Toyota Jidosha Kabushiki Kaisha v. M/S Prius Auto Industries Ltd.

Citation: 2018 (73) PTC 1

Court: The Hon'ble Supreme Court of India

Bench: Justice Pradeep Nandrajog and Justice Yogesh Khanna, JJ.

Facts:

Toyota Jidosha Kabushiki Kaisha (“Toyota”) sued Prius Auto Industries (“Prius Auto”), a spare parts supplier, to prevent them from using the trademarks "Prius", "Toyota", and "Innova". "Innova" and "Toyota" were registered trademarks of Toyota, which led the lower courts to rule in Toyota's favour. Prius Auto did not protest against these rulings. Instead, they claimed that the trademark "Prius" was theirs and not Toyota's. To back this, Prius Auto proved that Toyota had not registered the "Prius" trademark. However, Prius Auto had it registered as early as 2002. Toyota argued that it had used the trademark since 1997 and that Prius Auto had wrongfully registered a trademark that was not its own. Having been put through several appeals in the lower courts, this case was finally taken up by the Supreme Court of India.

Issues:

Whether Prius Auto is guilty of passing off their products through the "Prius" trademark, thereby harming Toyota's market reputation?

Laws:

Section 20 of the CPC - Territoriality Doctrine.

Analysis:

Toyota's main contentions rested on the premise of the Universality Principle. As per this principle, once a trademark is registered or recognised in one country, it is deemed to have universal recognition and favours trans-border reputation.

Simply put, Toyota claimed that its trademarks were of immense repute and possessed considerable goodwill because of its aggressive marketing tactic through print media and the internet, which extended to India. N. R. Dongre v. Whirlpool Corporation was one of the cases that Toyota cited, which said that "wide advertisement of a trademark without the existence of the goods in the local market can well be considered as use of the trademark in the local market." Coalescing all of these contentions, Toyota argued that the "Prius" trademark was a well-known mark under Section 2(1)(zg) read with Sections 11(6) and 11(9) of the Trade Marks Act, 1999 because the mark "Prius" possessed tremendous goodwill in many other jurisdictions in the world well before Prius Auto's registration and use of the trademark "Prius" in India.

Prius Auto took to the Territoriality Doctrine and elaborated on how most courts worldwide accept the Territoriality Doctrine over the Universality Principle to root goodwill and repute within a specific jurisdiction. Thus, for this doctrine to apply, one must prove that she has garnered adequate goodwill for a particular mark in a jurisdiction.

The Court while deciding the current matter cited the Starbucks v. British Sky Broadcasting case. It was held 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." In essence, the prior use of a trademark in one jurisdiction would not entitle its user or owner to demand exclusive rights to the mark in question in any other jurisdiction.

The Supreme Court ruled that a test of likelihood of confusion would be a better way to prove the occurrence of passing-off, which could only be done through documents of evidence, which Toyota did not provide. The Court also instructed for the Trinity Test to be performed, as instructed in the case of Reckitt & Colman Products Ltd. v Borden Inc. The test contains three components:

1. The good or service should have accumulated goodwill or repute in the market such that it is discernible from its competitors.

2. The infringing party misrepresents his goods or services either on purpose or by accident, resulting in the public confusing the goods or services of the infringing party for the original party's.

3. The original party could suffer damages caused by such misrepresentation.

The long brawl between Toyota and Prius Auto was thus concluded with the Supreme Court's judgment, favouring Prius Auto and declaring that rights associated with a trademark are territorial and not worldwide. So one has to prove that she has acquired repute or goodwill for a mark only by presenting actual evidence, thereby rejecting Toyota's claims.

Conclusion:

The Supreme Court deliberated on two key trademark law concepts, namely, the Universality Principle and the Territoriality Doctrine, to help determine the rightful owners. Global trade today has invoked numerous channels of sale in the Indian market, which makes applying the Territoriality Doctrine in this case completely justifiable. Having clarified this, it is perhaps time for Indian courts to expand the jurisprudence surrounding trademarks' territorial character before addressing issues concerning trans-border reputations and prior use.