Toyota Jidosha Kabushiki Kaisha v. Deepak Mangal & Ors., C.S. (O.S.) No. 2490 of 2009, Del. H.C., 8 July 2016
On July 8, 2016, the High Court of Delhi issued a landmark decision in favor of Toyota Jidosha Kabushiki Kaisha (“Toyota”), the Japanese automobile manufacturer. The Delhi High Court recognized Toyota’s unregistered PRIUS mark as well known worldwide, including in India, and enjoined the four defendants, Deepak Mangal, Sandeep Verma, M/s Prius Auto Industries, and M/s Prius Auto Accessories Pvt. Ltd. (collectively, “Defendants”), from using the PRIUS trademark in connection with their auto parts business. Significantly, the Defendants’ two Indian registrations for the PRIUS mark in Class 12 did not afford them a viable defense against Toyota’s claim of passing off.
The Defendants adopted the PRIUS trademark and trade name in 2001, in connection with their business for the manufacture and sale of spare automobile parts. They claimed that their parts were compatible with Toyota’s vehicles, and their packaging prominently bore a number of Toyota’s trademarks, including TOYOTA, PRIUS, INNOVA, and (“Toyota Design”).
In 2002 and 2003, respectively, the Defendants filed two trademark applications with the Indian Trade Marks Office, both for PRIUS covering “auto parts and accessories” in Class 12. These marks issued to registration under Registration No. 1086682 for and Registration No. 1163594 for . The Defendants filed a third PRIUS application in 2002, which remains pending.
In 2009, while conducting a trademark search prior to filing the PRIUS trademark in India, Toyota learned of the Defendants and their PRIUS registrations. Toyota filed rectification petitions with the Indian Trade Marks Office against the two existing registrations, and brought a lawsuit seeking a permanent injunction against the Defendants for (1) infringing Toyota’s registered TOYOTA, INNOVA, and Toyota Design trademarks; and (2) passing off Toyota’s well-known, but unregistered, PRIUS trademark.
High Court’s Decision
The Court first considered Toyota’s claim of infringement of its registered TOYOTA, INNOVA, and Toyota Design marks. The Defendants argued that they were using the marks as a bona fide description of the character and quality of their goods, and that this use did not amount to trademark infringement.
In holding that the Defendants’ use infringed Toyota’s marks, the Delhi High Court noted that the Defendants had wholly failed to comply with, and indeed “willfully disobeyed,” a 2010 interim order of the Court (i) prohibiting use by the Defendants of TOYOTA and INNOVA in the same font as that used by Toyota, and wholly prohibiting use of the Toyota Device; (ii) directing the Defendants to replace the term “Genuine Accessories” with “Genuine Accessories of PRIUS Auto Industries Limited” in their packaging and advertising; and (iii) requiring that the Defendants prominently state that “the vehicle name (plaintiff’s trademark) is used for item identification only.” The Court reviewed samples of the Defendants’ packaging submitted by Toyota and found that not only did the use of the marks fail to comply with the 2010 order, but this use was not a bona fide description of the character and quality of the Defendants’ goods. Rather, the marks were used “as trademarks and in the similar manner, script and device” as Toyota’s own use, thus conveying the erroneous impression that the Defendants sell genuine spare parts manufactured by Toyota, and sold with Toyota’s consent.
In concluding that Toyota held superior rights in the PRIUS trademark, a critical fact was the High Court’s assessment that Toyota had in fact been the first in the world to adopt the PRIUS mark. The Court reviewed and relied on past precedent holding that, where a mark is sufficiently well known, first adoption internationally is sufficient to establish trademark rights in India. The Court noted that Toyota adopted its PRIUS mark in 1990, when it filed its first trademark application in Japan, followed by filings in a number of other countries prior to the Defendants’ adoption in India in 2001. Importantly, the first commercial use of PRIUS by Toyota pre-dated the Defendants’ use in India, having taken place in 1995 at the Tokyo Motor Show. Sales of Toyota’s PRIUS electric hybrid car first commenced in 1997, also in Japan, and were greeted by strong media attention. Sales in the United States and Europe followed in 2001 and 2002.
It was not until 2009 that Toyota first showed its PRIUS model in India, at two trade shows in Bangalore and New Delhi, and sales in India began in 2010.
The Court noted that, even though Toyota’s commercial use of the PRIUS mark in India commenced several years after the Defendants had begun using and had applied for registration of PRIUS, the spill-over into India of Toyota’s substantial reputation abroad was sufficient to establish Toyota’s priority. Further to its review of the evidence submitted by Toyota, as well as its independent recognition of a number of books and articles establishing the fame of the PRIUS mark, the Court concluded that PRIUS enjoyed an international reputation prior to the Defendants’ adoption of PRIUS in 2001. It was not necessary that this reputation be localized in India, or that Toyota have had actual sales in India prior to the Defendants’ adoption. It was sufficient that Toyota’s PRIUS mark had a “trans-border” reputation in India at the time the Defendants entered the market, as a result of Toyota’s marketing efforts abroad and the worldwide recognition afforded the PRIUS as the world’s first mass-produced electric hybrid vehicle. The Court noted that the “reputation which is sought to be protected has to be [a] substantial one having global character,” and Toyota had met this test.
Having recognized the trans-border reputation of the PRIUS mark and Toyota’s prior worldwide adoption, the Court concluded that Toyota held prior common law trademark rights in India. In so concluding, the Court cited precedent noting that trademark registration “does not confer any new right to the mark claimed or any greater rights than what already existed at common law and at equity without registration.” The Court held that confusion was “inevitable,” as the Defendants were using an identical mark in connection with identical and related products. The Court also suggested that the risk of consumer confusion was further enhanced by the fact that the Defendants were using the registered TOYOTA, INNOVA, and Toyota Design marks, along with PRIUS, noting that such use was “blatantly dishonest.”
The Court closely examined the testimony of the Defendants’ witnesses, who had given differing explanations for adoption of the PRIUS trademark. The Court determined that the Defendants had knowledge of Toyota’s PRIUS mark at the time they commenced use in 2001. The Court held it was clear that “the defendants have adopted the trademark/name PRIUS with the sole intention of enjoying the benefits that flow from the tremendous reputation and goodwill that exists in favor of the plaintiff’s identical trademark.”
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The decision of the Delhi High Court is an unmitigated victory for Toyota and other owners of truly well-known, global brands. The decision bolsters the position of global brand owners who encounter an infringing prior registration of their mark in India, and is a rare application in a final ruling, following trial, of the principles of trans-border reputation and “first in the world” adoption. Notwithstanding the favorable decision, trademark owners are still advised to register their trademarks and to diligently police their trademark rights in any jurisdiction of potential interest, including India. Toyota’s favorable decision does not alter best practices, in this regard, and came at the high price of seven years in court.