The New School of Thought
A recent Supreme Court judgment pronounced over the issue of "bad faith filings" has baffled the business world as well as legal experts. In Toyota Jidosha Kabushiki Kaisha vs M/S Prius Auto Industries Limited (Civil Appeal Nos.5375-5377 OF 2017), the apex court has refused to accept the automobile giant Toyota's objection against registration of the mark "PRIUS" in favour of an Indian automobile parts manufacturer, Prius Auto Industries Ltd. Toyota pleaded "bad faith" on the part of Prius Auto and the same was rejected by the Court.
Toyota had launched its car, PRIUS, in several countries in the year 1997. However, the car was launched in India only in 2010, by which time Toyota had not filed for registration of the mark 'PRIUS' in India. Prius Auto, on the other hand, had obtained registration for the mark PRIUS in India in the year 2002 and had been using the same since the year 2001 for its business of automobile spare parts. In its judgement, the Supreme Court did not find Toyota's online evidence sufficient as to conclude that back in 2001-02 its brand PRIUS was well known in India. The Court was of the view that the online evidence was not 'a safe basis to hold the existence of the necessary goodwill and reputation' because in the year 2001 India had limited online exposure. Hence, the ruling ended up being in favour of Prius Auto on the ground that it was the first to use and register in India and there cannot be any element of "Bad Faith" on the defendant's part.
A Past Perspective
Under The Trade Marks Act, 1999 "bad faith" has not been defined or elaborately discussed except a contextual mention under section 11(10) (ii), forming part of the relative grounds for refusal of registration. Therefore, it becomes essential to find an epicenter for this analysis back in the previous rulings of Indian Courts on the subject matter.
In the year 2004, Supreme Court had held that non-use of a mark by foreign companies in Indian market will not affect its prior user status if the mark was used first in the global market. [See Milmet Oftho Industries & Ors. vs. Allergan Incorporated [2004 (12) SCC 624]. However, from the ruling of the apex court in Prius Auto case it appears as if the ratio of Milmet Oftho has been considerably downplayed, giving prior registration in India prominence over the principle of 'first in the world market'. Indian courts have on other occasions as well denied registration of marks on the ground of bad faith even if the opposing party did not have a presence in India, for example registration of the mark "PANADOL" was denied in the case of Winthrop Products Inc. v. Eupharma Laboratories Ltd. [1998 (18) PTC 213 (Bom).
The decision, as it reads now in Prius Auto case, may cause nightmare to the foreign companies and bring unwarranted results for them. These companies may be those who are well known in India but may not be operating in India or they deal in specialized goods targeting a small group of consumers. Conclusively, the judgement delivered in the Prius Auto case suggests that a settled principle has been converted into a grey area of law. Thus, the dust will only settle once the apex court confirms or clarifies its stance on the burning issue of "Bad Faith Filings."
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.