Toyota Fails to Establish Trans-Border Reputation for Prius:
Delhi High Court
A Division
Bench of the Delhi High Court constituting of Hon’ble Mr. Justice Pradeep
Nandrajog and Hon’ble Mr. Justice Yogesh Khanna recently held that Toyota
(Respondent herein) had failed to establish trans-border reputation of its
trade mark PRIUS when Prius Auto Industries (Appellants herein) adopted their
name, and therefore, the Appellants could not be held guilty of passing off
Toyota’s trademark.
Brief Facts/Background:
The
Respondent instituted a suit against Prius Auto Industries (Defendant No. 3
therein), its two partners Deepak Mangal (Defendant No. 1 therein) and Sandeep
Verma , and its sister concern Prius Auto Accessories Pvt. Ltd. pleading infringement
of its trademarks TOYOTA, INNOVA and the TOYOTA DEVICE and passing off of the
trade mark PRIUS. The Respondent claimed that the Appellants were selling auto
parts meant for use in different brands of automobiles manufactured and sold by
Toyota and were marketing spare parts using the registered trademarks of
Toyota. Toyota sought an injunction to restrain the Appellants from
manufacturing or selling auto parts using identical or deceptively similar
trade marks as that of Toyota.
The
Appellants filed a common written statement claiming that using the words of
Toyota and Innova on the packaging material was not as a trademark but to
merely inform the consumers that a particular automobile part was suitable for
a particular brand of motor vehicle manufactured and sold by Toyota. They
further contended that Prius being a word in dictionary meaning prior in use,
was the motivation to adopt the word Prius as the trademark, and the same was
registered by Prius Auto Industries on March 30, 2002 claiming usage since July
01, 2001.
Learned
Single Judge granted ex-parte ad-interim injunction restraining the appellants
from using the trade mark Toyota, Innova, Prius and the Toyota device in
respect of auto parts and accessories. The order was vacated on March 19, 2010.
Toyota took the matter in appeal, registered as FAO(OS) 248/2010, which was
disposed of by the Division Bench on August 10, 2010, imposing an interim
arrangement wherein the Appellants were restrained from using the trademarks
Toyota and Innova except for the purpose of identifying that their product
could be used in cars and that the Appellants were required to mention the
company name after “Genuine Accessories”.
Thereafter,
the Ld. Single Judge framed the issues, and the parties led their evidence and
the trial concluded. After such conclusion, the Ld. Single Judge disposed off
the suit on July 16, 2016. The Learned Single Judge held that Prius Auto
Industries was guilty of infringing on Toyota's trademarks based on the goodwill
and reputation that had been acquired by them and that the mark PRIUS by Toyota
had acquired trans-border reputation and restrained the Prius Auto Industries
from manufacturing, selling, or using the trademarks PRIUS, TOYOTA and INNOVA
alongwith paying Rs. 10 Lakhs as compensation to Toyota. Aggrieved by the said judgment/decree
dated July 16, 2016, the Appellants/ Original Defendants filed the present
appeal being RFA(OS) 62 of 2016, challenging part of the impugned judgment and
decree, regarding use of the trademark/word mark PRIUS which forms a part of
their corporate name, and that there was no trans-border reputation of the
trademark PRIUS as claimed by the Respondent in 2001, when they had commenced
their business under the name/mark Prius Auto Industries. It should be noted
that no relief was sought regarding being restrained from using Toyota, the
Toyota device and Innova as trademarks and only use them for identification
purposes.
Appellant’s (Prius Auto Industries) Contentions:
The
Appellant preferred an appeal against the order of the Ld. Single Judge on the
following grounds:
- That the word PRIUS is publici
juris and that was proof that the adoption of Prius in the corporate name of
the Appellant was honest and bonafide as they were the first company to
introduce chrome plated accessories and motor parts in India, and were looking
for a name which would serve as the equivalent of the Hindi words “Pehla
Prayas” when they came across the word Prius in the dictionary.
- That not all motor vehicles sold in
different jurisdictions abroad under different trade marks become known in
India and therefore there is no trans-border reputation in India of motor
vehicles sold in foreign jurisdictions by Toyota. The Appellants counsel
further submitted that the documents and publications considered by the Ld.
Single Judge to establish trans-border reputation of Prius are all post April,
2001, when Prius Auto Industries had commenced its business or were not in
circulation in India when the Appellant Company was incorporated.
- The articles being relied on by the
Respondent to establish Trans-border reputation in India were released in the
years when there was low internet penetration in India, and there is no
evidence as to how many people accessed the websites in question when the articles
were published/uploaded.
- That mere evidence of brochures
circulated in India were not enough to prove trans-border reputation where
goods under the trade mark were not sold in India.
- That law declared by the Supreme
Court in the decision reported as SCR 1963 484 Amrit Dhara vs. Satya Deo Gupta
required it to be held that the suit filed was not only hit by laches but there
was acquiescence by Toyota in allowing appellants to build reputation of the
trade mark Prius concerning their goods.
- That whereas Toyota’s application
for registration of the trade mark Prius was still pending, the appellants had
obtained a registration of trade mark Prius in the year 2001 and benefit of
said registration as contemplated by Section 28 of the Trade Marks Act, 1999 would
be available to the appellants.
- That since admittedly appellants
were using the trade mark Prius since April, 2001 and the suit was filed in
December, 2009, i.e. after more than eight years of the mark being used, the
test of likelihood of confusion had not to be applied. The test to be applied
was actual confusion being proved.
Respondent’s (Toyota) Contentions:
- That though the word Prius was a
word in the dictionary as of the year 2000, its origin is clearly Latin,
therefore, its absorption in English language was not of such a nature and to
such an extent that a person, either in the general public or in the automobile
industry trade, would be using it or would be aware of it. The word is not an
apt description for an automobile. It is therefore an arbitrary and fanciful
mark and thus it deserves a strong protection.
- That when Toyota launched the
hybrid car Prius in the year 1997 it became a global event because concerns of
environmentalists were likely to be met and this became global news. Further,
it was contended that as per Section 56 of the Evidence Act, 1872, a fact which
a Court will take judicial notice of need not be proved and that as per Section
57 a Court shall take judicial notice of matters of public history and for
which the Court may resort for its aid to appropriate books or documents of
reference. The Counsel for the Respondents drew a parallel with the drug
Viagra, whose reputation was held by this Court in Pfizer Products Inc. case
(supra), to have spread like fire in the forest just after it was launched and
which came to be known as a wonder drug, learned counsel urged that same would
be the position in the instant case.
- There was dishonesty in adopting
the trade mark Prius by the appellants because the family of defendant No.2 was
in the trade of auto parts for over ten years when defendants No.1 and 2
adopted the trade mark Prius. From the fact that appellants were also
infringing the trade marks Toyota, Innova and the Toyota logo, it was urged
that cases of multiple copying were also an evidence of dishonest
appropriation.
- That the entire path taken on
deciding on the name Prius as seen in the affidavit by way of examination in
chief of the Defendant No. 1 therein, Deepak Mangal, wherein he explains that since
it was their first venture in producing chrome plated automobile parts they
wanted a name that would be along the lines of the Hindi words “Pehla Prayas”
translated as “first attempt” in English, and thereafter came across the word
Prius in a dictionary and chose it as their company name.
- The fifth contention urged was that
the triple identity test being fulfilled in the instant case, a very strong
case against the appellants for grant of injunction was made out. The triple
test being: identity in the goods (motor vehicles and spare parts in relation
thereto); goods sold in the same market; and the class of buyers being the
same.
- That where dishonesty in adoption
of a well-known trade mark was established, principles of equity which afford a
protection in the form of acquiescence or waiver in favour of the offender,
would not be applicable.
- The seventh argument was that the
appellants cannot invoke the benefit of Section 28(3) of the Trade Marks Act,
1999, because the statutory provision comes into play when both parties are
bona-fide registered proprietors of a trade mark and neither can sue the other,
but each can sue third parties. The adoption in the instant case not being
bona-fide and honest, learned counsel urged that the protection envisaged by the
Section would not be available to the appellants.
Decision of the Division Bench
The Division
Bench observed that the law on trans-border reputation requires two facts to be
established. The first is reputation in foreign jurisdictions of the trade mark.
The second is knowledge of the trade mark due to its reputation abroad in a
domestic jurisdiction. The reason being a trade mark is territorial in its
operation. If its reputation spills over beyond the territories of its
operation the benefit thereof can be claimed in an action of passing off. The
corollary of the finding that newspaper reporting of the event of Prius car
launched in Japan in the year 1997, and further sales in the year 1998 and 1999
being not with much prominence would be that the knowledge would be limited to
the class of persons associated with the trade in automobiles. The trade mark
has to build a reputation in the form of public confidence in the goods and
therefore the association of the mark with the source of the goods. Toyota has
led no evidence of money spent in advertisements in India of the Prius car
before it was sold for the first time in India in the year 2010.
The Division
Bench further observed that issues of trans-border reputation or likelihood of
confusion decided in various cases cited before the Bench and even in cases not
cited arose before the Court either in quia timet actions or when the
defendants had just entered the market. At that point of time, the issue could
obviously be decided on the test of likelihood of confusion, but in a case of the
kind at hand where the appellants had been selling the goods under the offending
trade mark for nearly ten years when the suit for injunction was filed, there
must be evidence of actual confusion.
The Division
Bench also observed that the argument that dishonesty of the appellants is writ
large from the fact that they brazenly infringed Toyota’s registered trade mark
Toyota, Innova and the Toyota logo, overlooks the fact that the appellants had
been selling auto parts under the trade mark Prius since April 2001, and till December
2009 when the suit was filed there was a constant rise in the sales figures
which by December 2009 would be around Rs. 4.5 crores for the period 2006 till
December 2009. However, It is possible that manner of representation to write
that the goods are compatible may appear to one as a trade mark use and to
another as a non-trade mark use. The Division Bench observed that this would
not be evidence of dishonesty, and that this line of reasoning adopted by
Toyota is an ancillary line of reasoning and not the main plank. It is intended
to support the main plea of dishonesty in adoption sought to be proved through
trans-border reputation and lack of credibility in the justification given by
the appellants as to how defendants No.1 and 2 adopted the trade mark Prius
motivated by the words ‘Pehla Prayas’.
The Division
Bench observed Toyota has failed to establish trans-border reputation of its
trade mark Prius in India when appellants adopted the same. The Division Bench
found credibility in the justification given by the appellants as to how they
adopted the word prius which was publici juris in the year 2001.
The Division
Bench also observed that the justification in the written statement is, not
that it was the first (Pehla) business venture of the appellants. The
justification given is that the appellants were the first in India to
manufacture add-on chrome plated accessories. The word ‘Pehla’ was used in said
context of the first manufacturer and not the first business venture. The word
‘Prayas’ was used as an attempt in the context of the manufacture and not the
business venture. The Division Bench held if a word is publici juris and a
person gives good justification as to how he appropriated a word as a trade
mark, relating to the state of mind of the person, unless the testimony of the
person is discredited, a Court would have no option but to accept the statement
made on oath because the fact is of a kind which a person can prove by stating
the truthfulness thereof on oath. And if, as in the instant case, there is
proof that the word was publici juris it lends assurance to the claim. The Division
Bench further held that the logical line of reasoning for finding a catchy
trademark for Pehla Prayas would lead from Pehla meaning first, to the English
word Prior, and thereafter Prius, and therefore the Division Bench did not find
any blemish in the logic of the search and the reasoning.
The Division
Bench gave the following order in view of all the observations and submissions:
“We
accordingly allow the appeal with respect to the limited issues which were
argued in the appeal concerning the trade mark Prius and set aside the decree
as per para 207(i) but limited to the injunction issued relating to the trade
mark Prius. Since the appellants did not challenge the injunction order, which
we find is upon a condition, concerning the trade mark Toyota, the Toyota
device and the trade mark Innova, said part of the injunction granted is
retained. Mandatory injunction as per para 207 (ii) is set aside.”
