[This post has been authored by Sanya Sethi & Shuchi Agrawal, students at Jindal Global Law School.]
Introduction
The Trademarks Act, 1999 (the “Act”) protects both registered and unregistered trademarks in India, and section 27 of the Act recognizes the tort of passing off. Passing off refers to the act of representing one’s goods as the goods of another. The classical trinity test, established in Reckitt & Colman Products Ltd v. Borden Inc.,[i] is often relied upon to gauge whether a certain act constitutes passing off. As per the test, three elements, i.e., goodwill, misrepresentation, and damage, must be satisfied for a claim of passing off to be successful.[ii] However, globalization and the advent of the internet have raised interesting issues with respect to the element of goodwill. A foreign corporation may acquire a reputation in international markets while limiting its services and goods to only certain particular jurisdictions. In such a situation it becomes difficult to ascertain whether the threshold for proving goodwill should be based on territoriality or universality. This article engages in a discussion of the various cases that have been decided by the Indian courts on the issue of the trans-border reputation of trademarks. Additionally, through a comparative analysis with the UK, it makes an argument in favor of universality.
Judicial Trends in India
Notably, in Starbucks (HK) v. British Sky Broadcasting, it was held that a claimant could not be granted a monopoly over a trademark only because they had established a reputation in the concerned jurisdiction for the goods and services which they offered in other jurisdictions. However, the concept of trans-border reputation states that a product or service can transcend jurisdictional boundaries and acquire an ‘extra-territorial reputation’ through advertisements in addition to imports. India saw the application of this concept in N.R. Dongre v. Whirlpool Corporation.[iii] In this case, Whirlpool had challenged the use of the trademark ‘Whirlpool’ as an act of passing off. At that time, Whirlpool did not sell products in India, except for limited sales to the U.S. Aid offices and the U.S. Embassy.[iv] Nonetheless, it was held that Whirlpool had acquired a reputation in India through extensive advertising of its products in magazines. Therefore, it was held that Whirlpool had goodwill in India despite not selling its products in India.
Subsequently, in MilmetOftho Industries v. Allergan Inc., a foreign pharmaceutical manufacturer had filed an action to prevent the use of the trademark ‘Ocuflox’ in India, as it had previously been used in other jurisdictions. The foreign manufacturer relied on advertisements and publications in journals to demonstrate that it had a reputation in India. The court decided in favor of the Plaintiff to prevent confusion regarding pharmaceuticals, but cautioned corporations against hindering business in India, if they did not themselves intend to supply their goods or services in India. However, in a recent case Toyota Jidosha Kabushiki Kaisha v. Prius Auto Industries Ltd, involving Toyota, the Supreme Court stated that the prior use of a trademark in a jurisdiction does not by itself entitle the trademark holder to have exclusive rights over that trademark in another jurisdiction. It was further held that the presence of the trader in Indian markets must be proved through substantial evidence and that advertisements in magazines and availability of information on websites would not be sufficient to prove reputation or goodwill in Indian markets. The Court also stated that the territoriality principle had gained global acceptance; however, the Court seems to have not taken into consideration any previous judgments that have consistently decided against strict application of the territoriality principle. Therefore, adherence to this judgment could restrict the progress that the Indian courts were making in light of the liberal approach towards the trans-border reputation of trademarks.
The trend in India seems to be moving back towards universality, as is evident from the Delhi High Court’s recent decision in Singh and Singh LLP v. Singh + Singh Lawyers LLP.[v] The Defendant in this case did not practice in India and had its office in Canada. The Plaintiff, on the other hand, primarily practiced in India and also had a significant online presence. So, the issue was whether the Defendant’s mark caused confusion to the Plaintiff’s foreign clientele. The Court was of the opinion that in a world that is internet-driven, law firms such as that of the Plaintiff have a reputation that is not limited by geographical boundaries. Therefore, this case is an example of the acceptance of modern means of spill-over and seems to have reinstated the position that the internet-driven world has permeated the geographical nature of trademarks and its actual presence is not needed for the establishment of its trans-border reputation.
Comparative Analysis with the United Kingdom
The Courts in the UK have consistently taken the position that it is the goodwill that deserves protection and not the reputation. Following this reasoning, these courts have been reluctant in granting protection to well-known trademarks, which although have a spill-over of their reputation in the UK, but do not have a localized consumer base. Lord Macnaghten gave one of the most renowned interpretations of goodwill when he mentioned – “I think that if there is one attribute common to all cases of goodwill it is the attribute of locality. For goodwill has no independent existence. It cannot subsist by itself. It must be attached to a business.”[vi] This definition points to the localization of goodwill and therefore, clarifies its territorial nature.
The distinction between goodwill and reputation was discussed in the case of Alain Bernardin et Compagnie v. Pavilion Properties Limited,[vii] also known as the ‘Crazy Horse’ case. Concurring with Lord Macnaghten’s interpretation of goodwill, the Court, in this case, upheld that “the user in the country” is a sine qua non for acquiring goodwill in the country. A peculiar fact about this case is that although, it was a clear case of deception and deliberate copying, the Court went on to hold that there was no case of passing off. Therefore, this judgment reflects the drawbacks of a strict adherence to the territoriality principle.
Certain important changes were brought to the UK’s trademark regime with the enactment of the Trademark Act, 1994. Among these was the introduction of the current Section 56 that provided additional protection to unregistered well-known marks instead of just banking on the option of passing off. However, itdid not solve the problem of having to establish a user of the mark in the UK for the protection of such trademarks. This is evident from a fairly recent decision of the UK Supreme Court in Starbucks (HK) Limited and Anr. v.. British Sky Broadcasting Group PLC and Others, where the Court held that even before establishing the three elements of passing off as established in Reckitt & Colman Products Ltd v Borden Inc.,[viii] the existence of goodwill, with regard to customer base in the UK must be established by the Claimant. Considering the advancement of the internet and dominant travel culture, the Claimant argued for a liberal interpretation of goodwill. However, the Court did not consider this to be consequential enough to change its position.
Therefore, the development of the trans-border reputation of trademarks in the UK has been slow as courts have been apprehensive about protecting such marks. This contradicts the liberal approach towards well-known trademarks, as adopted by other jurisdictions including India and brings forth the issue of reciprocity at a global level. For instance, a trademark originating in the UK which is significantly well-known but does not have any physical presence or business operations in India would be eligible for protection and recognition in India. However, a similarly placed Indian mark would not be eligible for protection and recognition in the UK because of the jurisdiction’s strict adherence to the territoriality principle.
Conclusion
It can be concluded from the above discussion that time and again, Indian courts have maintained that the existence of business activities within the jurisdiction is not necessary for protecting the trans-border reputation of trademarks. The advertisement of goods and services within the jurisdiction is, therefore, considered as a factor that could cause sufficient spill-over of reputation. The Toyota judgment is an aberration to an almost consistent liberal interpretation of the trans-border reputation of trademarks by the Indian courts. Furthermore, India seems to be much more accommodative of the modern means of spill-over such as internet, travel and television as compared to other jurisdictions such as the UK. Therefore, Indian courts should continue adopting an approach similar to that adopted by the Delhi High Court in its recent decision, given its liberal position favoring universality in future cases regarding the trans-border reputation of trademarks.
[i]Reckitt & Colman Ltd. v. Borden Inc. [1990] 1 All E.R. 873.
[ii] ibid.
[iii]N.R. Dongre v. Whirlpool Corporation [1996] 5 SCC 714.
[iv] ibid.
[v]Singh and Singh LLP v. Singh + Singh Lawyers LLP [2021] SCC OnLine Del 3059.
[vi]IRC v. Muller’s and Co. Margarine[1910] SVC 25, (House of Lords).
[vii]Alain Bernardin et Compagnie v. Pavilion Properties Limited[1967] RPC 581.
[viii]ibid (n 1).