1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOs.5375-5377 OF 2017

TOYOTA JIDOSHA KABUSHIKI KAISHA   ...APPELLANT(S)

VERSUS

M/S PRIUS AUTO INDUSTRIES LTD.  & ORS.    ...RESPONDENT(S)

J U D G M E N T

RANJAN GOGOI, J.   

1. The  appellant  (hereinafter  referred  to

as ‘the plaintiff’) is an automobile manufacturer

incorporated under the laws prevailing in Japan.

The  first  respondent  is  a  partnership  firm

engaged in the manufacture of automobile spare

parts of which the second and third respondents

are  partners.   The  partnership  firm  of  the

respondents  was  constituted  in  the  year  2001.

The  fourth  respondent  is  a  Private  Limited

Company in which the second and third respondents

are majority shareholders.

2

2. Civil Suit [CS (OS) No. 2490 of 2009]

was instituted by the plaintiff in the Delhi High

Court seeking a decree of permanent injunction

for infringement of trade mark, passing off and

for damages against the respondents (hereinafter

referred  to  as  ‘the  defendants’)  in  order  to

protect  the  plaintiff’s  trade  marks  ‘TOYOTA’,

‘TOYOTA  INNOVA’,  ‘TOYOTA  DEVICE’  and  the  mark

‘Prius’ of which the plaintiff claimed to be a

prior user.

3. In the plaint filed, it was averred by

the  plaintiff  that  it  is  a  renowned  carmaker

having its presence in many countries across the

world. The plaintiff claimed an enviable goodwill

and reputation as one of the foremost automobile

manufacturers  in the  world.  According to  the

plaintiff it had acquired registration in India

in  different  classes  for  its  trade  marks

‘TOYOTA’,  ‘TOYOTA  INNOVA’  and  ‘TOYOTA  DEVICE’

3

during the years 1989-2003. It was specifically

averred  by  the  plaintiff  that  the  goods

manufactured and sold by the defendants bore the

plaintiff’s  registered  trade  marks  thereby

clearly  constituting  infringement  of  the  said

registered marks.

Furthermore, according to the plaintiff,

it  had  launched  the  world’s  first  commercial

hybrid car called ‘Prius’ in Japan in the year

1997 and in other countries like U.K., Australia,

the U.S.A. etc. during the year 2000-2001. The

plaintiff also claimed registration of the trade

mark ‘Prius’ in different countries as early as

the year 1990 (in Japan) and eventually in other

jurisdictions all over the globe. So far as India

is concerned, however, the car was released in

the year 2009 and until that point of time the

plaintiff had not obtained registration of the

mark  ‘Prius’  in  the  Indian  jurisdiction.

However, the car was displayed in the car shows

4

in Delhi and Bangalore held in the year 2009 and

it was formally launched in India in the year

2010.  

The  plaintiff  claimed  that  various

advertisements and news reports about ‘Prius’ and

publications in car magazines in India and across

the globe has made ‘Prius’ a well known trade

mark within the meaning of the said expression

under Section 2(1)(zg) of the Trade Marks Act,

1999  (hereinafter  referred  to  as  ‘the  Act’).

According to the plaintiff, in the year 2009, it

discovered that the defendants not only had got

the mark ‘Prius’ registered way back in the year

2002-2003  for  all  types  of  auto  parts  and

accessories but that they had also been using the

said trade mark in carrying out their trade in

such auto parts and accessories. The plaintiff,

therefore, approached the Trade Mark Registry for

cancellation of the registered trade mark of the

defendants and also filed the suit in question on

the ground that the defendants had been using the

5

well known trade marks of the plaintiff without

any  authorization  thereby  taking  an  unfair

advantage of the reputation and goodwill of the

plaintiff which it had earned over a period of

time across the globe. Accordingly the plaintiff

prayed for:

(i) Permanent  injunction  restraining  the

defendants  from  using  the  plaintiff’s

registered trade marks (‘TOYOTA’, ‘TOYOTA

INNOVA’ and ‘TOYOTA DEVICE’); and (ii) Permanent  injunction  restraining  the

defendants  from  using  the  well  known

(unregistered) trade mark ‘Prius’ so as to

prevent passing off the defendants’ goods

as that of the plaintiff.

4. The  defendants  contested  the  claim  of

the plaintiff by contending that they have been

using  the  words  ‘TOYOTA’,  ‘TOYOTA  INNOVA’  and

‘TOYOTA  DEVICE’  on  the  packaging  materials  in

which  the  auto  parts  manufactured  by  them

6

are/were  packed  for  the  purpose  of  item

identification and nothing more. According to the

defendants, since they were in the business of

manufacturing  spare  parts  of  automobiles,  they

are/were entitled to indicate the cars for which

the  spare  parts  have  been  manufactured  by

displaying the same name on the packaging of the

products. The use of the words ‘TOYOTA’, ‘TOYOTA

INNOVA’ and ‘TOYOTA DEVICE’ etc. were, therefore,

for the purpose of honest use in an industrial

matter and thus protected under Section 30 of the

Act.

5. Insofar  as  the  mark  ‘Prius’  is

concerned, according to the defendants, they had

obtained  registration of  the said  mark in  the

year 2002 and have been continuously using the

same  since  the  year  2001.  They  have  been

regularly supplying auto accessories to various

automobile  giants  like  Hyundai  Motors,  General

Motors.  The  defendants  claimed  that,  over  a

7

period of time, they have built up a considerable

market reputation. According to the defendants,

the  mark  ‘Prius”  had  not  been  registered  in

favour of the plaintiff for any of its products;

nor had any Prius Car sold been in India so as to

enable the plaintiff to claim goodwill in respect

of such cars in the Indian market. As the product

itself was not in existence in the Indian market,

according to the defendants, it was impossible

for the people in India to identify and recognize

or  associate  the  defendants’  registered  trade

mark  ‘Prius”  with  any  of  the  products  of  the

plaintiff.  In  fact,  in  the  written  statement

filed, the defendants claimed that as they were

the first in India to manufacture add-on chrome

plated accessories, they had conceptualized their

attempt as ‘pehela prayas’ (Hindi word meaning

first attempt). It was on that basis that they

had adopted the name ‘Prius’ and got the same

registered  in  the  year  2002  as  ‘PRIUS’

(Registration No. 1086682 dated 13.03.2002) and

8

‘PRIUS - The name you can trust’ (Registration

No. 1163594 dated 2.1.2003).

6. The  learned  trial  Judge  of  the  High

Court by Order dated 22.12.2009 granted ex-parte

ad-interim injunction restraining the defendants

from  using  the  registered  trade  marks  of  the

plaintiff  i.e.  ‘TOYOTA’,  ‘TOYOTA  INNOVA’  and

‘TOYOTA DEVICE’ and the mark ‘Prius’ in respect

of  auto  accessories  manufactured  by  the

defendants. This order was vacated on 19.03.2010

on  the  basis  of  an  application  filed  by  the

defendants. Aggrieved, the plaintiff had filed an

appeal  before  the  Division  Bench  of  the  High

Court and by Order dated 10.08.2010, the Division

Bench  permitted  the  defendants  to  use  the

registered as well as un-registered trade marks

of  the  plaintiff  subject  to  the  following

conditions:

“(i) The defendants were restrained from

9

using  the  plaintiff’s  registered

trade marks (TOYOTA, INNOVA) except

for the purpose of identifying that

the defendants’ products can be used

in these cars;

(ii)  the  defendants  were  to  ensure  that

the words ‘TOYOTA’ and ‘INNOVA’ were

not  written  in  the  same  font  as

written  by  the  plaintiff  and  the

logos of the plaintiff;

(iii) the defendants would have to replace

the words “Genuine Accessories” with

“Genuine  Accessories  of  PRIUS  Auto

Industries Limited;

(iv) the defendants were to ensure that

the words – “the vehicle name (i.e.

the appellant’s trade mark) is used

for item identification only.”  

7. It does not appear that the defendants

had carried the aforesaid Order dated 10.08.2010

10

of the Division Bench of the High Court in any

further  appeal.  Consequently,  the  said  order

governed the parties during the pendency of the

suit.  Allegations  of  the  breach  of  the  order

were, however, brought before the Court by the

plaintiff.

8. At  the  conclusion  of  the  trial,  the

learned trial Judge by judgment dated 08.07.2016

held  that the  impugned acts  of the  defendants

constituted  infringement  of  the  trade  marks

‘TOYOTA’,  ‘TOYOTA  INNOVA’  and  ‘TOYOTA  DEVICE’

registered  in  favour  of  the  plaintiff.  The

learned Judge also held that such acts of the

defendants  amounted  to  passing  off  of  the

defendants’ goods under the trade name ‘Prius’,

which,  though  registered  in  favour  of  the

defendants in the year 2002-2003, the plaintiff

was the first user thereof having marketed its

hybrid  car  all  over  the  globe  under  the  name

‘Prius’  at  least  from  the  year  1997.

11

Consequently, the learned trial Judge restrained

the defendants from using the plaintiff’s trade

marks  (‘TOYOTA’,  ‘TOYOTA  INNOVA’  and  ‘TOYOTA

DEVICE’  marks)  except in  accordance with  the

terms of the conditional injunction order passed

by the Division Bench dated 10.08.2010. So far as

the mark ‘Prius’ is concerned, on the basis of

the finding that the plaintiff was the prior user

of the mark ‘Prius’ in various countries, if not

in India, and that goodwill and reputation of the

plaintiff so far as the mark ‘Prius’ is concerned

having permeated to the Indian jurisdiction, it

was held that the plaintiff was entitled to an

injunction  against  the  defendants  restraining

them  from passing  off the  said mark.  Punitive

damages quantified as Rupees ten lakhs was also

awarded in favour of the plaintiff.

9. Both  sides  appealed  against  the

aforesaid  order  of  the  learned  Single  Judge.

While the appeal of the plaintiff was with regard

12

to the quantum of the damages awarded, the appeal

filed by the defendants was in respect of the

order  of  injunction  granted  against  them.

However, in the course of hearing of the appeal

filed  by  the  defendants,  the  grievance  with

regard to the conditional use of the trade marks

‘TOYOTA’, ‘TOYOTA INNOVA’ and ‘TOYOTA DEVICE’ (in

terms of the interim Order dated 10.08.2010) was

not  persisted  with  and  the  sole  grievance

expressed  was  in  respect  to  the  permanent

injunction  granted  by  the  learned  trial  Judge

with regard to the use of the name ‘Prius’.

10. The Division Bench of the High Court by

the  impugned  judgment  dated  23.12.2016,  on

grounds and reasons, that will be noticed in the

course  of  deliberations  and  discussions  that

follow, took the view that grant of injunction in

favour of the plaintiff insofar as the trade name

‘Prius’  is  concerned  was  not  justified.

Accordingly the aforesaid part of the order of

13

the  learned  trial  Judge  was  set  aside.

Consequently, the appeal filed by the plaintiff

with  regard  to  quantum  of  damages  was  also

dismissed.  Aggrieved, the plaintiff has filed

the instant appeal.

11. At the very outset it must be clarified

that in view of the virtual acceptance of the

conditional order of injunction with regard to

the ‘TOYOTA’, ‘TOYOTA INNOVA’ and ‘TOYOTA DEVICE

MARKS’ by the defendants, the truncated scope of

the  present  appeal  would  be  confined  to  the

correctness of the views of the  Division Bench

of the High Court with regard to the use of the

name ‘Prius’ and specifically whether by use of

the said name/mark to market the automobile spare

parts manufactured by them, the defendants are

guilty of passing off their products as those of

the plaintiff thereby injuring the reputation of

the plaintiff in the market.

14

12. The  learned  trial  Judge  in  taking  the

view  that  the  plaintiff  was  entitled  to  an

injunction  against  the  use  of  the  trade  mark

‘Prius’  by  the  defendants,  took  into  account,

inter  alia,  the  global  sales  of  Prius  Cars

(ranging upto over a million sales globally); the

exponential hike in the sales of cars (300 units

in 1997 to 285600 units in 2008); and that the

plaintiff’s trade mark ‘Prius’ which had acquired

an excellent global goodwill had already spilled

over to India much before the direct sales of the

car in India in the year 2010. The fact that the

plaintiff’s web sites have been visited by many

Indians seeking information about Prius cars was

held by the learned trial Judge to be evidence of

the fact that people in India were aware of the

car and its popularity. The exhibitions of the

car held in India and other countries; various

advertisements published in different automobile

magazines  and  cover  stories  published  in

international magazines and journals were taken

15

into account by the learned trial Judge to hold

that the car in question had a stellar reputation

in the world market including India. The learned

trial  Judge  also  took  into  account  the

availability of information regarding the car in

information-disseminating portals like  Wikipedia

and online Britannica dictionary. Consequently,

it was held that the physical presence of the car

in India at a later point of time was immaterial.

In fact, the learned trial Judge went on to hold

that  the  mark  ‘Prius”  had  satisfied  the

definition  of  a  “well-known  trade  mark”  under

Section 2(1)(zg) read with Section 11(6) & 11(9)

of the Act. Relying on the decision of this Court

in S. Syed Mohideen  vs.  P. Sulochana Bai1, the

learned trial Judge took the view that if the

plaintiff could successfully prove that its case

was covered by “passing off” the registered trade

mark of the defendants would not remain protected

under the Act. Proceeding further, the learned

1  2016 (2) SCC 683

16

trial Judge took the view that the plaintiff was

the  prior  user/adopter of  the  mark  ‘Prius’,

though it may not have been such prior user so

far as the Indian market is concerned. In this

regard,  the learned  trial Judge  relied on  the

decision  of  this  Court  in  N.R.  Dongre   vs.

Whirlpool  Corporation2 wherein  this  Court  had

approved  the  views  of  the  Delhi  High  Court

holding that wide advertisement of a trade mark

without the existence of the goods in the local

market can well be considered as use of the trade

mark in the said local market. Again, relying on

the  decision  of  this  Court  in  Milmet  Oftho

Industries & Ors.  vs.  Allergan Incorporated3

the learned trial Judge held that the real test

of establishing prior use is to determine who is

the  first  in  the  world  market.   Adopting  the

tests laid in   Reckitt and Colman Ltd.  vs.

Borden Incorporated4 the learned trial Judge came

to the conclusion that the goods of the plaintiff

2  1996 (5) SCC 714 3  2004 (12) SCC 624 4  1990 (1) All  E.R. 873

17

enjoy  transborder reputation and goodwill which

had permeated the Indian market and that as the

defendants had used an identical mark in relation

to more or less an identical product(s) having a

common market, the likelihood of confusion was

unavoidable. The learned trial Judge further held

that, as both the parties had advertised their

respective  products  in  the  same  magazines  and

periodicals,  any  person  reading  such  an

advertisement  would  be  bound  to  be  misled  to

believe that the defendants goods emanates from

the plaintiff’s organization and that there is a

nexus between the two. Accordingly, the learned

trial  Judge  came  to  the  conclusion  that  the

adoption of the mark ‘Prius’ by the defendants,

though  they  were  the  registered  proprietor

thereof, was misleading, as the plaintiff was the

true and first user of the trade mark all over

the world and the reputation of the mark and the

goodwill  of  the  plaintiff  on  that  basis  had

permeated to the Indian Market well before the

18

use of the mark by the defendants in 2001 and its

registration thereafter in 2002-2003. The trial

Judge  further  held  that  the  defendants  had

adopted the mark ‘Prius’ with the sole intention

of enjoying the benefits from the use of the said

mark. The explanation given as to why and how the

defendants had adopted the name ‘Prius’ was found

to  be  wholly  untenable  by  the  learned  Single

Judge.  Accordingly,  the  finding  that  the

defendants were guilty of passing off their goods

under the mark, of which the plaintiff was the

first  user,  was  arrived  at.  Consequently,

permanent injunction restraining the use of the

mark  ‘Prius’  by  the  defendants  in  order  to

prevent passing off the defendants’ goods as the

plaintiffs’ was issued and damages  quantified at

0.25%  of  the  total  sales,  amounting  to  Rs.10

lakhs, was awarded.

13. In appeal, the Division Bench reversed

the  conclusion(s)  of  the  learned  Single  Judge

19

holding that the findings with regard to spread

of the transborder reputation of the mark ‘Prius’

had not been correctly arrived at by the learned

trial  Judge as  facts and  materials beyond  the

relevant point of time i.e. first date of use

(April, 2001) of the mark by the defendants in

India was taken into consideration. The Division

Bench of the High Court while holding that the

launching of the car ‘Prius’ in the year 1997 was

widely  reported  and  advertised,  however,  held

that such publication in the print media was not

ground  breaking  and  in  fact  in  the  issue  of

Economic Times dated 27.03.1997 and 15.12.1997,

small news items with regard to the launching of

the product in Japan had been published, which

could  not  have  impacted  the  Indian  public  at

large. Relying on one of its own judgments in the

case of Trans Tyres India Pvt. Ltd.  vs.  Double

Coin Holdings Ltd. & Anr.5 the Division Bench of

the  High  Court  took  the  view  that  the

5  2012 SCC Online Delhi 596

20

Universality Doctrine (which posits that a mark

signifies the same source all over the world) has

not been accepted by courts. Modern day trade;

globalization have brought in multi-channel modes

of sale of goods in the market and therefore it

is  the  Territoriality  Doctrine  (a  trade  mark

being recognized as having a separate existence

in each sovereign country) would hold the field.

The Division Bench further held that prior use of

the trade mark in one jurisdiction would not ipso

facto entitle  its  owner  or  user  to  claim

exclusive  rights  to  the  said  mark  in  another

dominion. It was, therefore, necessary for the

plaintiff  in  the  case  to  establish  that  its

reputation  had  spilled  over  to  Indian  market

prior to April, 2001.

14.    The aforesaid issue was decided by the

Division  Bench  of  the  High  Court  against  the

plaintiff  on  the  ground  that  not  only  the

publicity  and  advertisement  surrounding  the

21

launching of the product by the plaintiff in the

international  market  was  scanty,  internet

penetration in India at that point of time (prior

to  April 2001)  was limited  and, therefore,  it

cannot  be  said  that  prior  to  April  2001  the

plaintiff  had  established  its  goodwill  and

reputation  in  the  Indian  market,  which  the

defendants had taken advantage of. The Division

Bench of the High Court further held that the

test  of  possibility/  likelihood  of  confusion

would be valid at the stage of quia timet actions

and not at the stage of final adjudication of the

suit, particularly when the defendants had used

the impugned mark for a long period as in the

instant case. The test, therefore, would be one

of actual confusion. No evidence was led by the

plaintiff  to  show  that  any  section  of  the

consuming public was misled by the use of the

trade mark ‘Prius’ by the defendants.

15.    Laches  and  delay  on  the  part  of  the

22

plaintiff  in instituting  the suit  in the  year

2009  was  also  held  against  the  plaintiff  to

reverse the decree passed by the learned trial

Judge. In this regard, the Division Bench held

that the plaintiff was aware of the defendants’

mark at least from April, 2003. Publications in

Pioneer  magazines  (like  Autocar,  Overdrive)

contained  defendants’  advertisements  under  the

name ‘Prius’ and in fact both the parties have

been  advertising  their  products  in  the  same

magazines. In fact, the plaintiff, at no relevant

point of time, had applied for registration of

the trade mark, which was done only on 3.12.2009,

followed  by  the  institution  of  the  suit  on

21.12.2009, and that too on a ‘proposed to be

used basis’. The Division Bench of the High Court

in reversing the conclusion of the learned trial

Judge also took the view that the word ‘Prius’ is

publici juris and that the explanation given by

the  defendants  for  adopting  the  said  word  as

their trade mark is logical and acceptable. It is

23

on the aforesaid broad basis the decree passed by

the  learned  trial  Judge  was  reversed  by  the

Division Bench of the High Court.

16. The arguments advanced on behalf of the

rival parties may now be noticed.

17. Shri  P.  Chidambaram,  learned  senior

counsel, who had argued the case of the appellant

before  us,  submitted  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,  i.e.,

India. It is urged that in the present case the

car Prius was widely publicized and advertised in

leading  newspapers  and  magazines  with  wide

circulation  all over  the world  since the  year

1997. It is also urged that to establish goodwill

24

and reputation it is not necessary that the mark

should  be  recognized  by  every  member  of  the

public  and  it  would  be  sufficient  if  persons

associated with the industry/goods are aware of

the  mark.  In  this  regard  learned  counsel  has

urged that the Division Bench of the High Court

in the impugned judgment accepted the fact that

the launch and sale of the car Prius had been

widely  advertised.  However,  the  Division  Bench

took  the view  that such  publications were  not

groundbreaking  and  did  not  have  the  necessary

prominence to show that the public at large would

be aware of the trade mark. Learned counsel has

further urged that the Division Bench of the High

Court did not deal with the issue of the trade

mark  ‘Prius’  being  a  well  known  mark.  The

entitlement of such a well known mark is to a

higher statutory protection against misuse under

the Act. The finding that the trade mark ‘Prius”

did  not  have  transborder  reputation  permeating

into India is, therefore, incorrect. He has also

25

urged that the test of passing off always rest

upon a likelihood of confusion irrespective of

the stage at which the matter may be considered.

The  fact  that  the  trade  mark  ‘Prius’  was

registered  in  favour  of  the  defendants  was

irrelevant insofar as the plaintiff’s claim for

passing  off  is  concerned.  The  triple  identity

test laid down in Reckitt and Colman Ltd. (supra)

would govern the instant adjudication. The use by

the defendants of the multiple trade marks of the

plaintiff (‘TOYOTA’, ‘TOYOTA INNOVA’ and ‘TOYOTA

DEVICE MARKS’); the conditional injunction Order

dated 10.08.2000; the violation thereof; all have

been urged by Shri Chidambaram to contend that

the  aforesaid  facts  are  strong  evidence  of

dishonest intention on the part of the defendants

to defraud the plaintiff to derive undue benefit

from  the goodwill  and reputation  of the  trade

mark of which the plaintiff is the first user.

18. Shri Chidambaram has additionally urged

26

that  the  story  put  forward  by  the  defendants

surrounding the adoption of the word ‘Prius’ is

on  the  face  of  it  absurd.  The  possibility  of

conjuring a word in the Hindi language and then

looking  for  it  in  the  English  dictionary  and

finally selecting a Latin word is too far fetched

for acceptance as a bona fide act of adoption of

a mark. If the initial use of the mark ‘Prius’ by

the defendants in April, 2001 is dishonest, as it

certainly is, no amount of user of the said mark

after  April,  2001,  can  sustain  any  claim  of

goodwill and reputation of the defendants in the

mark  in  question.   Shri  Chidambaram  has  also

struck an issue with regard to the trade mark

‘Prius’ being publici juris.  It is urged that

the  said  finding  has  been  arrived  at  without

there being an issue before the Court and without

any evidence being led on the point.

19. In  reply,  Shri  Sai  Krishna,  learned

counsel  for  the  respondents/defendants  has

27

submitted that as a manufacturer of spare parts,

the  defendants  are  entitled  to  inform  the

consumer the name of the specific vehicles for

which the particular spare part is suitable and

useful. This is precisely what has been done and

nothing  more.  Such  action  on  the  part  of  the

defendants is protected under Section 30 of the

Act.  It  is  urged  that  the  conduct  of  the

plaintiff  in  belatedly  moving  the  Registry  of

Trade Mark for registration and that too on a

“proposed to be used basis” and the amendment to

the said prayer made, after filing of the suit,

are  crucial  circumstances  for  determination  of

the  plaintiff’s claim.  On the  other hand,  the

mark was adopted by the defendants in the year

2001 and registration thereof was obtained in the

year 2002-2003 whereas this mark was adopted by

the plaintiff in India in the year 2009 and the

car in question was launched in the year 2010.

The  documents  proved  by  the  plaintiff  to

establish goodwill and reputation are all post

28

April, 2001 (date of adoption of the mark by the

defendants).  Furthermore,  the  evidence  of  the

plaintiff’s witnesses make it clear that not only

the mark was adopted by the plaintiff for the

first time in India in 2009 but also that no

advertisements  were  published  by  the  plaintiff

prior to April 2001. From the evidence of the

plaintiff’s witnesses it is clear that since the

launch of the car in 2010, only 130 cars were

sold.  Learned  counsel  for  the  defendants  have

further  urged  that  it  is  the  Territoriality

Principle as opposed to the Universality Doctrine

which has been accepted by the courts all over

the  world  as  the  correct  test  to  determine

goodwill  and  reputation  within  any  particular

jurisdiction. It is therefore necessary that the

trade  mark  is  recognized  and  has  a  separate

existence  in  each  sovereign  Country.  Positive

evidence of spill over of reputation and goodwill

of  the plaintiff’s  mark ‘Prius’  to the  Indian

market, prior to April, 2001, is absent. In this

29

regard reference is made to the several passages

in the book “The Law of Passing-Off” by Prof.

Christopher Wadlow to urge that the test whether

a foreign claimant (in this case, the plaintiff;

Toyota) may succeed in a passing off action is

whether  his business  has a  goodwill in  India;

that  even  the  most  internationally  renowned

business owns not one goodwill, but a bundle of

many different ones. 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.  It  is  submitted  on  the  strength  of  the

decision  of the  Federal Court  of Australia  in

ConAgra   vs.   McCain  Foods6 that  in  the  last

resort 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

6  (1992) 23 IPR 193

30

for it to provide customers, which if lost, is

likely to result in damage to him.  

20.  The delay and latches on the part of the

plaintiff in tolerating the defendants using the

trade mark ‘Prius’ since April, 2001 in spite of

due knowledge has also been urged to contend that

the  claim  of  the  plaintiff  has  been  rightly

rejected by the Division Bench of the High Court.

21. At the very outset, certain principles

that  govern  the  law  of  passing  off  may  be

usefully noticed. Such principles, in fact, have

been considered by this Court in its decision in

S. Syed Mohideen (supra), though in a somewhat

different  context,  i.e.,  the  right  of  a

registered owner of a particular mark to bring an

action for passing off against another registered

owner of an identical or largely similar trade

mark. In S. Syed Mohideen (supra), this Court on

a collective reading of the provisions of the Act

31

held “that the action for passing off which is premised on

the  rights  of  prior  user  generating  a  goodwill  shall  be

unaffected by any registration provided under the Act,” which

proposition actually stood approved in an earlier

decision of this Court in N.R. Dongre (supra).

The trinity test laid down in Reckitt and Colman

Ltd. (supra) was reiterated by this Court in S.

Syed Mohideen (supra) by holding that to prove

and  establish an  action of  passing off,  three

ingredients  are  required  to  be  proved  by  the

plaintiff, i.e., his goodwill, misrepresentation

and damages.

22.  The following passage from Kerly’s ‘Law

of Trade Marks and Trade Names’7 noticed in S.

Syed Mohideen (supra) may be reiterated herein

for a clear exposition of the principles laying

down the test for judging an action of passing

off in the Indian jurisdiction. The provisions in

the Indian Trade Marks Act, 1999 incidentally are

7  14th Edn., Thomson, Sweet & Maxwell South Asian Edition

32

analogous to those in the U.K. Trade Marks Act,

1994

“15-034. Subject  to  possibly one qualification, nothing in the Trade  Marks  Act,  1994  affects  a trader’s right against another in an action for passing off. It is, therefore, no bar to an action for passing off that the trade name, get up or any other of the badges identified  with  the  claimant’s business,  which  are  alleged  to have  been  copies  or  imitated  by the  defendant,  might  have  been, but are not registered as, trade marks, even though the evidence is wholly addressed to what may be a mark  capable  of  registration. Again, it is no defence to passing off that the defendant’s mark is registered.  The  Act  offers advantages to those who register their trade marks, but imposes no penalty upon those who do not. It is equally no bar to an action for passing  off  that  the  false representation relied upon is an imitation of a trade mark that is incapable  of  registration.  A passing  off  action  can  even  lie against a registered proprietor of the mark sued upon. The fact that a  claimant  is  using  a  mark registered  by  another  party  (or even  the  defendant)  does  not  of itself  prevent  goodwill  being generated by the use of the mark, or  prevent  such  a  claimant  from relying  on  such  goodwill  in  an

33

action  against  the  registered proprietor.  Such  unregistered marks are frequently referred to as ‘common law trade marks’.”

 (Underlining is ours)

23. Whether a trade mark is to be governed

by  the  territoriality  principle  or  by

universality doctrine? Prof. Cristopher Wadlow in

his book “The Law of Passing-Off8” has analysed

the problem and its possible resolution in the

following words:

“in  the  worst  case,  an international  company  seeking  to expand  into  a  new  territory  may find  itself  blocked  by  a  small business already trading under the same name or style, perhaps on a miniscule  scale;  and  perhaps having been set up for the very same  purpose  of  blocking anticipated  expansion  by  the claimant or being bought out for a large sum. On the other hand, a rule  of  law  dealing  with  this situation  has  to  avoid  the opposite  scenario  of  bona  fide domestic  traders  finding themselves open to litigation at the  suit  of  unknown  or  barely- known  claimants  from  almost anywhere in the world. Some of the more  radical  proposals  for

8  5th Edn., Sweet & Maxwell

34

changing the law to assist foreign claimants ignore the need for this balancing exercise, without which the  opportunities  for  abuse  are simply  increased,  and  further uncertainty created”

24. The view of the courts in U.K. can be

found in the decision of the U.K. Supreme Court

in  Starbucks   vs.   British  Sky  Broadcasting9

wherein Lord Neuberger observed as follows:

“As  to  what  amounts  to  a sufficient business to amount to goodwill, it seems clear that mere reputation  is  not  enough...The claimant must show that it has a significant goodwill, in the form of customers, in the jurisdiction, but it is not necessary that the claimant  actually  has  an establishment  or  office  in  this country.  In  order  to  establish goodwill, the claimant must have customers within the jurisdiction, as  opposed  to  people  in  the jurisdiction  who  happen  to  be customers  elsewhere.  Thus,  where the claimant’s business is carried on abroad, it is not enough for a claimant  to  show  that  there  are people  in  this  jurisdiction  who happen  to  be  its  customers  when they are abroad. However, it could be  enough  if  the  claimant  could show  that  there  were  people  in

9  2015 UK SC 31

35

this jurisdiction who, by booking with,  or  purchasing  from,  an entity in this country, obtained the  right  to  receive  the claimant’s service abroad. And, in such a case, the entity need not be  a  part  or  branch  of  the claimant: it can be someone acting for  or  on  behalf  of  the claimant...”

25. It seems that in Starbucks  vs.  British

Sky Broadcasting (supra), the Apex Court of UK

had really refined and reiterated an earlier view

in Athletes’ Foot Marketing Associates Inc. vs.

Cobra Sports Ltd.10 to the following effect:

“…no  trader  can  complain  of passing-off as against him in any territory...in  which  he  has  no customers, nobody who is in trade relation  with  him.  This  will normally shortly be expressed by stating that he does not carry on any  trade  in  that  particular country...but the inwardness of it will be that he has no customers in that country…”

26. A passing reference to a similar view of

the Federal Court of Australia in Taco Bell  vs.

10  (1980) R.P.C. 343

36

Taco Co. of Australia11 may also be made.  

27. Prof.  Cristopher  Wadlow’s  view  on  the

subject appears to be that the test of whether a

foreign  claimant  may  succeed  in  a  passing-off

action is whether his business has a goodwill in

a  particular  jurisdiction,  which  criterion  is

broader  than the  “obsolete” test  of whether  a

claimant has a business/place of business in that

jurisdiction.  If  there  are  customers  for  the

claimant’s  products  in  that  jurisdiction,  then

the claimant stands in the same position as a

domestic trader.

28. The  overwhelming  judicial  and  academic

opinion all over the globe, therefore, seems to

be in favour of the territoriality principle.  We

do not see why the same should not apply to this

Country.

11  1981 60 FLR 60

37

29. To  give  effect  to  the  territoriality

principle, the courts must necessarily have to

determine if there has been a spill over of the

reputation and goodwill of the mark used by the

claimant who has brought the passing off action.

In the course of such determination it may be

necessary to seek and ascertain the existence of

not necessarily a real market but the presence of

the claimant through its mark within a particular

territorial jurisdiction in a more subtle form

which  can best  be manifested  by the  following

illustrations, though they arise from decisions

of  Courts  which  may  not  be  final  in  that

particular jurisdiction.

30. In SA Anciens Etablissements Panhard et

Levassor  v.  Panhard  Levassor  Motor  Co12,  the

plaintiffs were French car manufacturers who had

consciously decided to not launch their cars in

England  (apprehending  patent  infringement).

12  1901 2 Ch. 513

38

Nevertheless,  some  individuals  had  got  them

imported to England. It was seen that England was

one of the plaintiff’s markets and thus, in this

case, permanent injunction was granted. Similarly

in Grant v. Levitt13, a Liverpool business concern

trading as the Globe Furnishing Company, obtained

an injunction against the use of the same name in

Dublin as it was observed that advertisements by

the plaintiff had reached Ireland and there were

Irish customers. C&A Modes  v. C&A (Waterford)14,

was a case where the plaintiffs operated a chain

of clothes stores throughout the U.K. and even

in Northern Ireland but not in the Republic of

Ireland where the defendants were trading. The

Court held that, “a very substantial and regular

custom from the Republic of Ireland was enjoyed

by this store. Up to that time an excursion train

travelled each Thursday from Dublin to Belfast,

and so great was the influx of customers from the

Republic as a result of that excursion that the

13  1901 18 RPC 361 14  1976 I.R. 198 (Irish)

39

store ordinarily employed extra part-time staff

on  Thursday  on  the  same  basis  as  it  did  on

Saturday which were normally the busiest shopping

days.” The said view has since been upheld by the

Irish Supreme Court.  

31. Whether  the  second  principle  evolved

under  the  trinity  test,  i.e.,  triple  identity

test laid down in Reckitt and Colman Ltd. (supra)

would stand established on the test of likelihood

of confusion or real/actual confusion is another

question that seems to have arisen in the present

case as the Division Bench of the High Court has

taken  the  view  that  the  first  test,  i.e.,

likelihood  of  confusion  is  required  to  be

satisfied only in  quia timet actions and actual

confusion will have to be proved when the suit or

claim is being adjudicated finally as by then a

considerable  period  of  time  following  the

initiation  of the  action of  passing off  might

have elapsed. Once the claimant who has brought

40

the  action  of  passing  off  establishes  his

goodwill in the  jurisdiction in which he claims

that the defendants are trying to pass off their

goods  under  the  brand  name  of  the  claimant’s

goods,  the  burden  of  establishing  actual

confusion  as  distinguished  from  possibility

thereof ought not to be fastened on the claimant.

The  possibility  or  likelihood  of  confusion  is

capable of being demonstrated with reference to

the particulars of the mark or marks, as may be,

and the circumstances surrounding the manner of

sale/marketing of the goods by the defendants and

such  other  relevant  facts.  Proof  of  actual

confusion, on the other hand, would require the

claimant to bring before the Court evidence which

may  not  be  easily  forthcoming  and  directly

available to the claimant. In a given situation,

there may be no complaints made to the claimant

that goods marketed by the defendants under the

impugned mark had been inadvertently purchased as

that  of  the  plaintiff/claimant.  The  onus  of

41

bringing  such  proof,  as  an  invariable

requirement, would be to cast on the claimant an

onerous  burden  which  may  not  be  justified.

Commercial  and  business  morality  which  is  the

foundation of the law of passing off should not

be  allowed  to  be  defeated  by  imposing  such  a

requirement. In such a situation, likelihood of

confusion would be a surer and better test of

proving  an  action  of  passing  off  by  the

defendants. Such a test would also be consistent

with commercial and business morality which the

law of passing off seeks to achieve. In the last

resort,  therefore,  it  is  preponderance  of

probabilities  that  must  be  left  to  judge  the

claim.

32. The  next  exercise  would  now  be  the

application of the above principles to the facts

of  the  present  case  for  determination  of  the

correctness of either of the views arrived at in

the two-tier adjudication performed by the High

42

Court of Delhi. 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 car itself was introduced

in the Indian market in the year 2009-2010. The

advertisements  in  automobile  magazines,

international business magazines; availability of

data  in  information-disseminating  portals  like

Wikipedia  and  online  Britannica  dictionary  and

the  information  on  the  internet,  even  if

accepted,  will not be a safe basis to hold the

existence  of  the  necessary  goodwill  and

reputation of the product in the Indian market at

the relevant point of time, particularly having

43

regard  to the  limited online  exposure at  that

point of time, i.e., in the year 2001. The news

items relating to the launching of the product in

Japan isolatedly and singularly in the Economic

Times  (Issues  dated  27.03.1997  and  15.12.1997)

also do not firmly establish the acquisition and

existence of goodwill and reputation of the brand

name  in  the  Indian  market.  Coupled  with  the

above, the evidence of the plaintiff’s witnesses

themselves would be suggestive of a very limited

sale  of  the  product  in  the  Indian  market  and

virtually the absence of any advertisement of the

product in India prior to April, 2001. This, in

turn, would show either lack of goodwill in the

domestic  market  or  lack  of  knowledge  and

information of the product amongst a significant

section of the Indian population. While it may be

correct  that  the  population  to  whom  such

knowledge or information of the product should be

available  would  be  the  section  of  the  public

dealing with the product as distinguished from

44

the  general  population,  even  proof  of  such

knowledge  and  information  within  the  limited

segment of the population is not prominent. 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

even against the registered owner.  In any event

the core of the controversy between the parties

is really one of appreciation of the evidence of

the parties; an exercise that this Court would

not undoubtedly repeat unless the view taken by

the  previous  forum  is  wholly  and  palpably

unacceptable which does not appear to be so in

the present premises.

33. If  goodwill  or  reputation  in  the

45

particular  jurisdiction  (in  India)  is  not

established  by  the  plaintiff,  no  other  issue

really  would  need  any  further  examination  to

determine the extent of the plaintiff’s right in

the action of passing off that it had brought

against the defendants in the Delhi High Court.

Consequently, even if we are to disagree with the

view of the Division Bench of the High Court in

accepting the defendant’s version of the origin

of the mark ‘Prius’, the eventual conclusion of

the Division Bench will, nonetheless, have to be

sustained.  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.

34. For all the aforesaid reasons, we deem

46

it proper to affirm the order(s) of the Appellate

Bench  of  the  High  Court  dated  23.12.2016  and

12.01.2017 and dismiss the appeals filed by the

appellant/plaintiff.

................,J.         (RANJAN GOGOI)

................,J.                     (NAVIN SINHA)

NEW DELHI; DECEMBER 14, 2017

47

ITEM NO.1503               COURT NO.3               SECTION XIV [FOR JUDGMENT]

              S U P R E M E  C O U R T  O F  I N D I A                        RECORD OF PROCEEDINGS

CIVIL APPEAL  NO(S).  5375-5377/2017

TOYOTA JIDOSHA KABUSHIKI KAISHA                    APPELLANT(S)

                               VERSUS

M/S PRIUS AUTO INDUSTRIES LIMITED  & ORS.          RESPONDENT(S)

Date : 14-12-2017 These appeals were called on for pronouncement of judgment today.

For parties:                      Mr. Aditya Verma, AOR

Ms. Archana Sahadeva, AOR Mr. Kapil Midha, Adv.

Hon'ble Mr. Justice Ranjan Gogoi pronounced

the  judgment  of  the  Bench  comprising  His

Lordship and Hon'ble Mr. Justice Navin Sinha.

The appeals are dismissed in terms of the

signed reportable judgment.

[VINOD LAKHINA] [TAPAN KUMAR CHAKRABORTY]

AR-cum-PS BRANCH OFFICER

[SIGNED REPORTABLE JUDGMENT IS PLACED ON THE FILE]