SC dismisses Toyota appeal in passing off action against auto parts maker Prius

The Supreme Court last week dismissed an appeal by Toyota in a case filed against Indian automobile parts manufacturer Prius Auto Industries for passing off..Toyota had filed a suit against Prius in the Delhi High Court back in 2009, claiming that the goods manufactured and sold by the defendants bore the plaintiff’s registered ‘TOYOTA’, ‘TOYOTA INNOVA’, ‘TOYOTA DEVICE’ and ‘PRIUS’ trademarks, thereby resulting in infringement of these trademarks..It was claimed that the car maker had registered the ‘Prius’ trademark in Japan as far back as 1990, and had released the Prius car in India in 2009. Prior to that, Prius Auto Industries had got the mark ‘Prius’ registered in the year 2002-2003..The plaintiff claimed that advertisements and news reports about its ‘Prius’ model had made it a well-known trademark under Section 2(1)(zg) of the Trade Marks Act. Therefore, it approached the Trade Mark Registry for cancellation of the registered trade mark of the defendants and also filed the suit in question..The defendant company, on the other hand, argued that it has built up a considerable market reputation over a period of time, and were operating even before Prius model was sold in India. As the product itself was not in existence in the Indian market, according to the defendant, it was impossible for people in India to identify or associate its registered trademark ‘Prius’ with any of the products of the plaintiff..In December 2009, the single judge of the Delhi High Court had passed an interim injunction restraining the defendant from using the registered trademarks of the plaintiff. After this order was vacated on application by the defendant, Toyota appealed before a Division Bench of the High Court, which permitted the defendants to use the registered as well as unregistered trademarks of the plaintiff, pending the conclusion of the suit before the single judge..Then, in July 2016, the trial judge held that the acts of the defendant constituted infringement of the trademarks ‘TOYOTA’, ‘TOYOTA INNOVA’ and ‘TOYOTA DEVICE’ and that it was guilty of passing off the plaintiff’s goods under the name ‘Prius’. The defendant was order to pay damages of Rs. 10 lakh..Both parties then appealed this judgment before the Division Bench of the High Court. The plaintiff appealed to increase the damages awarded, while the defendant challenged only the permanent injunction granted with regard to the use of the name ‘Prius’. The Division Bench, in December 2016, sided with the defendant and set aside that part of the single judge’s order. Which is when Toyota approached the Supreme Court in appeal..The Supreme Court Bench of Justice Ranjan Gogoi and Navin Sinha confined its adjudication to the correctness of the High Court’s decision with regard to the use of the name ‘Prius’. In the apex court, Senior Advocate P Chidambaram appeared for Toyota, while advocate Sai Krishna argued for Prius Auto Industries..Applying the Trinity Test, the Bench sought to ascertain if the plaintiff’s Prius product had any goodwill in the Indian market. Pursuant to this, it was observed that when it comes to gauging goodwill of a product within a jurisdiction, the Principle of Territoriality would trump the Universality Doctrine..“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 Court further held that news items relating to the launch of Toyota’s Prius model in Japan back in 1997 do not firmly establish the existence of goodwill and reputation of the brand name in the Indian market..“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.”.As a parting shot, the Bench criticized the plaintiff’s delay in filing litigation, given that the suit was filed only in 2009, just after the Prius model was launched in India..“We cannot help but also to observe that in the present case the plaintiff’s 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.”.Read judgment: