Claims of Transnational Reputation Need Corroboration and Cannot Be Mere Assertions | India

In the recent case of Toyota Jidosha Kabushiki Kaisha vs Tech Square Engineering Pvt Ltd, the Delhi High Court rejected Toyota’s rectification petitions on the grounds that it could not establish goodwill and reputation of its ALPHARD mark in India, and the documents placed on record by Toyota did not corroborate extensive use and trans-border reputation acquired in such trade mark.

The petitioner, Toyota, a Japanese automotive manufacturer whose vehicles are sold in over 170 countries, filed rectification petitions seeking the removal of trade mark registrations that were granted to Tech Square Engineering for the ALPHARD trade mark under Classes 9 (car stereos, etc), 12 (car accessories, etc) and 27 (automobile carpets). Toyota entered the Indian market via a joint venture with the Kirloskar Group in 1997 under the trading name Toyota Kirloskar Motor Pvt Ltd. It adopted the ALPHARD trade mark in 1986 for a luxury MUV (multi-utility vehicle) launched in 2002, which was not formally launched in India, though it was available to Indian residents through direct imports. Globally, the petitioner sold more than 850,000 units under the ALPHARD trade mark. The petitioner’s trade mark application for ALPHARD was filed under Class 12 in November 2017 in India. The respondent had obtained registrations for identical marks – ie, ALPHARD – under Classes 9, 12 and 27, which were filed in November 2015 and had been claimed as mala fide adoption by the petitioner.

The defendant countered these allegations, claiming prior use since 2015 and bona fide adoption of the ALPHARD trade mark under Classes 9, 12 and 27, stating that the term is the name of a star. Since the petitioner was not using the ALPHARD trade mark in India, there was no goodwill or trans-border reputation in said trade mark in India. The petitioner was not using the ALPHARD trade mark for goods under Classes 9 or 27 – not even abroad. 

The petitioner repudiated the defendant’s defence, stating that vehicles with the ALPHARD trade mark have been sold in India since 2008 through listings on third-party websites, showing the petitioner’s vehicles for sale in India. The ALPHARD trade mark enjoys a worldwide reputation, and has a direct spillover in India, substantiated by international brochures, annual reports, awards, global trade mark registration certificates and promotional materials.

In dealing with these issues, the Court relied on two tests – ie, the principle of territoriality and the difference between the applicability of the “spillover effect” of trans-border reputation in passing off and rectification cases. 

The Court analysed the Supreme Court of India’s judgment in a previous passing-off case of the petitioner that laid down the principles for determining transnational reputation. In such appeal moved by the petitioner, the Supreme Court applied the territoriality principle and did not grant a permanent injunction in favour of Toyota, as the reputation of Toyota’s mark Prius had not spilt over to India merely via advertisements in automobile and international business magazines and information on the internet. It was observed that, to give effect to the territoriality principle, the existence of a real marketplace is not necessary, but the presence of a claimant through its trade mark in a marketplace must be established, even if it is subtle.

Referring to the Appellate Board’s finding in the Hypnos Limited case, wherein it was observed that rectification proceedings cannot be equated with passing-off action, the burden to prove the likelihood of the defendant’s goods being passed off rests on the plaintiff, whereas the aspects of rectification proceedings are completely different as they deal with the power to cancel or vary registration on the register. In a rectification action, the onus is on the petitioner to establish a trans-border reputation through strong evidence, and such burden ought to be discharged to allow a rectification petition.

In considering the petitioner’s evidence, the Court observed that the petitioner had not filed any invoice to demonstrate the sale of ALPHARD-branded cars in India, and even their trade mark application filed in November 2017 was on an intent-to-use basis. Further, there were no India-specific advertisements, and all evidentiary documents such as international brochures, annual reports, awards, etc pertained to international usage only. In addition, import-export data furnished by the petitioner showed only 15 imports made by private parties (not the petitioner) for the ALPHARD brand between 2014 and 2016, and not all of them were for vehicles. Even the articles published in automobile magazines mentioning the plausible launch of the petitioner’s ALPHARD vehicle in India were subsequently dated as against the respondent’s registration date.

The Court applied the territoriality principle and concluded that none of the furnished documents could demonstrate that the trade mark had acquired goodwill and reputation in India, and that trans-border reputation could not be considered as having permeated India. Further, the petitioner also failed to show mala fide adoption of ALPHARD by the respondent.

The Court favoured the respondent and held that the petitioner could not prove that they had acquired a trans-border reputation in India and had failed to prove the grounds of rectification of the respondent’s ALPHARD registered trade mark(s) under Classes 9, 12 and 27. The petitions were accordingly dismissed. The petitioner has moved appeals before the Division Bench of the Court against this order, which are set to be heard in the second week of May 2023.

This order highlights the assessment factors in the test of territoriality principle which must be considered to ascertain the spillover of trans-border reputation into India. There is no doubt that in this era of digitalisation and visual marketplaces, where any and every piece of information for a particular product and its proprietor is available at the click of a button, the global proliferation of information about international brands is a fact and cannot be ignored.

Several factors substantiate trans-border reputation claims, which should essentially be performed by way of cogent documentary evidence. The Indian courts recognise the trans-border reputation of trade marks and assess all factors individually to conclude their findings. Thus, it is vital that the interested party substantiate and corroborate their claims via strong irrefutable evidence.