The doctrine of “Transborder Reputation” of Trademarks in India

A short note

“Transborder reputation” protects the trademarks not registered in India as courts are not bound to consider the question of prior usage strictly within the geographical limits of India. In today’s world, technological advancements and good communication means, the products if don’t reach the market, reach the views via advertisements, internet as well as social media apps.  The law thus prohibits using of a trademark to be appropriated by another user though that trade doesn’t happen in the geographical area. This common law is called ‘passing off’. There are three essentials based on goodwill and reputation of trader; 

  • Continuous prior use
  • Volume of sales
  • Degree of familiarity

In India this principle was introduced in N.R. Dongre v. Whirlpool Corpn. (1996) 5 SCC 714. Whirlpool in this case is a USA based company using the mark ‘whirlpool’ since 1937 which was registered in India in 1956, however, registration lapsed in 1977. Dongre started using the mark in 1986 and filed an application for registration which despite Whirlpool’s counterclaims was successful. This decision was appealed by Whirlpool on the grounds of prior use and trans-border reputation. The courts held that Whirlpool was rightful owner of trade mark as was recognised due to its duration f trading under that name. though a small circle of buyers is available in India, advertisements are done in magazines available in India. Thus, the application of Dongre was rejected. 

A different approach to doctrine of trans-border reputation can be read in Prius Auto Industries Ltd. and ors. v. Toyota Jidosha Kabushiki Kaisha. In this case Toyota, a Japanese automobile manufacturer, launched Prius in Japan in 1997 as the first hybrid car and was well-known over-all jurisdiction by 2001-2002. Prius Auto Industries, constituted in 2002, manufactures spare parts for automobiles. They sold spare parts by the name of Prius as well as Toyota, Innova and Qualis, under Toyota’s official logo. Toyota filled a case claiming infringement of trade mark. It was argued by Toyota that; advertisements and promotions in different magazines and other portals is sufficient and does not require specific registration of trademark. The test here shall be the confusion this degree of similarity can cause. Prius Auto Industries argued that under the protection of section 30 of Trade Marks Act, 1999, their action was not infringing trademark rather names were given to parts for knowledge of product and its utility. As the model of Prius was not available in India in 2009, invoking territoriality principle, Toyota is thus late in applying for trademark in India and has no goodwill here.   

Territoriality principle states that trademark shall be reputed and has goodwill earned for the alleged jurisdiction to qualify as pass off. Supreme court, regarding this principle held that, referring to Starbucks (HK) Ltd and anr v British Sky Broadcasting group plc and anr., recognition of a trademark in foreign jurisdiction is not a sufficient evidence to prove the reputation in claimed jurisdiction rather it should prove goodwill in the jurisdiction. Good will stands as most essential test of Trinity Test of Passing off. Toyota could not establish the goodwill as internet advertisements are not accessible to most Indian citizens and the advertisement began post 2001 anyway and the sale was not high in India. Moreover, courts held that, mere registration of Prius in 2002 could not establish prior use in India. 

This case draws difference between goodwill and reputation (the two essentials of trans-border reputation) and domestic trade and commerce was favoured by court. Where this case does away with the discretionary and broad interpretation of principle of trans-border reputation, it ignores the dishonest use of Prius by Prius Auto Industry in misappropriating the name. the judgement was based on the test of likelihood of confusion v actual confusion applied in cases where the defendant has recently entered against a rival trademark, in this case however, the principle of likelihood of confusion v evidence of actual likelihood of confusion was applied for the party was in market since 10 years, adding on Toyota’s default in providing evidence for actual confusion of trademarks. As the term “prius” means prior or coming before in Latin and is recognised in English since 1989, thus a term of publici juris. 

Yet what can be observed from these cases is the courts discretion to define goodwill and reputation in which Indian courts have failed to consider residual reputation and shared reputation. A certain amount of rigidity is required in application of trans-border reputation due to which the deep-rooted plagiarism dilutes and reduces the interest of such companies to trade in India. 

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

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In the year 2021, we wrote about 1000 Inspirational Women In India, in the year 2022, we would be featuring 5000 Start Up Stories.

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