Toyota Vs. Prius Auto – Analysis On Permeation Of Goodwill And Reputation Of Foreign Marks Into India And Passing Off Such Marks

Trademark infrignement

The judgment of The Supreme Court of India in the matter of Toyota Jidosha Kabushiki Kaisha Vs. Prius Auto Industries Ltd. & Ors is worth bookmarking for IP practitioners in India. The tussle between Toyota and Prius Auto has been going on since the year 2009. The initial matter concerned several trademarks, viz., TOYOTA, TOYOTA INNOVA and TOYOTA (device mark) and PRIUS. While the judgement (largely in favour of Toyota) of the lower court concerning the first three listed marks are not appealed in The Supreme Court, the judgment, which was in favour of Prius Auto and others (“Defendants”), concerning PRIUS, was appealed. The Supreme Court held in favour of Defendants, Prius Auto and others.

By way of background, the Defendants had obtained registration of the mark, PRIUS, in the year 2002, and has been using the mark since 2001. Toyota (“Plaintiff”) on the other hand launched the world’s first commercial hybrid car called Prius in Japan in the year 1997. In India however, the car was released in the year 2009, and the Plaintiff applied (as “proposed to be used”) for registration of the PRIUS mark on December 03, 2009, and followed it up with institution of suit against the defendants on December 21, 2009.

In the appeal, the Supreme Court set out to determine whether the defendants, by using the mark, PRIUS, to market the automobile spare parts manufactured by them, are guilty of passing off their products as those of the plaintiff, thereby injuring the reputation of the plaintiff in the market.

In order to address the issue at hand, Division Bench of the High Court considered two largely differing doctrines that have an impact on scope of trademark protection, viz., Universality Doctrine and Territoriality Doctrine. Universality Doctrine posits that a mark signifies the same source all over the world. In contrast, Territoriality Doctrine posits that a mark has separate existence in each sovereign country. In other words, under the Territoriality Doctrine, prior use of the trade mark in one jurisdiction would not, by that very fact, entitle its owner or user to claim exclusive rights to said mark in another dominion. The Division Bench held that Territoriality Doctrine holds, and the Supreme Court concurred.

In view of territoriality principle, the court had to determine whether there has been a spill over (by the time the Defendants started using the mark) of the reputation and goodwill of the mark used by the claimant who has brought the passing off action. The court considered the evidence, dated prior to first use of the mark by Defendants, supplied by the Plaintiff to assert spilling over of the reputation and goodwill of the mark to India.

The court noted that the car itself was introduced in the Indian market in the year 2009-2010. Further, the advertisements in automobile magazines, international business magazines; availability of data in information-disseminating portals like Wikipedia and online Britannica dictionary and the information on the internet, even if accepted, would not be a safe basis to hold the existence of the necessary goodwill and reputation of the product in the Indian market at the relevant point of time, particularly having regard to the limited online exposure at that point of time, i.e., in the year 2001. In view of these observations, among others, the Supreme Court agreed with the conclusion of the Division Bench that the brand name of the car Prius had not acquired the degree of goodwill, reputation and the market or popularity in the Indian market so as to vest in the Plaintiff the necessary attributes of the right of a prior user so as to successfully maintain an action of passing off even against the registered owner. The Supreme court further held that if goodwill or reputation in the particular jurisdiction (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.

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