This article has been written by Nitin Kumar pursuing Diploma in Intellectual Property, Media and Entertainment Laws and edited by Shashwat Kaushik.

This article has been published by Sneha Mahawar.

Introduction 

Territoriality is a doctrine that is in accordance with the principles of equity, justice, and good conscience. It protects traders against giant multinational corporations based in other countries, as nobody should take advantage of the hard work and reputation of another person. It gives others the right to prevent others from doing within the protected territory any of the acts that are exclusively reserved to the right holders under the Intellectual Property Statute that grants and protects intellectual property rights. It informs us that intellectual property rights granted and protected by a state are independent of those granted or protected by other states. 

The principle stipulates that intellectual property does not extend beyond the territory of the sovereign state, which granted the rights in the first place. It also allows countries to design their intellectual property laws in a manner that facilitates the achievement of specific socio-economic goals. It serves both the private interests of individuals and especially the interests of communication in the interest of intellectual property law. 

Each state decides the question involving the origin, content, protection, transfer, and loss of patents, trademarks, etc., but such decisions are effective only within its territory. 

Principles of territoriality and the globalised world

In the era of globalisation, there are agreements/understandings, whether expressed or implied, between the original manufacturer and the domestic trader to establish a market in different dominions. We must also understand the concept of territorial principle (also territoriality principle) in international law, which allows a sovereign state to have exclusive jurisdiction over the general public and other legal persons within its territory. 

Moreover, the territorial period is dominated by the principle of territoriality that intellectual property rights do not extend beyond the territory of the sovereign, which has granted rights in the first registration of a trademark. This does not give worldwide protection to the trademark for doing the trade but protection in a specific territory to a specific individual in a specific state to use the trademark in the course of trade. There is every possibility for the trademark to have different owners in different countries.

Territoriality doctrine vs. universality doctrine and rise of territoriality over universality

The territoriality doctrine is a principle of public international law that enables a sovereign state to exercise exclusive jurisdiction over individuals and other legal persons within its territory. 

Universality doctrine – It provides for the fact that if a trademark is registered or recognised in one country, it gets a transborder reputation all over the world.

Territoriality always goes in accordance with the principles of equity, justice, and conscience and emphasises the fact that no one should be permitted to take advantage of someone else’s reputation and hence take precedence over the universality doctrine.  

Recently, the Delhi High Court declined the prayer of granting an interim injunction to the applicant in the case titled Keller Williams Realty, Inc. vs. Dingle Buildcons Pvt. Ltd. and Ors, (2020), in which it was held that the applicant/plaintiff was not having the business or franchisees and he was only producing certain e-mails of Indians and was showing interest in becoming an agent of the applicant. The condition of the extension of its reputation and goodwill in India was not satisfied. Despite the registration of its mark “KW” by the plaintiff in India for further use, it was found that he had not set up any business in India to date. It was concluded in this case that mere registration of the mark in India would not amount to an extension of its reputation in India.

In the case titled Toyota Jidosha Kabushiki Kaisha vs. M/s Prius Auto Industries Limited (2017), it was held by the Supreme Court after keeping in mind the jurisprudence of the UK and Australia concerning the transborder reputation that in India the reputation of transborder would be governed by the territoriality principle and not by the universality principle and it created a new benchmark decision for testing the evidence regarding the claim of transborder reputation in India.

Moreover, it was also held that the escalation of reputation can be through advertisement, the internet, or any other mode that can provide sufficient knowledge to the citizens of a particular country regarding brands and their products. 

In another case titled ConAgra Inc. vs. McCain Foods (1992), it was held by the Federal Court of Australia to test the fact that the owner has established a “sufficient reputation” as far as his goods are concerned within a particular country to gain a sufficient level of consumer knowledge for its product and fascination for it to provide the same to his customers, which if lost, could result in loss and damage to his reputation and goodwill.

So, it is rightly observed that the territoriality doctrine takes precedence over the universality doctrine. 

Trademark and its Infringement 

A trademark owner has control over the use of a trademark within its territory and offers to sell those products in that specific country only. However, if those products are offered for sale originally in a country in which the owner does not have the trademark rights, like through an online marketplace assessed worldwide, it may be infringing the rights of the trademark owner in a different country. 

Lifestyle Equities CV & Anor vs. Amazon UK Services Ld & Ors. (2021) The case involved trademark infringement and passing off claims brought against Amazon regarding the sale of goods bearing the Beverly Hills Polo Club trademarks on amazon.com. 

The Court of Appeal reversed the ruling in favour of brand owners and held that infringement took place. In this case, the global nature of e-commerce and the protection of territorial trademark rights are brought to light. In the present case, the High Court agreed with Amazon’s argument that the US website had not targeted UK and EU consumers and therefore held that Amazon’s use of science identical to the BHPC marks did not amount to use in the course of trade in the UK and EU. 

It further held that factors such as average consumers, ad viewing figures, the volume of website traffic, and the subjective intent of Amazon were relevant and could be taken into account. But the Court of Appeal reverses the decision on allowing the appeal filed by Life Style, holding that the question of whether there has been use of a sign in a relevant territory. It was further held that Amazon’s sales of US branded goods to UK and EU consumers constituted use of the sign in the relevant territory and therefore amounted to infringing uses, even if the advertisements and offers for sale did not. 

Territoriality and copyright: digital era

The principles of territoriality and copyright go hand in hand, as the laws of copyright are governed by the principle of territoriality, which means that the existence, content, and expiration of the copyright are subject to the laws of the country in which the use or copyright occurs. Copyright law is “territorial” and national in scope. Protection of copyright always depends upon the national laws of the country in which the owner seeks protection. Copyright laws do not have any extra-territorial operation. The territoriality of substantial copyright laws leads to the need for checking initial ownership, scope of rights, etc., under each national copyright law.  

Parallel importation

Parallel imports mean parented or market goods are purchased in a foreign market and resold in the domestic market. Further, it means the trademark of a product is used commercially in the course of trade but with the consent of the trademark owner in the specific country where the product is purchased. Parallel imports are genuine products that were originally purchased in a country where the trademark owner in that specific country has consented to the product being put on the market in that country. The purchased product is then transported to another country and further offered for sale in that country. Parallel imports, therefore, do use a trademark on products in the course of trade (i.e., commercially) but with the consent of the trademark owner in the specific country where the product is originally purchased. When the purchased product is then transported to another country and the product is further offered for sale in that country, this generally does not amount to trademark infringement. 

Trademarks and virtual markets 

In the present global world of the virtual market, IPR plays a very important and crucial role in protecting and using virtual goods such as designs, characters, etc. Without IPR protection, the same would be copied, replicated, or stolen without permission. IPR ensures a fair and equitable virtual environment, which is necessary to protect trademark owners not only within the territory but also to safeguard the rights of trademark owners while buying and selling outside in the real physical world and virtual world as well. It should always be kept in mind that trademark rights do not grant the owners the right to censor the internet and businesses and brands need to live with the realities of the global nature of an online retail platform.

Conclusion

In the modern day, where globalisation is worldwide, it depends on the trademark owner how vigilant he is in his business to protect his trademark by establishing internal policies and procedures to take action against infringing parties. Hence, registration of a trademark makes it easy to take legal action and to initiate proceedings against brands that cause infringement on your business assets. Copyrights or patents can protect software and text-based HTML code used on websites. Intellectual property rights stand as a protective shield against the activities of e-commerce. A diverse network of trade is the norm in a globalised world and hence the principle of territoriality will remain pre-eminent in the times to come.

References

• https://indiankanoon.org/doc/146849270/ 
• https://trademarklawyermagazine.com/from-flintstones-to-jetsons-the-principle-of-territoriality-in-digital-era/ 
• https://www.intellectjuris.com/territoriality-vs-universality-the-rise-of-debate/ 
• https://swarb.co.uk/conagra-inc-v-mccain-foods-aust-pty-ltd-14-apr-1992-2/ 
• https://blog.ipleaders.in/trademarks-and-principle-of-territoriality/#:~:text=The%20Principle%20of%20Territoriality%20or,anyone%20in%20that%20country%20uses
• https://www.mondaq.com/india/trademark/668364/universality-territoriality-doctrine-reference-well-known-trademarks

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