Case: Toyoto Jidosha Kabushiki Kaisha Vs. M/s. Prius Auto Industries Ltd. &amp; Others

The appellant (hereinafter referred to as `the plaintiff) is an automobile manufacturer incorporated under the laws prevailing in Japan. The first respondent is a partnership firm engaged in the manufacture of automobile spare parts of which the second and third respondents are partners. The partnership firm of the respondents was constituted in the year 2001. The fourth respondent is a Private Limited Company in which the second and third respondents are majority shareholders.2. Civil Suit [CS (OS) No. 2490 of 2009] was instituted by the plaintiff in the Delhi High Court seeking a decree of permanent injunction for infringement of trade mark, passing off and for damages against the respondents (hereinafter referred to as `the defendants) in order to protect the plaintiffs trade marks `TOYOTA, `TOYOTA INNOVA, `TOYOTA DEVICE and the mark `Prius of which the plaintiff claimed to be a prior user.3. In the plaint filed, it was averred by the plaintiff that it is a renowned carmaker having its presence in many countries across the world. The plaintiff claimed an enviable goodwill and reputation as one of the foremost automobile manufacturers in the world. According to the plaintiff it had acquired registration in India in different classes for its trade marks `TOYOTA, `TOYOTA INNOVA and `TOYOTA DEVICE during the yearsIt was specifically averred by the plaintiff that the goods manufactured and sold by the defendants bore the plaintiffs registered trade marks thereby clearly constituting infringement of the said registered marks.Furthermore, according to the plaintiff, it had launched the worlds first commercial hybrid car called `Prius in Japan in the year 1997 and in other countries like U.K., Australia, the U.S.A. etc. during the yearThe plaintiff also claimed registration of the trade mark `Prius in different countries as early as the year 1990 (in Japan) and eventually in other jurisdictions all over the globe. So far as India is concerned, however, the car was released in the year 2009 and until that point of time the plaintiff had not obtained registration of the mark `Prius in the Indian jurisdiction. However, the car was displayed in the car shows in Delhi and Bangalore held in the year 2009 and it was formally launched in India in the year 2010.The plaintiff claimed that various advertisements and news reports about `Prius and publications in car magazines in India and across the globe has made `Prius a well known trade mark within the meaning of the said expression under Section 2(1)(zg) of the Trade Marks Act, 1999 (hereinafter referred to as `the Act). According to the plaintiff, in the year 2009, it discovered that the defendants not only had got the mark `Prius registered way back in the yearfor all types of auto parts and accessories but that they had also been using the said trade mark in carrying out their trade in such auto parts and accessories. The plaintiff, therefore, approached the Trade Mark Registry for cancellation of the registered trade mark of the defendants and also filed the suit in question on the ground that the defendants had been using the well known trade marks of the plaintiff without any authorization thereby taking an unfair advantage of the reputation and goodwill of the plaintiff which it had earned over a period of time across the globe. Accordingly the plaintiff prayed for:(i) Permanent injunction restraining the defendants from using the plaintiffs registered trade marks (`TOYOTA, `TOYOTA INNOVA and `TOYOTA DEVICE); and(ii) Permanent injunction restraining the defendants from using the well known (unregistered) trade mark `Prius so as to prevent passing off the defendants goods as that of the plaintiff.4. The defendants contested the claim of the plaintiff by contending that they have been using the words `TOYOTA, `TOYOTA INNOVA and `TOYOTA DEVICE on the packaging materials in which the auto parts manufactured by them are/were packed for the purpose of item identification and nothing more. According to the defendants, since they were in the business of manufacturing spare parts of automobiles, they are/were entitled to indicate the cars for which the spare parts have been manufactured by displaying the same name on the packaging of the products. The use of the words `TOYOTA, `TOYOTA INNOVA and `TOYOTA DEVICE etc. were, therefore, for the purpose of honest use in an industrial matter and thus protected under Section 30 of the Act.5. Insofar as the mark `Prius is concerned, according to the defendants, they had obtained registration of the said mark in the year 2002 and have been continuously using the same since the year 2001. They have been regularly supplying auto accessories to various automobile giants like Hyundai Motors, General Motors. The defendants claimed that, over a period of time, they have built up a considerable market reputation. According to the defendants, the mark `Prius" had not been registered in favour of the plaintiff for any of its products; nor had any Prius Car sold been in India so as to enable the plaintiff to claim goodwill in respect of such cars in the Indian market. As the product itself was not in existence in the Indian market, according to the defendants, it was impossible for the people in India to identify and recognize or associate the defendants registered trade mark `Prius" with any of the products of the plaintiff. In fact, in the written statement filed, the defendants claimed that as they were the first in India to manufacturechrome plated accessories, they had conceptualized their attempt as `pehela prayas (Hindi word meaning first attempt). It was on that basis that they had adopted the name `Prius and got the same registered in the year 2002 as `PRIUS (Registration No. 1086682 dated 13.03.2002) and `PRIUSThe name you can trust (Registration No. 1163594 dated 2.1.2003).6. The learned trial Judge of the High Court by Order dated 22.12.2009 grantedm injunction restraining the defendants from using the registered trade marks of the plaintiff i.e. `TOYOTA, `TOYOTA INNOVA and `TOYOTA DEVICE and the mark `Prius in respect of auto accessories manufactured by the defendants. This order was vacated on 19.03.2010 on the basis of an application filed by the defendants. Aggrieved, the plaintiff had filed an appeal before the Division Bench of the High Court and by Order dated 10.08.2010, the Division Bench permitted the defendants to use the registered as well astrade marks of the plaintiff subject to the followingThe defendants were restrained from using the plaintiffs registered trade marks (TOYOTA, INNOVA) except for the purpose of identifying that the defendants products can be used in these cars;(ii) the defendants were to ensure that the words `TOYOTA and `INNOVA were not written in the same font as written by the plaintiff and the logos of the plaintiff;(iii) the defendants would have to replace the words "Genuine Accessories" with "Genuine Accessories of PRIUS Auto Industries Limited;(iv) the defendants were to ensure that the words"the vehicle name (i.e. the appellants trade mark) is used for item identification only.It does not appear that the defendants had carried the aforesaid Order dated 10.08.2010 of the Division Bench of the High Court in any further appeal. Consequently, the said order governed the parties during the pendency of the suit. Allegations of the breach of the order were, however, brought before the Court by the plaintiff.8. At the conclusion of the trial, the learned trial Judge by judgment dated 08.07.2016 held that the impugned acts of the defendants constituted infringement of the trade marks `TOYOTA, `TOYOTA INNOVA and `TOYOTA DEVICE registered in favour of the plaintiff. The learned Judge also held that such acts of the defendants amounted to passing off of the defendants goods under the trade name `Prius, which, though registered in favour of the defendants in the yearthe plaintiff was the first user thereof having marketed its hybrid car all over the globe under the name `Prius at least from the year 1997. Consequently, the learned trial Judge restrained the defendants from using the plaintiffs trade marks (`TOYOTA, `TOYOTA INNOVA and `TOYOTA DEVICE marks) except in accordance with the terms of the conditional injunction order passed by the Division Bench dated 10.08.2010. So far as the mark `Prius is concerned, on the basis of the finding that the plaintiff was the prior user of the mark `Prius in various countries, if not in India, and that goodwill and reputation of the plaintiff so far as the mark `Prius is concerned having permeated to the Indian jurisdiction, it was held that the plaintiff was entitled to an injunction against the defendants restraining them from passing off the said mark. Punitive damages quantified as Rupees ten lakhs was also awarded in favour of the plaintiff.9. Both sides appealed against the aforesaid order of the learned Single Judge. While the appeal of the plaintiff was with regard to the quantum of the damages awarded, the appeal filed by the defendants was in respect of the order of injunction granted against them. However, in the course of hearing of the appeal filed by the defendants, the grievance with regard to the conditional use of the trade marks `TOYOTA, `TOYOTA INNOVA and `TOYOTA DEVICE (in terms of the interim Order dated 10.08.2010) was not persisted with and the sole grievance expressed was inBoth sides appealed against the aforesaid order of the learned Single Judge. While the appeal of the plaintiff was with regard to the quantum of the damages awarded, the appeal filed by the defendants was in respect of the order of injunction granted against them. However, in the course of hearing of the appeal filed by the defendants, the grievance with regard to the conditional use of the trade marks `TOYOTA, `TOYOTA INNOVA and `TOYOTA DEVICE (in terms of the interim Order dated 10.08.2010) was not persisted with and the sole grievance expressed was inrespect to the permanent injunction granted by the learned trial Judge with regard to the use of the name `Prius.10. The Division Bench of the High Court by the impugned judgment dated 23.12.2016, on grounds and reasons, that will be noticed in the course of deliberations and discussions that follow, took the view that grant of injunction in favour of the plaintiff insofar as the trade name `Prius is concerned was not justified. Accordingly the aforesaid part of the order of the learned trial Judge was set aside. Consequently, the appeal filed by the plaintiff with regard to quantum of damages was also dismissed. Aggrieved, the plaintiff has filed the instant appeal.The learned trial Judge in taking the view that the plaintiff was entitled to an injunction against the use of the trade mark `Prius by the defendants, took into account, inter alia, the global sales of Prius Cars (ranging upto over a million sales globally); the exponential hike in the sales of cars (300 units in 1997 to 285600 units in 2008); and that the plaintiffs trade mark `Prius which had acquired an excellent global goodwill had already spilled over to India much before the direct sales of the car in India in the year 2010. The fact that the plaintiffs web sites have been visited by many Indians seeking information about Prius cars was held by the learned trial Judge to be evidence of the fact that people in India were aware of the car and its popularity. The exhibitions of the car held in India and other countries; various advertisements published in different automobile magazines and cover stories published in international magazines and journals were taken into account by the learned trial Judge to hold that the car in question had a stellar reputation in the world market including India. The learned trial Judge also took into account the availability of information regarding the car inportals like Wikipedia and online Britannica dictionary. Consequently, it was held that the physical presence of the car in India at a later point of time wasfact, the learned trial Judge went on to hold that the mark `Prius" had satisfied the definition of atrade mark" under Section 2(1)(zg) read with Section 11(6) & 11(9) of thelearned trial Judge took the view that if the plaintiff could successfully prove that its case was covered by "passing off" the registered trade mark of the defendants would not remain protected under the Act. Proceeding further, the learned trial Judge took the view that the plaintiff was the prior user/adopter of the mark `Prius, though it may not have been such prior user so far as the Indian market isfurther, the learned trial Judge took the view that the plaintiff was the prior user/adopter of the mark `Prius, though it may not have been such prior user so far as the Indian market islearned trial Judge further held that, as both the parties had advertised their respective products in the same magazines and periodicals, any person reading such an advertisement would be bound to be misled to believe that the defendants goods emanates from the plaintiffs organization and that there is a nexus between the two. Accordingly, the learned trial Judge came to the conclusion that the adoption of the mark `Prius by the defendants, though they were the registered proprietor thereof, was misleading, as the plaintiff was the true and first user of the trade mark all over the world and the reputation of the mark and the goodwill of the plaintiff on that basis had permeated to the Indian Market well before the use of the mark by the defendants in 2001 and its registration thereafter inThe trial Judge further held that the defendants had adopted the mark `Prius with the sole intention of enjoying the benefits from the use of the said mark. The explanation given as to why and how the defendants had adopted the name `Prius was found to be wholly untenable by the learned Single Judge. Accordingly, the finding that the defendants were guilty of passing off their goods under the mark, of which the plaintiff was the first user, was arrived at. Consequently, permanent injunction restraining the use of the mark `Prius by the defendants in order to prevent passing off the defendants goods as the plaintiffs was issued and damages quantified at 0.25% of the total sales, amounting to Rs. 10 lakhs, was awarded.The aforesaid issue was decided by the Division Bench of the High Court against the plaintiff on the ground that not only the publicity and advertisement surrounding the launching of the product by the plaintiff in the international market was scanty, internet penetration in India at that point of time (prior to April 2001) was limited and, therefore, it cannot be said that prior to April 2001 the plaintiff had established its goodwill and reputation in the Indian market, which the defendants had taken advantage of. The Division Bench of the High Court further held that the test of possibility/ likelihood of confusion would be valid at the stage of quia timet actions and not at the stage of final adjudication of the suit, particularly when the defendants had used the impugned mark for a long period as in the instant case. The test, therefore, would be one of actual confusion. No evidence was led by the plaintiff to show that any section of the consuming public was misled by the use of the trade mark `Prius by the defendants.15. Laches and delay on the part of the plaintiff in instituting the suit in the year 2009 was also held against the plaintiff to reverse the decree passed by the learned trial Judge. In this regard, the Division Bench held that the plaintiff was aware of the defendants mark at least from April, 2003. Publications in Pioneer magazines (like Autocar, Overdrive) contained defendants advertisements under the name `Prius and in fact both the parties have been advertising their products in the same magazines. In fact, the plaintiff, at no relevant point of time, had applied for registration of the trade mark, which was done only on 3.12.2009, followed by the institution of the suit on 21.12.2009, and that too on a `proposed to be used basis. The Division Bench of the High Court in reversing the conclusion of the learned trial Judge also took the view that the word `Prius is publici juris and that the explanation given by the defendants for adopting the said word as their trade mark is logical and acceptable. It is on the aforesaid broad basis the decree passed by the learned trial Judge was reversed by the Division Bench of the High Court.

Court's reasoning:
28. The overwhelming judicial and academic opinion all over the globe, therefore, seems to be in favour of the territoriality principle. We do not see why the same should not apply to this Country.29. 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.Whether the second principle evolved under the trinity test, i.e., triple identity test laid down in Reckitt and Colman Ltd. (supra) would stand established on the test of likelihood of confusion or real/actual confusionanother question that seems to have arisen in the present case as the Division Bench of the High Court has taken the view that the first test, i.e., likelihood of confusion is required to be satisfied only in quia timet actions and actual confusion will have to be proved when the suit or claim is being adjudicated finally as by then a considerable period of time following the initiation of the action of passing off might have elapsed. Once the claimant who has brought the action of passing off establishes his goodwill in the jurisdiction in which he claims that the defendants are trying to pass off their goods under the brand name of the claimants goods, the burden of establishing actual confusion as distinguished from possibility thereof ought not to be fastened on the claimant. The possibility or likelihood of confusion is capable of being demonstrated with reference to the particulars of the mark or marks, as may be, and the circumstances surrounding the manner of sale/marketing of the goods by the defendants and such other relevant facts. Proof of actual confusion, on the other hand, would require the claimant to bring before the Court evidence which may not be easily forthcoming and directly available to the claimant. In a given situation, there may be no complaints made to the claimant that goods marketed by the defendants under the impugned mark had been inadvertently purchased as that of the plaintiff/claimant. The onus of bringing such proof, as an invariable requirement, would be to cast on the claimant an onerous burden which may not be justified. Commercial and business morality which is the foundation of the law of passing off should not be allowed to be defeated by imposing such a requirement. In such a situation, likelihood of confusion would be a surer and better test of proving an action of passing off by the defendants. Such a test would also be consistent with commercial and business morality which the law of passing off seeks to achieve. In the last resort, therefore, it is preponderance of probabilities that must be left to judge the claim.32. The next exercise would now be the application of the above principles to the facts of the present case for determination of the correctness of either of the views arrived at in theadjudication performed by the High Court of Delhi. 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, and we have already held it should, 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 yearThe advertisements in automobile magazines, international business magazines; availability of data inportals 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 plaintiffs 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. 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 with the conclusion of the Division Bench of the High Court 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. In any event the core of the controversy between the parties is really one of appreciation of the evidence of the parties; an exercise that this Court would not undoubtedly repeat unless the view taken by the previous forum is wholly and palpably unacceptable which does not appear to be so in the present premises.33. 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 plaintiffs right in the action of passing off that it had brought against the defendants in the Delhi High Court. Consequently, even if we are to disagree with the view of the Division Bench of the High Court in accepting the defendants version of the origin of the mark `Prius, the eventual conclusion of the Division Bench will, nonetheless, have to be sustained. We cannot help but also to observe that in the present case the plaintiffs delayed approach to the Courts has remained unexplained. Such delay cannot be allowed to work to the prejudice of the defendants who had kept on using its registered mark to market its goods during the inordinately long period of silence maintained by the plaintiff.