Note: 1. Territoriality Principle: The Principle of Territoriality holds that if a trademark is widely recognised in a country, even without a business presence, anyone in that country using the same trademark can be liable for trademark infringement.

2. Universality doctrine: The universality doctrine in trademark law recognizes certain marks as being so widely used and understood that they are considered generic and cannot be protected as trademarks.

Facts:

• Toyota Jidosha Kabushiki Kaisha or Toyota (Plaintiff) is a Japanese multinational automotive manufacturer, established in 1937. The Plaintiff owns the well-known trademark 'Prius' for hybrid cars, which has been in use since 1997 and registered in various countries worldwide. The Plaintiff launched the Prius car in India in 2009.
• Prius Auto Industries Ltd. or Prius Auto (Defendants) and its partners were a partnership firm engaged in the manufacture of automobile spare parts. They registered the trademark ‘PRIUS’ in India in 2002-2003.
• The Plaintiff filed a Civil Suit [CS (OS) No. 2490 of 2009] in the Delhi High Court seeking a permanent injunction for infringing their trademark, passing off, and for damages against the Respondents for protecting ‘‘TOYOTA’, ‘TOYOTA INNOVA’, ‘TOYOTA DEVICE’ and the mark ‘PRIUS’ which the Defendants claim to be Prior User of.
• This was a Plaintiff’s appeal against the decision of the Division Bench of the High Court of Delhi’s decision dated 23.12.2016.

Background:

• Toyota (the Plaintiff) sought cancellation of the Defendants' (Prius Auto and Ors.) registered trademark and filed a suit in the High Court of Delhi seeking a Permanent Injunction against the Defendants from using the trademarks in question.
• The High Court granted an ex-parte ad-interim injunction on 22.12.2009, but this was later vacated upon the Defendant's application, leading to a trial.
• Toyota appealed the vacation order before a Division Bench, which, in an order dated 10.08.2010, permitted the Defendant's conditional use of the trademarks pending adjudication.
• The Single Judge subsequently granted a permanent injunction in favour of Toyota and against the Defendants, along with awarding punitive damages to Toyota.
• Both Toyota and the Defendants appealed against the damages and injunction order, respectively, before the Division Bench. The bench, in an order dated 23.12.2016, set aside the permanent injunction regarding the usage of the trademark ‘Prius’, deeming it unjustified. The appeal of Toyota regarding the quantum of damages was also dismissed.
• Aggrieved with the Division Bench's decision, Toyota filed the present appeal.
  

Main Issue:

1. Whether the adoption of a globally recognized trademark of a foreign company by another company in India would amount to infringement?
2. Whether a trademark is to be governed by the territoriality principle or by universality doctrine?
   

Response to the issue:

1. No, the adoption would not amount to infringement of trade marks if the same is not in use in the Indian Territory. To impose global recognition and prior usage into Indian territory there must be adequate evidence to show that the claimant had acquired substantial goodwill in the Indian market to the public at large.
2. The territoriality principle was observed to have predominance. However, the courts must determine whether the reputation and goodwill of a trademark have "spilled over" to a territory where the trademark is not registered. This determination is crucial because, for a passing off claim to succeed, the claimant must prove that their mark has a reputation in the territory where the action is brought, even if they don't have a physical market presence.

Relevant Sections:

The Trademark Act 1999-

• Section 2(1) (zb): Definition of trademark.
• Section 2(1) (zg): Definition of well-known trademark.
• Section 11(6) and (9): Protection of well-known trademarks.
• Section 29- Infringement of registered trademark.
• Section 30- Limits on the effect of registered trademark.
  
  

Overview of the Argument by the Appellant/Petitioner:

• The Appellant argued that the Defendants’ use of the mark ‘Prius’ for auto spare parts was likely to deceive the public into believing that the Defendants’ goods were that of the Plaintiffs.
• It was argued that to establish goodwill and reputation it is not necessary that every member of the public should recognize the mark and it would be sufficient if persons associated with the industry/goods were aware of the mark.
• Recognition and reputation of a trademark are not contingent upon the actual sale of goods in India bearing the mark in question. Advertisement and promotion of the mark through different forms of media are sufficient to establish reputation and goodwill within a particular geographical area, i.e., India.
• It was further submitted that the Division Bench of the High Court did not deal with the issue of the trademark ‘Prius’ being a well-known mark. The entitlement of such a well-known mark was to a higher statutory protection against misuse under the Act.
• The Defendants' initial use of the mark in April 2001 was dishonest, nullifying any subsequent claim to goodwill. The Appellant also disputed the classification of 'Prius' as publici juris, citing lack of due consideration and evidence.
  (Paragrapsh 17 & 18)
  
  

Overview of the Argument by the Respondent/Defendant:

• The Respondents argued that as spare parts manufacturers, they had the right to indicate to consumers the specific vehicles for which their spare parts were intended. They contended that this action was protected under Section 30 of the Act.
• They adopted the mark in 2001 and obtained registration in 2002-2003, while the Plaintiff adopted the mark in India in 2009, and the relevant car was launched in 2010. (Paragraph 19)
• The Plaintiff's evidence of goodwill and reputation dated back to after April 28, 2001, when the Defendants adopted the mark. The Plaintiff's witnesses testified that the mark was first used in India in 2009 and no advertisements were published before April 2001.
• Courts generally prioritise the Territoriality Principle over the Universality Doctrine in assessing goodwill and reputation, emphasising the need for a trademark to be recognized and established in each country. Insufficient evidence existed of the Plaintiff's 'Prius' mark extending into the Indian market before April 2001.
• The delay and latches on the part of the Plaintiff in tolerating the Defendants using the trade mark ‘Prius’ since April, 2001 despite due knowledge had also been urged to contend that the claim of the Plaintiff had been rightly rejected by the Division Bench of the High Court. (Paragraph 20)
  

Reasoning:

• The Supreme Court accepted the territoriality principle, which stated that substantial evidence must be shown to acquire trans-border goodwill in India even though it had obtained huge goodwill in other jurisdictions. (Paragraph 29)
• Once the claimant established goodwill in the jurisdiction in which they claimed the Defendants were trying to pass off their goods under the claimant's brand name, the burden of establishing actual confusion ought not to be placed on the claimant.
• The application of these principles to the present case required determining the Plaintiff's substantial goodwill for its car under the brand name 'Prius' in the Indian market. Despite 'Prius' acquiring significant goodwill in other jurisdictions, evidence of its goodwill and reputation in the Indian market was insufficient, as observed by the Division Bench of the High Court.
• Lack of evidence regarding 'Prius' goodwill in the Indian market led to the conclusion that the brand name had not acquired the necessary degree of goodwill and reputation, preventing the Plaintiff from successfully maintaining an action of passing off against the registered owner.
• Even if disagreeing with the Division Bench's view on the origin of the mark 'Prius,' the eventual conclusion had to be sustained due to the Plaintiff's delayed approach to the courts, which could not prejudice the Defendants who had continuously used their registered mark during the Plaintiff's silence.(Paragraphs 31 to 33)
  

Conclusion:

• The Hon’ble Supreme Court upheld the decision of the Division Bench of the Hon’ble High Court of Delhi. It affirmed the order dated 23.12.2016 and 12.01.2017 of the High Court and dismissed the appeal.
• It further concluded that the Appellant/Plaintiff’s delayed approach to the Courts remained unexplained. Such delay could not 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.
• The appeals filed by the Appellant/Plaintiff were dismissed.