The Apex court’s decision of December 14, 2017 in the case of Toyota Jidosha Kabushiki Kaisha v Prius Auto Industries Ltd & Ors (Civil Appeal Nos. 5375-5377 of 2017) affirming the decision of the Division Bench of the Delhi High Court confirms the new trend of applying the principle of ‘territoriality’ over the ‘universality’ doctrine in the case of a passing off action. In this case, the plaintiff (Toyota) was unable to prove the existence of goodwill and trans-border reputation at the relevant point in time in India for its mark PRIUS and had to lose the case.

Keeping in mind the ‘within India’ picture, the Hon’ble Supreme Court of India noticed that though the plaintiff had used the mark PRIUS first in the world in 1997 and gained certain amount of publicity since then across the world in relation thereto, it was able to use the mark in India only in 2010 and had filed an application for its registration in 2009 on a “proposed to be used” basis. Whereas, the defendant (Prius Auto Industries) had been using the mark in India since the year 2001 in respect of automobile parts and accessories and had obtained statutory rights over the same through registration in 2002.

The Apex court observed that the existence of trans-border reputation and claimed well-known nature for the mark PRIUS on or before the relevant date (i.e. the year 2001 when the defendant started using the mark) needed to be established, which was lacking in this case owing to ‘scanty’ evidence and/or absence of appreciable documentary proof. The Apex court also observed that knowledge of the said brand even among the relevant sections of the public was not prominent, due to inter alia, lack of internet connectivity/omnipresence of the world-wide-web back in 1997 when just two news items were published in print (in India) pursuant to the plaintiff’s launch of its PRIUS brand of cars in Japan.

The findings of the Apex court may have been different with the increasing penetration of internet in India if the facts of the case were to be assessed on the basis of contemporary records. With over 450 million internet users, India is the second largest online market, ranked only behind China.

The importance of having customers within a particular jurisdiction from a brand-specific perspective was also seen by the Apex Court as a key factor for establishing goodwill within that jurisdiction.

This decision tells the story of an evolving IP jurisprudence in India which not only redefines trans-border reputation but also shows that IP jurisprudence manifests in sync with the business environment, and the changing economic landscape of India and associated policies. In the last couple of decades we witnessed the Indian judicial system adopting an approach that was aimed to develop a level playing field for foreign brand owners, who could not do business in India up till 1991 due to policy restrictions. In cases involving subsequent adoption of internationally used trade marks by Indian businesses, most of the decisions suggested presumption of bad faith on part of the defendants; rather than relying on a thorough inquiry, scrutiny and appreciation of evidence led by both the parties. This decision of the Apex court sets a new standard for testing of evidence to claim trans-border reputation in India. The decision relies on thorough inquiry and appreciation of relevant evidence to determine who has better rights or whether a case of passing off is made out on the basis of prior adoption in another jurisdiction, alleged trans-border reputation in India and/or ‘well-known’ nature of the mark.