Trademark Infringement case went against TOYOTA in Delhi HC

In a recent decision of the Delhi High Court, available here, the
Japanese automobile magnet Toyota suffered a setback, when the
petition that it had filed seeking exclusive rights over the trademark
“PRIUS” for its hybrid cars was dismissed by the court. The matter,
titled Toyota Jidosha Kabushiki Kaisha v. Deepak Mangal & Others,
comprised of I.A.Nos.16776/2009, 110/2010, 1156/2010 & Crl.M.A.No.
1032/2010 in CS(OS) No.2490/2009 and the judgement was delivered on
March 19, 2010 by Indermeet Kaur, J.
The petitioner had sought to prevent the defendants from using the
trademark/trading style TOYOTA, the toyota device, INNOVA and PRIUS
regarding automobile parts and accessories or any other related goods
or to perform a passing-off action with respect to the defendant’s
goods in the name of the petitioner.
This suit was actually based on a two-fold cause of action. The first
was regarding the infringement of the 3 registered trademarks of the
petitioner by the defendants, viz. TOYOTA, the toyota device and
INNOVA. The second was with respect of the defendants seeking to pass
off the trademark PRIUS as their own. The petitioner had claimed to be
the prior user of that trademark, although it had not been registered
before in India in the petitioner’s name.
According to the petitioner, in 1994, it had designed a concept
vehicle with a hybrid engine, named it “PRIUS” after the Latin word
“prior” or “before”. The first model was sold in December, 1997 in
Japan and the vehicle was officially launched in 2001. Petitioner has
also been the registered proprietor of the trademark PRIUS in as many
as 28 countries from 1990 onwards. In order to back its position, the
petitioner put on record the sales figures of the car in foreign
counties as well as extensive advertisements of the vehicle both in
national and international publications. Newspaper reports and other
online media coverage of the petitioner’s promotion of the PRIUS brand
had also been cited along with. The defendants, on the other hand,
were alleged to have been using the same mark as an essential and
leading portion of their trading name and the same appears on the
defendants’ products. Nor have the defendants sought any authorization
from the petitioner for such use and hence such action on the
defendants’ part allegedly amounted to passing off and dilution of the
plaintiff’s trademark, thereby adversely affecting the plaintiff’s
goodwill.
Given the wide media coverage that the vehicle and the petitioner’s
actions to promote the same along with the new hybrid system received
even in prominent Indian newspapers and automotive journals, the
petitioner contended that it was not possible to believe that the
defendants were unaware of the prior usage of the mark PRIUS and the
petitioner company’s association with the same and that their
subsequent efforts to use the mark had not been aimed to pass off the
petitioner company’s huge goodwill and brand value as their own.
In this context, the petitioner relied upon the decision of the
Supreme Court in N.R. Dongre v. Whirlpool Corporation [(1996) 5 SCC
714]. The relevant part of the judgement that had been cited is as
follows:
“The concept and principle on which passing off action is grounded is
that a man is not to sell his own goods under the pretence that they
are the goods of another man. A trader needs protection of his right
of prior user of a trade mark as the benefit of the name and
reputation earned by him cannot be taken advantage of by another
trader by copying the mark and getting it registered before he could
get the same registered in his favour. We see no reason why a
registered owner of a trade mark should be allowed to deceive
purchasers into the belief that they are getting the goods of another
while they would be buying the goods of the former which they never
intended to do. In an action for passing off if should not matter
whether misrepresentation or deception has proceeded from a registered
or an unregistered user of a trademark. He cannot represent his own
goods as the goods of somebody else.”
According to the petitioner, as per this judgement, although the
defendants might have registered the trademark PRIUS under their
names, but the same did not constitute a defence for their action
seeking to pass-off the petitioner’s goods as their own. To
substantiate this allegation, the decision in Jolen Inc. v. Doctor and
Company [(2002)2 C.T.M.R. 6] was also cited.
The petitioner also referred to Pfizer Ireland Pharmaceuticals v.
Intas Pharmaceuticals and Anr. [2004(28) PTC 456(Del)] to support the
submission that the worldwide reputation of the trademark PRIUS has
been established by his sale turnover. Regarding the defendants’ plea
of the plaintiff not having any presence/business in India when the
defendant had adopted the mark, it was contended that the plaintiff
was naturally affected when it sought to establish such business in
India and found the defendant to be trespassing, as was the case in
Ford Motor Company of Canada Limited & Anr. v. Ford Services Centre
[MANU/DE/1774/2008], where plaintiff was found entitled to the interim
relief.
The defendants pleaded that the petitioner has delayed for long before
approaching the court, in response to which, the latter cited the case
of Daimler Benz Aktiegesellschaft and Anr. v Hybo Hindustan [AIR 1994
Delhi 239] to contend that the delay in approaching the Court could
not justify the use of the trademark which was a worldwide famous
name. The petitioner had further drawn the court’s attention to the
packaging of the defendants’ products, showing use of the trademark
TOYOTA, the toyota device, INNOVA and PRIUS along with the invoices,
brochures and price list. It had further been submitted that the
extensive use of the said marks on these documents of the defendant
prima facie evidence his malafide intent; i.e. of the infringement of
the petitioner’s trademarks and passing off his goods to the innocent
purchaser as that of his own. The defendants pleaded that such use for
the purpose of character identification of goods, which was
categorically denied by the petitioner.
Defendants in this case had put up a defence of delay, waiver and
acquiescence on the part of the petitioner. According to them, the
petitioner had neither applied for registration of the trademark PRIUS
itself nor objected to the defendants’ registration of the same in
2002. By allowing use of said mark by defendants for such a long time
from 2002 to 2009, the petitioner was alleged to have given up all
claims, if any, on that mark. Defendants further submitted that
certain advertisements, as produced by the defendants in evidence
clearly exhibit that the defendant is the supplier of garnish covers
and auto accessories for various vehicles including that of the Toyota
group. The usage of marks ‘toyota device’ had only thus been for the
purpose of the identification of the item and its suitability to the
wide range of vehicles mentioned thereunder and not with the intent to
deceive the purchaser or to confuse him into believing that defendants
had been selling auto accessories of ‘TOYOTA’. In fact, petitioner
itself had relied on the same published advertisements.
Nor had the petitioner provided any explanation regarding the delay
that it indulged into before bringing the matter to court, which
indicated acquiescence of defendants’ claim by the petitioner, if not
a waiver of rights. In this context, reliance had been placed on the
cases Amritdhara Pharmacy v. Satyadeo Gutpa [AIR 1963 SC 449] and
Khoday Distilleries Limited(Now known as Khoday India Limited) v. The
Scotch Whisky Association and Ors. [AIR 2008 SC 2737] were delay in
filing application alleging infringement had been held as fatal to the
accusation.
"PRIUS" being contained in the English dictionaries, it was argued
that petitioner could not claim a monopoly over the word, which was
not an invented one and Sections 30(1)(b), (2)(d) and Section 35 of
the Trademark Act were relied upon to argue that ‘Toyota’, ‘toyota
device’ and ‘INNOVA’ had been used by the defendants only to
demonstrate the compatibility of the auto accessories in the use of
these vehicles, along with several others. For this, defendants had
relied upon Hawkins Cooker Ltd v. M/s Murugan Enterprises [2008(36)
PTC 290(Del)].
Petitioner, in return argued that mere existence of the aforesaid
advertisements on the defendants’ part did not necessarily imply that
petitioner had prior knowledge of the infringement. A distinction was
sought to be drawn between constructive knowledge and actual knowledge
in this context and the cases of Automatic Electric Limited v.
R.K.Dhawan & Anr. [1999 PTC (19) 81] and M/s Hidesign v. M/s Hidesign
Creations [AIR 1991 Delhi 243] were cited in support. It was further
contended tha the cumulative sales figure of the defendants during
this 7 year-delay consisted of a miniscule figure only and hence could
not be regarded as proceeds from a well-established business. To
establish the legality of the petitioner having proprietary word PRIUS
and to quash the defendants objections regarding the same, the matters
of Ciba Ltd. Basle Switzerland v. M.Ramalingam and S.Subramaniam
Trading in the name of Sought Indian Manufacturing Co., Madura and
Another [AIR 1958 Bombay 56 (V 25 C 21 )], Altiebolaget Volvo v. Volvo
Steels Limited [1998 PTC (18) (DB)], Satyam Infoway Ltd. v. Siffynet
Solutions (P) Ltd. [(2004) 6 SCC 145] were relied upon. To drive home
defendants’ dishonest usage of the marks from the beginning, the
petitioner cited the cases of L.D.Malhotra Industries v. Ropi
Industries [ILR 1976 Delhi 278] and Beiersdorf A.G. v. Ajay Sukhwani
and Another [2009 (39) PTC 38 (Del.)].
The petitioner also contended that high safety measures adopted by the
petitioner compared to the defendant also needed to be borne in mind
and the purchaser could not be exposed willingly to a risk given the
nature of the goods involved, viz. automobile parts.
The court held that the journals publicizing petitioner’s usage of
PRIUS were not easily available to the common Indian public. Even the
Indian magazine publications relied upon by the petitioner had been
irregular at best. It had only been in 2009 that the Auto Indian
Magazines had published detailed information on the Toyota vehicle.
The court referred to the case of Gillette Company vs. A.K. Stationery
[2001 PTC 573 (Del)]. In that matter, judiciary had recognized the
principle of a trans-border reputation and the spill over of its
international reputation from foreign lands to the Indian boundaries.
It had been held that its application would depend on case-to-case
basis. In the present case, the court believed that there was not
sufficient material on record to hold that an Indian purchaser of
chrome plated auto accessories had become aware Toyota’s association
with the PRIUS mark. The case of Sakalain Meghjee v. B.M.House (India)
Ltd. [2002 (24) PTC 207 (Del)] was also referred to in this relation.
On the other hand, the registration of the mark by the defendants in
2001 and the subsequent sales figures indicated that the exclusive use
of the said mark by them as per Section 28(2) of the Trademarks Act
and continuing business regarding the same. The court refused to
accept the petitioner’s argument of it having only a constructive
knowledge of the defendants’ usage of the mark. The defendants’
reliance on the Amritdhara Case and the Khode distilleries case was
also approved of.
The court opined that acquiescence was one facet of delay and if the
petitioner had stood by knowingly and let the defendants build up an
important trade until it had become necessary to crush it, then the
petitioner would be stopped by his acquiescence. Thus if the
acquiescence in the infringement amounted to consent, it would be a
complete defence and the acquiescence must be such as to lead to the
inference of a license sufficient to create a new right in the
defendant. The court in this context also referred to cases such as
Ramdev Food Products(P) Ltd. v. Arvindbhai Rambhai Patel and Ors.[2006
(33) PTC 281] and other legal authorities like Halsbury’s Laws of
England, Fourth Edition, Vol. 16, paragraph 1505 to emphasize this
point.
The court then went on to say that petitioner’s delay in filing the
case by 7 years without having a reasonable explanation allowed the
defendant to establish a substantial business and at that point, such
delay might be prejudicial to the petitioner being granted any relief.
Reference was made to cases such as Allied Blenders and Distillers P.
Ltd. v. Paul P.John and Ors. [2008 (38) PTC 568 (Del)] and Procter &
Gamble Company v. Satish Patel and Ors. [1997 (1) ARBLR 158 (Del)] and
also Standard Electricals Limited v. Rocket Electricals and Anr. [2004
(72) DRJ 794]. The court also dubbed the petitioner’s submission of it
having learnt about the defendant only in 2009 on a stray web search
as patently false and chastised the petitioner for not having
disclosed to the court the date of registration of the mark by the
defendants as far back as March, 2002. Had it done so, then that would
have been taken into consideration before the court had granted
interim relief to the petitioner. Mention was made of Old Navy (ITM)
Inc. and Ors., GAP (ITM) Inc. and Ors. and Banana Republic (Itm) Inc.
and Ors. [2007(99) DRJ 571], wherein it was held that non-disclosure
of material facts would work to the prejudice of such a non-disclosing
party disentitling him to a relief in equity.
The status of PRIUS as not being an invented word was also established
and the defendants were held to be honest user of the same. The court
also took note of the dissimilarity between the trade dress of the
petitioner and the defendants, including the packaging, shape of
material, all visual impressions and their getup including its colour
scheme, description of the words i.e. their font, size and
alphabetical array etc. as also the variation in price. Moreover,
according to the court, the purchaser of those auto accessories being
usually one from a high income group, he was likely to be an educated
person aware of the identity of the seller who was unlikely to mistake
the defendant for the petitioner. The defendant on the use of the
registered marks Toyota, the toyota device and the INNOVA was held to
be protected under the saving clause of Section 30 of the Trademarks
Act, which protects a honest user of a registered trade mark for the
purpose of identification of the goods. Mention was also made of the
European Court decision in Gillette Company vs. L.A.Laboratory
[2005(37) FSR 808] in this context. In that case, the conditions of an
honest use within the meaning of Article 1(1)(c) of the Directive
89/104 was held to be in substance the expression of a duty to act
fairly in relation to the legitimate interests of the trade mark
owner. The use is dishonest only if: “It is done in such a manner as
to give the impression that there is a commercial connection between
the third party and the trade mark owner; ii. It affects the value of
the trade mark by taking unfair advantage of its distinctive character
or repute; iii. It entails the discrediting or denigration of that
mark.”
The petitioner had failed to establish such dishonest use by the
defendant, who in turn had proven that his use of the mark PRIUS was
in accordance with the honest practices in industrial and commercial
matters. Since he had not been taking any unfair advantage and his use
was not detrimental to the distinctive character or the repute of such
a trademark, therefore it did not amount to an infringement/passing
off. As per Section 29 of the Trademark Act, the onus to prove that
the mark of the petitioner had been infringed lied upon the plaintiff
and so did the responsibility of proving that the alleged infringement
fell beyond the purview of the exceptions laid down in Section 30. The
court also accepted defendant’s argument under Section 30(2)(d) of the
use of the other marks like TOYOTA, toyota device and INNOVA as
reasonably necessary to indicate that the goods are adaptable and
suited to the vehicles mentioned therein
The balance of convenience also lied in favour of the defendant, since
if after business growth of more than seven years the defendant is
prevented from using his trade name, he would suffer huge business
loss and his legitimate financial expectations would be harmed
irreparably. On the other hand, given that petitioner had not even
launched the vehicle PRIUS on the Indian roads, no similar injury
would be suffered by him if defendant was allowed to continue the
usage.
Thus, given the aforesaid reasoning, the court dismissed the
petitioner’s allegations of trademark infringement against the
defendants.