In Toyota Jidosha Kabushiki Kaisha v Prius Auto Industries Ltd & Ors. (Civil Appeal Nos 5375-5377 of 2017), the Supreme Court of India (Supreme Court) has affirmed the order of the Division Bench of the Delhi High Court (Division Bench) permitting the use of the mark PRIUS by Prius Auto.

Earlier, the Single Judge of the Delhi High Court had restrained Prius Auto by a permanent injunction from violating Toyota’s rights in its marks TOYOTA, INNOVA, and PRIUS; and had recognized PRIUS as a well-known trademark whilst observing that Toyota was the prior user of PRIUS in other countries and that the trans-border reputation had penetrated in India (although Prius Auto was the prior user and registered proprietor of the mark PRIUS in India). Aggrieved by the decision of the Single Judge, Prius Auto filed an appeal with the Division Bench on the limited aspect of challenging the legality of the decision of the Single Judge concerning the permanent injunction pertaining to the mark PRIUS. The Division Bench set aside the permanent injunction, amongst other things, on the basis that Toyota had failed to establish trans-border reputation of its mark PRIUS in India when Prius Auto adopted the same- at a time when there was limited online/internet exposure. This decision came to be challenged under the present appeal before the Supreme Court.

The Division Bench had come to a conclusion that Toyota had failed to establish trans-border reputation of its mark PRIUS in India when Prius Auto adopted the same, which could be interpreted to mean that the mark was not well-known at that time (which aspect was not specifically touched upon by the Division Bench). However, in the present appeal before the Supreme Court, amongst other things, Toyota argued that the Division Bench did not deal with the issue that PRIUS was a well-known mark.  Further, it was argued that the Division Bench incorrectly took the view that Toyota’s publications/advertisements did not have necessary prominence although it accepted that the launch and sale of Toyota’s PRIUS car was widely advertised.

In its defense, amongst other things, Prius Auto argued that it is the ‘Territoriality Principle’ as opposed to ‘Universality Doctrine’, which has been accepted worldwide as the correct test to determine goodwill and reputation. Further, positive evidence of spillover of reputation and goodwill of Toyota’s mark prior to Prius Auto’s adoption of the mark was absent. Prius Auto also emphasized on the delay on part of Toyota to approach the court.

After hearing the parties, amongst other things, the Supreme Court gave credence to Prius Auto’s arguments on ‘Territoriality Principle’ and on that principle stated that there must be adequate evidence to show that the plaintiff had acquired substantial goodwill in India for its mark. The aforesaid was stated in spite of the observation that Toyota’s mark PRIUS had acquired a great deal of goodwill in several other jurisdictions in the world much prior to Prius Auto’s use and registration in India. Contrary to the Division Bench, which observed that actual confusion is required to be proved at the final adjudication of the suit and that the test of ‘likelihood of confusion’ is only required to be satisfied in quia timet actions, the Supreme Court observed that ‘likelihood of confusion’ would be a better test of proving a passing off action.

This decision is likely to have an impact on the provisions of well-known mark under the (Indian) Trade Marks Act 1999 especially in respect of the new rules thereunder, which permit inclusion of a mark in the list of well-known marks maintained by the Indian Trade Marks Registry. Brand owners will have to fulfill the higher threshold of documentary evidence (earlier the better) as laid down by the Division Bench and affirmed by the Supreme Court.