media is sufficient to establish reputation and goodwill within a particular geographical area. He also urged that “the test of passing off always rest upon a likelihood of confusion irrespective of the stage at which the matter may be considered.” The fact that the trade mark ‘Prius’ was registered in favour of the Respondents was irrelevant insofar as the plaintiff’s claim for passing off is concerned.

On the other hand, Sai Krishna, counsel of the Respondents, invariably argued that as a manufacturer of spare parts, the defendants are entitled to inform the consumer the name of the specific vehicles for which the particular spare part is suitable and useful. This is precisely what has been done and nothing more. Such action on the part of the defendants is protected under Section 30 of the Act. Further it is urged that it is the Territoriality Principle as opposed to the Universality Doctrine which has been accepted by the courts all over the world as the correct test to determine goodwill and reputation within any particular jurisdiction.

After hearing the parties, the Supreme Court favoured Respondent counsel’s arguments on “Territoriality Principle” and on that principle stated that there must be adequate evidence to show that the Appellant had acquired substantial goodwill in India for its mark. The aforesaid was stated in spite of the observation that Appellant’s 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. The Supreme Court observed that “likelihood of confusion” would be a better test of proving a passing off action.

The Court concluded the judgment by stating the below:

“If 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 plaintiff’s right in the action of passing off that it had brought against the defendants in the Delhi High Court. Consequently, even if we are to disagree with the view of the Division Bench of the High Court in accepting the defendant’s version of the origin of the mark ‘Prius’, the eventual conclusion of the Division Bench will, nonetheless, have to be sustained. We cannot help but also to observe that in the present case the plaintiff’s delayed approach to the Courts has remained unexplained. Such delay cannot be allowed to work to the prejudice of the defendants who had kept on using its registered mark to market its goods during the inordinately long period of silence maintained by the plaintiff.”

Honorary Research Chair Professor of IP Law, Nirma University and Visiting Professor of Law, National Law School, Bangalore, Prof. (Dr.) Shamnad Basheer wrote in his blog, Spicy IP,

“The court’s ruling appears robust and well reasoned. Given the undue expansion of IP rights in the recent past and a shift away from the “consumer confusion” model to an unrestrained ability to control any and all third party uses of the mark (whether or not the consumer was confused), this ruling by the apex court will serve to bring the balance a bit back. And take trademark law back to its foundational roots; by blunting the pervasive overreach of the trans-border reputation doctrine.”

He added,

“All in all, a very refreshing read from the Supreme Court. Lucid, not too lengthy, and very well reasoned. So on legal legibility (a point I’ve often ranted about in the past), I’d rate this decision quite highly. And on its jurisprudential rigour too. Though on certain legal aspects (such as whether or not a passing off action requires proof of local “goodwill”, and not merely local “reputation”), the decision could have done far better.”

You can read his detailed analysis here.

Read the judgment below:

Toyota Trademark Case-watermark (1)

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