The Indian Supreme Court on 14th December, 2017 passed a retrograde decision which will have a direct impact on genuine and foreign proprietors of trade marks. Prior to this decision, India was considered as a “safe haven” for trademark owners. Prior to this case, the Indian Supreme Court had protected the rights of the prior adopter of a trade mark even if it was in the international market. This was in contrast to the climate for trade mark rights enforcement in China and Brazil, where proprietors of well-known marks such as “Iphone” and “New balance” had lost their right to use their genuinely adopted marks. Also, in N.R. Dongre and Ors. vs. Whirlpool Corpn. and Anr the Supreme Court ruled that a trade mark which has been used for long, internationally will acquire “trans-border reputation” in India. Therefore, proprietors of trademarks, whether Indian or foreign, had the “legal comfort” that even if their marks were copied by unscrupulous traders in India, their rights stemming from original adoption and prior registration, be it outside India, would stand protected and the Indian Courts would respect and honor their rights.

The apex court’s decision in Toyota Jidosha Kabushiki Kaisha v Prius Auto Industries Ltd & Ors has turned this position on its head.

Toyota filed a civil suit against Prius Auto Industries in 2009 claiming that Toyota was the prior user of the trade mark ‘Prius’ globally and the reputation of the mark extended to India.. The trade mark ‘Prius’ was registered by Toyota in Japan in 1997 in respect of its hybrid electrical cars. This adoption of the trade mark in Japan was covered in the Economic Times newspaper in India, in 1997 itself. Toyota also obtained registration of the mark Prius in countries such as U.K., Australia and USA but not in India. Prius Auto Industries, was a supplier of accessories of, inter alia, Toyota vehicles and behind Toyota’s back obtained registration for the mark ‘Prius’ in India, in the year 2002. The Trial Court while adjudicating the dispute was of the opinion that Toyota was the prior adopter of the trade mark ‘Prius’ and therefore injuncted Prius Auto Industries from using the trade mark. This decision was appealed before the Division Bench, which overturned the Trial Court’s decision. Toyota then filed an appeal before the Supreme Court.

The Supreme Court in its decision dated 14th December, 2017 ruled that even though the launch of Toyota’s ‘Prius’ cars was covered as a news article in the Economic Times in 1997, it could not have had an impact on Indian readers. Furthermore, the internet had also not permeated into the lives of Indian masses in 2001 therefore, it could not be said that Toyota had established that its trade mark ‘Prius’ had goodwill or reputation in India.

The Supreme Court held that the acquisition of goodwill and reputation in one territory will not ipso facto result in spillover of reputation of such trade mark in another territory as well (the principle of trans-border reputation). Furthermore, the fact that the suit was filed in 2009 was held to be a delay on the part of Toyota.

In view of this judgment, to sustain an action for passing off in India for an entity claiming honest adoption and prior use of a trademark overseas, , it will not be enough merely:

i) to establish honest adoption,

ii) prior registration of the trademark overseas,

iii) knowledge of the trademark in India prior to the adoption and use by the usurper,

iv) sporadic use of the trade mark and

v) availability of information on the internet.

The proprietor will have to now, additionally establish that it has acquired goodwill and reputation in its trade mark in India and there exists a probability of confusion between the use of the usurper of the trademark in India and the use of it mark.

In this case it appears that Toyota was lulled into a safe haven by the Supreme Court’s earlier principles of recognizing trans-border reputation, else more evidence might have been produced before the Trial Court. The previous decision in Milmet Oftho did not make it necessary for Toyota to produce evidence to show that it had acquired a substantial goodwill for its car under the brand name ‘Prius’ in the Indian market/ The requirement to establish goodwill and reputation is therefore a drastic change.

One of the important aspects of this case is that Toyota’s Prius is a vehicle costing nearly INR 40 lakhs in India(USD 62,421), which only a selected few can afford in India. Therefore, the fact that the existence of Toyota Prius was known to a certain class of consumers, instead of the general public in India, should have been considered. The other issue which worked in favor of Prius Auto Parts is that there was an ‘unexplained delay’ of 6-7 years in initiating the action against it. This also changes the ratio in the Whirlpool case where the Court had held that 14 years delay was not considered as an issue against the original adopter of the trade mark. Similarly, in the case of Bengal Waterproof Limited v Bombay Waterproof Manufacturing Company and Anr the apex court had taken into consideration the fact that every act of passing off will be a continuing wrong and give rise to a fresh cause of action. In the present case too, Prius Auto Ltd.’s acts were a continuing wrong therefore, the cause of action for the suit arose each time there was such misrepresentation. Therefore, to hold that there was a delay in filing suit which weighed in favor of Prius Auto Ltd is contradictory to the previous holding of the Apex Court. With all due respect, delay can be an issue at the time of considering an interim injunction, but certainly cannot be an issue at the time of trial, particularly in infringement and passing off matters.

Pursuant to this decision it is strongly recommended that proprietors of trade marks protect their trade mark by filing applications for registration of their trade mark(s) in India and periodically disseminate information through print or electronic media about the products or services in relation to which the mark is used or is intended to be used. Each time, a clear case of reputation and goodwill within India will need to be established to sustain a passing off action. For trade mark purposes, therefore, India cannot any longer be considered as part of the global village and instead of trans-border reputation, the principle of intra territorial reputation will now be considered.