IP Connect

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:

1. 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.
2.  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.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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:

1.  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.
2. 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.
3. 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.
4. 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.
5.  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.
6.  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.
7. 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.”