This article is written by Om Daga, pursuing a Certificate Course in Trademark Licensing, Prosecution and Litigation from LawSikho.com.
Table of Contents
Introduction
Trademark as defined under section 2(1)(zb) of the Trade Marks Act, 1999 means a mark capable of being represented graphically that serves to identify the goods or services of a given enterprise and distinguishes them from those of its competitors. For example, the trademark ‘SAMSUNG’ distinguishes the goods of ‘SAMSUNG’ from those of, say, the ‘ASUS’. A trademark identifies the originator of a particular product or service and establishes a connection between the specific good or service and originator in the minds of the members of the trade, potential buyer and public at large. The quality and credibility attached to the product or service of the originator percolate as reputation which helps in developing into the brand and creates a niche amongst the customers, who are looking for consistent quality and credibility in the product or service. The reputation of a trademark in the marketplace is an important factor in passing off.
With the opening of economy and growth of international trade in globalised economy followed by relaxation in FDI norms, foreign body corporate entities looking forward to expand their business interest in India may find business concerns incorporated or existing in India already using and/or carrying on their business under an identical or similar trademark as their own which are protected under the IPR laws of India and may at times pose trademark legal challenges to a brand. Such a business concern could be a prior user in India or a registered user of the mark in India. The legal principle of trans-border reputation has been developing and has reached a decent stage and the benchmarks in assessing the standards for trans-border reputation have been set.
Trans-Border Reputation
The principle of trans-border reputation principle, as it stands now, Indian Courts can protect an international trademark in India even though such trademark is not in use in India, based on its reputation in foreign jurisdictions and knowledge and information of the same within the public at large in India due to spill-over of its reputation through people travelling or the internet or advertisement or any other means.
Principle of Territoriality
The principle of territoriality stipulates that the trademark rights granted by a sovereign state are limited to the territory of the country which had granted the said rights. It favours the notion that the reputation of a product or service is limited to the jurisdiction of the country in which that trademark was granted.
The Indian courts have recognized this doctrine. In Jones Investment Co v. Vishnupriya Hosiery Mills[1], the Intellectual Property Appellate Board had ruled against the notion of preventing Indian companies from using trademarks even though the MNCs have no intention to introduce their product in the Indian market.
Principle of Universality
According to the Universality principle, a trademark once registered in one country gains universal recognition across the world. It favours trans-border reputation and is an exception to the Territoriality principle. This means that if a trademark enjoys the status of a well known trademark in Italy, it would enjoy the same status with regard to its goods or services in India as well, or any other country for that matter.
Judicial Precedents in India
One of the first Indian judgments to recognise the principle of trans-border reputation was delivered almost 32 years ago when a Division Bench of the Bombay High Court in M/s Kamal Trading Co. v. Gillette UK Limited[2] held that the goodwill and reputation could not be limited to one particular country and that they do not depend only upon the availability of goods in a particular country. With this judgment, the seed of the principle of trans-border reputation being recognised in India was sown, which grew into a plant and has developed slowly to become a strong tree.
The principle of trans-border reputation again found support in early 1993 when the Delhi High Court in the matter of Apple Computer Inc. v. Apple Leasing & Industries[3] echoed the same sentiment after discussing the law prevalent in various foreign jurisdictions and held that “if the reputation of a trader, trading or carrying on business in another country, had travelled to a country where he carried on no business, this reputation having been acquired. On the basis of extensive advertisements and publicity, then another trader could be injuncted to protect the reputation of the trader who was not trading in the country.”
The principle attained new heights by virtue of judgment(s) rendered by the Delhi High Court and the Supreme Court of India in 1996 in N R Dongre & Ors. v. Whirlpool Corporation & Anr.[4] wherein a large Indian corporation was restrained from using the trademark “Whirlpool” despite having to be the registered proprietor of it on the Indian Trademark Registry and despite Whirlpool Corporation’s having never sold its goods on a commercial scale in India. The supply of goods in Indian embassies was held sufficient to satisfy the requirement of reputation and use in India. Further, advertisement in foreign magazines with wide circulation in India was held to be sufficient to acquire a reputation. It was laid down that “Mere advertisement of a trademark, without the physical presence of goods in the Indian market, was sufficient to establish local use and goodwill.”
The journey of the principle of trans-border reputation reached its next big milestone in the year 2004 when the Hon’ble Supreme Court of India in Milmet Oftho Industries v. Allergan Inc.[5] held that “the non-use of the mark in India by the foreign company would be irrelevant if they had entered the world market first.”
This principle was carried forward by the Delhi High Court in 2006 while delivering the judgment in Austin Nichols & Co. & Anr. v. Arvind Behl & Anr.[6] wherein it was authoritatively held that because of huge advances made in information and communication technology over the years, it would be too late for the defendant to urge that regular sale of a product in one or more foreign countries would be unknown to persons living in India. The Hon’ble High Court beautifully used the phrase ‘first past the post’ to conclude that prior use in international markets would be superior to first use in India.
Whether a trademark is to be governed by the territoriality principle or by universality doctrine?
The principles of the doctrine of territoriality and the doctrine of universality have been recognised and upheld by the Indian Courts through its various rendered judgments. This gives rise to a significant moot point whether trademarks should be governed by the principles of territoriality doctrine or the principles of universality.
The above question came before the Hon’ble Supreme Court of India in the latest case of Toyota Jidosha Kabushiki Kaisha v. M/s Prius Auto Industries Limited[7]. While upholding the Hon’ble Delhi High Court Division Bench judgment, the Hon’ble Supreme Court opined that all over the globe the judicial and academic opinion seems to be in favour of the territoriality principle and there are no reasons to see why the same should not apply to India. The courts should determine whether there has been a spill-over of the reputation and goodwill of the mark used by the claimant. The issue of trans-border reputation in India would be governed by the territoriality principle and not by the principle of universality. The legal position which stands now in India on trans-border reputation is that although the concept is recognized in India and the presence of actual business establishment is not a requirement for establishing a trans-border reputation, the existence or non-existence of trans-border reputation is a question of fact. If goodwill or reputation in India cannot be established, the examination of another related issue in the matter is of no relevance. Evidence to support the contentions must be groundbreaking. The spill-over of reputation can be through the internet, advertisement or through any other means which provides the citizens of a country with sufficient knowledge regarding a brand and its products.
It can, therefore, be rightly inferred that the Territoriality Doctrine takes precedence over the Universality Doctrine.
Legal position in other developed nations
Judicial approach in United States of America
In ITC Limited and ITC Hotels Limited v. Punchgini Inc.[8], The Appellants were operating the world famous BUKHARA restaurant since 1977 in New Delhi, India and had opened a “BUKHARA” restaurant in New York in 1986 and obtained the registration of the mark “BUKHARA” for restaurant services with USPTO in 1987 and in the same year the mark “BUKHARA” was licensed for use to a Chicago restaurateur. The Appellants closed its New York restaurant on December 17, 1991 and on August 28, 1997 they cancelled their Chicago franchise. In 1999, the Respondent (promoted by ex-employees of the Appellants) not only opened an Indian restaurant with the name BUKHARA GRILL in New York City but also replicated the concept, design, decor, ambience, etc. of the Appellants restaurant. The Appellants sued the Respondents in federal district court in New York for trademark infringement, unfair competition and false advertising in violation of federal and state law, relying on the famous foreign trademark doctrine. The Respondents put up the defence that the Appellants had abandoned the mark “BUKHARA” and counterclaimed for cancellation of the registration of the mark of the Appellants. The federal district court ruled in favour of the Respondents on the ground that the Appellants had abandoned the “BUKHARA” mark through non-use and hence, couldn’t claim for trademark infringement and also in the opinion of the court the Appellants could not produce enough evidence to show that the mark “BUKHARA” had acquired required level of “fame” to be considered under “famous mark doctrine” and the court was, therefore, not convinced by the Appellants argument that the Respondents were liable for unfair competition under “famous mark doctrine”. On appeal, the second Circuit Court of Appeals affirmed the federal district court decision and examined the issue of whether “famous mark doctrine” was part of the U.S. trademark laws. The Court observed that “while Article 6bis of the Paris Convention and Article 16(2) of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) do recognises the doctrine, these international agreements are not self-executing and have not been implemented in the United States”. The Court noted that even after a considerable number of amendments to the Lanham Act, the Congress did not incorporate this doctrine into the Act and that the territoriality principle “is basic to American trademark law”. Hence, the “famous mark doctrine” was considered not to be an exception to the “territoriality principle” and it was held that “a foreign mark holder generally may not assert priority rights under federal law, even if a United States competitor has knowingly appropriated that mark for his own use.”
Judicial approach in United Kingdom
In Starbucks (HK) Ltd. and Another v. British Sky Broadcasting Group, PLC and Others[9], the Appellant ran a successful TV subscription service under the name “NOW TV” in Hongkong. The service provided by the Appellant enjoyed a reputation amongst the members of the Chinese speaking community in the U.K. and the same was accessed and enjoyed for free in the U.K. via the internet and also a number of airlines had also made the appellants “NOW TV” programmes available through video-on-demand in-flight services. In 2012, the Respondent launched their “NOW TV” service in the U.K. The Appellant sued the Respondent for passing off. The Supreme Court of U.K. observed that the claimant must show that they had significant goodwill in the form of customers in the U.K., as opposed to people in the U.K. who happens to be customers elsewhere, and it was not necessary that the claimant had an establishment or office in the U.K. The appeal was dismissed and it was held that the primary purpose of the Appellant in making programme content available via internet and international airlines was to promote its Hongkong business by encouraging people to subscribe to Hongkong and it simply amounted to advertisement in the U.K. and therefore the appellant’s business was based in Hongkong and it had no customers and therefore no goodwill in the U.K. The Court further held that in so far as the members of the Chinese speaking community in the U.K. with access to “NOW TV” programmes were concerned who associates the Appellant’s internet television service with the mark “NOW TV”, they were customers in Hongkong, and not in the U.K., because it was only in Hong Kong that they could enjoy the service in question, and the service was not marketed, sold or offered in the U.K. because there was no payment involved. The Court also held that action for passing off could not be maintained for a reputation acquired through advertising in the U.K.
Judicial approach in Japan
In C. W. Communications, Inc. v. K. K. Denchi Shinbunsha[10], the Appellant holds a trademark “COMPUTERWORLD” in U.S.A. for newspapers which is well known in the U.S.A. as well as Japan. The Respondent registered the same mark “COMPUTERWORLD” in its own name with the Japan Patent Office. The Appellant thereupon filed an application seeking invalidation of the registration of the mark of the Respondent which was rejected by Japan Patent Office. On appeal, Tokyo High Court observed that a trademark widely recognised in a foreign country may also be deemed widely recognised in Japan through media publicity, notwithstanding the virtual absence of actual use of the trademark in the Japanese market and it was held that even though if a trademark is not being used and well-known in Japan, it can be protected if it is well-known abroad and accordingly passed an order to invalidate the Respondent’s mark.
Conclusion
The recent historical decision of the Hon’ble Supreme Court of India on the trans-border reputation of the foreign brand in India has heralded the new path of the trans-border reputation doctrine. It will now be pre-requisite for foreign companies to get their marks registered in India even though they have no plans to use them in India to get the benefit of an infringement action, as in view of the aforesaid new development, it will henceforth be difficult to establish passing off under trans-border reputation and to establish the latter, significant material evidence shall be required to prove that there has been a spill-over to India of the reputation of the mark used by the claimant in a foreign jurisdiction.
References
1. https://indiankanoon.org/doc/19312430/ [2004 (28) PTC 585 SC]
2.https://indiancaselaws.wordpress.com/2015/07/27/kamal-trading-co-and-ors-v-gillette-u-k-ltd/ [(1988) PTC 1 (Bom-DB)]
3. https://indiankanoon.org/doc/1607318/ [(1993) IPLR 63 (Del.)]
4. https://indiankanoon.org/doc/1732339/ [(1996) 5 SCC 714]
5. https://indiankanoon.org/doc/292146/ [(2004) 12 SCC 624]
6. https://indiankanoon.org/doc/523027/ [(2006) 32 PTC 133 (Del).]
7.https://main.sci.gov.in/supremecourt/2017/9646/9646_2017_Judgement_14-Dec- 2017.pdf [AIR 2018 SC 167]
8. https://law.resource.org/pub/us/case/reporter/F3/482/482.F3d.135.html
[482 F.3d 135 (2d Cir. 2007)]
[(2015) ETMR 31]
[1430 HANREI JIHO 116 (Tokyo High Ct., Feb. 26, 1992)] (Page No. 105 -106)
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