India: Universality Territoriality Doctrine Reference Well-Known Trademarks

By Shrabani Rout & Garima Raonta1

Introduction

The Indian Trade Mark Law bestows considerable protection on "well-known" trademarks. Well known trademarks have been defined under the Trade Marks Act, 1999 as a mark which is associated with a particular range of goods or services, by the public and if such mark is used on some other goods or services, it raises a presumption that there is a connection between the two.2 The concept of trans-border reputation and goodwill of a corporation was recognized by the Hon'ble Supreme Court of India, back in 1996, in the case of N.R. Dongre & Ors. v Whirlpool Corporation & Anr.3 But with the passage of time, the views of the Courts have changed regarding trans-border reputation. This article aims at explaining the concept of the universality and territoriality doctrine, and which doctrine shall take precedence over the other with reference to well known trademarks.

Territorality Doctrine

The Territoriality principle stipulates that the intellectual property rights do not extend beyond the territory of the sovereign state which had granted the rights in the first place. It favors the notion that the reputation of a product or service is limited to the territory of the country in which that trademark was granted the status of a well known trademark.

The Indian courts have also recognized this doctrine. For instance, in the recent case of Jones Investment Co v. Vishnupriya Hosiery Mills,4 the Intellectual Property Appellate Board (IPAB) had ruled against the notion of preventing Indian companies from using trademarks even though the MNCs have no intention to introduce their product in Indian market.

Universality Doctrine

According to the Universality doctrine, once a trademark is recognized or registered in one country, it gains universal recognition. It favors trans-border reputation and is an exception to the Territoriality doctrine. This means that if a trademark enjoys the status of a well known trademark in the United States of America, it would enjoy the same status with regards to its goods or services in India as well, or any other country for that matter.

The Apex court has held the same in a plethora of cases. For instance, in the case of Milmet Oftho Industries & Ors v. Allergan Inc5 the Hon'ble Supreme Court, after establishing the trans-border reputation of the Respondents stated that "The mere fact that the Respondents have not been using the mark in India would be irrelevant if they were first in the world market."

Rise of Territoriality over Universality

Both the doctrines have been recognized and upheld by the Indian courts. This gives rise to a significant moot point relating to well known trademarks that whether they should be governed by the territoriality doctrine or the universality doctrine.

The judicial and academic opinion all over the globe is in favor of the territoriality principle as it protects the domestic traders against giant multinational corporations based in other countries. The favored notion is that the corporation claiming the status of a "well known" trademark in a territory should actually possess a reputation in that territory. For instance, the Apex Court of U.K in the case of Starbucks vs. British Sky Broadcasting6 held that, no trader can complain of passing-off as against him in any territory in which he has no customers and nobody who is in trade relation with him.

The contention supporting Universality doctrine is that recognition and reputation of a trade mark is not contingent upon the actual sale of goods in India bearing the mark in question. Advertisement and promotion of the mark through different forms of media is sufficient to establish reputation and goodwill within a particular geographical area. But this perspective is not in accordance with the principle of equality because if two things have to be compared, they must be equals in the first place. Therefore, if a corporation has not launched its product or does not have any consumers as well as reputation in a specific market then it cannot be compared with the corporation which has an existing product as well as a consumer base in that market. It must be proved that the reputation of a corporation has exceeded the boundaries of its home country and has extended to other nations.

The same question came before the Apex court of India in the recent case of Toyota Jidosha Kabushiki Kaisha V. M/S Prius Auto

Industries Limited7 and it was held that it must necessarily be determined if there has been a spillover of the reputation and goodwill of the mark used by the claimant who has brought the passing off action in the country in question. This decision of the Hon'ble Supreme Court sets a new benchmark for testing of evidence to claim trans-border reputation in India. It is therefore necessary that the trade mark is recognized and has a separate existence in each sovereign Country. The Supreme Court, after considering the jurisprudence in the U.K and Australia on trans-border reputation, came to the conclusion that the issue of trans-border reputation would be governed, in India, 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 trans-border reputation, the existence or non-existence of trans-border reputation is a question of fact. Evidence to support the contention must be explosive or ground breaking. The spillover of reputation can be through the internet, advertisement or through any means which provides the citizens of a country with sufficient knowledge regarding a brand and its products.

Reputation of a trademark implies to the knowledge and awareness of such trademark among the public and is the means by which a trademark is recognized. With globalization of trade and commerce, products are widely available in every nook and corner of the world irrespective of their place of origin. Adding to this, the knowledge about the products reach other countries long before the actual availability of the product through various modern mass communication technology like TV, internet, newspapers, magazines, cinemas, etc. And thus, the reputation of a trademark is not limited to the country of its origin, but surpasses the geographical frontiers and is spread all across the world.

The nature of goodwill as a legal property with no physical existence means that when a business is carried on in more than one country, there must be separate goodwill in each. Federal Court of Australia in ConAgra vs. McCain Foods 6 (1992) 23 IPR 193 observed that the test is whether the owner of the goods has established a 'sufficient reputation' with respect to his goods within the particular country in order to acquire a sufficient level of consumer knowledge of the product and attraction for it to provide customers, which if lost, is likely to result in damage to him.

Therefore, by virtue of the above stated facts and observations it can be rightly inferred that the Territoriality doctrine takes precedence over the Universality doctrine.

Conclusion

The modern day trade, i.e globalization, has brought in multi-channel modes of sale of goods in the market and therefore it is the Territoriality Doctrine that would hold the field. Prior use of the trade mark in one jurisdiction should not ipso facto entitle its owner or user to claim exclusive rights to the said mark in another dominion.

Prior to the introduction of the New Economic Policy in 1991 the foreign brand owners or corporations were incapable of doing business in India. But post 1991 the Indian courts adopted an approach which aimed at developing a level playing field for foreign corporations. By virtue of which, the giant corporations ended up exploiting the small domestic traders and started wiping them out of business. But now since the Apex court of India has ruled in the favor of the territoriality doctrine, it would provide protection to the domestic traders and entrepreneurs against international or foreign corporate entities.

Territoriality doctrine is in accordance with the principle of equity, justice and good conscience as nobody should be allowed to take the benefit of someone else's hard work and reputation and hence it should take precedence over the universality doctrine.

The stance of the Hon'ble Supreme Court in the case of Jidosha Kabushiki Kaisha V. M/S Prius Auto Industries Limited8 signifies the story of an advancing IP jurisprudence in India which not only redefines trans-border reputation but also shows that IP jurisprudence manifests in sync with the business environment, and the changing economic landscape of India.

Footnotes

1 Legal Intern, 4th year Army Law School, Mohali

2 Section 2(1)(zg), The Trade Marks Act, 1999

3 (1996) PTC 415 (Del)

4 Order (No.24 of 2014) , OA/48/2010/TM/CH & MP NO. 260/2010 IN OA/48/2010/TM/CH

5 2004 (28) PTC 585 SC

6 [2015] UKSC 31

7 Civil Appeal Nos. 5375-5377 of 2017 (14-12-2017)

8 Civil Appeal Nos. 5375-5377 of 2017 (14-12-2017)

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