• Skoda banned from using 'Monte Carlo' car model name in India
  • The move follows infringement allegations from local fashion brand
  • Shows growing vigilance of local rights holders against multinationals

Skoda has been banned from using the car model name ‘Monte Carlo’ in India following allegations of infringement by a local fashion brand. The dispute underscores the crucial importance of thorough trademark searches in all jurisdictions, and also the growing vigilance of domestic brands in protecting their rights against multinational corporations.

An Indian district judge barred the Czech car manufacturer from using Monte Carlo as the name of its new edition of Rapid model – which became available for order in August but is not yet on the country’s roads. This followed infringement claims by local clothing company Monte Carlo Fashions – the registered owner of the MONTE CARLO trademark – which claimed “malafide and deceptive” use of its mark had caused it significant commercial and reputational loss. Passing a temporary injunction, Judge Mukesh Kumar said it was “crystal clear” that Skoda had infringed the rights of Monte Carlo Fashions, which would suffer irreparable losses if a ban were not imposed.

On first glance, the judgement appears a little harsh on Skoda. “It does seem odd to me that a well-established brand should be restrained without being given the opportunity to explain itself first, as seems to have been the case here,” comments Ranjan Narula, an attorney at north India-based RNA IP Attorneys. “Skoda is not a fly-by-night operator, and when there is an established player alleged to have infringed, normally the judges will choose to hear their side of the story before acting”. He continues: “When infringement cases are pursued against products in completely different industries, they usually involve blatant copying, which doesn’t seem to have happened in this instance”. Furthermore, NDTV’s Car and Bike expressed its perplexity at the decision, questioning whether geographical names, such as Monte Carlo, should qualify for trademark protection.

Nevertheless, the episode raises questions about how Skoda approached trademark clearance/searching for its new range. As a multinational car company entering a major consumer market, it ought to have undertaken – and had the ability to undertake – a thorough search of existing Indian trademark rights. “I do not know all of the details obviously, but perhaps Skoda did not do a thorough clearance”, says Narula: “It is possible that Skoda looked only in Class 12 for registered rights in the automotive sector, without a proper search of other classifications.” Another potential pitfall for international brands in India, he suggests, is to neglect to search for common law rights in addition to registered trademarks.

However, it is also perfectly possible that Skoda performed a thorough search, knew about the existing trademarks, but decided that the risk of infringement was sufficiently small that it would proceed to launch its Monte Carlo brand. This might be because, Narula suggests, the mark was in Class 25 for garments and footwear, and Skoda’s team believed its car name was unlikely to be infringing a fashion brand. If so, this analysis failed to take account of India’s broad definition of infringement, which holds that rights can be infringed by actors in different industry sectors, providing that those actors use a similar or identical mark, and that the registered trademark has a reputation which is damaged or unfairly disadvantaged by that use. It could also be that Skoda thought its use of the name Monte Carlo would be more defensible for being a famous geographical place, but this would have been to overlook the experience of Ford, which in 2003 had to rebrand its Everest model following allegations of infringement.

On the other hand, Skoda may have identified risks in launching its Monte Carlo range, but decided to do so nevertheless, because of its commitment to the branding, which is already being used across a number of other jurisdictions. As such, it is difficult to say whether the automotive manufacturer has found itself in these difficulties by oversight, high-risk tactics, bad luck, or a combination of these things.

But putting to one side questions of Skoda’s particular approach to the Monte Carlo brand, there is another important lesson for international brands to take from this dispute: many domestic enterprises in India are increasingly aware of the value of intellectual property and are determined to uphold their rights. For Narula, it is important to bear in mind that “local players are now equally vigilant in protecting their brand names – multinational companies entering the Indian market should not take for granted that they will not be challenged.” Indeed, the Indian government has launched a number of schemes in recent years (such as this announcement in July) to promote better understanding of the importance of IP rights among domestic companies.

Whether Skoda will appeal to the High Court – and whether it will enjoy success if it does – remains to be seen. Although it is not clear how the Czech car brand came to find itself on the wrong side of a trademark injunction, its dispute with Monte Carlo Fashions flags up a number of potential pitfalls for multinational brands operating in India, not least that they can be taken to task – and effectively so – by local rights holders.