The Goodwill in Passing Off Actions: The Toyota Prius Story

TOYOTA JIDOSHA KABUSHIKI KAISHA, launched the world’s first hybrid car, ‘Prius’ in Japan in the year 1997. In India, the car was released in the year 2009 and until that point of time Toyota had not obtained registration of the mark ‘Prius’ in the Indian jurisdiction.

Prius.jpg

M/S PRIUS AUTO INDUSTRIES LIMITED, had got the mark ‘Prius’ registered way back in the year 2002-2003 for all types of auto parts and accessories. They were the first in India to manufacture add-on chrome plated accessories. They conceptualized their attempt as ‘pehela prayas’ (‘First Attempt’). It was on that basis that they had adopted the name ‘Prius’. [Shri Chidambaram termed the story ‘absurd’. The possibility of conjuring a word in the Hindi language and then looking for it in the English dictionary and finally selecting a Latin word was too far-fetched for acceptance as a bona fide act of adoption of a mark.]

Prius.png

Toyota filed a suit in 2009 praying for a permanent injunction restraining Prius Auto from using the well-known trade mark ‘Prius’, to prevent passing off Prius Auto’s goods as that of Toyota’s. The Battle of the Prii.

The SC has recently held in Toyota Jidosha Kabushiki Kaisha v. M/s. Prius Auto Industries Ltd., [Civil Appeal Nos. 5375-5377 of 2017]:

To prove and establish an action of passing off, three ingredients are required to be proved by the plaintiff, i.e., his goodwill, misrepresentation and damages…

Prof. Cristopher Wadlow’s view on the subject appears to be that the test of whether a foreign claimant may succeed in a passing-off action is whether his business has a goodwill in a particular jurisdiction, which criterion is broader than the “obsolete” test of whether a claimant has a business/place of business in that jurisdiction. If there are customers for the claimant’s products in that jurisdiction, then the claimant stands in the same position as a domestic trader.

The overwhelming judicial and academic opinion all over the globe… seems to be in favour of the territoriality principle . We do not see why the same should not apply to this country.

To give effect to the territoriality principle, the Courts must necessarily have to determine if there has been a spill-over of the reputation and goodwill of the mark used by the claimant who has brought the passing off action. In the course of such determination it may be necessary to seek and ascertain the existence of not necessarily a real market but the presence of the claimant through its mark within a particular territorial jurisdiction in a more subtle form which can best be manifested by the following illustrations, though they arise from decisions of Courts which may not be final in that particular jurisdiction.

In Panhard Levassor Motor Co., 1901 2 Ch. 513 the plaintiffs were French car manufacturers who had consciously decided to not launch their cars in England (apprehending patent infringement). Nevertheless, some individuals had got them imported to England. It was seen that England was one of the plaintiff’s markets and thus, in this case, permanent injunction was granted. Similarly, in Grant v. Levitt, 190118 RPC 361 a Liverpool business concern trading as the Globe Furnishing Company, obtained an injunction against the use of the same name in Dublin as it was observed that advertisements by the plaintiff had reached Ireland and there were Irish customers…

Indeed, the trade mark ‘Prius’ had undoubtedly acquired a great deal of goodwill in several other jurisdictions in the world and that too much earlier to the use and registration of the same by the defendants in India. But if the territoriality principle is to govern the matter… there must be adequate evidence to show that the plaintiff had acquired a substantial goodwill for its car under the brand name ‘Prius’ in the Indian market also.

The car itself was introduced in the Indian market in the year 2009-2010. The advertisements in automobile magazines, international business magazines; availability of data in information-disseminating portals like Wikipedia and online Britannica dictionary and the information on the internet, even if accepted, will not be a safe basis to hold the existence of the necessary goodwill and reputation of the product in the Indian market at the relevant point of time, particularly having regard to the limited online exposure at that point of time, i.e., in the year 2001. The news items relating to the launching of the product in Japan isolatedly and singularly in the Economic Times (Issues dated 27.03.1997 and 15.12.1997) also do not firmly establish the acquisition and existence of goodwill and reputation of the brand name in the Indian market. Coupled with the above, the evidence of the plaintiff’s witnesses themselves would be suggestive of a very limited sale of the product in the Indian market and virtually the absence of any advertisement of the product in India prior to April, 2001 (date of adoption of the mark by the defendants). This, in turn, would show either lack of goodwill in the domestic market or lack of knowledge and information of the product amongst a significant section of the Indian population. While it may be correct that the population to whom such knowledge or information of the product should be available would be the section of the public dealing with the product as distinguished from the general population, even proof of such knowledge and information within the limited segment of the population is not prominent.

All these should lead to us to eventually agree that the brand name of the car Prius had not acquired the degree of goodwill, reputation and the market or popularity in the Indian market so as to vest in the plaintiff the necessary attributes of the right of a prior user so as to successfully maintain an action of passing off even against the registered owner.

If goodwill or reputation in the particular jurisdiction (in India) is not established by the plaintiff, no other issue really would need any further examination to determine the extent of the plaintiff’s right in the action of passing off.”

_____

The Court refused to wade into the argument of whether or not Prius Auto were honest or dishonest in adopting the mark ‘Prius’ (The First Attempt Story). In any case, the alleged dishonest adoption did not matter to the Apex Courts’ ultimate analysis. It correctly noted that even if the defendants had been dishonest, that by itself would not exonerate the plaintiff of having to prove that they had trademark rights in ‘Prius’ in the first place.

_____

Eashan Ghosh, rising stalwart in Intellectual Property Law matters, had this view to share on the judgment:

“The finding on merits is objectionable. The SC’s rejection of the respondents’ etymology story (‘Prius’/‘Prayas’) is not tied to a full-blooded conclusion. This is disappointing. A strong word by the SC on the issue – which is unfortunately replete in trademark suits – would have done much to discourage the practice, at least in the short term.

Further, the SC’s finding that the Appellant didn’t demonstrate sufficient reputation and goodwill in India to sustain its claim is insensitive to at least to two sets of issues.

First, what is the standard of proof that a pure passing off claim by an unregistered proprietor (as Toyota was in relation to the ‘Prius’ trademark) against a registered proprietor must meet? Is this the same or greater than the proof that an unregistered proprietor must meet against another unregistered proprietor? What of the precedent rendered by the Courts on this exact issue in the past? No clear answers by the SC on this.

Second, how is it that a passing off claim such as this must demonstrate evidence of goodwill and reputation in India and yet be part of trademark jurisprudence that permits passing off claims to be brought on the basis of international (or ‘cross-border/‘trans-border’) reputation and goodwill alone. Again no clear answers by the SC.

Finally, i think it’s fascinating that the SC has revisited the core of passing off law – the principle of commercial and business morality – to find that the claimants only need to prove likelihood of confusion and not actual confusion. The SC says the likelihood standard is preferable because evidence of actual confusion “may not be easily forthcoming and directly available”.

However, there is considerable doubt about how this is intended to be understood. Is this a simple rule of substitution or preference, i.e., where you are unable to bring evidence of actual confusion then likelihood of confusion will suffice? or is it something to be adopted by claimants more generally, i.e., only lead evidence of distinctiveness of your own trademark because the legal presumption is that a trademark broadly similar to yours will be likely to confuse anyway, even if there is no proof that it does?

This, again, is significant, and could have profound consequences for how the evidence in support of trademark claims is to be judged in the future.”

 

Advertisements