Global citizens and travellers extensively use online sites, social media and search engines to smooth their journeys and stays. Usually this involves no thought as to where any service provider is based or the countries in which it operates. Such providers may be protected in jurisdictions where they have a physical presence, but as they cannot physically set up everywhere they are available, they may have little or no protection in countries where they are absent. Trademark law deals with this through transborder reputation and goodwill.
When entities venture abroad, they may encounter identically or similarly named entities providing identical or similar goods and services. If the foreign entity has registered trademarks, proceeding against infringement is easy. Without registration, alleging passing off may work. In India, for a passing off action to succeed, the entity must prove transborder reputation and goodwill by showing that its fame has transcended borders and is known among the relevant public. Interpreting transborder reputation involves a spectrum ranging from universal to territorial. The former requires proof of first use of the trademark anywhere in the world and the latter demands a more nuanced, but clearer territorial presence. Courts have generally accepted transborder reputation, but are moving away from universality towards territoriality as the guiding principle.
In the leading case of NR Dongre and Ors v Whirlpool Corporation and Anr, the Supreme Court underscored the principle of universality, under which foreign trademark owners were protected on proving they were the first world-wide to use the mark and thereafter gained reputation. The same court upheld the principle in Milmet Oftho Industries & Ors v Allergan Inc. Mere non-use in India was deemed irrelevant when the mark was first used elsewhere in the world by the plaintiff, although the court did consider the greater potential harm where pharmaceuticals were involved.
A shift came in Century 21 Real Estate LLC v Century 21 Main Realty Pvt Ltd, where the Delhi High Court held that mere trademark registration did not imply use. The foreign entity neither provided goods or services nor advertised in any media in India. The court did not approve of trademark and trade name blocking.
The case of Toyota Jidosha Kabushiki Kaisha v Prius Auto Industries Ltd and Ors was decisive in upholding territoriality over universality. The Supreme Court held mere reputation insufficient, and considered the goodwill involved. Evidence of online materials at the time of hearing was ineffectual, as there was limited internet access at the time of the alleged infringement. Isolated references in Indian publications were also inadequate. The court held the spillover of goodwill could, however, be shown by judging the mark’s presence in more subtle forms and did not require a real market.
The Delhi High Court in Keller Williams Realty Inc v Dingle Buildcons Pvt Ltd & Ors relied on this case to deny interim relief, as the plaintiff could only produce emails from those seeking agency rights. Despite having registered its mark in India, it had no local business operations and there could be no rights in a trademark not being used.
In the recent case of Toyota Jidosha Kabushiki Kaisha v Tech Square Engineering Pvt Ltd & Ors, the Delhi High Court again upheld the territoriality principle. The petitioner had not begun using the trademark in India and had filed applications on a proposed-to-be-used basis. They also had limited sales, through private imports, and had not advertised.
Transborder reputation law is evolving as new networks and connections emerge, and litigation is likely to increase. But these essential elements proving the spillover of goodwill are found in cases. First, a market presence, not necessarily a real market, must be established, if only subtly. Having customers in India satisfies this requirement as the claimant is then in the same position as a domestic trader. Second, a substantial number of advertisements and articles available to users in India must have been published before the competing mark by a domestic entity was adopted. This will prove that the claimant enjoys a reputation in India. How foreign companies in India will fare in the future protecting their brands, only the courts and time will tell.
Essenese Obhan is the managing partner and Sannidhi Mahapatra is an associate at Obhan & Associates.
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