Trans-Border Reputation Of Trademarks

I. Introduction

A trademark serves as a graphical representation, not necessarily employing the use of symbols, that symbolizes various goods, products, or services. It acts as a visual identifier, often comprising a blend of colors, distinctive shapes, and unique terms, all of which are associated with a brand or trade name. The primary function of a trademark is to establish a clear link between the mark and a particular business entity. This association enables the differentiation of goods and services offered by one trader from those provided by others, while also signifying the source or origin of these goods.

When a trademark is consistently used in connection with a specific business entity for a significant amount of time, it fosters a sense of reputation and goodwill that could be accorded to that trademark. Consequently, the general public becomes acquainted with the brand or trade name, forming an immediate connection between the trademark and the particular goods and services it represents. This progressive process contributes to the establishment of a trademark's reputation and goodwill, which can eventually extend beyond local boundaries to gain global recognition by way of advertisements, workshops, etc. apart from physical presence of the goods and services themselves in that jurisdiction. This worldwide acknowledgment of a trademark is commonly referred to as the trademark's "trans-border reputation."

With the advent of globalization and the growing presence of companies/entities across borders, a series of disputes concerning the trademark rights of foreign entities (owing to their trans-border reputation) have emerged before the Indian Courts for adjudication. In this blog, the author aims to examine the viability of the existing regulatory framework vis-à-vis protection accorded to foreign trademarks owing to their transborder reputation spillover, particularly in the context of India. In pursuance of the same, the author first traces the evolution of the position of Indian Trademark law in this respect by delving into the analysis of germane judgments. Further, the author elaborates on the protection accorded to foreign trademarks by way of domestic statute (i.e., The Trademarks Act, 1999). Towards the end, the author discusses the prospect of discouragement of the foreign investors as a result of the current position and explores the potential violations of certain international instruments that could ensue from such a position.

II. Evolution Of The Indian Position vis-à-vis Transborder Reputation

Initially, in the avenue of trademark law, Indian Courts failed to distinguish between 'reputation' and 'goodwill' unlike their English counterparts. This is evident from one of the early judgments, namely, the Kamal Trading case, wherein the primary contention before the court for adjudication revolved around whether the reputation and goodwill associated with the "7 O' Clock" trademark had diminished due to the absence of blades featuring this mark in India after the year 1958. The court formulated the judgment that insinuated at the notion that 'reputation' and 'goodwill' could be used interchangeably. The court held that it could not be inferred that the goodwill or reputation ceases to exist simply because the goods are temporarily unavailable within a specific country and emphasized that it is essential to recognize that goodwill is not constrained by national boundaries in today's interconnected global trade environment. Further, the reputation or goodwill of a manufacturer could not be confined to the jurisdiction where the goods are physically accessible; rather, it could be extended to jurisdictions where they have been extensively promoted through channels such as newspapers, magazines, and various other media outlets.

Owing to the absence of acknowledgment of distinction between 'reputation' and 'goodwill,' the courts did not heavily delve into a standalone discussion of reputational element associated with trademarks. One of the earliest judgments that dealt with the reputational aspect in a standalone manner in detail and formulated the transborder reputation doctrine is the Whirlpool Case. In this case, the principal contention before the apex court to adjudicate upon was whether the defendants-appellants, in their manufacturing, selling, and advertising of washing machines bearing the name 'WHIRLPOOL' as a part of their product name, are engaged in an act of 'passing off.' The plaintiffs based their claim on being the prior users of the 'WHIRLPOOL' mark and asserted a trans-border reputation. This reputation suggests that any products bearing the 'WHIRLPOOL' mark in the market create an impression that these goods are associated with the plaintiffs, leading to potential confusion among prospective buyers.

The Supreme Court reaffirmed the position established by the High Court in the same subject matter. It held that the utilization of a trademark through advertising, even in the absence of the actual presence of goods in the market, constitutes a valid form of trademark usage and is sufficient to act as a testament to the existence of goodwill and reputation. Further, it clarified that there does not exist any prerequisite that the trademark must enjoy the highest degree of recognition, i.e., recognized throughout the entire country or by every individual in the region, for it to be regarded as a trademark with goodwill and reputation in that jurisdiction. In order to come to a conclusion, the court took into account extensive prior usage of the 'WHIRLPOOL' name, trans-border reputation as established, earlier registration than the defendant's date of filing application for registration, and lack of credible evidence demonstrating that the defendants marketed their washing machines for a significant duration.

In the aforementioned judgment, the court laid down the principle of transborder reputation, which asserts that in cases involving a claim of passing off, the favorable reputation and goodwill associated with a registered or unregistered trademark in one jurisdiction can be attributed to the same mark in another jurisdiction. Provided, it can be established that the goodwill cultivated in the first jurisdiction has extended and influenced the reputation of the mark in the second jurisdiction. The Supreme Court judgment in Prius Case marked a paradigm shift wherein the court replaced the "doctrine of transborder reputation" with the "territoriality principle" in cases related to passing off actions. The territoriality principle dictates that a trademark should either be officially registered or possess its distinct reputation and goodwill within each jurisdiction autonomously. Therefore, the previous utilization of a trademark in one jurisdiction does not automatically grant its owner exclusive rights to the same mark in another jurisdiction.

In the Prius Case, the central issue addressed by the Supreme Court pertained to whether Toyota's prior use of the 'Prius' mark in other countries conferred upon them the exclusive rights to claim the mark in India. In rendering its decision, the Supreme Court drew from the UK Supreme Court's ruling in the Starbucks v British Sky Broadcasting case, which propounded the perspective that the claimant is required to demonstrate the presence of customers within the specific jurisdiction to establish goodwill. The Supreme Court also considered the viewpoint that foreign claimants can succeed in passing off actions if they possess goodwill within the particular jurisdiction, effectively placing them in a position analogous to a domestic trader if they have customers within that jurisdiction. Therefore, the Supreme Court determined that Toyota needed to provide substantial evidence showing the acquisition of substantial goodwill for their 'Prius' brand in the Indian market, irrespective of the mark's overseas reputation.

Furthermore, the court remarked that the material assessed by the High Court was considered inadequate to establish Toyota's requisite goodwill in India, given the limited online visibility of the mark at the relevant period, coupled with meager product sales and the virtual absence of pre-April 2001 product advertisements in India. Consequently, the Supreme Court concluded that Toyota lacked the necessary goodwill in the Indian market to prevail in a passing off action. Evidently, the court's judgment falls on the lines of the territoriality principle and not the doctrine of transborder reputation. This judgement marks a significant departure from a well-established series of cases that began with Kamal Trading Co v Gillette UK Ltd.

In recent times, several judgments have reaffirmed the position established by the Prius Case. For instance, a recent case involving Princeton University and several Hyderabad-based educational institutions, the Delhi High Court emphasized that the mere fact that numerous Indians have attended Princeton University in the United States does not constitute the "use" of the "Princeton" trademark by the American Ivy League college in India, as per the Trade Marks Act. The court found that there was no substantial evidence of consistent use of the "Princeton" mark by the American Ivy League institution before 1991, which was the acknowledged date of first use by the defendant institutions. Additionally, the court reasoned that although both the "Princeton" marks of Princeton University and the defendant institutions pertained to educational services, it would be unreasonable to assume that consumers could confuse the services offered by them. Furthermore, the court noted that Princeton University had not provided any material demonstrating statements about the availability, provision, or performance of its services in India before 1991, the undisputed date of use by the defendants.

III. Legal Viability Of The Indian Position

The adoption of the stringent territoriality principle, which demands that foreign companies must demonstrate a customer base in India to establish goodwill for their trademarks in the domestic market, could potentially place India in breach of its commitments under Article 6bis of the Paris Convention, which is produced below:

Furthermore, it could also potentially violate Article 16 of the TRIPS agreement, which essentially reflects the principle formulated under Article 6bisof the Paris Convention. Clearly, this shift may result in owners of well-known international trademarks, which are not yet registered in India, having no legal recourse in the country. This could stand in direct contradiction to the aforementioned provisions. The transition from the transborder reputation doctrine to the territoriality principle raises significant apprehensions among potential foreign investors entering the Indian market. This change might also embolden cyber-squatters to procure domain names that incorporate the trademarks of renowned companies not yet present in India. While such practices would have previously amounted to passing off under Indian law, the current legal landscape may provide limited remedies for foreign companies in such cases.

IV. Conclusion

Through this piece, the author primarily aimed to trace the evolution of the Indian position on transborder reputation and thereby highlight the paradigmatic shift from the doctrine of transborder reputation to the principle of territoriality when it comes to according protection to foreign trademarks. Furthermore, the piece highlighted how the current position could potentially transgress the provisions of certain international instruments. The foreign entities have been left with no potential legal recourse to resort to in case of serious transgressions of their trademarks if they could not substantially establish the physical presence of their goods or services in that jurisdiction. This piece attempts to stir a debate as to the viability of the existing regulatory framework in this respect. An apt framework would respect the rights of the all the entities that interact with the India, especially in a globalized world.

REFERENCES:

1. N.R. Dongre v. Whirlpool Corpn., (1996) 5 SCC 714
2. Toyota Jidosha Kabushiki Kaisha v. Prius Auto Industries Ltd., (2018) 2 SCC 1
3. The Trustees Of Princeton University v. The Vagdevi Educational Society &Ors., 2023 LiveLaw (Del) 806.
4. The Paris Convention for the Protection of Industrial Property, 1883
5. The TRIPS Agreement, 1994
6. Kamal Trading Co. v. Gillette U.K. Ltd., 1987 SCC OnLine Bom 754
7. Starbucks (HK) Limited &Anr v British Sky Broadcasting Group plc &Ors [2015] UKSC 31.
8. Agitha, T. G. "TRADEMARK DILUTION: INDIAN APPROACH." Journal of the Indian Law Institute, vol. 50, no. 3, 2008, pp. 339–66. JSTOR, http://www.jstor.org/stable/43952160. Accessed 26 Oct. 2023.
9. Vishudha Prakash, TRANSBORDER REPUTATION OF TRADEMARKS IN INDIA, Law Brigade Publishing Group.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.